GE pays no taxes, receives tax bonuses, ships jobs overseas, and its CEO is into job creation

[friedfunk]

For the longwinded answer here's a write-up:

http://pragcap.com/resources/underst...onetary-system

[Plow]

Yeah man, when China comes-a-knockin it's gonna be giant crates of $20 bills they're after.

[archibaldcrane]

Tax cuts and spending are not the same thing. They affect the deficit in the same way, however.

Can we stop with the semantics now please?

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[*Shinzon*]

If we would only go back to actually producing shit and actually making it worthwhile for manufacturing companies to say here we wouldn't have such a huge problem with debt. Our economy is nearly entirely service based and the only thing we build and sell worldwide are cars, and even most our american cars don't come from America.

[Plow]

uh, airplanes

and, um, military shit >.>

[Cantih]

The trouble is, it's cheaper for manufacturing to go elsewhere (and what they pay elsewhere, while shit, is usually still better than average for the area).
If you wanted to decrease the cost of business here in America, most likely in wages, you would HAVE to correct the price of things like housing, necessities, etc.

[*Shinzon*]

uh, airplanes

and, um, military shit >.>

We build them here but our economy is far from industrial.

[guartz]

Tax cuts and spending are not the same thing. They affect the deficit in the same way, however.

Can we stop with the semantics now please?

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It most certainly does not affect the deficit the same way. Not even close.

[Kuya]

What do you mean?

[Cantih]

May have already been posted somewhere on the board, but it feels like it should be here.
http://www.vanityfair.com/society/fe...?currentPage=1

[guartz]

What do you mean?

It's not a 1 to 1 ratio. For example, when a government needs to spend 1000 dollars, it creates a bond, a promise to pay back 1,000 plus interest. The fed takes the bond and prints 1,000 dollars and gives it to the government. The fed and the banking system then use fractional reserve to turn that 1,000 bond into something like 90,000 dollars which they loan out through commercial banks plus interest which gets circulated. Then the idea is that government assess taxes to pay back the 1,000 dollars plus interest at the maturity of that bond, say, 10 years later. The problem is that the government issued one too many bonds, e.i more then money in the circulation. Probably because it is politically easier to issue a new bond then to raise taxes to pay for existing bonds, and if the fed were to release all that currency into circulation the dollar would be debased beyond recognition. So the government in order to continue paying bills has to issue new bonds to pay for the existing bonds, and that is what we call deficit, and each bond is secured by future taxation, ergo, future labor and profits of the tax base. Now these bonds have become so popular that there is a international market for them, and their value is calculated using a fucked up ratio between tax income and interest versus inflation and age of maturity of said bond. So effectively the only value of taxes as it stands now, is that taxes provide scarcity and higher value for these bonds, and they do nothing to affect deficit.

Also, nobody knows the exact numbers, this is not something the fed shares.

[vivid2012]

We build them here but our economy is far from industrial.

That's might not too good.

[Tebet]

It's about Swampdonkey putting up smokescreen after smokescreen so that he doesn't have to come to terms with the fact that waiving your right to collect $1000 is functionally the same as spending $1000 on the person you had the right to collect it from.

this statement is true, although not based in reality. i do not derive the same utility from the government spending $1000 on me as i do from having $1000. more accurately would be to say not taking $1000 from person A is the same to the government as taking $1000 from person A and giving it to person B. they are not the same to person A or person B.

[Ragnus]

It's not a 1 to 1 ratio. For example, when a government needs to spend 1000 dollars, it creates a bond, a promise to pay back 1,000 plus interest. The fed takes the bond and prints 1,000 dollars and gives it to the government. The fed and the banking system then use fractional reserve to turn that 1,000 bond into something like 90,000 dollars which they loan out through commercial banks plus interest which gets circulated. Then the idea is that government assess taxes to pay back the 1,000 dollars plus interest at the maturity of that bond, say, 10 years later. The problem is that the government issued one too many bonds, e.i more then money in the circulation. Probably because it is politically easier to issue a new bond then to raise taxes to pay for existing bonds, and if the fed were to release all that currency into circulation the dollar would be debased beyond recognition. So the government in order to continue paying bills has to issue new bonds to pay for the existing bonds, and that is what we call deficit, and each bond is secured by future taxation, ergo, future labor and profits of the tax base. Now these bonds have become so popular that there is a international market for them, and their value is calculated using a fucked up ratio between tax income and interest versus inflation and age of maturity of said bond. So effectively the only value of taxes as it stands now, is that taxes provide scarcity and higher value for these bonds, and they do nothing to affect deficit.

Also, nobody knows the exact numbers, this is not something the fed shares.

So in other words the government expanded upon the assumption that the growth would be able to cover the cost of the bonds. Brilliant. -.-

[Melchiah]

Archi didn't claim the effect reflected any sort of dollar ratio guartz.

[aurik]

this statement is true, although not based in reality. i do not derive the same utility from the government spending $1000 on me as i do from having $1000. more accurately would be to say not taking $1000 from person A is the same to the government as taking $1000 from person A and giving it to person B. they are not the same to person A or person B.

Actually it would be exactly the same if not for the overhead of tracking and handling the transfer. If the system was truly frictionless, there would be no difference between the gov't handing you $1000 of your tax dollars back versus not collecting that $1000 in the first place. Since it isn't, refundable tax credits / tax cuts are a fairly efficient way to go about spending in this way. The only real downside is that it confuses people like Swampy.

[Ferion]

It's not a 1 to 1 ratio. For example, when a government needs to spend 1000 dollars, it creates a bond, a promise to pay back 1,000 plus interest. The fed takes the bond and prints 1,000 dollars and gives it to the government. The fed and the banking system then use fractional reserve to turn that 1,000 bond into something like 90,000 dollars which they loan out through commercial banks plus interest which gets circulated. Then the idea is that government assess taxes to pay back the 1,000 dollars plus interest at the maturity of that bond, say, 10 years later.

I'm assuming you're talking about Treasury bonds, notes, bills, etc. If you aren't feel free to correct me.

I think you might have some stuff mixed up. When the government sells bonds, they generally auction them off to a a group of primary dealers who then sells them to the general public. I think you can also purchase them yourself but for the most part they're provided by dealers and then supply/demand affects the price/interest rate. That's also how the Fed does open market operations, they buy these bonds from banks when they want to increase the money (increasing the amount banks have to lend in the federal funds market) and sell bonds when they want to decrease the money supply. Even if bond sales worked how you're talking about (the Fed printing money and handing it to the government), the banks would need to sell the bonds before fractional reserve banking could take effect.

Now these bonds have become so popular that there is a international market for them, and their value is calculated using a fucked up ratio between tax income and interest versus inflation and age of maturity of said bond. So effectively the only value of taxes as it stands now, is that taxes provide scarcity and higher value for these bonds, and they do nothing to affect deficit.

What? Can you show some math/explain this further?

Edit: My macro could just be rusty or I'm not understanding what you're saying.

[aurik]

I wouldn't bother, he's into hallucinating conspiracy theories, particularly about the fed.

[Tebet]

Actually it would be exactly the same if not for the overhead of tracking and handling the transfer. If the system was truly frictionless, there would be no difference between the gov't handing you $1000 of your tax dollars back versus not collecting that $1000 in the first place. Since it isn't, refundable tax credits / tax cuts are a fairly efficient way to go about spending in this way. The only real downside is that it confuses people like Swampy.

then why spend at all other than the bare minimum if it is more efficient to just give tax cuts/credits. in order to do the maximum good taxes should be as low as possible and lowered every year.

while i agree with your logic i disagree with your premise. your argument assumes that the person being taxed will always recieve 100% of the money taken in gov. spending. this would not happen.

[aurik]

So what is the bare minimum?