Slashdot Mirror
70% of U.S. Government Spending Is Writing Checks To Individuals
An anonymous reader writes with this excerpt from Investor's Business Daily:"Buried deep in a section of President Obama's budget, released this week, is an eye-opening fact: This year, 70% of all the money the federal government spends will be in the form of direct payments to individuals, an all-time high. In effect, the government has become primarily a massive money-transfer machine, taking $2.6 trillion from some and handing it back out to others. These government transfers now account for 15% of GDP, another all-time high. In 1991, direct payments accounted for less than half the budget and 10% of GDP. What's more, the cost of these direct payments is exploding. Even after adjusting for inflation, they've shot up 29% under Obama." It's very hard to lay blame on only one part of the U.S. government, though; as the two largest parties are often fond of pointing out when it suits them, all spending bills originate in the House.
Why is this a problem? You've outlined some interesting results here, but what makes you think there's an issue here?
I hate to be the guy saying "why is this on Slashdot", especially since I've been posting these very budget numbers here for years, when it has been relevant to the thread, but WTF? This is a blatant political click-troll story. It's not news (been this way for many years), and it's not "for nerds".
Sure, I guess we could rehash the same old "NASA's budget is trivial in the scheme of thing" posts, but really.
Socialism: a lie told by totalitarians and believed by fools.
http://www.ssa.gov/
Feel free to run on eliminating it. After all, it's what you're complaining about in your post.
In 2009 Slashdot turned into an internet libertarian website targeted to IT personnel. Didn't you get that memo?
Riiight,
because after 40 years in the military, getting a pension check means you're a "Taker".
F.U. and Romney too.
So the richest 1% receive approximately 0.4% of the money. Not really surprising or interesting.
mandatory (adj): Obligatory; required or commanded by authority.
As the article points out, most of this is going to mandatory programs, which would be the same even if it were Romney or McCain or Sarah Fucking Palin in office.
What this means, for those dumb enough to believe what they read in IBD, is that what Obama has achieved is to reduce the amount of spending on the discretionary side. Agriculture, down 8%. HHS, down 7.6%. Even Homeland Security, down 2.8%. The Pentagon is down over $100 billion.
But hey, by all means, let's make sure that this looks like Obama's doing a bad job, because that was clearly the author's goal before he wrote it. The rest is just a matter of selecting the data until it proves what you wanted it to prove.
When we hear a serious discussion of how to cut benefits (something other than "the poor should die" and "let's give it all to Wall Street, because they're so freaking responsible"), we can have an actual conversation. But articles like this show why anything from Obama, no matter how reasonable, is doomed even before it gets printed.
Goddammit, if the government is going to give money, it should be to corporations. Pah!
What if the checks are only taking money from the Fed, which creates it out of thin air anyway, and is required to return all interest on T-bills to the Treasury? No harm.
Lincoln realized that government's greatest potential lay in its ability to create money, and created over $400 million greenbacks to raise revenue without increasing taxes or borrowing it.. The Greenback Party of the 1870s, made up mostly of poor farmers who were being hurt by the deflation of trying to take those greenbacks out of circulation and go back on the gold standard, were ahead of their time in recognizing that government can and should create money to help individuals.
Seriously. The entire story should be modded "troll".
"Individual" in this case does NOT mean "person".
If you download the spreadsheet you can see that they classify total spending as either "direct" or "grants", of which the vast bulk is "direct". Everything that is not a grant must be being paid to an entity of some kind, whether an actual person, a company, a non-profit or something. You can verify this is the total Federal spending using the Monthly Treasury Statements at https://www.fms.treas.gov/mts/... - I recommend the PDF versions.
As for the percentage going to veterans, I expect the number of veterans isn't growing very much, whereas the Federal budget is. So a constant amount in a larger total is going to be a smaller fraction.
Bottom line, this article is FUD and should not be taken serious by anyone.
Graham
Much of the remaining 30% was things like defense and infrastructure -- this may be bloated, but in theory it benefitted fuure generations, so it was considered ethical to borrow from them to pay for it. But wealth transfer payments?
That is flat-out current generations refusing to carry their own weight.
By the way, taxing the rich won't cut it -- taxing 100% of the rich's income would gain you an additional $500 billion a year (assuming they continue to work for free, good luck with that and keeping their salaries pointlessly high). This is still hundreds of billions a year short.
No, every elected politician knows you have to tax the middle class to pay for the middle classess' wealth transfers (social security, whether retirement or disability).
And these politicians are cowards because they are a huge and motivated voting block.
No, we, the middle class, have to decide on an amendment to prevent ourselves from borrowing from our children. We won't, because we, and our politicians who we elect, are weak.
(-1: Post disagrees with my already-settled worldview) is not a valid mod option.
Of the 70% spent on "individuals", 39% is Medicare, Medicaid + "Obamacare" (I wonder what the split is - I'd guess 40-40-20), 33% is Social Security, 21% is poverty programs, and 5% is veteran's pensions, with the remaining 2% not accounted for in TFA (they mention farm subsidies and disaster payments later, perhaps that's what this is).
Have you even looked at the budget breakdown? Pensions are the #1 expense. Instead of 40 years in the military we're probably closer to the point where people's retirements are longer than their actual years of service. You only need 20 years of service in order to retire younger than 62. The average retirement age of a federal employee is 60 but what if someone retires in their 50's or even 40's and then ends up living into their 90s? The results can be fairly extreme. http://www.usgovernmentspendin...
I would think an increase in the percentage of checks going to individuals would be a good thing. That's a lower percentage of checks going to military contractors. This is the government focusing more on helping people instead of killing them.
I read the internet for the articles.
Ummm No. In the Bitcoin debates I have always been liberal on money creation – that some low level inflation is better than low level deflation. But never give control of the printing press to politicians. They will turn on the tap and inflation will spiral out of control. See Germany in the interwar era, or Zimbabwe a few years ago. Deflation may enrich the wealthy (as you point out), but high inflation destroys and savings of the poor and long term investments for the growth of tomorrow.
This actually does cause problems since you are essentially getting something for nothing. We can't go on forever living like this since something will give eventually.
Don't try to pretend to be nonpartisan with that candy coated BS at the end. This story was posted here by the usual crowd of slashdot conservatives aiming to make President Obama look bad. Nevermind that the article actually points out that less money is paid out in social welfare programs than at any time since before the Reagan administration, the new conservative mantra here is that no money should ever be given by the federal government to individual citizens, regardless of whether it is for retirement, health care, or even wages for work done. If you're not independently wealthy to the degree that you can afford to be part of the federal government for no wage whatsoever, then the conservative voice here wants you thrown out of Washington immediately and asking for assistance at your local church.
Yes, I know this will be moderated down. But none of "troll", "flamebait", and "overrated" are the same as "factually inaccurate" - indeed most are just used as ways of saying "I disagree".
Damn_registrars has no butt-hole. Damn_registrars has no use for a butt-hole.
taking $2.6 trillion from some and handing it back out to others.
Ummm, what else is the government supposed to do with the money? If it gave the money back to the same people who paid the taxes in the first place, it wouldn't make much sense, would it?
This year, 70% of all the money the federal government spends will be in the form of direct payments to individuals, an all-time high.
Including medicare, medicaid, and Obamacare? So the payments for drugs and health care are counted as going directly to individuals. OK, and other than the military, what's left? Highways, schools, NASA, and the post office -- and we've been cutting all of those.
So in short, article is saying that taxes are money transfers (which they had better be, or they'd be really stupid), and that health care and social security are going up, and everything else but the military is getting cut. That's news?
an eye-opening fact
Maybe if you're retarded.
Stop-Prism.org: Opt Out of Surveillance
Anyone who thinks the fed "creates [money] out of thin air" and as a consequence is able to "raise revenue without increasing taxes or borrowing it" has undoubtedly received their economic education from a single source, namely youtube.com
When the federal reserve increases the supply of money, inflation is the net result. The net result of the fed increasing the money supply and inflation, is a tax on everyone who currently owns US dollars, as each of their dollars now purchases fewer real goods.
It doesn't come from thin air at no cost, no matter how many youtube videos you watch that claim it does, or what liberal college professor you overpaid to tell you it does. If you learned this in college, demand a refund on your tuition.
And it is not 1870 anymore either.
Slashdot title is misleading, so had to RTFA to find out
"Direct payments to individuals" would seem to include your pay during those 40 years too. It's obvious to me that the wording is chosen to be deceptive.
Why should the government's sticky fingers be involved in the money flow for these programs? For retirement, the government has a needed roll in setting standards for "safety net" investment choices, and in insuring people actually do save, but they don't need to handle the money. Charity is great, and we should all be compassionate, and again the government has a needed role in setting standards, but they don't need to handle the money.
Plus lets never forget that if you depend on the government each month for a check you can't live without, you've given the government total power over you. Governments attract people who want nothing more than total power over others, and it's never smart to give it to them! We haven't seen the first "dictatorship through the monthly check", but we've seen early hints of it. London protestors were threatened with being cut off from benefits just recently.
Helping people is great. Having power over people is what megalomaniacs seek over all else. We can do the first without feeding the latter.
Socialism: a lie told by totalitarians and believed by fools.
Yet if you point this fact out, you lose a presidential election...
Actually, there may be a confounding factor (this is a hypothesis, anybody who has real numbers is welcome to step forward to argue for or against):
Assuming you aren't inimically opposed to the concept of the welfare state (whether because you think that it's actually a good idea, or whether you think that it's relatively cheap insurance to keep a fundamentally capitalist economy with slightly higher tax rates to buy off the proles, irrelevant), the state basically has two options for 'redistribution':
1. Actually comparatively high taxes on individuals and corporations, used to fund a variety of not-directly-cash public services(eg. national health system, cheap or free education, etc.).
2. Avoid the flack associated (in the US) with robust public-sector offerings, and sneak in your social welfare spending primarily in 'emergency' programs (WIC, etc. which pay in scrip; but have nontrivial USD value once you discount them for being able to purchase only certain classes of goods) and in 'hand up for the virtuous poor' type things ("earned income tax credit", assorted subsidies for small business loans, edging up to programs that are basically a sop for the middle class, like mortage related deductions).
Now, lest anybody misinterpret me on this point: I Think It Is A Bad, Bad, thing that nontrivial swaths of the US population are basically so damn poor that the only cash worth squeezing out of them is sales taxes and check-cashing joint fees. However, barring a solution to that problem, it would be my contention that (like our absurd 'We should really have universal health care; because our current system is an utter clusterfuck delivering bad results for crazy high prices, and tying workers to their jobs; but universal health care is commie socialism, so let's have a crazy arrangement where the government 'launders' universal health care(at a tidy markup) through the incumbent private insurance companies!') our 'let's see if we can get some of the benefits of a welfare state without courting the unpopularity of calling it that, and without the clout to do anything about the ever-widening wealth gap' approach has left us with a singularly dysfunctional creature, neither fish nor fowl.
This is the theory.
In actual practice, both House and Senate do separate budget bills at the same time, which are then reconciled.
"I do not agree with what you say, but I will defend to the death your right to say it"
I hope you're joking about Baby Boomers earning Social Security. SS taxes were half the current level when the Boomers started their careers. See http://www.ssa.gov/oact/progda...
I'm all for paying them back based on what they paid in, but they have not earned the current benefit level.
When a substantial portion of the money supply is out of circulation, printing money taxes that out of circulation money and gets it back into circulation, which can grow the economy. So while the effect you describe exists, it is not the only effect that must be accounted for. When the bulk of money in the economy is not circulating, the economy shrinks, and that's at least as damaging as the value of money shrinking.
At first, I thought the story here is that the U.S. government spends 70% of its budget on writing checks. To which my response would have been that moving to something more efficient than the ridiculous banking system we have in the U.S. would then make the federal government much more efficient.
It appears to be that, rather, 70% of the budget is being paid out to individuals - much of it in the form of health benefits, social security, and income security. Is that cause for concern? Direct payments to individuals have increased relative to other things the federal government spends money on. Ok, the percentages move, that's expected. They're now at 70% of the total budget. Ok, that's somewhat interesting. But what's the actual story here? Is some program growing faster than tax revenue to the point that we have to be concerned that we won't be able to afford it anymore? Did total budget decrease, thus making the percentage larger? Do you feel that the government is spending money on things they shouldn't be spending (as much) money on?
The article provides some more detail: it claims the percentage spent on income security will drop from 25% in 2009 to 17% in 2019, as more is spent on "middle-class entitlement programs such as ObamaCare". So I guess the problem isn't with the 70% being paid to individuals, but with the individuals it gets paid to. Fair enough, we all have our own ideas about which groups the government should be sending money to (if anyone), but perhaps it would have been more productive to get straight to that part, instead of suggesting that 70% is rather high, when the thing you would like money to be spent on is actually part of that 70%.
Please correct me if I got my facts wrong.
...When the federal reserve increases the supply of money, inflation is the net result. The net result of the fed increasing the money supply and inflation, is a tax on everyone who currently owns US dollars, as each of their dollars now purchases fewer real goods
Not exactly. The (money supply) times (velocity of money) equals (cost of goods), times (production rate).
So, if the amount of money increases but velocity of money and the production rate (amount of goods produced per unit time) stay the same, the result is inflation.
However, conversely, if the production rate increases but the money supply and velocity of money does not, then the cost of goods decreases-- that's deflation. (Note that this is production rate, not productivity: production rate equals productivity time population times employment fraction.)
A steady economy is one in which the money supply increases exactly at a rate equal to the production rate-- in this case, the cost of goods stays constant (assuming that the velocity of money doesn't change).
http://www.geoffreylandis.com
For retirement, the government has a needed roll in setting standards for "safety net" investment choices, and in insuring people actually do save, but they don't need to handle the money.
Yeah, that would be better handled by outfits like AIG and Lehman Brothers.
Charity is great, and we should all be compassionate, and again the government has a needed role in setting standards, but they don't need to handle the money.
Just imagine how much junk mail it would take to raise enough charity funds to replace every government assistance program. The USPS would be profitable again after only a few days!
...if only it was going to infastructure, pork projects, and transport.
Our roads and bridges are crumbling. Some good old fashioned pork projects could be really helpful right about now.
A Pirate and a Puritan look the same on a balance sheet.
Inflation certainly grows the economy, as all assets denominated in dollars, see their valuations rise, because the value of a US dollar has fallen.
Whoopity do ... the GDP number went up. This isnt real growth. Your example of 'promoting economic activity for the sake of economic activity' is also not real growth, when one defines real growth as the production of wealth. If this were true, as a nation, we could become exceedingly wealthy simply by expanding the money supply, issuing monthly checks to ourselves, and buying as much consumer crap as we can each month. Certainly you are not claiming that behavior generates real wealth ?
I am not arguing against the concept of monetary expansion and contraction, or its usefulness when utilized responsibly, as you seemed to provide an example of.
I am however pointing out the ridiculousness of thinking it "comes from thin air" at "no cost." I suppose when grandma can't buy a single carton of eggs with her entire months social security check, we can just blame it on evil greedy corporations right ?
"Printing money" is a tax, same as any other, in color if not name, and someone pays the price. The same is true of the opposite action of "destroying money." It to is a tax, and someone pays the price. And no matter the form of tax, there will always be a politician claiming its for everyones benefit, even tho, someone will be getting fucked, while someone else gets to do the fucking sans lubricant.
Every action has an equal and opposite reaction, and there are no free lunches.
Which is why this statitistic is utterly meaningless without a thorough breakdown of where the checks go and why.
I mean technically every tax payer who gets a refund gets a check from the government, but (barring EIC) it shouldn't really count because that money was never the governments in the first place.
All the people who work for the government? I presume most of them get checks or they would stop showing up to work.
Social Security?
Military pay and pensions?
But I guess we are supposed to assume that 70% of the money we pay in taxes is spent on welfare on top of the 50% that goes to foreign aid and 30% on interest and 400% on nasa and 50000000% on foreign wars....
The problem with your reasoning is that it presumes that money is given in exchange for work of equal value, but of course the very basis of business is that you pay less than what the work is worth, and the difference is your profit.
You have a very strange notion of how business works. The idea is that you pay more than what the work is worth to the worker, and charge less than what the product is worth to the customer. The difference between these two is your profit. It works because the same good can be worth different amounts to different people.
The middleman isn't getting paid for nothing, either. He provides value to the worker in the form of a predictable paycheck, and value to the customer by organizing workers to produce the desired goods. Without him the (now self-employed) workers would have to go out and find individual short-term jobs on their own, and customers would be limited to such goods as can be produced by individuals or small, close-knit groups.
"The state is that great fiction by which everyone tries to live at the expense of everyone else." - Bastiat
That's clearly not what he's referring to.
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
The problem with your reasoning is that it presumes that money is given in exchange for work of equal value, but of course the very basis of business is that you pay less than what the work is worth, and the difference is your profit. So this notion of a 1:1 connection between money and value is simply mistaken, and not only that, it's impossible in a capitalist society.
No you don't understand capitalism.
In a free market people don't exchange something of lessor value for something of greater value or vice versa, one of the parties would never agree. What happens is we meet and discover we value things differently.
If I hire you do a job, I do so because I value the "work" less than my money. That might be for any number of reasons: maybe I don't have time to do it myself despite the need; maybe I have a lot of money I don't need for anything else; maybe I don't know how to do the work and so If I chose to invest time instead of dollars the costs would be much greater; etc.
You on the other hand have offered to do the work because you have time, and want something else more and believe that you could satisfy that if you had more money. You value your time and labor less than my dollars.
Repeal the 17th Amendment TODAY! Also Please Read http://www.gnu.org/philosophy/right-to-read.html
But I guess we are supposed to assume that 70% of the money we pay in taxes is spent on welfare on top of the 50% that goes to foreign aid and 30% on interest and 400% on nasa and 50000000% on foreign wars....
Whoa, whoa, whoa... 70% + 50% + 30% + 400% + 50000000% = more than 100% -- How could they possibly spend more than they bring in?!?!
... because after 40 years in the military, getting a pension check means you're a "Taker"
There should not be any stigma, whether it be positive or negative, attach to the word "taker".
Just like anything else, there are good and bad in every category.
If a person has served his/her country for the past 40 years in the military, of course that individual (and his/her spouse) ought to enjoy the fruit of his/her lifelong endeavor.
A check from the gov is insignificant, in the light of the contribution that has been paid forth, in advance.
Now ... we got to be realistic here and admit that there are way too many who have abused the system.
Way too many of them lazy fuckers who just do not have that urge to make themselves better are sucking the gov dry.
We, as the taxpayers, should not bear the cost of paying those lazy fuckers to continue to be lazy fuckers.
Let's be clear - there are some who are down on their luck (I was very poor before, I know the physical and emotional stresses extreme poverty brings) who needs temporary assistance. I have no qualm of giving them a hand.
But we should draw a limit somewhere - and should not continue in paying those who claim they can't find any work a monthly check just because they tell us they can't find a job.
Are there no job or are those people being too choosy ?
There are millions of illegal aliens in America who can find jobs - the claim of there is no job in America just won't fly.
If those who are getting monthly checks from the gov refuse to work, then they should be on their own.
As I said, I had been poor before, so poor that I didn't even have a place to stay in winter (yes, I did spent some winter nights sleeping on a bench in a park) but at least once I got a chance I grab it and no matter how tough/dangerous that job was, how miserable the pay was, as long as the pay could get myself back to the society, I grabbed it.
Muchas Gracias, Señor Edward Snowden !
Except that this fact isn't correct, which makes me wonder if anyone bothered to fact check the original article. The article states that 38.6% of 2.6 trillion is transfer payments in the form of medicare and medicaid, that's about 1 trillion for the mathematically challenged. That encompasses basically all medicare and medicaid outlays. The problem is medicare and medicaid outlays are not payments to individuals. For example 26% of medicare outlays are to hospitals, 23% to insurance companies for medicare advantage, 13% to physicians and so on. So the article is factually wrong, a fact that I think will be overlooked by everyone.
"Technology.....the knack of so arranging the world that we don't have to experience it." Max Firsch
How many? Do you have stats on this? Furthermore, how much would it cost to fix this? Would we actually end up saving money?
There are plenty of stats on the subject, and the amount of pervasive abuse is also apparent.
But you can't cite any stats.
Therefore, many of us would conclude:
1. There are no statistics.
2. You're full of shit.
When money is not circulating, price levels adjust accordingly; it has no net impact on the economy unless for some reason a shift happens very rapidly. Sometimes prices are not allowed to fall due to various government interventions; the solution is generally thought to require more interventions, but for some reason it's seldom thought that we could just remove the bad policies that prevent price elasticity (which is a very important component to the free market).
It would change America's mindset. If suddenly the "freeloaders" and system "cheaters" couldn't extract cash from an ATM with their foodstamp card, then they would have to go about it a different way.
There are plenty of cases where people live in gov't funded housing, get food stamps, slang drugs and have more than I do as professional. Take away the gov't funded housing, and suddenly they have some skin in the game... makes fuckin' sense to me. Maybe they find other avenues of illegitimate income, but maybe they don't. Either way, if we keep closing loopholes, eventually they have to do it the way I am.
Yeah, let's get rid of the freeloaders and cheaters.
From FTA:
http://news.investors.com/0310...
The 1% Handouts
Instead, a surprisingly large amount of federal money is handed out to wealthy Americans through Social Security, Medicare, farm subsidies, unemployment benefits, conservation programs, disaster payments and other programs.
An IBD analysis found that the richest 1% of Americans, in fact, receive roughly $10 billion each year in federal checks.
Outgoing Sen. Tom Coburn, R-Okla., who exposed these vast payment programs available to the rich, said "this reverse Robin Hood-style of wealth distribution is an intentional effort to get all Americans bought into a system where everyone appears to benefit."
Leftists always gloss over the details. Yes, the house controls the spending. They "control the purse" as the saying goes. But just like the Left conveniently forgets that it was the GOP house that balanced the budget, and they forget it was the Democrat congress that spent all the increased revenue from Reagan's tax cuts, they also forget that we are currently locked into 2009 spending because the democrats in the senate refuse to pass any budget submitted by the GOP house. Using this situation to blame the GOP is just being ignorant of the facts.
You mean like the 2008 Financial collapse? If you kept your money still invested in stocks, it would be back up to beyond where it was in 2008. How is that wiped out? Only those who were living on leveraged money took it in the shorts. Sure, my house dropped 30% in value in 2008 - but it's now back up over where it previously peaked. I didn't have a 2nd and 3rd mortgage on the place, though - so I wasn't gambling with "on paper" money - leveraged assets.
Not sure of your age, but I am sufficiently advanced (two score and 6!) that I can remember my grandparents AND parents who constantly harped on saving, paying with cash as much as possible, and paying off your debts as quickly as possible. They all lived through financial nightmares that would make today's issues seem like a stubbed toe. Where did they learn those lessons? Seeing what happens when you didn't - the results of bad decisions. Preventing people from experiencing the results of bad choices does not help them learn from those bad choices.
One of the best pieces of advice I ever got, I got from the first engineer I ever worked for, at the young age of 19. He said "you only learn from failure. Success can be dumb luck, but failure is all you". Perhaps we need to let people learn more - not everyone wins first place, not everyone will get a beachfront house and Mercedes.
As far as HOW to do it, look south to Chile. It's a system that works, works VERY well, encourages personal savings (heck, we could do the same - lift the annual cap on IRA contributions), and is guaranteed - unlike our Social Security system. It's become the model that most of South America has adopted and, when it's not riddled with corruption (Argentina) it works really really well.
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
The rich pay most of the taxes and pay a higher percentage of income on taxes than everyone else.
I know that right-wing talking point and I've checked it out before. Don't forget the footnote:*
_________
*Footnote: "Taxes" are defined to exclude FICA, which is the largest payment most middle-class and working people pay.
Percentagewise, the rich pay roughly 30%, the same as the middle-class, although those that can put everything into investment income like Mitt Romney pay about 15%.
That's why Warren Buffet pays less than his secretary.
Proof that Forbes lies? Because looking at Apple's published, audited financial information, I see an income before taxes of $17.7 billion - and they pay $4.6 billion in taxes, about a 23% tax rate. Now, if you are privy to some secret information you could make history and become a "Woodward and Bernstein" level famous journalist by revealing counter information and having Tim Cook and the rest of the executive team sent to prison for violating SOX laws...
It seems to me that Forbes is telling the truth. And the published, SOX-compliant reporting from Apple backs that up.
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
Not quite: The idea is that you pay as much as the work is worth to the worker, and charge as much as the product is worth to the customer. The difference between these two can still be a positive number because the same good can be worth different amounts to different people. If it is, you profit. If it isn't, why did you start that business, when a market survey should have told you not to. Nobody pays more than what they have to to get workers, or gives a customer a better deal than will gain sales. Still, thank you for at least saying customers rather than consumers.
Who is John Cabal?
Ah, but who are the "takers"?
Maybe this will help a little: http://pando.com/2014/02/26/fo...
You are welcome on my lawn.
You incorrectly fail to realize that is "of declared taxable income" of "that which was not hidden in a tax haven" or "excluded for purposes of a trust" or "excluded from consideration due to being non-taxable farm income".
There's a reason they paid 24 percent of "declared income".
It's because that amount declared is much much smaller than the amount they earned.
Unless they have really stupid tax accountants and tax lawyers.
In which case they should fire them.
-- Tigger warning: This post may contain tiggers! --
First, central bankers have shown a remarkable restraint. There haven't been ANY hyperinflation episodes in developed countries for more than 50 years. Even in developing countries or xUSSR countries most hyperinflation episodes are linked with political upheavals.
In fact, right now ECB doesn't print _enough_ money - inflation is way under the targeted level, threatening to go into outright deflation.
It was one obvious example.
Other examples are the people who payed FICA all their life and are now collecting. The people who payed UI and are collecting. These people are counted in that 70% figure, even though they are just withdrawing from a (mandatory to participate) insurance program that they were formerly funding.
Lots of claims in this thread as to "plenty of statistics" about how many freeloaders there are. No actual statistics provided. Tell you something?
Politicians and their buds just want to steal the cash retirees put into the system.
Someone had to do it.
The idea is that you pay more than what the work is worth to the worker
Where, since one is compelled to work, what "the work is worth to the worker" is defined by what you pay them. Quite.
OP's point still stands, you must necessarily pay the worker less than the value the worker adds for you. I'm not sure, however, that the macroeconomic conclusion he draws from this observation is well founded.
Better to be despised for too anxious apprehensions, than ruined by too confident a security. --Edmund Burke
In fact, right now ECB doesn't print _enough_ money - inflation is way under the targeted level, threatening to go into outright deflation.
Have you been shopping for food in the last few years? All the important stuff like food, gas, heat and shelter sure seems to be going up faster then claimed. Or perhaps it is offset by the luxury goods that many or most can't afford or need to buy very often. I don't care if yachts and big screen TVs are getting cheaper. I do care that my income is flat and groceries keep going up.
https://en.wikipedia.org/wiki/Inverted_totalitarianism
"There haven't been ANY hyperinflation episodes in developed countries for more than 50 years"
To put that in context, Dona Branca's pyramid scheme lasted only 14 years, Lou Pearlman's lasted only 20 years, and Bernie Madoff's lasted only 30 years.
Central bankers are obviously way better.
Investing money in securities is typically about as useful to the economy as stuffing it in a mattress. It is only when money is spent on goods and services that it adds to the economy. When I buy $100 in Google stock, that money just vanishes as far as the economy is concerned (well, modulo the 30% broker fee, of course). It might come back later, but until it does it's gone.
You're being snarky, I take it. The old scoff-instead-of-rebuttal trick?
The specter that "developed" economies would collapse without growth is a pretty strong clue that those economies are real pyramid schemes.
Fractional Reserve Banking is nothing but a legalized pyramid scheme. That's not sensationalism, politics or hyperbole, it's irrefutable fact.
Investing money in securities is typically about as useful to the economy as stuffing it in a mattress.
Umm, no.
When I buy $100 in Google stock, that money just vanishes as far as the economy is concerned (well, modulo the 30% broker fee, of course)
Again, this is wrong. For one thing, note that broker fees are on the order of fractions of a percent, not 30%.
When you buy Google stock from Google (i.e. during an IPO or subsequent public offering), that money goes to the company so that it can invest the cash in growth -- that means buying equipment, facilities, real estate, hiring and paying employees, etc. That money is most definitely in circulation.
Of course Google isn't selling stock right now because it has plenty of cash to fund growth and doesn't need to raise capital. So if you buy Google stock right now, you're buying it from someone else who bought it from Google (or from someone who did; the chain can be arbitrarily long). But the point is that you're buying it from someone. As it happens, I just sold a non-trivial (for me) chunk of Google stock; there's a check waiting at home for me which I'm going to spend on building a house (well, on covering some of the early incidentals; I'll get a loan for the bulk of it). That money will buy building materials, pay constructor workers, etc. That money is also definitely in circulation.
But what if you buy your stock from a big investment firm rather than from someone like me? Is it out of circulation then? Nope. The investment bank will take your cash and put it into something else... something, in fact, that it believes will be more productive than Google. At least that's true of the value-investing portion of the investment industry, obviously there are other segments that focus on arbitrage. The money managed by those segments is more debatable, but they do contribute significantly to liquidity, which translates to your ability to buy or sell Google stock on a whim.
There are some issues with the velocity of money in the US, which is a measure of how quickly it circulates. It's at the lowest point in decades. The fed has been pumping massive amounts of new money into the system, and it's not helping. I'm not enough of an economist to really understand the issues here, but the most sensible explanation I've seen is that circulation is reduced because people are using the money to pay down debt. We had a massive explosion of velocity fueled by an extravagant credit boom, but it was unsustainable. That unsustainability was a big part of the housing crash and the recession, but we still have excessive debt and the correction isn't over yet, so velocity stays low.
Note to ACs: I usually delete AC replies without reading them. If you want to talk to me, log in.
No, the politicians had fairly low control for most of the history, most of the time it has been tied to the gold standard. Lincoln went off the gold standard with the Greenbacks but he was punished whenever he drifted to far (IIRC the Greenback at one point trade $.25 to the dollar). FDR weakened the link but it was Nixon who cut it.
Warren Buffett pays a lower marginal tax rate than his secretary because he uses dishonest math -- he lumps the tax that his company pays for her into her tax number, but excludes most of the tax that Berkshire Hathaway and its subsidiaries pay for him. (If he wants to claim that the employer part of payroll tax really comes out of the employee's pocket, fine, but the same logic applies to corporate income tax.)
Yes, the article is pure political spin. WTF is it doing on Slashdot? These periodic political rants are off-topic, and are nearly as destructive to Slashdot as the horrible beta software.
Enable 3D printed prosthetics!
I find that hard to believe. Just looking at one common item that I've really noticed has gone up, ground beef has gone up from $3.005/lbs to $3.467/lbs since 2012, which is 15.4%. Lean ground beef has gone from $3.884/lbs to $5.021/lbs, which is 29.3%.
That's had a huge knock-on affect in fast food as well. Compare Wendy's "value menu" or "right price menu" or whatever they're calling it to the dollar menu of yesteryear (long ago in the foggy past of 2012). Same food items, now 20%, 30%, 50% more expensive.
I'd love to see inflation statistics from Visa and Mastercard rather than theoretical "baskets" from researchers.
Weimar Germany inflation was due to the allies demanding war reparations. Weimar had little productive capacity after the war and in order to pay the Allies, they debased their currency. Once the allies stopped demanding payment, the new issue of the transition currency allowed the country to escape the inflationary spiral.
The US can't become Weimar Republic because the US is resource rich and has ridiculous productive capacity. The only thing inflation in the US would lead to is MAYBE less imports.
The problem the US has today is our political system has not figured out a way to keep people employed while importing the rest of the world's wealth.
That's why there's this formula for nominal GDP and Real GDP. Real GDP adjusts for the price levels and inflation.
Fed governors are certainly politicians (just not elected), and the Fed has existed only since 1914. Before that time, the US Treasury spent money directly to fund its budget. Even under the gold and silver standards, the government constantly had to increase its leverage on the gold backing, but the US dollar never collapsed.
My broader point is that events like the Weimar hyperinflation are not the result of politicians madly printing money for no reason. The Weimar hyperinflation occurred because of combination of circumstances in which Germany lost a war. France and Russia confiscated its manufacturing capacity by literally disassembling factories and shipping them away. Germany was made to pay enormously large reparations, which had to be rendered in gold. The reparations required more gold than ever existed in Germany, and Germany was estimated to need at least until 1990 to make up the difference. The response was to print more and more marks, in order to buy gold and other currencies from abroad, and also for domestic use. The resulting inflation forced people to spend any earned money immediately. This drove the re-establishment of the German manufacturing sector. In the meantime, a new bank was established which issued notes backed by immobile real assets, like farm land. Once the Rentenbank was large enough it was merged with the central bank, and began issuing a stable currency. The whole stabilization only took a few months.
TL;DR: The Weimar hyperinflation, which resulted from a confluence of political factors, may have scarred the German people, but it did re-inflate manufacturing in the run-up to the creation of a new mark, in a way which the gold standard would have impaired.
Finally, with respect to growth, there is no evidence that inflation up to ~40% has any correlation with reduced growth. So the obsession with extremely low inflation as a opposed to moderate ~4% inflation is really unjustified.
.: Semper Absurda
But now, the printing presses are controlled by the richest people in the world, which happen to profit the most from the current money printing. The biggest banks get essentially free loans, then buy treasuries at 2% yield, profit! All while the brunt of the population has to suffer the corresponding inflation. Sure, inflation is low, if you don't eat or use any energy.
> But never give control of the printing press to politicians.
The current system gives a ton of control to politicians. Modern states are pretty much never constrained from doing what they want to do for lack of money. When's the last time you heard them say: no we can't go to war, it will cost too much ? As well as allowing them to spend money however they want, the current system allows them to *not* do the stuff whenever they don't really want to (eg when it would only benefit a group with no political power such as single parents or the disabled) by claiming its too expensive.
If the government invented the money instead of the bankers that would eliminate the need for taxation which would get rid of the main excuse for the government to keep tabs on everybody and everything. The IRS would disappear completely for instance. I strongly recommend http://www.amazon.co.uk/The-Gr... . I did a couple of years of economics at university but this was a real eye-opener.
http://rareformnewmedia.com/
They don't hate inflation, they love it at moderate levels. Imagine the following, there is no inflation at all. You own money, it will never lose value. This is good for you, but but banks and companies can not make anything from it. Add moderate inflation and your money slowly loses value. Now you need to do something about it so you don't lose all your money. The banks offer to work for you to preserve the value of your money, FOR A SMALL FEE. They invest the money into companies (credits) or the stock market and as a result also extract additional money. The result is that without inflation you will not even think of putting your money into stocks, bonds or similar financial instruments, cash will do the job of maintaining value. What they hate is when the inflation is so strong that is starts to eat into their profits. For example when inflation almost nullified a credit.
I apologize if I didn't express it clearly; but the punchline of my thinking is this: Unlike some countries that operate welfare states (the northwestern European ones, say), which have fairly broad political agreement on the fact that that's an OK idea, and so do a lot of their welfare spending 'in kind' (things like healthcare, education through college, sometimes various housing schemes) because it is not politically toxic to do so, the US has a welfare state; but is far more conflicted about that. This tends to cause such (highly visible and vulnerable) 'in kind' programs either to never make it to production or to get shot down; which means that most of the redistribution ends up happening just by cutting people checks directly (under a varied and ever-shifting collection of programs and excuses) which is easier to sustain, in the face of lacking political support and poor odds of long-term support, than would be programs that involve funding institutions rather than throwing checks at people.
Look, if someone complains that their time is worth more than they are getting for it, there are three options:
1) They produce enough economic surplus that they can capture (significantly) more for themself, in which case they should try to do that, either by asking for a raise or looking for a new job.
2) They produce significantly more surplus than they get in pay, but somebody else can do the job basically as well, so they can't get a raise; this means their time is in fact not worth more than they are getting paid.
3) They don't produce much more economic surplus than they get, in which case anyone who gave them a raise would start losing money.
When somebody complains about their pay rather than look for a different job, my money is on option 2 or 3 rather than option 1.
The problem is that you mix tools and how they are used. Fractional reserve banking is not evil in itself. It basically creates, through credits the opportunity for economic growth. That being a company has a great idea, but not the capital to realize it. The bank has the capital, but not the idea. Through a credit it is possible to realize the idea and it is a win/win situation. The company makes a great product which it sells, the bank makes a profit through the credit and maybe even the people putting money into the bank make something off of it, though savings. This is all and well when you ensure that the bank makes proper risk analysis on the credits and on average comes out on top.
What you should really be afraid of the the credit bubble. What we are currently seeing is that individuals are given credits, which means they are now spending money and helping the economy grow, but this is at the cost that in the future this person will have less money to spend, since he is repaying the credit. So the economy slumps, as a result "to help the economy" more credit is injected. This has been going on since the 60s and in totally high ways since the 80s. The result is that the economic growth is propped up though credits and growing unnaturally. The economy is extracting money from individuals more than they can afford and the only way to keep the current pace is to increase individual debt. The situation is additionally aggravated by greedy bankers which gave out sub prime credits. There will be a point where the individuals dept is so grate that the scheme can't go on. This debt fueled economic growth is the ponzi scheme.
Bizarrely, these so-called "baskets" that these alleged "experts" employ contain more than two items. "Scientists", what do they know, with all their "data" and "equations" and stuff?
Confucius say, "Find worm in apple - bad. Find half a worm - worse."