Rolling US Economy Into The Shitbin Thread

sorry, that should prob be high school education - and even if they were, I highly doubt they are doing a trig problem before inserting chip A into socket B

they have to do a trig problem every 15 minutes just to make sure they're not sleeping on the job

Or trying to kill themselves.

euler it's also important to note that when the supply of workers looks like this:

http://graphics8.nytimes.com/images/2012/01/22/business/apple/appple-articleLarge.jpg

the average education of a worker might be higher than the necessary education to do the work

see: american degree inflation

dont get the pic but I'm sure I'm inclined to agree with your conclusion re inflation

(it's the pic from the nyt article w/ dozens of young chinese workers trying to hand their application to this one dude)

because they are mostly male and wear glasses?

http://money.cnn.com/2012/01/27/news/economy/gdp_growth/index.htm?hpt=hp_t1

Its ridiculous that we're going to have 0% interest rates for 6 years.

http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2012/03/Shadow%20Inventory_0.jpg

Americans Brace for Next Foreclosure Wave

http://upload.wikimedia.org/wikipedia/commons/thumb/4/40/Tectonic_plate_boundaries.png/500px-Tectonic_plate_boundaries.png

http://www.interfluidity.com/v2/3212.html

An interesting "decline of retail" article:

http://www.businessweek.com/articles/2012-04-12/the-future-retail-wasteland

Article on why too-big-to-fail banks must be broken up, published by the Dallas Federal Reserve Bank:

linked within iatee's link - http://www.slate.com/articles/technology/technology/2011/12/how_eliminating_paper_money_could_end_recessions_.html

why not just put an expiration date on money?

Some early utopian socialists used to have that as part of their scheme. Which I suppose is why it wouldn't happen - capitalist accumulation would become impossible.

no, you could still accumulate things that were worth money

The ancient Hebrews had the Year of Jubilee once every 49 years when all land would revert to its original owners - so basically no accumulation of land was possible since land was only "sold" for the remaining period until the next Jubilee.

http://en.wikipedia.org/wiki/Jubilee_(biblical)

Yes, I suppose.

x-post

I'm trying to remember who it was that most notably had expiration dates on money - the 'money' was in 'labour-hours', so had a more explicitly egalitarian bent.

linked within iatee's link - http://www.slate.com/articles/technology/technology/2011/12/how_eliminating_paper_money_could_end_recessions_.html

― pleural eff u son (k3vin k.), Thursday, April 19, 2012 3:39 PM Bookmark Flag Post Permalink

This article is basically economically illiterate. Savings accounts have fuckall to do with the use of rate cuts to spur growth.

no, interest rates are all related

Yes, but the reason to cut rates to spur growth (regardless of whether it's a good idea) is not to get people to take money out of savings accounts, it's to spur large-scale lending and business spending. In any case, our savings rate is near zero so it wouldn't do much good, and the money would run out pretty quickly. You're not going to get much of a demand boost out of it.

Also, assuming below-zero rates would be necessarily inflationary, people's money is going to lose value whether it's in electronic form or in cash in a shoebox.

I mean there are a million other reasons why his idea is implausible and absurd.

yeah I don't think the goal was to get individuals to take money out of savings accounts, where the difference wouldn't even be noticeable. I'm not going to spend the 1k in my savings account because there's a -1% interest rate. but apple might not sit on $100b.

why would moving from 1% to 0% be any different from 0% to -1%?

Yeah but eliminating paper money has nothing to do with whether Apple sits on $100 billion.

well his argument is more about negative interest rates than eliminating paper money. paper money isn't gonna be here forever anyway, who knows what the time horizon is gonna be, but I could see an end to paper money within 50 years. anyway his argument is in line w/ a lot of market monetarist stuff so it's not really 'economically illiterate' or even super far out of the mainstream dialogue atm. .

steve waldman had a better critique a few months ago:

http://www.interfluidity.com/v2/2535.html

Some sort of non-metallic money is likely to stay in use, but the essence of such money is trust in the issuer, so paper money is always vulnerable to a catastrophic loss of trust and can rather quickly plummet to zero value outside of areas where its face value can be enforced by government edict and police action.

The whole premise of this article 'Economy's Biggest Drag Right Now Is Government' seems incoherent to me, I'm throwing it out there though to see if anyone agrees with it ...

well I would imagine most people here do....you're misreading the premise - it's not that government is too big, it's that when governments are forced to cut spending it tears into economic and job growth

rereading it tho, it does seem like the premise almost wants to be misread

"Incoherent" pegs that article pretty well. The linkage between the thoughts contained in consecutive sentences and paragraphs are so weak the most charitable description would be "scattershot".

Buried in all that incoherence is the basic truth that government spending cuts when overall economic growth is very, very slow are anti-Keynesian. btw, Keynes actually recommended that governments use revenue surpluses to pay down debt when economic growth was high.

well his argument is more about negative interest rates than eliminating paper money. paper money isn't gonna be here forever anyway, who knows what the time horizon is gonna be, but I could see an end to paper money within 50 years. anyway his argument is in line w/ a lot of market monetarist stuff so it's not really 'economically illiterate' or even super far out of the mainstream dialogue atm. .

steve waldman had a better critique a few months ago:

http://www.interfluidity.com/v2/2535.html
― iatee, Thursday, April 19, 2012 6:44 PM Bookmark Flag Post Permalink

No, his argument is about eliminating paper money. The article is subtitled "How eliminating paper money could end recessions" and contains this premise, which I don't think it's a stretch to call "economically illiterate": Stop for a moment and ask yourself why the interest rate can’t be reduced much below 1 percent. The trouble is cash. At any given time, relatively little paper currency circulates in the United States. Instead, most of the American money supply consists of bank accounts and other electronic stores of value. People prefer to keep money in bank accounts because it’s convenient and because you get interest on it. If the rates were driven below zero—in effect a tax on holding cash in the bank—people would just withdraw money and store it in shoeboxes instead. But what if you couldn’t withdraw cash? What if all transactions were electronic, so the only way to avoid keeping money in a negative-rate account was to go out and buy something with the money? Well, then, we would have solved our depression problem. Too much unemployment? Lower interest rates below zero, Americans will start spending and investing again, the economic will grow, and unemployment will go back down to its “natural rate.”

the issue of paper money is a segue to talk about the idea of negative interest rates

Well I have a lot of reasons for thinking that further driving down interest rates (which are already "real" negative) isn't going to do any good, but I don't even think Yglesias is really getting at the issue because he misunderstands basic concepts.

Anyway, in re Apple, their calculus is not going to be "Are we losing money by sitting on this cash" but "are we losing more money by sitting on it than we would be doing something else with it." -1% interest is only going to motivate them to do something with their cash if there's anything better to do with it. In that sense it really doesn't matter whether interest rates are 1%, 0% or -1%.

well it "2% matters"

Sorry, the missing point from that line of thinking is that the -1% interest rate is also going to bear on the kinds of returns they can get elsewhere.

how is that any different from going from 3% to 1%, do you just not believe in monetary policy

I believe in monetary policy and I believe in the limits of monetary policy.

Don't we already have negative interest rates in real terms, since the "safe" rate of interest is less than inflation?

Yes.

Conversely, if there is deflation at -3%, then a nominally negative interest rate of -1% would be effectively positive.

This will end well

Kansas Gov. Sam Brownback (R) in January proposed a tax cut he said would give the state a “fairer, flatter, simpler” tax code, even though it raised taxes on the poor to help pay for a massive tax cut for the top one percent of state residents. Tuesday, Brownback signed an even bigger package into law, even as the state Senate’s top Republican and a host of other conservative lawmakers urged him not to.

The new package, largely backed by Tea Party-affiliated state legislators, abandoned some of Brownback’s proposals that would have hit the poor the hardest, though some still remain. But it will force lawmakers to make even deeper cuts to education and other programs to make up a growing budget gap, the Wall Street Journal reports:

The tax plan, which was the subject of weeks of intense debate and political maneuvering in the legislature, will reduce the top individual state income-tax rate to 4.9% from 6.45% in 2013. It also will eliminate income taxes on non-wage income for about 191,000 small businesses.

The plan likely would require additional cuts in spending on education and social services to cover a reduction in annual tax revenue projected by the Kansas Legislative Research Department to exceed $800 million by 2014, or 12.8% of projected state revenues.

“It is not good public policy,” state Sen. Steve Morris (R), the president of the state Senate, said of the legislation. Other Republicans agreed, including a group of 50 former Kansas Republican lawmakers who attempted to persuade Brownback to veto the bill. “I think Kansas taxpayers need to be asking where the governor would make these cuts,” said Rochelle Chronister, who formerly served as a state representative and as the president of the state GOP, said earlier this month.

Kansas’ tax code is already regressive, as the poorest 20 percent of Kansans paying more than 9 percent of their income in taxes, while the richest 1 percent pay less than 6 percent of theirs. Now, it is even more regressive, and on top of that, poor and middle class Kansans will have to deal with spending cuts that hit social programs on which they depend.

eh, the "even some Republicans opposed" bit misses the point of Kansas politics, which is that the GOP (t)here divides fairly neatly into "moderates" & wingnuts, & they're at odds with one another on lots of things. In the rest of the country the "moderates" here would be Democrats (Obama joke here).

in any case I'm glad to be leaving for a blue state, even though my property taxes are gonna double. At least we won't pay 8.5% sales tax on food anymore, since my new, civilized, home state charges only 1% on it.

So the world economy is about to have another shitfit, isn't it.

why? it sounds like Europe is starting to come around a plan for the Euro, thankfully.

More of a hunch than anything. Every day headlines are vascillation between "Europe hopes" and "Europe fears" -- one day deal looks more promising, next day it looks less promising. When I feel like the financial press is jerking me around like this, I expect bad things to happen.

Steve Keen confident the UK will suffer another credit crunch sometime soonish: http://www.bbc.co.uk/programmes/b01j5h51

Hooverism didn't work the last time, it's not gonna work again.