Where is the US economy headed?

@georgeob1,

georgeob1 wrote:

The value of our currency is declining. That's a tax on savers and it is the real reason why the prices of oil and food products are rising.

Which currencies are you comparing the dollar against over what time frame, Georgeob? Canada works, but are there others? Thanks.

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@georgeob1,

Quote:

That however shouldn't be taken as evidence that printing money won't lead to accelerating inflation later on.

Since I never made that claim, why bring it up? Or did you want to make your own claim without evidence?

Quote:

The value of our currency is declining. That's a tax on savers and it is the real reason why the prices of oil and food products are rising.

And it has done so every year with or without the Fed pumping money into they system. What is your point?

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Long ago the question was:

Where is the US economy headed?

The answer is: To hell and a handbasket if Obama is re-elected.

One simply needs to have seen him lying through his teeth about the Ryan budget to know this is true. It was breathtaking. You need not support the Ryan budget to appreciate that Obama's response was utter distortion of the truth. It's astounding that he should think he can get away with it, and it is deeply disturbing that he may be right.

History is going to focus on him being our first black president and if, as I hope, he's a one-termer, it won't put much emphasis on how terrible a president he has been. If he gets a second term however, he will enjoy a very significant place in our history: Possibly the most mendacious president we have ever had, the US president who presided over the bankruptcy of the nation, and, I would not be surprised, the president who instigated the greatest constitutional crisis in our history.

There is a bitter sweet irony concerning the Obama presidency. Legions of polaroid historians surged to declare George W Bush the worst president in history before he even left office, and, by and large, they are all Obama supporters. When historical perspective is achieved, Bush will sit in a slot well above Obama's. That's the sweet part. The bitter part is that I will not be around to see it.

Spend Baby Spend has been Obama's mantra and if he gets a second term it will morph to Order Executively Baby Order Executively. If he wins, Dems will hold the Senate but not win back the House and so legislative monsters like Obamacare will not be possible, but he's already tipped his hand for a second term. He will use his agencies and czars to rule the nation and the legislature be damned (notwithstanding his outrageous charge that the Supreme Court needs to default to Congress on "big" laws.)

Liberals who bemoan imperial presidencies have one of their own making.

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@Finn dAbuzz,

OMG.. there's a boogey man under Finn's bed!!!

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@Finn dAbuzz,

Finn dAbuzz wrote:

Long ago the question was:

Where is the US economy headed?

The answer is: To hell and a handbasket if Obama is re-elected.

One simply needs to have seen him lying through his teeth about the Ryan budget to know this is true. It was breathtaking.

Which part was a lie? I ask, because Ryan has not quibbled with the numbers the president stated - at all.

Quote:

Spend Baby Spend has been Obama's mantra

Obama's level of spending, and budgets, have risen no faster than Bush's did. And that's a fact. You have a lot of invective and hate for Obama but you're pretty damn light on factual information.

Quote:

Liberals who bemoan imperial presidencies have one of their own making.

You're indistinguishable from idiots on FreeRepublic or HotAir these days, Finn. Do you know who has you pegged?

Andrew Sullivan.

The best part about this conversation is that you know in your heart that Obama's going to beat Romney here in a few months. And the most likely outcome of this is a much larger, prolonged shift to liberalism amongst Americans.

Cycloptichorn

1 Reply

@georgeob1,

georgeob1 wrote:

The value of our currency is declining. That's a tax on savers and it is the real reason why the prices of oil and food products are rising.

Well good! For now, the American saving rate is too high anyway. It's investment spending out of those savings that is low. So why shouldn't there be a disincentive to save rather than spend? The real interest rate is a price like any other. This is just the loan market clearing excessive supply with anemic demand.

As for oil prices: Since Obama's inauguration, the US Dollar has declined by an average of seven percent relative to America's major trading partners. That's a fraction of the percentage increase in oil prices. This horse won't hunt. This theory won't predict.

1 Reply

@Cycloptichorn,

Quote:

Which part was a lie? I ask, because Ryan has not quibbled with the numbers the president stated - at all.

Nonsense. You obviously have not even bothered to listen to his reaction.

He all but called Obama the liar he is.

Do you realize that the Ryan budget reflects spending that is higher than current for Medicare and Social Security? As is so typical of Democrats, anything that doesn't match the proposed spending of the Left is a "cut."

Quote:

Obama's level of spending, and budgets, have risen no faster than Bush's did. And that's a fact. You have a lot of invective and hate for Obama but you're pretty damn light on factual information.

How is this for a fact: Obama has increased the deficit in three years more than Bush did in eight.

I have to laugh at your line of argument.

Bush was the worst of our presidents and everything he did was horrible, but somehow Obama's actions are justified if they can be considered roughly equal to those of Bush in terms of results.

Finn wrote:

Liberals who bemoan imperial presidencies have one of their own making.

No retort for this one? All hail the left-wing dictator?

No doubt you're a Friedman fan who joins him in admiring China for getting things done without the messy impediment of democracy.

Pragmatism!

Quote:

You're indistinguishable from idiots on FreeRepublic or HotAir these days, Finn. Do you know who has you pegged?

Andrew Sullivan.

Andrew Sullivan who is obsessed with the down syndrome child of Sarah Palin?

I don't need to compare you to anyone to realize your idiocy Cy.

Quote:

The best part about this conversation is that you know in your heart that Obama's going to beat Romney here in a few months. And the most likely outcome of this is a much larger, prolonged shift to liberalism amongst Americans.

There you go again telling me what I know. You don't even appreciate the utter arrogance of this habit of yours.

Care to place a wager on the November election? Third time may yet be the charm for you.

There are actually folks on the right who hope Obama wins because they are convinced that he will snuff out liberalism in America for a very long time. I agree with their prediction but am not willing to suffer through the mayhem he will cause to realize it.

In any case, the fact remain that Obama blatantly lied in his mischaracterization of the Ryan budget.

He has a habit as you do. Attack and denigrate with lies anyone with whom he disagrees. Witness his diatribe against the Supreme Court which even a host of his supporters feel was not only politically ill advised but legal nonsense.

You're in such lock step with Democrat that I never expected you to see the speech for what it was. You didn't disappoint me.

How long does it take for you to study the Democrat talking points before you log on to A2K and spend your employer's hours posting?

1 Reply

@Finn dAbuzz,

Finn dAbuzz wrote:

Quote:
Which part was a lie? I ask, because Ryan has not quibbled with the numbers the president stated - at all.

Nonsense. You obviously have not even bothered to listen to his reaction.

He all but called Obama the liar he is.

I both listened to Ryan's reaction and read his post on Facebook about it. In neither did he actually point out where the Prez was lying. Instead, he made political statements that were designed to give that impression.

Here, why don't you educate yourself a bit?

http://www.washingtonpost.com/blogs/ezra-klein/post/ryans-full-response-to-obama/2012/04/04/gIQAW2BIvS_blog.html

Ryan's budget is a sham and a crock of lies, wrapped up to make credulous fools like yourself think it's a serious document. Obama was right to ridicule it - and it will be very, very effective for him to continue to do so this Fall, because the simple fact of the matter is that the numbers in the Ryan budget don't add up and the cuts he calls for are not popular amongst the populace at large. Neither is the fact that the wealthy will receive a large tax cut under his plan - an action which totally belies the idea that he is trying to do anything about the deficit at all. Ryan doesn't give a **** about the deficit and debt.

Quote:

Quote:
Obama's level of spending, and budgets, have risen no faster than Bush's did. And that's a fact. You have a lot of invective and hate for Obama but you're pretty damn light on factual information.

How is this for a fact: Obama has increased the deficit in three years more than Bush did in eight.

That's because receipts are down dramatically due to the recession - not because Obama's budgets have been that much larger than Bush's, or grown faster than Bush's budgets grew. If you bothered to look the data up, you would have known that before making such a fool out of yourself. But you can't be bothered to do such things, because that would take work, and when it comes to politics, you're just a loudmouth.

Quote:

No retort for this one? All hail the left-wing dictator?

Boring

Quote:

Quote:
You're indistinguishable from idiots on FreeRepublic or HotAir these days, Finn. Do you know who has you pegged?

Andrew Sullivan.

Andrew Sullivan who is obsessed with the down syndrome child of Sarah Palin?

Yes, that Andrew Sullivan. He has you pegged. I suggest you read the article I linked to and reflect on it.

Quote:

There you go again telling me what I know. You don't even appreciate the utter arrogance of this habit of yours.

You don't deny it, though. You just get angry because I'm right. That part is absolutely delicious.

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In any case, the fact remain that Obama blatantly lied in his mischaracterization of the Ryan budget.

Name the lies - specifically. I'll wait patiently.

Cycloptichorn

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@Thomas,

Quote:

It's investment spending out of those savings that is low.

True, and that contributes to the painfully slow recovery. But, investing isn't without risk and while a low capital gains tax might make it worth my while, I might have to ask myself if taking a risk is prudent given the current uncertainties.

Business Week did the math:

Quote:

Obama is proposing a top individual income tax rate of 39.6 percent in 2013, up from 35 percent. His budget would tax long- term capital gains at a top rate of 20 percent, up from 15 percent. The top dividend tax rate is now 15 percent.

An additional 3.8 percent tax on the unearned income of couples earning $250,000 and individuals making at least $200,000 will take effect next year as part of the 2010 health- care law. As a result, under Obama’s plan some taxpayers would pay 43.4 percent in federal taxes on their dividends next year. That’s almost triple what they now pay and comes on top of corporate taxes.

Maybe the risk-takers are thinking it's just not worth ... the risk?

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In the "take it for what it's worth" category...

I met with our financial adviser yesterday who said they're expecting a market pullback this summer based on continued bad news out of Europe and rising oil prices. He suggested making some portfolio moves in the May-June time frame and then again in late summer to catch some expected upswing prior to November.

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@Irishk,

Strangely enough, we saw plenty of risk-taking in the past when those taxes were actually higher than what Obama is proposing.

http://seekingalpha.com/article/285468-u-s-dividends-and-the-capital-gains-tax-rate-since-1961

Cycloptichorn

1 Reply

@Irishk,

I always find it a specious argument when someone argues an investor would rather make ZERO instead of 60 cents of every dollar earned.

1 Reply

@Cycloptichorn,

Ha! Another seekingalpha fan! I'm a regular reader there, as well.

So....what's your theory, then? Mine was only meant to point out a possibility, and oddly enough, one of the contributors to seekingalpha had a similar concern, although I can't find the exact article at the moment.

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@Irishk,

Irishk wrote:

Ha! Another seekingalpha fan! I'm a regular reader there, as well.

So....what's your theory, then? Mine was only meant to point out a possibility, and oddly enough, one of the contributors to seekingalpha had a similar concern, although I can't find the exact article at the moment.

The thing is, the savings rate over the decade has indeed been 'too high,' as Thomas put it - but that was during a period in which dividend taxes were the LOWEST they've ever been, in the last 60-70 years. If investor behavior were truly affected by the tax rates on dividends, I don't know why this would be the case.

Instead I would posit that many Americans (such as myself) have lost confidence in the stock market being an engine of economic growth and expansion, and simply wish to have little to nothing to do with it. Increased volatility due to world unrest, combined with the fact that the investment houses seem to be far more interested in using technical games and tricks to enrich themselves than to actually build wealth for the country as a whole, has hurt overall investment levels.

This is one of the prime reasons that I'm a big supporter of greatly increased regulation of Wall Street: without it, we simply won't see greater investment.

Cycloptichorn

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@Irishk,

Seekinggamma fans it should be. They only tell them they are alphas to get them in whatever it is they are being got into.

It's like when the atheists say that there are a lot of gods and they don't believe in any of them with equal determination. All these different solutions to our economic woes being offered up can't all be right. So why believe in any of them? And there is good cause not to believe in any of them because they will all have been shot down in bureaucratic labyrinths long ago.

1 Reply

@spendius,

Who said anything about believing them? I'm also a fan of science fiction...doesn't mean I believe that aliens will someday descend upon us and poison our minds.

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@parados,

I do take your point. Some have claimed that people only give to charity for the tax break. I have never convinced them that saving from ten to thirty-five dollars might not be the sole motivation for giving away a hundred.

Speaking of investments with a good return, though, it's the risk in addition to taxes that is under consideration. You have to balance a known cost against an uncertain return. The costs rise as taxes rise. There is no corrosponding increase in that uncertain gain.

1 Reply

@Irishk,

Quote:

.doesn't mean I believe that aliens will someday descend upon us and poison our minds.

They already did didn't they?

Good writers know how to get people believing if they read them often enough. Many newspapers have faithful lifetime readers. And periodicals. It really is so incredibly, fantastically subtle that it is close enough to being irreducibly complex as makes no difference.

But you do seem defensive. Almost as if you consider it a fault to be influenced by your choice of reading material. Especially a site claiming to be seeking alphas.

I tried Cyclo's link and it influenced me after about 2 minutes to click it off.

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@roger,

Charity is a slightly different thing. I can give $100 to a charity and know it really only cost me $70 (not actually based on taxes) with the government paying the other $30. In some ways it's a way to force the government to support the charities I think are valuable.

Quote:

Speaking of investments with a good return, though, it's the risk in addition to taxes that is under consideration. You have to balance a known cost against an uncertain return. The costs rise as taxes rise. There is no corrosponding increase in that uncertain gain.

Yes, it is a complicated formula. If taxes rise on all income, then there is little to no reason to change investment based solely on the increased tax. If taxes rise on only one form of investment income then it changes the risk/reward per investment which may drive people to another investment.

1 Reply

@Irishk,

Irishk wrote:

Quote:
It's investment spending out of those savings that is low.
True, and that contributes to the painfully slow recovery. But, investing isn't without risk and while a low capital gains tax might make it worth my while, I might have to ask myself if taking a risk is prudent given the current uncertainties.

You always have to ask yourself that. But maybe an after-tax capital gain on a risky investment is still better than the certainty of losing money to a negative real interest rate. And that's what you do when you park your money in treasury bonds these days.

But that's not the only reason I'm not buying into scare stories about rising capital-gains taxes. Over the course of history, the United States has experimented with a broad range of capital-gains tax rates, spreading all the way from 7 to 70 percent. We have decades worth of precedent on how this affects investment. According to the evidence we have, a rate of 35 percent will decrease people's willingness to invest somewhat. But it won't decrease it to the point where it chokes off economic growth.

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