March 30, 2008

Doomsday Prediction: A Depression is Coming
— Gabriel Malor

For the past three days ABC News has been pushing this story at the top of their business section and on the front page. Apparently, "right-wing ideology" is going to cause the U.S. government to "fail to ward off a major depression." So says Professor of Finance Robert Parks, who thinks there is a 60 percent chance that we are headed for a "Bush depression."

The Fed, under Chairman Ben Bernanke, has taken several orthodox and unorthodox monetary actions to prevent the credit freeze-up from spreading and damaging further the basic economy.


Mr. Parks, however, doubts the cuts will do much to boost the economy. Rather, he sees a further steep fall in housing prices, continued major deficits in the federal budget and in the international trade balance, a tumbling dollar, and a weak stock market leading to a genuine depression with 30 to 35 percent unemployment, greater poverty, more loss of homes, plunging bond and stock prices, even some starvation.

This is just a happy continuation of the Democrats' election strategy. They desperately want to convince people that Bush is Hoover and that we very much need a savior like FDR. If Park's reference to "right-wing ideology" wasn't too much of a giveaway, his proposed solutions to the impending economic disaster should make this clear.

Parks would like the federal government to step up outlays to fix rickety bridges, repair pot-holed roads, improve schools, and more to provide more jobs, more income, and thus more spending to cure any economic downturn.

This is a Keynesian pipe-dream. What Parks is missing is that measures like the RFC and the WPA worked when unemployment rates were already higher than 16% in the case of the RFC and almost 25% in the case of the WPA. The financial industry had already collapsed and world-wide trade had slumped to a third of its previous high. There were plenty of unemployed and desperate people who were willing to build roads and bridges and libraries. In other words, FDR's policies contributed to pulling the U.S. out of a depression, not to preventing one in the first place. It is the sloppiest kind of thinking to assume that what worked to end a depression will also work to avoid it.

Parks and ABC News leave untouched the question of how the government is going to pay for these projects, which is especially telling since the Democrats have made such a ruckus about federal deficits and the national debt. Perhaps it bears mentioning that during the Great Depression, the top tax rate was 63% (later raised to 91% at the end of WWII). It wouldn't surprise me if the Democrats want to resurrect that FDR policy along with the rest.

In the end, we should all be deeply suspicious of a Keynesian finance professor who thinks about economics in terms of political ideologies and who seems devoted to reliving the FDR years. I estimate that there is a 60 percent chance that he's just trying to get his name in the headlines.

Thanks to genghis for the tip.

Posted by: Gabriel Malor at 10:26 AM | Comments (125)
Post contains 523 words, total size 3 kb.


I was just at some fancy schmancy chain crap restaraunt called "Panera Bread" outside Philly

PACKED with people

Yesterday, we took our kids to see a crappy "Cinderella' play in the city. $20 bux a pop

SOLD OUT all 3 shows

I was at the mall last weekend. Every store was JAMMED

Everyone I know has a job. Everyone I know could find a job quickly if they were fired. NO one I know has had their homes foreclosed on.


Posted by: TMF at March 30, 2008 10:34 AM (/YM8H)


...improve schools...

Yeah, increased federal outlays in the form of increased teachers' salaries are the surest way to improve schools.  Because they're doing such a great job now that just think how much better they'll be with higher paid teachers while retaining the same disruptive students from families who don't give a shit.  While the families with kids in these same hellhole schools who'd like their kids in a better school by utilizing vouchers continue to vote for Democrats who oppose vouchers.  It all makes sense.

It's more like a 100 percent certainty that Parks wants his name in the headlines.  Does he have a book coming out too?

Posted by: cranky at March 30, 2008 10:36 AM (tWD2Q)


Not to say that the devaluation of the dollar, the housing slump and the shakyness of the financial sector arent real problems,

but i think there is a huge disconnect between basic economic realities (jobs, relatively cheap goods, most people owning homes and cars and alot of other shit) and these problems (all part of natural economic cycles) that the media has decided to pick up on and ram down our non Obama votin' throats.

Posted by: TMF at March 30, 2008 10:37 AM (/YM8H)

4 Depression?

Of course, we'll first need our version of the Smoot-Hawley. 

Thank God the fearful, tearful, anti-globalization wing of the Democratic party stands ready to deliver us higher tariffs and a protectionist industrial policy. 

Happy Days are Here Again!

Posted by: DelD at March 30, 2008 10:47 AM (SXTZQ)

5 Whatever.

Posted by: eman at March 30, 2008 10:49 AM (0AZ4a)

6 "...even some starvation..." Hey, this could workout. "Dr. Richard H. Carmona, the surgeon general, urged pediatricians on Monday to do more to combat childhood obesity, noting that many overweight children became overweight adults..."

Posted by: nixon at March 30, 2008 10:53 AM (uZM77)


There's no question that the bursting of the greatest real estate bubble in American history, which has just begun and will run another year or two, is going to create a significant recession.

In addition, the bursting of a similar all-around debt bubble (consisting of a combination of student loans, credit card loans and other consumer/small business debt) will add to the carnage.

The reason why this debt is so large is because Wall Street figured out how to take it off the balance sheets of the people who were stupid enough to loan it out (create it) in the first place.  Which then freed them up to loan a shit-load of more money.  Which was then sold by Wall Street, again and again.

Wall Street sold this debt to people looking for higher yields than plain old US Treasuries and corporate debt provided.

The end result will be millions of Americans losing a large percentage of their life savings, which were invested in either (1) their employee retirement plans, or (2) annuities purchased from mainstream financial service providers.  Annuities, life insurance companies and employee retirement plans were the largest purchasers of this junk/semi-worthless debt.  They will lose their collective asses.

I say that as a committed right-winger and patriotic American.  I say it because I spend several hours a day researching American economic and business data, because I'm directly responsible for managing millions of other peoples' retirement funds.

However, my clients are making money while stocks fall and bonds go belly up.

And, hopefully, they will continue to make money, regardless of what our nation's economic condition is.

Because, in the end, people who are intelligent and objective enough to accurately analyze the news and the data will always come to the most accurate conclusion of where we are today, and where we'll be tomorrow.  Which is why I come here.  You people, believe it or not, are some of the smartest (and funniest) people I've had the pleasure to read.  God bless all of you beeeeotches.

Even Tushar, who's (possibly) brown and thus very scary.

Posted by: Dogstar at March 30, 2008 10:53 AM (FgxdU)

8 Hm. Stave off a depression by... acting like we're already in a depression. Works for me!

Posted by: Andrea Harris at March 30, 2008 11:00 AM (FxiaH)

9 Gabriel " In other words, FDR's policies contributed to pulling the U.S. out of a depression, not to preventing one in the first place. "

This still gives FDR too much credit.  The RFC and WPA eased some of the symptoms of the Depression, but they didn't pull the U.S. out of it.  That depression was ended by the Japanese Naval Air Force.
   And I just checked on the wholesale price of bottled water and gasoline, two staples of my business.  Guess what?  Bottled water still sells for more per volume than gasoline does, and people are still buying it.
   Alas, people will also keep on buying this doomsday reportage, and you know who that helps?  Not John McCain.

Posted by: Stoop Davy Dave at March 30, 2008 11:02 AM (bYXzv)


I think the real estate slump is nearing the bottom. Another 6 months tops.

Recession? Maybe. Show me another quarter or two of nearly non exsitent growth (less than 1%) and Ill believe it.

Even if we do hit the "R" I think it will be short and shallow

BUt what the fuck do I know? Im a right wing moron.

Posted by: TMF at March 30, 2008 11:04 AM (/YM8H)

11 That's Professor of Finance (and wannabe Secretary of the Treasury) Robert Parks to you, bub.

Posted by: XBradTC at March 30, 2008 11:05 AM (E5mM5)

12 I am a very staunch Conservative in most lights, and I certainly disagree with socialism like this. However, I do believe that billionaires need a higher taxation rate, but to allow them to write off their taxes at a rate of one dollar per every two that the add to the GDP, and then one dollar per every five that the add to the GNP, but not the GDP. Steve Forbes had a good article on the devaluation of the dollar, and said the President Bush was the most clueless since Carter to not view the damages that devaluation of the dollar. I believe a few things that may be out of sync with most Conservatives. 1) I believe that taxes on the ultra rich (not the way Dems describe them as anyone making over the aver wage, but people with fortunes in the hundreds of millions) need to be raised. 2) I believe that minimum wage should be locked to inflation permanently. but I agree with Conservatives 3) The housing crash is over so long as we can find a way to keep people in their homes 4) Taxes on the middle to upper class need to be lowered 5) The US should outright cut out social services to people who aren't disabled who have worked less than 1/5 of their life Those are my thoughts. Don't you find it ironic that the Dems call the economy horrible while they are TAKING record donations, and while illegals are in our country STEALING resources (like medical treatment) from actual Americans who haven't broken laws to get here. All the while it is those who don't support the illegal invasion who are wrong. I think that I can say one thing definitively: I don't like Republicans, but a despise Democrats.

Posted by: Jeff at March 30, 2008 11:05 AM (wtUwG)

13 How many authors have become wealthy writing the next doomsday economic collapse book.  I used to worry when I would see one of these books on the shelves while in college.  I haven't seen one prediction come true yet.  I put more faith in the end of the world Nostradamus predictions that sprout up every couple of years. 

BTW:  Doesn't the Mayan calendar run out in 2012? we're fucked!!!

Posted by: elliot at March 30, 2008 11:06 AM (jGGKE)


Indeed, a lot of folks argue that the Depression was worsened by FDRs policies. The stock market crash of '29 was bad. Smoot-Hawley tanked the economy and started a trade war. Funny thing about trade wars-nobody wins.

Posted by: XBradTC at March 30, 2008 11:08 AM (E5mM5)

15 Thanks for the insight, Dogstar.

BTW, I willing to sell one of my kidneys for 50k to pay off my student loans.

And if there are any Feds reading this, I'm joking.

And if there is anyone in the market for a kidney reading this, I'm not.

Posted by: runninrebel at March 30, 2008 11:09 AM (o/KrO)

16 Jeff, why would you like to see the ultra rich taxed at a higher rate? What are the benefits, and what are the possible downsides? Also, what would you call the cutoff point? ie. how rich do you have to be to get taxed at the higher rate?

Posted by: XBradTC at March 30, 2008 11:10 AM (E5mM5)

17 Professor of Finance Robert Parks is 100% correct and as a fellow academic I can vouch for him.

Posted by: Paul Ehrlich at March 30, 2008 11:19 AM (1Mq7K)


FDR's grabasstic fixes, such as wage and price freezes, worsened the Great Depression, extending it, deepening it, and plunging us into a triple-dip instead of the normal recovery that occurs in capitalist systems.

Even the WPA created joblessness, for example in Appalachia, because they were paying a fixed wage across the US which was higher than what coal mine supervisors were making in the region.  The supervisors quit their important jobs to lean on shovels beside WPA road projects, and that shut down many mines and threw the rest of the miners into unemployment.


Posted by: George Turner at March 30, 2008 11:30 AM (3m51V)


I think our ultra-rich could handle paying another 5% or so on taxable income significantly above the highest existing bracket.  Maybe another bracket starting at $500,000 annual income?  I don't know.

But the amount generated is nothing compared to what we could save by chopping farm supports, foreign aid and earmarks.

So, net-net, I would say raising taxes is not the answer.

If anything, certain taxes (estates and the AMT) need to be lowered.  My family is facing a $750,000 estate tax bill and we are definitely not rich.

Posted by: Dogstar at March 30, 2008 11:33 AM (FgxdU)

20 Granted, economics in the Fed era are certainly the logical minefield that produces the torrents of incomplete reasoning we see all around us, the lead to this topic included:  Bush is no more responsible for a very serious economic problem than Clinton was for creating the Taliban. 

But what's concerning is that conservatives are so head-in-the-sand about a very real problem.  Witness the first comment in this thread.  Somehow hoorahing the single biggest shell game in the economic history of civilization, which is fiat currency, is deemed righteous and American and all that.

Except that it's still fraud.

By now the world runs on fiat currency -- money proclaimed into existence as the units of debt it actually is.  Such naturally ebbs and flows on the basis not of the conservative's free markets, but on the basis of whim and power.   The US has for decades simply run a debt column it cannot and will not pay off.  By now, inflation is tradition, even expectation.  And, goes the conventional wisdom, if it pumps up a bubble, it's naturally proof of economic health.  So it always goes, even when bubble after bubble pops and reality almost comes knocking.

This most recent recession is a severe one.  It could easily be termed a depression, especially since it's not even close to being over.  For it to be over we need a correction, and so far the only correction are the big banks taking it in the shorts.

Or do you really think that's what's going on in these protectionist states of America, home of this fiat currency Keynesian ripoff?

Meanwhile, despite some trillion dollars in writedowns and counting, despite housing nowhere near the bottom (sorry folks) as folks lose a third their property value in some markets, and even despite the cause of it all -- the Fed -- quietly just this week being given the keys to the kingdom by Congress,  we're all in great shape simply because Bush is in office and malls are packed with folks running up debts in instruments of debt.

This is, as Malor alludes, decidedly Keynesian, which is to say, definitely not conservative.

Somebody once made the observation that owning the power to mint meant owning the only power that mattered.  That "conservatives" were so busy condemning Paul for skinhead donations and shitty newsletters while he was absolutely right in merely defining the source of all this fiscal fraud doesn't bode well for conservatism.

Government has no fundamental, constitutional right to spend money on social issues or concerns.  That's conservative.  But government also has no fundamental, constitutional right to debauch your worth, yet as it does so to a simply staggering degree, everybody just looks the other way.  Or condemns the messenger.

Posted by: Ten at March 30, 2008 11:38 AM (jM582)

21 If we're intent on avoiding what Herbert Hoover did, it ought to be pointed out he raised taxes as a response to the crisis (especially on the rich).

Posted by: AD (acting as local corporate shill) at March 30, 2008 11:39 AM (vYzH/)

22 I believe that taxes on the ultra rich (not the way Dems describe them as anyone making over the aver wage, but people with fortunes in the hundreds of millions) need to be raised.

Sorry, but you can't tax the wealthy to the point where all of our "needs" are resolved.  The wealth you mention ( I assume) are the people who don;t actually earn a paycheck, rather they have huge sums in trusts and whatnot.  These people for the most part don't pay taxes like you and I - if at all, and I can see why you might want to glom onto say, 25% of every dollar these people possess.  If you tried that you might get by with it once, afterwards they would just shift the money elsewhere, out of Uncle Sam's reach.  And you would be back to square one with increased taxes on the little guy.

You want the solution?  Easy - spend less, politicians.  Period.  We don't have a taxes-are-too-low problem, we have a politicians-spending-money-like-there's-no-tomorrow problem.

Posted by: Ken at March 30, 2008 11:40 AM (D02O9)

23 This also reminds me of the old saw - if you were to take away every last penny from all successful and wealthy people and redistribute that money to every poor person throughout the land, within several years the wealthy will be wealthy again and the poor will be poor again.  There's a reason why many residents of Washington DC are 4th generation welfare recipients (think about that for a moment), and it has nothing to do with how much the wealthy are taxed. 

Posted by: Ken at March 30, 2008 11:51 AM (D02O9)

24 That's fascinating especially since FDR's policies were just more extreme versions of Hoover's and actually made the depression worse.

Posted by: Richard at March 30, 2008 11:54 AM (YONGp)

25 everybody just looks the other way.  Or condemns the messenger.

Or understands that the Fed/central back regime provides the most stability possible, and that a tie to a gold/assets standard has always exacerbated deflationary bias and completely hamstrung economies during the troughs of the business cycle.

Posted by: tachyonshuggy at March 30, 2008 11:54 AM (IVUjc)



Couple of problems with your comment.

1. We aren't in a recession. A recession is 2 consecutive quarters of negative growth. We haven't even had one yet.

2. Fiat currency. Every currency, whether fiat or not, is only worth what the people think it is worth. Tying the dollar to gold or any other commodity only adds a step. It is still only worth what people think it is worth. That's not just basic economics, it is human nature. Why is gold worth something? Folks decided it was. Is it inherently more valuable than oil, grain, water, or puppies? No, but folks decided it was.

Posted by: XBradTC at March 30, 2008 11:56 AM (E5mM5)

27 Bush's policices have NOT been 'right-wing.' That is, if 'right-wing' means 'conservative.' And you don't solve any problems by raising taxes on ANYBODY. PERIOD. You do it by LOWERING SPENDING. Period. Seeing it the former way is looking at it backwards. In other words, you look at it as if the useless programs and pork-barrel bullshit you are spending money on have always been there, forgetting that they were CREATED by the government in the first place. It's completely backwards. Believing that someone should 'pay just a little bit more' because they are 'ultra-rich' is just as arbitrary as placing ceilings on prices and wages - both upper and lower ceilings. Who defines the levels? It tends not to work because it sticks someone's big, fat ass into the free market and influencing it in some unnatural way, making it no longer a free market.

Posted by: art at March 30, 2008 11:57 AM (5+uph)



I would strongly recommend that if no one has died yet, you look at some trust solutions for wealth transfer for your family.

Many people think the estate tax is neat and keen, but my time in the trust business showed mostly that small businesses that were family owned were incredibly vulnerable. To pay off the estate tax, the business had to be liquidated. What ended up happening was that a tax revenue generating entity ceased to exist and paid no more taxes. Furthermore, the employees of that business were laid off and unemployed. Way to kill two geese laying golden eggs with one "it's only the rich" stone.

Posted by: XBradTC at March 30, 2008 12:01 PM (E5mM5)

29 By the way, these relative-value arguments about how much to tax who are part of the anti-constitutional tone that makes one despair for sanity ever returning to the debate.  Just where did we get the notion that virtually enumerating a right on the basis of what amounts to a mob sentiment was a good idea? 

Because we self-identify as Republicans?  Conservatives?

Personal income tax doesn't really pay for much of anything, although it is a hell of an effective mechanism to exert power.  The corporation was and should be the entity for collecting what few taxes a minimalist republic needs to function, not the socialist lobby (whether Republican or Democrat) buying off the legislature (whether Republican or Democrat) on the basis of crap notions of what works and/or what's "fair".

Especially when it's crystal clear that it never works and it certainly won't be fair.

As to the balance of federal expenditures on stuff government has no real right to be funding, we'll just declare it into existence and leave it as part of the nine trillion dollars of debt for our kids to deal with.

Why we're consumed with all this political left vs right crap when the underlying effect is really whether we'll add to or reduce simply staggering authoritarianism by a percentage point is anybody's guess.

Posted by: Ten at March 30, 2008 12:01 PM (jM582)

30 But a finance professor at the "esteemed" Pace university can't be wrong.

Posted by: NYNastyboy at March 30, 2008 12:05 PM (IcWzI)

31 Ten, I'm confused by your post #29. Are you saying abolish the personal income tax and just tax the corporations? Or similarly, use corporate taxation as a proxy to individual taxation, much like a consumption tax? Please clarify that.

Posted by: XBradTC at March 30, 2008 12:06 PM (E5mM5)

32 The lesson of the depression should have been don't raise taxes as doing so has the effect of forcing business and individuals to curtail or halt hiring, expansion, or investment plans.

While FDR's policies did help stave off growing communist or national socialist attitudes that swept much of the world during the 20's and 30's (by appearing to care) he really didn't help the poorest Americans and he discouraged investment by individuals and people.

From CATO, Tough Questions for the Defenders of the New Deal:
1. Why did FDR triple federal taxes during the Great Depression?
2. Why did FDR discourage investors from taking the risks of funding growth and jobs?
3. Why did FDR channel government spending away from the poorest people?
4. Why did FDR make it more expensive for employers to hire people?
5. Why did FDR destroy all that food when millions were hungry?
6. Why did FDR make everything more expensive during the Depression?
7. Why did FDR break up the strongest banks?
8. What was the point of New Deal securities laws that made it harder for employers to raise capital and didn't help investors to do better?
9. How did the Tennessee Valley Authority become a drag on the economy?
10. Why did FDR disrupt companies employing millions?

His New Deal was quite similar to the rhetoric you hear from both Barack and Hillary today and rather then help they would probably push us further into a recession or perhaps even a depression.

It is typical liberal anti business attitudes, right down to Walmart hating:
(H)e banned discounting by signing the Anti-Chain Store Act (1936) and the Retail Price Maintenance Act (1937).

These are the same types of policies Chavez has used to bring his economy close to it's knees!

The business cycle has recessions and slowdowns every 3 to 5 years that MUST occur in order for all of us to get our houses in order, both personal, business, and government.  It makes us lean and mean dollar making machines.  If you force a short circuit in that cycle you only set yourself up for worse next time, and there will be a next time.  Slow downs should keep waste and bloating down and government is not good at belt tightening (The duce you say).

If you want to help the economy, then encourage investment (that's you Barack planning to raise capital gains from 15% to 25% is foolish) by business and individuals.  Policies that do this assist in keeping slowdowns shallow.

But then again what is all this about anyway, according to the media we have been in or teetering on the edge of a depression since December 11, 2000 with Bush v. Gore.

Posted by: LifeTrek at March 30, 2008 12:08 PM (H+/DW)

33 The corporation was and should be the entity for collecting what few taxes

The corporation?  Who/what is this corporation you speak of?

Posted by: Ken at March 30, 2008 12:09 PM (D02O9)

34 Ten (#29), I'm confused with your 'mob-sentiment' line vis-a-vis self-identifying as a Republican or conservative. Not disagreeing with your or agreeing with you, I just don't know what you meant.

Posted by: art at March 30, 2008 12:11 PM (5+uph)

35 You present a false dichotomy, XBradTC.  Gold is no more an absolute than oil is.  But it is a way to prevent fraud.  We can shout Ron Paul! and point, but we cannot get around that simple fact.

If the US government held nothing but real value -- whether gold or oil or some other substantial, long-term unit of value - -it couldn't rip us off, that being the point.  Making it hold such value would be a conservative principle.

In addition, the idea that the Fed was enacted in order to prevent bubbles and runs on bank assets is obvious folly, and that by recent experience.  The Fed created a trillion on writedowns and it created what is only the most recent bubble to pop.  Look for more, the next one, as the article implies, probably to be infrastructure and/or alternative energy.

From there we get into the trillions US government spends on socialism, but that's a subject for another thread.  In #27, art points to the fact we need to have an insurmountable standard for our public servants to be held to, not an arbitrary one for our masters to game us with.

In other words, "fiat" absolutely does describe the US dollar.  And it's like that not for your and my best interest, but because somebody once got away with it for their own ends. 

With power operating as it always has, can we imagine how and why?

As to the definition of recession, you can do the wordplay; I'll go back to the indicators.  When the only way to fuel the feel-good is with another needle, recessions are the least of our worries.  The Fed is hovering three points above the state of affairs the Japanese still haven't recovered from two decades on.  And the US dollar is fast going the way of the Pound Sterling.

"Recession" is a construct.  Those realities are realities.

Posted by: Ten at March 30, 2008 12:14 PM (jM582)


art, you're gonna have to change your nic. I keep thinking those are my posts. Especially since you think along the same lines.

Posted by: XBradTC at March 30, 2008 12:14 PM (E5mM5)

37 art, mob sentiment simply means majority political power.  It's entirely unlike the originalist restraint on government to be utterly separate from the private sector.

When government enters yours and my purses simply by way of vote, we have the biggest problem we can ever have, politically speaking.

Posted by: Ten at March 30, 2008 12:16 PM (jM582)


Amen to planning and family businesses, Brad.  It's really, really important.

Posted by: Dogstar at March 30, 2008 12:17 PM (FgxdU)

39 XBradTC, the personal income tax is simply constitutionally without precedent and morally ill advised.  Given what little it pays for, it's also just a failed plan.

Why would anyone in their right mind defend subservience?

Posted by: Ten at March 30, 2008 12:18 PM (jM582)

40 according to the media we have been in or teetering on the edge of a depression since December 11, 2000

I believe the left/MSM (was that an echo I just heard?) are somehow hoping that all this chatter about brink-of-recession or already-in-a-recession becomes a self fulfilling prophecy.  My wife and I meet people and clients daily, and most who are not tied to residential real estate are doing rather well.  Business is up, sales are up, projections for near- and far-term are all positive for just about everyone we see. The press is going to hammer their narrative down our throats regardless of reality.  

Posted by: Ken at March 30, 2008 12:19 PM (D02O9)

41 XBradTC, art is my name. I can come up with something however. I usually don't have time to read or comment, so I didn't think using my name would cause an issue. No snark there, I'll think of a nickname. Ten, I understand mob sentiment as a term, but what I didn't understand in your statement, reading for context, was where you were coming up with it relating to conservatives. Is it that you were reacting to some of the other comments here, as I was (the folks who were advocating raising taxes on the 'ultra-rich')? Otherwise, in reading your responses, we are in agreement.

Posted by: art at March 30, 2008 12:23 PM (5+uph)



With all due respect, FDR did everything Hoover did plus he doubled down with more Keynesian crap that didn't do anything constructive economically. Sure, the TLA agencies garnered headlines in the drive-by media of the day; but it was all show and no go, as it were. Shuffling money around within an economy via taxes cannot cause economic growth. As mentioned previously, FDR's policies worsened and extended the depression. His Supreme Court packing scheme has given us the misuse of the "Commerce Clause" we still suffer under today.

Posted by: Hank Rearden at March 30, 2008 12:24 PM (eXk2G)

43 I'm afraid it's not the press, ken.  It's the exploding money supply, the banking crisis brought on by Greenspanian idiocy, the global ripples (which are not inconsequential; check with Germany) the trillion just lost into thin air, the skyrocketing costs of basics, abysmal personal consumption and recird defaults and debt, and the fact real inflation is not reported (it's 3x what we're told it is; talk about the power of the press.)

Look, we print the stuff on whim.  We export it in exchange for goods.  And guys in the mideast are literally buying up US banking while we watch big banks become bail-out targets.

Do we honestly think that the US dollar is forever going to remain a rock-sold stand-in for value?   Best case scenario says this is a game of chicken we may not have the productivity to win.

If money is indeed trust, by exactly what measure does trust occur?  On the other hand, the indicators themselves paint quite a different picture.  Because trust erodes.

Posted by: Ten at March 30, 2008 12:28 PM (jM582)


XBradTC, the personal income tax is simply constitutionally without precedent and morally ill advised.  Given what little it pays for, it's also just a failed plan.

Uh, really? I mean, they went to all the trouble of passing an amendment to the Constitution and all...

Is it a failed plan? It ain't perfect, but what is? I'll tell you what is counterproductive is capital gains taxation and corporate income tax. Would that I could wave a magic wand- both would be gone. Since that is a pipe dream, I will continue to advocate for lowering the rates. Failing that, I'll damn sure try to keep them from being raised.


I agree that our federal government spends way too much money. I think that even though the courts have repeatedly found the social programs that you decry to be constitutional, they are ill advised and counterproductive. Be that as it may, they are here, and they aren't going away. What can we do to reign in the rate of growth of existing programs and limit the creation of new ones? (Please don't tell me, "Elect noR lauP!!)

Posted by: XBradTC at March 30, 2008 12:33 PM (E5mM5)

45 Which goes to show bad news is good news for Democrats.

Posted by: douger at March 30, 2008 12:38 PM (rOhot)

46 Do these people ever not exaggerate to the point of absurdity?

Posted by: Guy Ritchie's Career at March 30, 2008 12:40 PM (yX30S)


art, no worries, my name as well, just a little jarring at first.

Posted by: XBradTC at March 30, 2008 12:45 PM (E5mM5)

48 Jeff: Minimum wage increases drive inflation by increasing the minimum cost of labor. Linking them together is just creating an institutionalized "ratchet effect" under inflation. It isn't just what you earn, but what you have to spend that sets your "lifestyle."


1) Fiat money is quite subject to abuses, but it was created to allow more rapid growth by aiding the availability of capital. No way in hell we could grow as fast as we have without it, though, like I said, it sure is subject to abuses.

2) Corporations don't pay taxes, customers do. Adding a layer of accounting doesn't change that, it just makes it more wasteful.

Posted by: Merovign at March 30, 2008 12:50 PM (IaYDo)

49 Guys, you should all be congratulated for treating Ten respectfully, but I advise you to treat what he says with a great deal of skepticism. After this election season, I have much the same response to the words "fiat currency" in our comments section as Ace does to racism. And here's why: the Paulians lie and misrepresent. A lot.

For example, when Ten says:

Personal income tax doesn't really pay for much of anything, although it is a hell of an effective mechanism to exert power. The corporation was and should be the entity for collecting what few taxes a minimalist republic needs to function...

He's quite mistaken. That link goes to the Treasury Department's budget figures for FY 2007. Individual income taxes receipts were $1,163 billion. Corporate income tax receipts were only $370 billion. So when he says that individual income tax doesn't pay for anything, he's spectacularly incorrect.

Posted by: Gabriel at March 30, 2008 12:50 PM (1Ug6U)

50 Gabriel, I wouldn't trust him with a nickel. Whether he's lying, misrepresenting, or just mistaken, I don't know. I can't see in another man's heart. I had hoped to get a couple of straight answers from him. Anybody that thinks the personal income tax is unconstitutional, however, has an uphill struggle to  convincing me that they are an authority on macroeconomics.

Posted by: XBradTC at March 30, 2008 12:53 PM (E5mM5)

51 Media and Dems push a WPA. One problem: Illegal Aliens.

Illegal Aliens will simply underprice Americans in the wage market. Pushing them out. All a WPA type program would do is give money from American taxpayer (mostly American citizens, though not all) to Mexican immigrant labor, most of it illegal.

The devastating riposte is to point this out: you can't make a WPA project work unless you close the labor market. Otherwise you might as well just give the money directly to Mexico and Mexicans.

Charge does not work: Bear Sterns bailout, Home Ownership bailout (unpopular too btw) are all GWB and the Fed's doing.

I'm all for a FDR-LBJ-Ike style spending on infrastructure, it's long overdue, but the positive effects are just wasted down a rathole unless you close the Labor Market.

Posted by: Jim Rockford at March 30, 2008 12:54 PM (4878o)

52 I went to an Arby's today and it was packed!  I had to WAIT to place my order!  This is the first time in my life that I have been in an Arby's where the customers outnumbered the employees.  The 5 for $5 deal is now 5 for $6.59 so depression here we come!

Posted by: dude at March 30, 2008 12:56 PM (owpwm)


The 5 for $5 deal is now 5 for $6.59 so depression here we come!

Fucking fiat money is causing inflationary pressures that are ruining this country! Next thing you know the $.99 menu will be up to  $1.01! I blame Bushitler!!11!!

Posted by: XBradTC at March 30, 2008 12:59 PM (E5mM5)

54 Gabriel:

"Thanks" for letting the fiat money Paultards out of the box again.

At least Glenn has the decency to blend puppies in the privacy of his own house.

Posted by: Tinian at March 30, 2008 01:02 PM (1Mq7K)

55 Quick glance at your history lesson, I was under the impression that the act that FDR did to pull the US out of the depression was to die.  I don't think a nation of labor camps and enterprise-free zones would do anything except slowly starve.

These economists have been predicting rain for 7 years now.  Instead, we got 52 months of straight growth.  This is called a correction. 

Posted by: joeindc44 at March 30, 2008 01:06 PM (NXelq)

56 XBradTC,

You're right. I shouldn't have implied that Ten himself is lying or misrepresenting. I don't know if he's just uninformed, the victim of someone else's lies, or intentionally misleading. It has, however, been my experience that Paultards in general have a casual relationship with the truth.

Part of the problem is that once you start discussing economics with them, you get sucked into a deathspiral over foundational premises. That's why it's important to nail down some basic facts at the beginning. Don't just grant that "there's problems with fiat currency." Make the Ronulan specify them. Be ready to discuss what problems are solved by "fiat" money. Because once you've allowed the term "fiat currency" the word "fraud" cannot be far behind.

Then, of course, has to come a discussion of the alternatives, wherein wishful thinking really does take over for reason as the Paulian will simply shut his eyes to the problems inherent in pegging currency to a commodity and gloss over the financial devastation that would occur before, during, and after a switchover.

Posted by: Gabriel at March 30, 2008 01:07 PM (1Ug6U)

57 Well, Joe, the commenter way up top was correct. The Japanese Naval Air Force solved the Depression. Interestingly enough, even during WW2, there was about 2% unemployment. That with 10% of the entire population in uniform.

Posted by: XBradTC at March 30, 2008 01:09 PM (E5mM5)

58  "Thanks" for letting the fiat money Paultards out of the box again.

Yeah, I am really sorry about that. I was kinda hoping that they'd crawled back under their rocks since Herr Doktor has gone back to his district in Texas.

Posted by: Gabriel at March 30, 2008 01:10 PM (1Ug6U)



I'm hardly an economist, and never even read Sowell's book (it's on the list of to do's). I have, however worked  hard to understand a lot of the concepts as they apply at the macro and micro level. It's funny, Ten would find a very receptive audience here to the idea of reigning in federal spending and minimizing government involvement in the economy, and our lives, but like all true revolutionaries, it's his way or the highway.

You know and I know that we aren't going to deepsix Social Security and the personal income tax. The question then becomes, what can we reasonably expect to achieve to advance conservative goals? The Paulbots (and many others) skip that step and claim only they know the Gnostic truth and all others are heretics.

Posted by: XBradTC at March 30, 2008 01:14 PM (E5mM5)


A recession just means less of the country are spectacularly successful.  With ag and energy prices through the roof, the Midwest and Texas will actually do pretty good (in general) while the rest of the country does less well.

California, Las Vegas/Phoenix, Florida and Lower Michigan/Ohio/West Virginia/Washington DC are four areas getting hammered and it's showing in food stamp rates and real estate prices.

Recessions don't have to affect everyone or the whole country.

Posted by: Dogstar at March 30, 2008 01:25 PM (FgxdU)


True, Dogstar, the economic effects impact differently in different places, and different industries and sectors of the economy. The fact remains, however, we have not yet met the definition of recession. (Note: I'm not saying we aren't in trouble) Ten tells me I'm just engaging in wordplay. Uh, no. I'm using the word the way it was meant to be used. Is the economy sluggish or stagnant. Yeah, I'd say so. Is it a problem? Yeah, I'd say so. But we have definitions for words so that we speak with a common tongue. I'm not in Alice in Wonderland where words mean precisely what I want them to mean, no mor and no less.


BTW, if you needs some wealth transfer/tax minimization ideas, let me know.

Posted by: XBradTC at March 30, 2008 01:31 PM (E5mM5)

62 Er, leave out "spectacularly".  Don't know why I did that.

Posted by: Dogstar at March 30, 2008 01:42 PM (FgxdU)

63 Jeez, Dogstar, why don't you start using words like, "Fabulous!"

Posted by: XBradTC at March 30, 2008 01:44 PM (E5mM5)

64 I love it when people try to say they have the answer to the economy, all we have to do is this......

Posted by: John Ryan at March 30, 2008 01:44 PM (TcoRJ)

65 I don't see what the big problem is. Everybody can just start up a blog, run it for 10 weeks or so, get a 6 figure book deal....

Posted by: bgates at March 30, 2008 01:49 PM (RzFhF)


John Ryan,

If you find my ideas intruiging and would like to subscribe to my newsletter, I'll give you all the answers to the economy.

Posted by: XBradTC at March 30, 2008 01:51 PM (E5mM5)

67 Most of you kids are too young to remember when during the 2000 election the Democrats accused Bush of "talking down the economy" as GOP nominee George W Bush was warning us of the impending recession.

They were worried that Bush was trying to undermine Gore's and the Democrats promise of an extension of the wonderful Clinton "New Economy."

I'd say the biggest differences between then and now are 1) Crude oil has more than quadrupled in price/bbl , and 2) the dollar is much weaker now. (On a sidenote, if I remember correctly, the Democrats, during an early point in Bush's first term were actually complaining about the dollar being too strong.)

So here we are with a Republican president and the Democrats are talking down the economy.

Posted by: Bart at March 30, 2008 01:52 PM (BuJSa)


FDR employed millions in his attempt at Keynesian economics, and still had 18% unemployment (down from mid-20% Hoover) plus another recession in 37-38. By 1945, the value of American money was so low the government couldn't continue fighting without large-scale bond drives (or a campaign of "hope and change").

The nice thing about Keynesian economics is that liberals make no pretense about it - "tax and spend, then tax more and spend more" as FDR's economic aides said. And the policies force one generation to take over the debt from the precedessor. It stops the government from being responsible from the people and responsible for the people.

But don't worry - Keynesian economics only cause problems (besides debts and nanny states) if there isn't a war to direct all government efforts.

Posted by: TheEJS at March 30, 2008 02:07 PM (nWQmo)

69 Bart, I'm old enough to remember the MSM telling us that the economy was the 'worst in the last 50 years' while Bubba was running against Bush Sr., and the FUCKING DAY after Clinton was elected Jim Michlazefski (or whatever it is) stood on the fucking White House lawn and suddenly said the good economic news meant that "Bill Clinton may have inherited an economy in recovery." Well, no shit, Sherlock.  It was the MSM version of "Mission Accomplished."

Huge f'ing brass ones, that's what it was.

Posted by: Stinky Esposito at March 30, 2008 02:09 PM (Ob57l)

70 Uh, Ten, I'm still waiting for an answer on the Constitutionality of personal income tax..

Posted by: XBradTC at March 30, 2008 02:18 PM (E5mM5)


Yes- even the retards packing the lines at Arbys are a sign that the economy is stronger than our douschebag friends in the apocalyptic MSM would have us believe.


Posted by: TMF at March 30, 2008 02:20 PM (/YM8H)

72 I'm not saying the economy is great. It's not. I'm not smart enough to tell you how to fix it, but yeah, there is an apocalyptic edge to economic reporting. While some of that is MSM v. Bush/Republicans, part (most, probably)  of it is the need for news to be sensational.

Posted by: XBradTC at March 30, 2008 02:28 PM (E5mM5)

73 "I'm not smart enough to tell you how to fix it..." XBradTC @ 72 above

One problem in your comment is the assumption that anybody is "smart enough" to "fix" an economy. Nobody can have perfect information about an economy and even if they could, that much information cannot be understood in such a complex system.

Even if the first impossibility were overcome, the idea of fixing an economy is nonsense. Economies are billions of decisions made in a distributed fashion between millions of people per day. The idea that there is, or could be, a fix is purely irrational.

The problem with command and control economies is those who run them must overcome two impossibilities. And that never can, nor will it ever, work.

Posted by: Nom de Blog at March 30, 2008 02:39 PM (5/uG4)


Nom, you are absolutely correct. Much like climate models, economic models are simplifications and based on assumptions. They are not truly authentic. Any model that was truly accurate would not be a model, but the reality.

We have to keep that in mind, and use models as tools, not truth.

Posted by: XBradTC at March 30, 2008 02:51 PM (E5mM5)

75 If many of the signs are correct, we are likely headed for a recession, but unless leftist economic "fixes" ala Jimmy Carter are applied by the next president, depression won't happen.

Posted by: Christopher Taylor at March 30, 2008 02:55 PM (3+3kx)

76 Contrary to Ten's claims, a currency firmly tied to precious metals can both inflate and deflate.  European history shows several examples of this.  Plus, it tends to deflate more than inflate, since you can pretty easily take gold out of circulation, but you have to acually mine/find more of it to put more in circulation.

Posted by: Calix at March 30, 2008 03:00 PM (8d3U/)



I was trying (poorly) to make that point when I mentioned that money is only worth what people think it's worth. Even if it's backed by a commodity.

Posted by: XBradTC at March 30, 2008 03:02 PM (E5mM5)

78 Much like climate models, economic models are simplifications and based on assumptions

And the left persists in believing that the government can control both the economy and the climate, in spite of mountains of evidence to the contrary.

Posted by: Andy at March 30, 2008 03:06 PM (23Gys)


As far as I can tell, the main problem with the economy right now seems to be a credit shortage.  The National Debt contributes to this problem by absorbing available credit.  Paying it down would free up more credit to be used by individuals and businesses.  I believe this would be a good thing.

In fact, I believe that so strongly that I would advocate a special tax for paying down the national debt, assuming that was where the money was actually going, and not into some Congressman's son's personal account via some shady accounting dodge.

Actually, I plan to send my stimulus check to W. with instructions that he put it against the National Tab, as I figure that's the actual problem the Gov't should be fixing. F'king idiot.

Posted by: Calix at March 30, 2008 03:12 PM (8d3U/)


I could go down to the Wing Phat Viet Supermarket, buy about 3 years worth of rice and bok choy for 100 bucks.

Ill be fine

Sick of fucking rice and bok choy, but fine nontheless

Posted by: TMF at March 30, 2008 03:19 PM (/YM8H)


Calix, while the credit problem is the biggie, it's not the only one. Nom de Blog touches on the fact that the economy is so interconnected, attempts to solve the credit problem would exacerbate problems elsewhere.

Your special tax would in fact reinforce the credit problem, even while the govt. is sucking up a good deal of the available credit market. The monies you would take in would be those very dollars that people and businesses would otherwise either invest in capital, or ventures, or put in banks- who would then loan it right back out as credit.

Posted by: XBradTC at March 30, 2008 03:21 PM (E5mM5)



YEah, I was trying to figure out how paying off the governments tab frees up private banks to lend money myself

Posted by: TMF at March 30, 2008 03:22 PM (/YM8H)


I must be one of them fucking idiots, b/c I thought the credit problem was due to banks taking on risky loans, selling them off for a "profit" and then getting burned by the deadbeats who shouldnt have gotten the $$ in the first place

How that relates to the national debt, Im not quite sure.

Posted by: TMF at March 30, 2008 03:24 PM (/YM8H)

84 Oh, if there was less government debt, that would free up lots of money. But the way to do that is spend less. Any other way tightens the credit market.

Posted by: XBradTC at March 30, 2008 03:32 PM (E5mM5)


#83  No, I meant Bush (and Congress) did an idiot thing for sending me a stimulus payment, which I believe is the exact opposite of what the gov't should be doing to fix the problem.

#81  At present, the National Debt seems to be a permanent drain on credit markets, and a factor in the current weakness of the dollar.  A special tax that ended this permanent drain and then went away, would be a net benefit to the country, I think, as well as sending a clear signal to the rest of the world that America really was serious about setting its financial house in order.

And, no, this isn't the whole of our economic problem, nor is this necessarily the best time to address this particular aspect of it.  I focused on the National Debt issue because that's the one the government directly controls.  The part of the problem caused by individuals making stupid decisions isn't something the government can really fix, nor is it something the Federal Gov't is directly responsible for preventing.

Posted by: Calix at March 30, 2008 03:46 PM (8d3U/)


Bush (and Congress) did an idiot thing for sending me a stimulus payment, which I believe is the exact opposite of what the gov't should be doing to fix the problem.


If the "stimulus package" stimulates anything other than a few strippers thongs w/ some extra $1s Ill eat my shoe

Posted by: TMF at March 30, 2008 03:50 PM (/YM8H)



The "stimulus"/bribe isn't so much about the money-if it was, it would be as stupid as you think. Far more important is the emotional/psychological effect. If enough people think the economy overall and personally sucks, then it will. If enough people think personally the economy is OK, then the economy overall will be able to weather. Panics are called panics for a reason.

The national debt is an issue, but again, taxing our way out won't work. Spending less is the answer. The only other answer is bringing in more tax dollars by increasing productivity and growing the economy. The way to do that is lessen taxation to the optimum point on the Laffer curve and letting the now non-taxed dollars go to work.

Posted by: XBradTC at March 30, 2008 03:55 PM (E5mM5)

88 Oh, and btw, in this particular case, when I go away you may take that as you have won and I concede defeat.

Posted by: Calix at March 30, 2008 04:17 PM (8d3U/)

89 Let's assume for a moment that we go back to a Gold backed currency. And later, someone discovered huge gold deposits (or somehow invents a magical way to make gold by splitting some other element) that suddenly doubles or triples the supply of gold in the market. What will happen to the gold-pegged currency?

Posted by: Tushar D at March 30, 2008 05:34 PM (DWXGz)

90 (Watching a rather twisted discussion.) Brad, the economy is an amazingly intricate and dynamic engine. And, like an engine, when congress passes a law--either to regulate or mandate--it's a lot like welding a weight to a high-speed flywheel. Given the speed with which transactions take place, congress tends to look at its actions as only being good. They tend to not look at the unintended effects of their actions. In reference to the writer who refers to himself as Ten... Ten, do you know how the money supply increases or decreases? Do you know of the relationship between the Federal Reserve bank and commercial banks in determining the amount of our money supply? Or, are you one of those who sees the Treasury Department simply printing more dollar bills? If you can't see the relationship between the Fed, commercial banks, the role of the Treasury Department and our money supply, chances are no amount of jawboning will set you in a meaningful direction in your search for truth. As a personal note, I'm always amazed at the amount of learned discussion I hear from people who have absolutely no idea of where or how our money is created. But it shows up quickly in any "intelligent" discussion. Opinions never replace facts, even if you really, really, really mean them.

Posted by: OregonGuy at March 30, 2008 06:02 PM (AJF6J)


The national debt has nothing at all to do with the current situation.  If the national debt was too high, we would have trouble selling government debt.

As a matter of fact, our government debt is dirt-cheap and getting cheaper.  Most of it yields at or less-than actual inflation.


It's all non-government debt that's causing the system to cramp up.  The nation's banks and brokers are holding a shitload of it and their stocks are in free-fall because most of it is just barely worth something, and when they actually have to write it down to the correct value, there AIN'T GONNA BE ANY BOOK VALUE IN THE FRIGGING BANK/BROKER LEFT.

Bear Stearns was just one of the first of dozens of brokers (and hundreds of banks) to fail in the next couple of years.

This shit is everywhere, and people are going to get cold-cocked with it.

Posted by: Dogstar at March 30, 2008 06:07 PM (FgxdU)

92 Jeff #12  " I believe that minimum wage should be locked to inflation permanently. "

That would make a self-reinforcing cycle, but we've kind of already got that.  It would DEFINITELY take away a recurring Democrite hot-button issue.  Status quo is that about every ten years they get to demogogue the Reps to hell and back over the plight of the minimum-wage worker, and the Reps cave in eventually, every time.  It would be cool if they could just cave in one more time and BE DONE WITH IT.  Sigh.

"The housing crash is over so long as we can find a way to keep people in their homes "

That's what renting is all about.

Posted by: Stoop Davy Dave at March 30, 2008 06:48 PM (WirW3)

93 "Blah, blah, blah, blah, blah, blah, blah...even some starvation."

There's always been starvation in this country, and there always will be. No matter how easy it is to become minimally employed, engage with a food bank, attend a soup kitchen, or rummage in a dumpster, some people are going to be too feeble-minded to attend to their own basic needs while being too stubborn to be helped. Worse yet, there are some whose sense of entitlement is so far ingrained that they are incapable of masticating what government or charity spoon-feeds into their mouths.

In other words, no matter what Olympian heights are scaled by this country, no matter the achievements, no matter the opportunities granted to anyone with a pulse and a desire to get ahead.....there will always be a natural constituency for the Democrats.

Posted by: cthulhu at March 30, 2008 06:50 PM (6rMco)

94 Dammit, that should read "the YIELDS on our government debt are dirt-cheap and getting cheaper".  US debt is being run-up something amazing, in price, which is why yields are at almost nothing.  It's the only kind of bond (debt) anybody wants to own right now.

Posted by: Dogstar at March 30, 2008 06:51 PM (FgxdU)

95 Jeff #12 " Don't you find it ironic that the Dems call the economy horrible while ..."

So I'm driving along in the motorcar and Mike McConnell is on the radio and he points out something I've missed.  The housing market deflation and the resulting credit crisis and the current probable-recession all coincide with the Demns gaining control of the House and Senate in 2006.  Heh heh heh heh heh...
McConnell isn't enough of a shameless political hack to take that ball and run with it, and Candidate McCain wouldn't be all that convincing if he were to try it, and it would be wrong if somebody more persuasive got on the air every day and sold this meme, but... but... heh heh heh heh heh... it's certainly not MORE wrong than the crap the Democrites are peddling, now is it?

Posted by: Stoop Davy Dave at March 30, 2008 06:57 PM (WirW3)


People don't understand how levered up our financial systems are right now.  A write-down of half or more is easily possible in a lot of the lesser-ranked stuff, and that's enough to send many, many balance sheets into "instant liquidation" status, which only makes things worse.

Plus, a lot of "AAA" stuff is actually crap.  So there's required selling from every downgrade, which is a regularly occuring thing now.

It's a vicious cycle and particularly bad for stocks, because our bond markets are much larger than our stock markets.  And when people have to throw stuff overboard, they will lick their lips at stock prices, compared to bond prices.

It's a no-brainer.  Stocks will go much lower in the next few quarters.  Get into cash, use the Proshares Inverse ETFs or stay long stocks and ride it down.  Or a mixture of the three choices.

Posted by: Dogstar at March 30, 2008 07:03 PM (FgxdU)

97 Dogstar #19 "But the amount generated is nothing compared to what we could save by chopping farm supports, foreign aid and earmarks."

There's good arguments to be made for chopping two of those three things, but all of them put together are trivial compared to the onrushing doom-train of Social Security, which in turn is trivial compared to the onrushing tsunami of Medicare. 

Ten #20 "... fiat money ..."

First find a way for one government, even this one, to keep the price of gold from fluctuating on the world market.  That will be a big step toward showing that a gold standard isn't simply a more unwieldy version of fiat money. 

Ken #22 "You want the solution?  Easy - spend less, politicians.  Period.  "

Ahahahahahaha but seriously...

Posted by: Stoop Davy Dave at March 30, 2008 07:10 PM (WirW3)


CNN had a special on the "mortgage crisis."  I tuned in sometime in the middle, and they were already talking about the difference between a rescession and a depression.  They said that luckily, depressions arise about "once every century." My first thought was, "Really?  What are they basing that on?"  But then it hit me: Our last depression was almost a century ago. 

Gee, what a coincidence.

So then they go to a panel discussion.  Lots of people, and only one economist.  You'll never guess who was the only economist CNN found to be on the panel: ...

Oh, wait.  You guessed Paul Krugman, didn't you?  I guess you could guess it.

Sure enough, Paul "Partisan Hack" Krugman went on and on about how the economic indicators were the worst we've seen since the 1920s, and the housing market is going to continue to drop for *years*.

Well, I guess it's nice that CNN isn't even bothering to hide their partisanship anymore.

Posted by: The Comish (sic) at March 30, 2008 07:11 PM (WZWmk)

99 XBrad #26 "We aren't in a recession. A recession is 2 consecutive quarters of negative growth. We haven't even had one yet."

We're coming to the end of the first quarter of probably-negative GDP growth, and expecting the second such quarter to start on Tuesday.  It won't be conclusively proven to be a recession until late summer, after the figures are tallied, and might yet turn out to not be one, but really, yeah, this will be a recession. 
     And this will also look like the "good old days," about a year from now, if as a result of this probably-a-recession the electorate starts buying the candyland la-la solutions of Candidate Hildy or Oby, which predictably they will.  If any of THAT shit gets implemented, our current maybe-recession will seem like a golden age.
     Have you heard how Hildy has a plan to bring down the price of gasoline?  Oh but she's not telling!  It's a secret!

Posted by: Stoop Davy Dave at March 30, 2008 07:20 PM (WirW3)

100 XBrad #50 "Anybody that thinks the personal income tax is unconstitutional, however, has an uphill struggle to  convincing me that they are an authority on macroeconomics."

Anybody whose solution to the problem at hand starts with "abolish fiat currency" and ends with "abolish the income tax" is moving from a non-starter to a pipe-dream, with a long series of rhetorical flourishes in between.  And is tiresome.  And is unhelpful.
We are STUCK WITH that shit, and despite all the good reasons for not liking it, we will still be stuck with it at the end of this century. 

Dogstar #60 "Recessions don't have to affect everyone or the whole country."

No, but the way they're measured (Gross Domestic Product of the entire USA) means that they have to be either VERY widespread or, if localized, must be extremely bad in some localities.  So they kind of end up affecting the whole country.
     Especially if, as I've tiresomely bitched before, they happen during an election year and stampede we-the-sheeple into making very bad political choices, which I very much fear is in the process of happening right now. 

Posted by: Stoop Davy Dave at March 30, 2008 07:44 PM (WirW3)

101 Stoop Davy Dave @ 99 above:

My understanding is that Q1 of 2008 will show about 0.6% growth.

Are you aware of some other consensus view that may be more recent?

Posted by: Nom de Blog at March 30, 2008 07:54 PM (5/uG4)

102 I'm not, and I hope your understanding is right. 

Posted by: Stoop Davy Dave at March 30, 2008 07:58 PM (WirW3)

103 "Recessions are visible only in the rear-view mirror." - Bob Brinker,  more or less.
  The measurement problem with recessions is that they have to be more than half a year long before anybody can say with certainty that there is one or that there was one.  But as we know, when it comes to bad economic news during a Rep Pres Admin, the MSM does not wait around for certainty, any more than they do with bad war news.
   Let's think back to the Bush-41 administration, when there was an almost-a-recession, being sold to the public by the MSM as an actual recession.  G.H.W.Bush went on television to tell us in his own words (*) that we were not in a recession.  He was ridiculed for this "hair-splitting" even though he was completely correct about the facts.  Do you think G.W.Bush, or any of his spokes-reps, has a better chance of selling the truth to the public?  Stoopy don't think so.
   So here's my new, sleazy, back-pedaling position in re my comment #99: Whether or not it later turns out to have been an actual, technically-correctly measured recession, it will be perceived as a recession the whole time it is going on, whether that's 6 months or 6 weeks.  And as far as the current political situation is concerned, perception really is reality.  And if any one thing tanks McCain's chances in the General Election, it's gonna be this.

(* which was probably part of the problem right there)

Posted by: Stoop Davy Dave at March 31, 2008 04:42 AM (WirW3)

104 A great book on this subject is The Creature Fron Jecyl Island.  It is about how and why-and by who-the Federal Reserve Bank was formed.

Posted by: molly at March 31, 2008 05:16 AM (rpSOw)

105 Careful, molly, Malor will call you Paulian.

Again, the issue is that the system is decidedly not conservative, yet "conservatives" hoorah it all day long.  Malor, wrong on many things by way of conflating the courts with the Constitution, handily diverts that problem with name-calling, but there that problem remains. 

It's not about winning arguments, Gabe, therefore it's not about nailing down isolated terms.  It's about how you'd justify something as suspect as a central Fed simply by way of indicating it's not going away.  That point is made (and heeded) about six times in this thread.  But I'm not aware of proofs of concept by way of slippery slopes.

As to corporations and taxation, the point -- again highly conservative in nature -- is that it's not American and it's not patriotic and it's not noble even to Republicans to submit folks to great personal liability when there's no constitutional precedent except to the very distinct contrary.  Wages are not profit, remember?  There may be a questionable amendment but there's no constitutional precedent for the personal income tax -- the corporation is not another layer of accounting, it's an effective means to legally insulate the sovereign individual from his government.

That is a conservative principle.

I'm not a goldbug, I'm not Paulian. and defending myself against those charges is therefore to defend myself against mere fallacy.  But I'm aware that forcing government to be a servant and not a master is a conservative principle.  My suggestion is that if we are to endure this blatant ripoff, we should at least know we're living under it rather than simply denying it as loudly as we can.

Posted by: Ten at March 31, 2008 05:36 AM (jM582)

106 Trouble is can we realy tust anything we hear from the AWFUL BROADCASTING COMPANY

Posted by: Spurwing Plover at March 31, 2008 06:13 AM (I9Upt)

107 Lastly, Gabe, it is you who appear incorrect:  The assertion that personal income tax pays anything is merely that.  The IRS, who's costs you omitted, is a cost center, not a profit center.

And the problem remains:  By what mechanism of conservatism would we urgently argue that declared money -- money supplied on the demand of a central bank and as instruments of debt -- is a wonderful, right-leaning thing? 

How would all the incumbent interest losses of created money be seen as a positive?  We do realize that each dollar created is leveraged to the tune of some ten or more added loaned dollars, don't we?  With each one incurring additional interest debts?

With what will those debts be paid if not more loaned dollars?

Would it be the "conservative" Keynesianism involved here?  If so, how is the Keynesian notion unattractive when it comes to Rooseveltian make-work but suddenly attractive when it comes to the very principle such make-work is based upon, which is spending yourself rich, a virtue when the Fed does it, at least until such time as it goes into positive feedback, a condition many now see surrounding us?

Would it be the terrific added costs to administrate a central accounting agency the outcome of which is to enmesh the private citizen in liability while not actually raising anything?  Is that method somehow conservative?

Would it be the construct of  what many believe is to this day a questionable Amendment occurring 135+ years after the Constitutional fact, one without, as I said, prior Constitutional precedent?

Would it be the money supply?

What of all this is conservative?

That's my central point:  By what logical, historical, constitutional, originalist, and/or otherwise principled means would we defend such a thing?  Given the ease with which Paulianism (and Paulians) are dispensed with, I genuinely look forward to a rational answer, after which time I can also understand how fraud is actually conservative and drop the subject altogether.

Posted by: Ten at March 31, 2008 08:19 AM (jM582)

108 By the way, Stoop Davey Dave, I'm not unaware of the negative power of the press and none of us are unaware of the fact the media are a bunch of chickenshit leftoids, hawking their biased wares.  This is not a mystery.

On this issue, I'm not even sure I'd give them the benefit of being a broken clock.  Hopefully we can dispense with any notions that by dint of wisdom and level perspective the socialized, Keynesian media lackeys are correct when they hang the faltering socialized, Keynesian US economy on Bush's neck.  Likewise when they, predictably, use it to paint McCain with that same brush.

I get that.  We all do.  But the problem of Debt-as-Growth America remains, and as you point out, is sucks.

Is is reformable?  Theoretically, perhaps not.  Pragmatically, very probably not.  But severe corrections tend to reform things too.

I can say I'll weep no tears for the trillion in writedowns incurred by the Fed's banker hanger's on.  Except, of course, when it's us funding their bailout, a prospect Bush does nothing to assuage fears of.

Remember, left vs right politics are not the core of our climate of political tension.  It's authoritarianism vs libertarianism and I don't mean with a capital L.

Posted by: Ten at March 31, 2008 08:35 AM (jM582)

109 Ten wins the thread by sticking around longer than the rest of us.
Congratulations, Ten!

Oh, and get a fucking life you economics challenged dipshit.

Posted by: Nom de Blog at March 31, 2008 10:17 AM (5/uG4)

110 Hey if that's all it takes then I want to win!

Do I win yet?

Posted by: Stoop Davy Dave at March 31, 2008 01:30 PM (WirW3)

111 We all win.  Because, you know, the best way to repair free markets is to deny competition.

Posted by: Ten at March 31, 2008 01:58 PM (jM582)

112 Ten:
Here is the cold brutal truth, as best I can grasp it, of our economo-political situation circa 2008-Q1:
1/ We the sheeple are not going to elect Dr Paul president, and even if we did, he would not be reimplementing the gold standard.
2/ We the sheeple are not going to elect Rev Huckabee president, and even if we did, he would not be replacing the income tax with a national sales tax.
(1 + 2 ) / Those prospects not only are not on the table, but there isn't even a table there for them to not be on.  We get that, and really, even you get that.
3/ By now everybody here gets that you alone are the One True Conservative and the Only Authentic Libertarian and that the rest of us are unworthy to even labor in your shadow.  No doubt about this remains, anywhere.
4/ Free markets aren't going to get any free-er under the current administration or any of the three prospective next administrations.  Nobody here is celebrating that; nobody here is in denial about that; nobody here is ignorant of that. 
5/ All things happen in fives, or in multiples or divisibles or additives or subtractives or factors of five, or in some number in some way related to a five.  There are no exceptions to the law of fives and, when viewed correctly, all events are explainable in terms of five.
6/ There is no six.  This whole discussion got on the bus to Mootville at about comment #20, which is a doubling of Ten, the inverse of which is a division of Ten into Five, by which are all things explainable.

Posted by: Stoop Davy Dave at March 31, 2008 02:33 PM (WirW3)


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