Comments on: ‘You Pays Your Money and You Takes Your…’ No Wait: You Just Pay

By: finance_today

finance_today — Fri, 10 Jun 2011 14:21:41 +0000

Cutting goverment spending could be a solution, but this solution must be thought with great care. Every penny the government spends has to come from those who would otherwise have spent or invested their money in the private sector. To the extent the money is borrowed from non-US residents, the money can no longer be spent on exports or foreign investments in the US private sector . In either case, the net cash flow and net increase in demand generated by government spending is zero.
However, the effects do not stop there. Since government spending is not based on mutually beneficial exchanges, it often is wasteful. By displacing the opportunities for wealth enhancing voluntary exchanges, wasteful spending further reduces employment and the overall wealth and income of the American people.
For example, labeling government spending as investments in so-called green-jobs is just political spin to cover money-losing investments by elite government bureaucrats with none of their own money on the line who, nonetheless, believe they have an ability to pick winners. But, squandering money on expensive energy gambits reduces our wealth, and therefore shrinks the economy and the number of jobs.
The path to more robust growth is first to stop doing what demonstrably has not worked for the past two years

By: louis17475259

louis17475259 — Sat, 31 Jul 2010 16:53:23 +0000

unsustainable and near the brink. monetizing the debt (inflation) sounds like it will also create more dollars to counter-act the slow down in cash velosity. so, get your wheel-barrows ready. louis

By: cmk

cmk — Fri, 19 Mar 2010 02:27:27 +0000

Insurance is communized calamity? In what way.

Economist have studied insurance, because as you might agree, it's a bit of an odd duck of a product (you pay someone and you don't really get anything in return… why buy it?).

Economist think of any kind of insurance as a bet. The deal goes: you bet the insurance company that they will have to pay you at some point, and they bet that they won't. Simple as that. Then there's the added benefit that by purchasing insurance, you are reducing the uncertainty in your life- in that you know you won't be financially wrecked if you get hit by a drunk driver or something of that nature, and there's an economic value placed on that reduced uncertainty. Both you and the insurance company are better of because of your business transaction.

That's what insurance does, in general, when it works correctly (meaning there are no sever asymmetric information problems or adverse selection problems). Now, if you think that insurance never meets its stated goal, that's up for debate, I suppose, but I fail to see how it is "communized calamity."

You would agree that "communistic" means the totalitarian implementation of full state ownership of economy, and that "calamity" means unrest or chaos, right?

By: Cmk

Cmk — Fri, 19 Mar 2010 02:16:48 +0000

For the sake of economic cogency, the article does not get inflation right. Hyperinflation, which strictly speaking is inflation > 65%, but typically above the thousand % level (re Zimbabwe, 1930's Germany), has been historically caused by one thing only- the physical, accelerating printing of money to finance government expenditures- a practice called seignorage. You might say, "well how is that one bit different from what we are doing today?!"

Obviously the US and the countries I mentioned earlier shared the issue of high deficits. However, there is a difference in that our's has been primarily financed by selling bonds- and yes, one could reasonably say that we have been selling an increasing amount of bonds in the last 50 years, but no, one can not say that we are doing so at a rate of acceleration near what produced hyperinflation in 1930's Germany.

So, do we have hyper inflation to worry about? Probably not.

Do we have inflation to worry about? Quite possibly.

Should we worry that the price level will jump 5+% tomorrow? Next month? In 2010 at all? Well, with CPI and GDP deflator measures of inflation of around 2% and those same measures adjusted for volatile energy prices at 0-1%, it just seems highly implausible that inflation is really going to hit us when we're not looking.

By: Gipsy

Gipsy — Sun, 07 Mar 2010 18:01:26 +0000

I agree. Insurance is communized calamity. And very few are the people who see it.

By: robobbob

robobbob — Sun, 07 Mar 2010 00:02:13 +0000

thx

By: robobbob

robobbob — Sat, 06 Mar 2010 22:27:56 +0000

burning up__working on my taxes, if you include state and sales tax on the priviledge of spending my own money, 40%

By: REV Wright

REV Wright — Sat, 06 Mar 2010 16:17:39 +0000

So……………….What happens when 50 million "dittoheads" refuse to pay for the Democrat welfare state? Alamo?

By: Ron

Ron — Sat, 06 Mar 2010 03:40:02 +0000

Thanks for the clever autolink to Wikipedia, where you find out that the term is misused. In the article it says quite clearly that the term should have been "Morton's Fork," not "Hobson's Choice." Or, as Mike would call it, a False dilemma.

By: lindava

lindava — Sat, 06 Mar 2010 02:20:17 +0000

""The tree of liberty must be refreshed from time to time, with the blood of patriots"

-Thomas Jefferson