Capitalism or Socialism: Which is better?

[Sibirsky]

Yes! Because that's all the economy needs. That's why counterfeiting should be legal.

Oi. While you're busy agreeing with each other, take the time out and tell me why what is being done right now is wrong.

I don't mind people disagreeing with me, but I addressed the reasons for the monetary stimulus (for example here) and the reasons it is unlikely to lead to any massive inflation outcomes earlier. Either tell me why you disagree, or agree with me. Just ignoring it and continuing these one-liners is not cool.

It's unethical, it's dangerous, it's having the opposite effect of what they're intending to do. That's the short version. Look at the chart below. The yield on ten-year US bonds has been rising since the beginning of QE2. But it is not just US bonds; European and UK bonds are moving up as well. This has also meant that mortgage rates in the US are up almost a half percent in the last few months. That certainly has not helped housing prices or sales, as it makes housing less affordable.

Goldman got tens of billions in taxpayer funds. For what? They did not have a single day with losses from prop trading in the last quarter. Not. A. Single. Day. Morgan Stanley are comparable losers. They only had gains on 93% of the days. Obviously we must bail them out. While that's TARP, and not QEII, when it's done by broke ass motherfuckers in DC, it's related. I mean, only an idiot would not see that firms that rape and pillage the US taxpayers in the markets, without suffering any losses must be bailed out by the US taxpayers. Or am I just confused? Goldman doesn't have a single day under $25 million in profits.

The fact that this is done to the reserve currency is also noteworthy, and makes it worse. It's all but guaranteeing higher oil prices. Last time the US saw $4+ gas went very well. Interest rates are rising. Real inflation is high. Funny how official numbers are low.

Banks are not lending to the private sector.

Why would they? They borrow from the Fed at 0% and lend to the Treasury at 3.3% in a risk-less trade. Call me crazy, but I would raise rates. This sounds crazy even to myself at first. But raising rates would attract capital to the US. It would boost the dollar. It would give incentives to the banks to lend to the private sector. The real engine of growth, not government spending. There is precedent.

Fed Chairman Alan Greenspan warned bankers in late 1993 that if they didn't start lending to the private sector, instead of borrowing from the Fed at 2% and lending it back to the Treasury by purchasing 10-year notes at 5%, he'd raise short-term interest rates.

No one believed him. After all, the economy was soft and economic activity was sluggish. Everyone figured raising rates in that environment would send the country into a recession.

But the Fed's easy money policy wasn't making it into the economy. So the benefit of low interest rates wasn't trickling down to mom and pop. It was stuck in the pockets of the banks. The difference between short-term rates and long-term rates was historically high.

In February 1994, the Fed raised short-term rates. The market was shocked. Stocks and bonds both sold off hard on the news. And Greenspan was painted as a villain whose policies would destroy the economy.

But… funny thing, long-term interest rates started to fall almost immediately.

Banks' cost of funds had increased. The only way to maintain their spreads was to lend to private-market customers, to mom and pop. Banks made the loans. The economy expanded. And long-term rates declined.

Bubbles wasn't bad all around apparently.

Unless it ends soon it will end badly.

Highly indebted governments, banks, or corporations can seem to be merrily rolling along for an extended period, when bang! - confidence collapses, lenders disappear, and a crisis hits.

QE2 and the nervousness of investors around the world are pushing up interest rates. We in the US may not have as much time as we think we do before Bang! and rates start moving up with a vengeance. And no amount of QE3-4-5 will bring rates down when the bond vigilantes strike fear into the markets. Further, that money is not showing up in new loans to either consumers or businesses. It is showing up in asset prices like stocks, emerging markets, and commodities. Oil at $90 and gasoline at $3 per gallon is a tax on consumers, especially at the lower end of the scale. Food prices climb as grains explode, along with the metals that go into our products. And rising interest rates are not good for mortgages. QE2 is not helping consumers or the housing market. Those are unintended consequences. I am sure that was not the plan. It is helping banks with a steeper yield curve. And maybe that is the plan.
Ben. Get a clue. The world is not responding to your theories. What it is doing is getting worried about a central bank that will debase a currency. I agree that your current QE is not all that much in the grand scheme of things, but it is perception and NOT the actual use of those new dollars that is driving rates up.

Further, I am sure you are paying attention to the problems over in Europe. There is the real potential for another credit crisis, where we may in fact need some liquidity injections. You are wasting your bullets on the wrong targets. It is NOT working.

Further, what if the Irish go to the polls in a few months and vote in a new government that repudiates the current agreement (for Irish taxpayers to back Irish bank debt that is owed to German and French banks), and then when the ECB and the Germans tell them no one will buy any new debt they simply say, "Fine, we won't pay you on anything." Think that wouldn't throw a wrench in the gears? Can you 100% assure me that it won't happen?

(As an aside, I might vote for that if I were Irish. Given where they are, how much worse can it get? Here in Texas we lost all our banks in the oil and real estate crash of the '80s. Now we are doing just fine. It would be tough, but the Irish are being asked to shoulder a massive amount of bank debt, far beyond their real means to pay. Erin Go Bragh.)

I can't get any real data on how closely tied US banks are to European banks. The ties were certainly close in the last credit crisis. How much has that changed? If we actually need the Fed to step in once again, the markets could get really spooked, as the next QE rounds might not be accepted so sanguinely.

Then maybe I am just a natural-born worrier, sitting back here in the cheap seats. The markets are going up. The call-to-put ratio is high and rising. Bull-bear sentiment is very high. The world is bullish. What could go wrong? Bartender, another round, please.

Rising government debt levels and overheating printing presses don't generate confidence about future cash flows. High government debt eventually leads to higher taxation, higher interest rates, and lower growth. So the Fed's action may produce an opposite result from what it intends.

QE2 is like a drug prescription that comes with the list of side effects that are often worse than the disease it was supposed to cure.

I can go on. Do I need to?

[Staenwald]

wow...

[Zutroy]

This should be a stickied mega-thread instead of Wikileaks.

[Mercator Terra]

wow...

Sibirsky is really fond of his charts.

[Hydesland]

It's unethical

Nope.

, it's dangerous

Keeping the money supply as tight as it is now is far more dangerous.

, it's having the opposite effect of what they're intending to do.

No it isn't, it's having the expected effect, given the monetary expansion was quite modest.

That's the short version.

That's my short answer, I'll address the actual substance of your argument at a later date. But I'd like to point out that:

The yield on ten-year US bonds has been rising since the beginning of QE2.

Could very easily be evidence of QE2 working exactly as it should. Furthermore, you're ignoring the effects of QE2 that happened well before it even came into effect.

[Sibirsky]

wow...

Sibirsky is really fond of his charts.

Yes, I love charts.

[Sibirsky]

It's unethical

Nope.

Debasing a currency is unethical because it's debasing people's savings.

, it's dangerous

Keeping the money supply as tight as it is now is far more dangerous.

I don't know if it's more dangerous. It's really just going to the Treasury. Not directly, but it's paying for government spending.

, it's having the opposite effect of what they're intending to do.

No it isn't, it's having the expected effect, given the monetary expansion was quite modest.

I don't follow. The idea is, by increasing demand for Treasuries they would go up in value, lowering rates. The opposite has happened.

That's the short version.

That's my short answer, I'll address the actual substance of your argument at a later date. But I'd like to point out that:

The yield on ten-year US bonds has been rising since the beginning of QE2.

Could very easily be evidence of QE2 working exactly as it should. Furthermore, you're ignoring the effects of QE2 that happened well before it even came into effect.

Looking forward to it.

[Sociobiology]

the physiological position assumes it.
of course it also means reflexes don't exist. the people who rush into buildings don't know why they made the decisions, (there has been some great research along similar lines dealing with learned instincts) people do all kinds of things without ever conscious decisions involved.

learned instincts don't count for a priori knowledge, obviously you've had enough experience of a situation for it to be internalised and become instinctive. Like you never forget how to swim or ride a bike. Anyway- you'd not run into a burning building if there was nothing valuable in it, and so so you've obviously at least sub-consciously thought about something. Then again people make stupid decisions sometimes without thinking.

I recommend a book titled "how we decide" which is coincidently enough about how the decision making process of the brain works, how much is conscious vs unconscious. how creative processes work and how learned instincts work, how panic suppression works. there is a great section on exactly what is happening when you over think something.
If nothing else read it for the story of the smoke jumper fireman.

[Staenwald]

learned instincts don't count for a priori knowledge, obviously you've had enough experience of a situation for it to be internalised and become instinctive. Like you never forget how to swim or ride a bike. Anyway- you'd not run into a burning building if there was nothing valuable in it, and so so you've obviously at least sub-consciously thought about something. Then again people make stupid decisions sometimes without thinking.

I recommend a book titled "how we decide" which is coincidently enough about how the decision making process of the brain works, how much is conscious vs unconscious. how creative processes work and how learned instincts work, how panic suppression works. there is a great section on exactly what is happening when you over think something.
If nothing else read it for the story of the smoke jumper fireman.

you got a PDF of it anywhere? i'd happily read but i have no spare cash at the moment, and a full reading list.

[Neu Leonstein]

The yield on ten-year US bonds has been rising since the beginning of QE2. But it is not just US bonds; European and UK bonds are moving up as well. This has also meant that mortgage rates in the US are up almost a half percent in the last few months. That certainly has not helped housing prices or sales, as it makes housing less affordable.

In which case it has been ineffective, and nothing has been lost. Mind you, I think the market just priced QE2 in quickly, and so the actual buying had little further effect.

While that's TARP, and not QEII, when it's done by broke ass motherfuckers in DC, it's related.

Grasping at straws much? I don't see the point of talking about bailouts when your disagreement was with quantitative easing. And more importantly, when you yourself have agreed that the bailouts were better than the alternative.

I would have thought you'd shy away from using Goldman profits as proof of evil intent.

The fact that this is done to the reserve currency is also noteworthy, and makes it worse. It's all but guaranteeing higher oil prices. Last time the US saw $4+ gas went very well. Interest rates are rising. Real inflation is high. Funny how official numbers are low.

Of course, I forget. Am I to assume that official numbers are low due to a conspiracy? Or could it simply be that people don't buy wheat on the open market, and it is the retailers competing for every one of the few dollars being spent?

Banks are not lending to the private sector.

That's true. Why is that? Are lenders not ready to take on risk, or are borrowers? To be honest, it's hard to tell and it's likely to be a matter of both. But one thing is sure, and that is that lower real rates are more likely to lead to more investment. But that's ultimately the only thing the Fed can do. The US is populated with zombie banks which will take years to sort themselves out, and really won't even start to do so until house prices stabilise. But that's not a question of liquidity, and therefore cannot be addressed by the Fed. It can only do its part on the borrower side.

Why would they? They borrow from the Fed at 0% and lend to the Treasury at 3.3% in a risk-less trade. Call me crazy, but I would raise rates. This sounds crazy even to myself at first. But raising rates would attract capital to the US. It would boost the dollar. It would give incentives to the banks to lend to the private sector. The real engine of growth, not government spending. There is precedent.

Yeah, there is. I recall Britain, around the late 20s, early 30s.

What does the US gain from a stronger dollar? Only pain. How do you figure the term structure of rates would change if the Fed hiked the Fed Funds rate now? Because you're arguing against the term structure of interest rates right now. The craziest thing though is that you seem to want to achieve the same thing as QE2, except by raising the low end of the curve, while QE2 wants to push down the high end.

As far as I can judge, the likelier scenario of higher short term funding costs for US banks is more investment outside the US, in emerging markets. I see no great hope of them going and lending to US citizens who sit on negative equity and bulging inventories, taking on that extra risk, when there are more attractive assets out there to get. And as I said, US companies need to actually want to use debt to expand, and US households need to actually want to borrow. I don't think either is actually a given.

-snip-

Bubbles wasn't bad all around apparently.

In 1993 they actually had somebody to lend to.

We in the US may not have as much time as we think we do before Bang! and rates start moving up with a vengeance. And no amount of QE3-4-5 will bring rates down when the bond vigilantes strike fear into the markets.

Hehehe. Bond vigilantes targeting the US? I'm not sure you're aware what kind of role US Treasuries and US dollars play in world markets. People in financial markets can do math. They know that what the Fed has done poses no serious risk to the value of the dollar, or to the value of US debt. If anything, that's why QE2 is not working.

If there is something that can make people worry about US debt, it's Congress and its inability to sit down and come up with a medium term strategy to get the Budget back into balance. The Fed is removed from all that. But even these issues are far outweighed by the sheer practical value of US assets.

Further, that money is not showing up in new loans to either consumers or businesses. It is showing up in asset prices like stocks, emerging markets, and commodities. Oil at $90 and gasoline at $3 per gallon is a tax on consumers, especially at the lower end of the scale. Food prices climb as grains explode, along with the metals that go into our products. And rising interest rates are not good for mortgages. QE2 is not helping consumers or the housing market. Those are unintended consequences. I am sure that was not the plan. It is helping banks with a steeper yield curve. And maybe that is the plan.

I still do not see how QE2 is steepening the yield curve. Correlation =/= causation, and all that.

All I'm seeing here is that QE2 is not working, with which I mostly agree and which I feel makes your point moot.

Rising government debt levels and overheating printing presses don't generate confidence about future cash flows. High government debt eventually leads to higher taxation, higher interest rates, and lower growth. So the Fed's action may produce an opposite result from what it intends.

I see no evidence of the Fed financing US debt to any significant extent, which is the minimum of what would be needed to produce such results. QE2 proposes to buy less than 4% of US debt. It is "financing" less than 16% of the spending for FY2011. Look, the point of QE2 is to create inflation expectations because there are legitimate fears that we'll end up with the opposite otherwise. I wish more people were as easily scared as you, because then it would probably work. Unfortunately, they are not.

I can go on. Do I need to?

I'm afraid so.

wow...

You need to learn to be impressed by substance, not flashy charts.

[Staenwald]

wow...

You need to learn to be impressed by substance, not flashy charts.

i like shiny things...anyway my economic competency is low. i know the simple stuff, and a littleout of that. you want me to learn more? Refer me to something? I've just started reading adam smith if that helps as a starting point?

[Sibirsky]

In which case it has been ineffective, and nothing has been lost. Mind you, I think the market just priced QE2 in quickly, and so the actual buying had little further effect.

Yes.

Grasping at straws much? I don't see the point of talking about bailouts when your disagreement was with quantitative easing. And more importantly, when you yourself have agreed that the bailouts were better than the alternative.

I would have thought you'd shy away from using Goldman profits as proof of evil intent.

Which alternative? Let banks fail and do nothing else? That would be quite... catastrophic. I would let banks fail, and use the original $700b TARP to set up a new banking system. Set up a number of banks, 15, 25, 50 banks, whatever. With fractional reserve they could lend $7 trillion. They could buy the good assets from the existing banks, including branches, ATMs and so on, and hire personnel. Give the taxpayers a share in the new banks and float them. Allow them to buy more or sell their shares. I have a paper on this some place. I can upload it somewhere if you want it. It's short.

The fact that this is done to the reserve currency is also noteworthy, and makes it worse. It's all but guaranteeing higher oil prices. Last time the US saw $4+ gas went very well. Interest rates are rising. Real inflation is high. Funny how official numbers are low.

Of course, I forget. Am I to assume that official numbers are low due to a conspiracy? Or could it simply be that people don't buy wheat on the open market, and it is the retailers competing for every one of the few dollars being spent?

Both. Retailers are competing, people aren't spending and the CPI uses hedonics, geometric weighting and substitution.

That's true. Why is that? Are lenders not ready to take on risk, or are borrowers? To be honest, it's hard to tell and it's likely to be a matter of both. But one thing is sure, and that is that lower real rates are more likely to lead to more investment. But that's ultimately the only thing the Fed can do. The US is populated with zombie banks which will take years to sort themselves out, and really won't even start to do so until house prices stabilise. But that's not a question of liquidity, and therefore cannot be addressed by the Fed. It can only do its part on the borrower side.

Yes it's both the lenders and borrowers being risk averse. And then there's that risk-less Fed/Treasury trade.

Yeah, there is. I recall Britain, around the late 20s, early 30s.

What does the US gain from a stronger dollar? Only pain. How do you figure the term structure of rates would change if the Fed hiked the Fed Funds rate now? Because you're arguing against the term structure of interest rates right now. The craziest thing though is that you seem to want to achieve the same thing as QE2, except by raising the low end of the curve, while QE2 wants to push down the high end.

As far as I can judge, the likelier scenario of higher short term funding costs for US banks is more investment outside the US, in emerging markets. I see no great hope of them going and lending to US citizens who sit on negative equity and bulging inventories, taking on that extra risk, when there are more attractive assets out there to get. And as I said, US companies need to actually want to use debt to expand, and US households need to actually want to borrow. I don't think either is actually a given.

I fail to see how a stronger dollar is painful. After Nixon closed the gold window, the Yen, and the German mark went up to 3-4 times their 1971 value. Certainly didn't hurt exports. Perhaps in the short term, there would be some pain. Long term it's a benefit. With so much consumption being driven by credit, what I see you saying is that without stimulus we'll be in a recession for quite some time.

In 1993 they actually had somebody to lend to.

Good point. It's not looking good.

Hehehe. Bond vigilantes targeting the US? I'm not sure you're aware what kind of role US Treasuries and US dollars play in world markets. People in financial markets can do math. They know that what the Fed has done poses no serious risk to the value of the dollar, or to the value of US debt. If anything, that's why QE2 is not working.

If there is something that can make people worry about US debt, it's Congress and its inability to sit down and come up with a medium term strategy to get the Budget back into balance. The Fed is removed from all that. But even these issues are far outweighed by the sheer practical value of US assets.

They can't. It's a political impossibility. Americans want all the social programs of Europe and they want to cut spending, without any actual cutting.

Sixty-one percent of Americans polled would rather see taxes for the wealthy increased as a first step to tackling the deficit, the poll showed.

The next most popular way -- chosen by 20 percent -- was to cut defense spending.

Four percent would cut the Medicare government health insurance program for the elderly, and 3 percent would cut the Social Security retirement program, the poll showed.

http://www.cnbc.com/id/40888810/

I still do not see how QE2 is steepening the yield curve. Correlation =/= causation, and all that.

All I'm seeing here is that QE2 is not working, with which I mostly agree and which I feel makes your point moot.

So what do you do when it's not working?

I'm afraid so.

Nah, it's all the same.

Coming in 2011, the Fed will begin buying munis.

[Tajpania]

I am going to start with a short view on the debate before expanding.

Both capitalism and socialism in their pure forms produce a lot of negative
occurences within their systems. Thus in the current economic system
they should in ideal case be in balance. However in our nation state
we are trying to achieve a social order in which the individual
development and growth is combined with a strong sense for community
thus taking best of both worlds without having to take the negatives of them
through implementing new dimensions of policies.

[Staenwald]

I am going to start with a short view on the debate before expanding.

Both capitalism and socialism in their pure forms produce a lot of negative
occurences within their systems. Thus in the current economic system
they should in ideal case be in balance. However in our nation state
we are trying to achieve a social order in which the individual
development and growth is combined with a strong sense for community
thus taking best of both worlds without having to take the negatives of them
through implementing new dimensions of policies.

A short view on the last 143 pages would be a little more than a paragraph. You've seen the way the balance has gone in the UK or the USA based on the current economic situation- not well.
if individuals refuse to develop a sense of community what would you do to 'correct' that? One of the main negative aspects of a system which uses social engineering policies is that it requires the use of force, which can't be eliminated, whatever policies you use. Capitalism is a system which makes individuals use their self interest to produce products for others in order to make money for themselves. Socialist systems force individuals to make products for others for the benefit of others- and cooperative ownership can be done through capitalism without the requirement of force as all parties who want to be involved would do so of their own free will.

[Neu Leonstein]

i like shiny things...anyway my economic competency is low. i know the simple stuff, and a littleout of that. you want me to learn more? Refer me to something? I've just started reading adam smith if that helps as a starting point?

Naw, Adam Smith wrote for a different time.

I'd start with a standard first year economics book. Mankiw or something. A first year finance text, featuring basic discounted cash flow valuation for shares and bonds would be good too. I don't think the great classics of economics are going to help you much until you have some grounding in modern mainstream theory. Same goes for any alternative schools of thought.

Which alternative? Let banks fail and do nothing else? That would be quite... catastrophic. I would let banks fail, and use the original $700b TARP to set up a new banking system. Set up a number of banks, 15, 25, 50 banks, whatever. With fractional reserve they could lend $7 trillion. They could buy the good assets from the existing banks, including branches, ATMs and so on, and hire personnel. Give the taxpayers a share in the new banks and float them. Allow them to buy more or sell their shares. I have a paper on this some place. I can upload it somewhere if you want it. It's short.

Don't think that'd be practical, but I'd be interested in the paper.

Both. Retailers are competing, people aren't spending and the CPI uses hedonics, geometric weighting and substitution.

And you know this but the Fed doesn't?

I fail to see how a stronger dollar is painful. After Nixon closed the gold window, the Yen, and the German mark went up to 3-4 times their 1971 value. Certainly didn't hurt exports. Perhaps in the short term, there would be some pain. Long term it's a benefit. With so much consumption being driven by credit, what I see you saying is that without stimulus we'll be in a recession for quite some time.

The US will be below potential growth for a long time. The real misallocation of capital that's been going on for years can't be reversed by stimulus measures. They can only make it less painful in the meantime. Bernanke is doing the best the Fed can (he actually wrote a few papers on the "financial accelerator effect" and balance sheets as a transmission mechanism for monetary policy), but that's limited.

Exports are one of the few things that are going well for the US at the moment. I don't think hurting that by some sort of strangely unmotivated appreciation of the dollar is a smart idea.

They can't. It's a political impossibility. Americans want all the social programs of Europe and they want to cut spending, without any actual cutting.

Well, it'll be a while yet until the reckoning comes. For the time being US debt and US dollars are the currency for world financial markets and institutions, and there is nowhere else to go.

So what do you do when it's not working?

I don't know. I don't even know whether it's not working, or whether it's working enough to counteract forces that would be driving things in the opposite direction even more.

I suspect, at any rate, that the theory behind QE is not sophisticated enough to factor in the complexity of US financial markets. Hence why more research is being done in the area.

Coming in 2011, the Fed will begin buying munis.

Don't see how that would help. And besides, there already is someone out there doing that...


http://online.wsj.com/article/SB1000142 ... 67296.html

[Sibirsky]

Which alternative? Let banks fail and do nothing else? That would be quite... catastrophic. I would let banks fail, and use the original $700b TARP to set up a new banking system. Set up a number of banks, 15, 25, 50 banks, whatever. With fractional reserve they could lend $7 trillion. They could buy the good assets from the existing banks, including branches, ATMs and so on, and hire personnel. Give the taxpayers a share in the new banks and float them. Allow them to buy more or sell their shares. I have a paper on this some place. I can upload it somewhere if you want it. It's short.

Don't think that'd be practical, but I'd be interested in the paper.

Google Docs PDF link to New American Bank Initiative: Removing structural flaws in the banking bailout. By Salman Khan and David Leinweber. Only 11 pages.

Both. Retailers are competing, people aren't spending and the CPI uses hedonics, geometric weighting and substitution.

And you know this but the Fed doesn't?

The Fed knows. I'm hypothesizing.

I fail to see how a stronger dollar is painful. After Nixon closed the gold window, the Yen, and the German mark went up to 3-4 times their 1971 value. Certainly didn't hurt exports. Perhaps in the short term, there would be some pain. Long term it's a benefit. With so much consumption being driven by credit, what I see you saying is that without stimulus we'll be in a recession for quite some time.

The US will be below potential growth for a long time. The real misallocation of capital that's been going on for years can't be reversed by stimulus measures. They can only make it less painful in the meantime. Bernanke is doing the best the Fed can (he actually wrote a few papers on the "financial accelerator effect" and balance sheets as a transmission mechanism for monetary policy), but that's limited.

Exports are one of the few things that are going well for the US at the moment. I don't think hurting that by some sort of strangely unmotivated appreciation of the dollar is a smart idea.

Studies also show high debt levels decrease growth. A long term price for a short term solution doesn't seem like a good idea. And improving exports at the cost of everything else doesn't seem like a good idea either.

They can't. It's a political impossibility. Americans want all the social programs of Europe and they want to cut spending, without any actual cutting.

Well, it'll be a while yet until the reckoning comes. For the time being US debt and US dollars are the currency for world financial markets and institutions, and there is nowhere else to go.

Judging by Japan, we do have time, yes.

So what do you do when it's not working?

I don't know. I don't even know whether it's not working, or whether it's working enough to counteract forces that would be driving things in the opposite direction even more.

I suspect, at any rate, that the theory behind QE is not sophisticated enough to factor in the complexity of US financial markets. Hence why more research is being done in the area.

I appreciate the honest answer.

Coming in 2011, the Fed will begin buying munis.

Don't see how that would help. And besides, there already is someone out there doing that...


http://online.wsj.com/article/SB1000142 ... 67296.html

I meant directly. To prevent cities going bankrupt. If a major city does go bankrupt it will be Detroit. Munis are in trouble.

[Sociobiology]

I am going to start with a short view on the debate before expanding.

Both capitalism and socialism in their pure forms produce a lot of negative
occurences within their systems. Thus in the current economic system
they should in ideal case be in balance. However in our nation state
we are trying to achieve a social order in which the individual
development and growth is combined with a strong sense for community
thus taking best of both worlds without having to take the negatives of them
through implementing new dimensions of policies.

A short view on the last 143 pages would be a little more than a paragraph. You've seen the way the balance has gone in the UK or the USA based on the current economic situation- not well.
if individuals refuse to develop a sense of community what would you do to 'correct' that? One of the main negative aspects of a system which uses social engineering policies is that it requires the use of force, which can't be eliminated, whatever policies you use. Capitalism is a system which makes individuals use their self interest to produce products for others in order to make money for themselves. Socialist systems force individuals to make products for others for the benefit of others- and cooperative ownership can be done through capitalism without the requirement of force as all parties who want to be involved would do so of their own free will.

the Norwegian system has always struck me as interesting, having a mandatory 1 yr of service, either in the military or other government dept. with exemption for those is higher education, provided they graduate, if they drop out they are once again required.
Making various government benefit, (public health, social sec.) contingent on such service(or legal exemption there of) would be an interesting system.
it provides optional vocational certification thru the mil.( if you stay in longer), reduction in military cost, incentive for entering and completing higher education, large scale vaccination, reduction in abuses of free services by non-contributers.
any thoughts?

[Sibirsky]

A short view on the last 143 pages would be a little more than a paragraph. You've seen the way the balance has gone in the UK or the USA based on the current economic situation- not well.
if individuals refuse to develop a sense of community what would you do to 'correct' that? One of the main negative aspects of a system which uses social engineering policies is that it requires the use of force, which can't be eliminated, whatever policies you use. Capitalism is a system which makes individuals use their self interest to produce products for others in order to make money for themselves. Socialist systems force individuals to make products for others for the benefit of others- and cooperative ownership can be done through capitalism without the requirement of force as all parties who want to be involved would do so of their own free will.

the Norwegian system has always struck me as interesting, having a mandatory 1 yr of service, either in the military or other government dept. with exemption for those is higher education, provided they graduate, if they drop out they are once again required.
Making various government benefit, (public health, social sec.) contingent on such service(or legal exemption there of) would be an interesting system.
it provides optional vocational certification thru the mil.( if you stay in longer), reduction in military cost, incentive for entering and completing higher education, large scale vaccination, reduction in abuses of free services by non-contributers.
any thoughts?

How does conscription reduce cost?

Further...

The draft is a form of slavery. There is no way around it. Compelling a person to work for the state is involuntary servitude. Forcing a person to fight, kill, and possibly die in a war — and threatening resisters with imprisonment and deserting conscripts with death — is a particularly immoral brand of enslavement, and it is murder for all conscripts who do not survive the war. For all of one’s liberty to be stolen, to have to serve the state even at the cost of one’s own life, is a far greater injustice to face than a tax increase or a new burdensome regulation — as horrible as the latter policies are to one’s liberty and property. If someone cannot own himself, all other property rights become moot. When his liberty is seized for the purpose of killing, wretched insult and injury are only added to the grave injustice of compelled labor. Conscription is slavery, and if it returns, any arguments over whether the US is a free country become obsolete. No nation is free when its government seizes not just the products, but the very means, of labor from its young. A nation that utilizes conscription in the name of freedom suffers under the most perverse of absurdities, for, to the extent that young people can be forced to fight, there is no free society left to defend.

[Sociobiology]

the Norwegian system has always struck me as interesting, having a mandatory 1 yr of service, either in the military or other government dept. with exemption for those is higher education, provided they graduate, if they drop out they are once again required.
Making various government benefit, (public health, social sec.) contingent on such service(or legal exemption there of) would be an interesting system.
it provides optional vocational certification thru the mil.( if you stay in longer), reduction in military cost, incentive for entering and completing higher education, large scale vaccination, reduction in abuses of free services by non-contributers.
any thoughts?

How does conscription reduce cost?

by reducing recruitment initiatives, a not insignificant cost. and more importantly merges veterans affairs into other departments vastly reducing red tape and bureaucracy.

with freedom comes responsibility, freedom without limits and responsibility is a meaningless term. Jury duty is mandatory, but not unethical.
it's payment in the purest sense, for the benefits of society you receive, you must put into it.
you would likely see an increase in interest in foreign policy and military decision making since there would now be a much more direct repercussion to these policies.

[Sibirsky]

How does conscription reduce cost?

by reducing recruitment initiatives, a not insignificant cost. and more importantly merges veterans affairs into other departments vastly reducing red tape and bureaucracy.

with freedom comes responsibility, freedom without limits and responsibility is a meaningless term. Jury duty is mandatory, but not unethical.
it's payment in the purest sense, for the benefits of society you receive, you must put into it.
you would likely see an increase in interest in foreign policy and military decision making since there would now be a much more direct repercussion to these policies.

Your argument is, to be free, you must be a slave.

If you believe in being judged by a jury of your peers, jury duty is hard to avoid. It's also asinine comparing jury duty to having to serve in the military.

Conscription gives you a bunch of people who are not skilled, and don't want to be there. It increases costs. It decreases effort. Slave labor is less efficient than voluntary labor. A draftee has no incentive to perform above the bare minimum to avoid trouble. Slave labor has been condemned on economic grounds (not to mention the iron clad moral arguments). Further, training is expensive. It's far more likely that volunteers will reenlist avoiding extra training.

[Sociobiology]

by reducing recruitment initiatives, a not insignificant cost. and more importantly merges veterans affairs into other departments vastly reducing red tape and bureaucracy.

with freedom comes responsibility, freedom without limits and responsibility is a meaningless term. Jury duty is mandatory, but not unethical.
it's payment in the purest sense, for the benefits of society you receive, you must put into it.
you would likely see an increase in interest in foreign policy and military decision making since there would now be a much more direct repercussion to these policies.

Your argument is, to be free, you must be a slave.

If you believe in being judged by a jury of your peers, jury duty is hard to avoid. It's also asinine comparing jury duty to having to serve in the military.

Conscription gives you a bunch of people who are not skilled, and don't want to be there. It increases costs. It decreases effort. Slave labor is less efficient than voluntary labor. A draftee has no incentive to perform above the bare minimum to avoid trouble. Slave labor has been condemned on economic grounds (not to mention the iron clad moral arguments). Further, training is expensive. It's far more likely that volunteers will reenlist avoiding extra training.

in a peotic sense yes freedom is a form of slavery, it always comes with a price, you can be free, or your can be secure, some of one must always be traded to gain the other. Freedom of speack means being continuosly confronted by Ideas and sentimates you would spend a life time fighting. giving everyone a vote means having to do your best to make sure they and you are worthy of the responsibility. accepting new Ideas also mean knowing the law will always be a mutable thing. being free to judge means being judged in turn. once education becomes possible, from then on you have no excuse in ignorance and must accept the facts nature hands you. Humans are shallow petty, lazy creatures, nature has insured that, to rise above that we must work at it constantly, any system worth using requires constant maintenance, society is no different.
thousands upon thousands of little things make our lives better everyday than our ancestors had, but the vast majority will never know them, we take a lot for granted. neighboring tribes no longer attack without warning simply to take rather than make, yet in the vastness of human history this is a novel situation. the flu is no longer fatal, nor is belonging to a different religion. "all people are equal" is something we take for granted but the vast number of our ancestors did not believe this, but even this had a price, if everyone is equal you are no longer special.
We decided, certain things were to big, to important, to powerful to leave in the hands of one person, thus bottom up governance was invented, let one man control the military, or the water supply or even education, and it invites a level of corruption most people born in mellow safe democracies cannot conceive of. So we said no these thing will be provided without favor, and everyone gives for it, lest we recreate the tyranny of kings and priests.

comparing jury duty to other service is very reasonable, I never said only military service, just public service, so lets keep the strawman population down.
I do love this will happen or that will happen as supposition when dozens of actual examples exist for you to look at, its the worst parts of philosophy, guessing ans assuming certainty without every inviting data or falsifiability.

[The Merchant Republics]

Your argument is, to be free, you must be a slave.

If you believe in being judged by a jury of your peers, jury duty is hard to avoid. It's also asinine comparing jury duty to having to serve in the military.

Conscription gives you a bunch of people who are not skilled, and don't want to be there. It increases costs. It decreases effort. Slave labor is less efficient than voluntary labor. A draftee has no incentive to perform above the bare minimum to avoid trouble. Slave labor has been condemned on economic grounds (not to mention the iron clad moral arguments). Further, training is expensive. It's far more likely that volunteers will reenlist avoiding extra training.

in a peotic sense yes freedom is a form of slavery, it always comes with a price, you can be free, or your can be secure, some of one must always be traded to gain the other. Freedom of speack means being continuosly confronted by Ideas and sentimates you would spend a life time fighting. giving everyone a vote means having to do your best to make sure they and you are worthy of the responsibility. accepting new Ideas also mean knowing the law will always be a mutable thing. being free to judge means being judged in turn. once education becomes possible, from then on you have no excuse in ignorance and must accept the facts nature hands you. Humans are shallow petty, lazy creatures, nature has insured that, to rise above that we must work at it constantly, any system worth using requires constant maintenance, society is no different.
thousands upon thousands of little things make our lives better everyday than our ancestors had, but the vast majority will never know them, we take a lot for granted. neighboring tribes no longer attack without warning simply to take rather than make, yet in the vastness of human history this is a novel situation. the flu is no longer fatal, nor is belonging to a different religion. "all people are equal" is something we take for granted but the vast number of our ancestors did not believe this, but even this had a price, if everyone is equal you are no longer special.
We decided, certain things were to big, to important, to powerful to leave in the hands of one person, thus bottom up governance was invented, let one man control the military, or the water supply or even education, and it invites a level of corruption most people born in mellow safe democracies cannot conceive of. So we said no these thing will be provided without favor, and everyone gives for it, lest we recreate the tyranny of kings and priests.

comparing jury duty to other service is very reasonable, I never said only military service, just public service, so lets keep the strawman population down.
I do love this will happen or that will happen as supposition when dozens of actual examples exist for you to look at, its the worst parts of philosophy, guessing ans assuming certainty without every inviting data or falsifiability.

Freedom is slavery, war is peace, I'm sorry, but that is literally and completely oxymoronic, you do not have a responsibility nor are you forced to respect freedom of speech, you just can't impede the freedom of another, there is no compulsion in that, you can say whatever you want, you can think whatever you want of what others say, but you can't stop the other from speaking his mind, that is not slavery, because it no person is being forced to do anything, except when they forced themselves on another first.

Voting is not a right nor a freedom, self-election in the sense of choosing what you do for yourself is however a fundamental freedom, democracy is merely an extension, and is in no way a fundamental right, even so, it is not a duty to vote or to "make sure your worthy", none of the things you said were in any way true duties of persons.

[Neu Leonstein]

The Fed knows. I'm hypothesizing.

The Fed cares about inflation. It's one of the main variables it targets and uses. So if you're right, they're not attaching great weight to the CPI, and there's no damage done.

Studies also show high debt levels decrease growth. A long term price for a short term solution doesn't seem like a good idea. And improving exports at the cost of everything else doesn't seem like a good idea either.

High debt levels hurt growth when there are problems with the potential of repaying it or rolling it over. I.e. exactly what is happening right now. But debt is also the thing that allows investment and is basically required for growth. It's a bad situation to be in, but without a jump start somewhere, nothing good is gonna just happen by itself for a very long time. And in the meantime, people are suffering, many through no fault of their own.

Judging by Japan, we do have time, yes.

Well, it's not exactly similar. Japan has Japanese people who buy Japanese bonds. The US doesn't have Americans like that.

I appreciate the honest answer.

This is all a question of academics. I don't know why politics and ideology keeps poking its head in there.

I meant directly. To prevent cities going bankrupt. If a major city does go bankrupt it will be Detroit. Munis are in trouble.

Anything is possible these days I guess, but as far as I can see right now that'd be a pretty gross misuse of the Fed, and qualitatively different to what they've done so far. I'd look at Washington instead if the muni problem is really that bad. Which I'm not sure it is.

[Sibirsky]

The Fed knows. I'm hypothesizing.

The Fed cares about inflation. It's one of the main variables it targets and uses. So if you're right, they're not attaching great weight to the CPI, and there's no damage done.

Not yet anyway. I agree, on aggregate it's small. I just don't know when and where he will stop. Although some good news came out since I posted that. There is hope.

Studies also show high debt levels decrease growth. A long term price for a short term solution doesn't seem like a good idea. And improving exports at the cost of everything else doesn't seem like a good idea either.

High debt levels hurt growth when there are problems with the potential of repaying it or rolling it over. I.e. exactly what is happening right now. But debt is also the thing that allows investment and is basically required for growth. It's a bad situation to be in, but without a jump start somewhere, nothing good is gonna just happen by itself for a very long time. And in the meantime, people are suffering, many through no fault of their own.

But our debt has been going to consumption for the past several decades.

Judging by Japan, we do have time, yes.

Well, it's not exactly similar. Japan has Japanese people who buy Japanese bonds. The US doesn't have Americans like that.

Very true. The Japanese government is going to have issues, because the Japanese savings rate is dropping. Which doesn't help the Americans.

I meant directly. To prevent cities going bankrupt. If a major city does go bankrupt it will be Detroit. Munis are in trouble.

Anything is possible these days I guess, but as far as I can see right now that'd be a pretty gross misuse of the Fed, and qualitatively different to what they've done so far. I'd look at Washington instead if the muni problem is really that bad. Which I'm not sure it is.

Certainly. To date though, we had several small cities go bankrupt. And there was one state that has ever defaulted. In 1934. Things are quite a bit worse right now.

[Staenwald]

on a another note, I heard today on the radio that scientists have found out that people's ability to make instinctive, gut decisions varies from person to person, and it also varies depending on the internal conditions of a person's body- like chemical balance or something.Surely this further disproves the myth that we don't have a priori knowledge and that we can't live solely on instinct, and support the fact that conscious thinking has great significance in our lives?