Tax The 1 %
- Thread starter Ron Party
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It may be worth mentioning the economic consequences of skewed wealth distributions, setting aside the social ones for a moment.
Robert Reich has a relatively new book called Aftershock, about the current economic crisis. In the book, he has some interesting discussion about a guy who's not too well-known named Marriner Eccles. The building that houses the Fed is named after him. He was a very successful banker who served as Fed chief from 1934 to 1948. He was extremely rich, and his businesses, including the banks he owned, survived the Great Depression.
Reich has numerous interesting quotes of his, one of which I'll leave without comment.
Robert Reich has a relatively new book called Aftershock, about the current economic crisis. In the book, he has some interesting discussion about a guy who's not too well-known named Marriner Eccles. The building that houses the Fed is named after him. He was a very successful banker who served as Fed chief from 1934 to 1948. He was extremely rich, and his businesses, including the banks he owned, survived the Great Depression.
Reich has numerous interesting quotes of his, one of which I'll leave without comment.
Robert Reich said:
"Jan Mayen is a desolate volcanic island located about 600 miles west of Norway’s North Cape. It is the home of a meteorological and communications station manned in the harshest of winters by 17 hearty members of the Norwegian Armed Forces. If you read Tom Clancy’s Hunt for Red October, you would know it as “Loran-C,” a NATO tracking and transmissions station. In the video game Tomb Raider: Underworld, Lara Croft visits Jan Mayen in search of Thor’s Hammer, considered the most awesome of weapons in Norse mythology, capable of leveling mountains and performing the most heroic feats.
My brother Mike recently visited this station on Jan Mayen. This is the sign that greeted him.
In norsk, it reads as follows:
“Theory is when you understand everything, but nothing works.”
“Practice is when everything works, but nobody understands why.”
“At this station, theory and practice are united, so nothing works and nobody understands why.”
My wry brother implied that this about summed it up for monetary policy. Drawing on theory and practice, the 17 members of the Federal Open Market Committee (FOMC) have been working in the harshest economic environment to harness monetary theory and lessons learned from practice to revive the economy and job creation without forsaking our commitment to maintaining price stability. But the committee’s policy has yet to show evidence of working and nobody seems to quite understand why.
Today, I am going to quickly summarize the action taken by the FOMC at our meeting last week. I am going to explain at greater length why I dissented from the consensus of the committee, incorporating why I believe the monetary accommodation we have thus far implemented has failed to deliver......................
Of course, I am only a single voice at the FOMC table. I presented my views, as did other participants. All views were given a fair hearing. In the end, the decision taken by the FOMC is that of the majority, and the majority supported the initiatives that were announced. We must now hope that they will work.
The Siren Call of Inflation
I might conclude by sharing my concerns about the prospect of temporarily allowing more inflation as a means of unlocking expansion in final demand.
I understand the theoretical basis for entertaining that thesis: If businesses and consumers believe prices will rise, they will rush out to invest and consume now. But the practical aspects of this approach appear to counter the theoretical.
Paul Volcker, who has the scars on his back from his Herculean effort to rein in inflation in the 1980s, wrote of this in the New York Times on Sept. 18.[7] He reminded us that once unleashed, inflation combines with stagnation to make stagflation, the most painful of all combinations for the poor, for workers, for job seekers, for bond and stock holders and for businesses trying to navigate the economy.
His words from that article should be engraved on the foreheads of every central banker: “The siren song [of inflation] is both alluring and predictable. … After all, if 1 or 2 percent inflation is O.K. and has not raised inflationary expectations?as the Fed and most central banks believe?why not 3 or 4 or even more? Let’s try to get business to jump the gun and invest now in the expectation of higher prices later … and maybe wages will follow. … Well, good luck. Some mathematical models spawned in academic seminars might support this scenario. But all of our economic history says it won’t work that way. I thought we learned that lesson in the 1970s. … What we know, or should know, from the past is that once inflation becomes anticipated and ingrained?as it eventually would?then the stimulating effects are lost. Once an independent central bank does not simply tolerate a low level of inflation as consistent with ‘stability,’ but invokes inflation as a policy, it becomes difficult to eliminate.”
To that I say, “Amen.”
Thor’s Hammer
I return to where I began?Jan Mayen Island. Paul Volcker understands better than most the limitations of theory and the harsh lessons of practice. I have nowhere near the wisdom or the experience of Volcker. But as the son of a Norwegian mother, I do know a little about Norse mythology. The legend holds that with his hammer in hand, Thor “would be able to strike as firmly as he wanted … and the hammer would never fail … and never fly so far from his hand that it could not find its way back.”[8] Monetary policy is not Thor’s hammer. It is an awesome weapon. But it has limitations. We must carefully harbor its power. If we deploy it incorrectly, we might level more than interest rates and destroy that which we seek to create. And if we let it fly too far from our grasp, we may never get it back. In conducting policy going forward, we must constantly bear this in mind.
About the Author
Richard W. Fisher is president and CEO of the Federal Reserve Bank of Dallas."
http://webcache.googleusercontent.c...ed.org/news/speeches/fisher/2011/fs110927.cfm
It is a crime and a shame that only one (Richard W. Fisher) out of 17 Federal Reserve Board members has the intellect to see the problem clearly. His observations like Eccles fit our present day problems perfectly. No two economic depressions are the same and Bernanke while rescuing the top 1 pct has doomed the 51 percent to a 'Stagflation" that Paul Volcker identifies perfectly. One can argue that actual deflation is worse,but death by one thousand cuts ,still ends in death.
That is one of the underlying questions. Another might be "does that question matter in the face of the fact that the American politicians who have built their careers on selling the idea of smaller government have never reduced the size of it when they have had the power to do so?"
They have only reduced the size of government's income, while increasing the size of its committments, making a massive contribution to the size of its deficits.
Tim
Actually, they have increased revenue but not as fast as they can increase spending....
For most of the past 70 years, revenue and spending have stayed within a narrow range of total GDP:
But our current budget deficits pale compared to the impending budget tsunami:
Consequently then No one should pay taxes. In fact no one should issue government bonds, No one should be allowed corporate or patent protection or be given a monopoly on government airways or oil leases. The notion of the government as protector of the poor is a very modern idea. In fact the poor can be raped any time. it's the rich who are protected. Liberals started out fighting the government. The top one percent are parasites. A successful parasite preserves its host.
The rich are quickly going to find their money is worthless and that they have no trained workers or customers. Just look at the car bailout. First we bailed the car companies form the top. Then we subsidized their car purchase. The cars were made in a foreign country.
The rich are quickly going to find their money is worthless and that they have no trained workers or customers. Just look at the car bailout. First we bailed the car companies form the top. Then we subsidized their car purchase. The cars were made in a foreign country.
The auto industry is a perfect preview of coming attractions. At the time it filed bankruptcy, GM was paying retirement benefits to 3x as many retirees and surviving spouses than active workers. In fact, there were almost as many surviving spouses receiving benefits as employees. Management and labor colluded for years; management receiving exorbitant bonuses and workers exorbitant benefits until the bill finally came due and the tax payers got stuck holding the bag.
So who is going to bail out USA, Inc?
For a number of reasons your charts are highly suspect, but even if they were beyond reproach they would not conclude that America's "fiscal conservatives" increased the nation's revenues by cutting taxes and increasing spending any more than lying on your back and pointing down at the rising moon would prove that you had flown over the thing.
Tim
Tim
What most of the protesters are calling the 1 percent are more appropriately called the 0.1 percent. The range from 99 to 99.9 tends to consist of relatively powerless, highly salaried professional gofers and small business owners who have managed to invest and accumulate some assets over lifetimes of work, not corporate pirates and wall street flim flam financeers who, win or lose, grant themselves outrageous plunder from the corporate and financial systems.
I think the protesters have a valid point, although it took them 30 or 40 years to wake up, but they need to move the decimal point a tick to the left.
I think the protesters have a valid point, although it took them 30 or 40 years to wake up, but they need to move the decimal point a tick to the left.
I don't think a culture or government can sustain itself if the division and number of people between the wealthy and the poor is too great. Unfortunately, I think violence will erupt. By the way, I seem to remember a pure capitalism experiment in a carribean island that didn't work out too well. Child labor problems etc. Am I crazy or does anyone remember this?
Paul Volcker is absolutely a hero for his corageous fight on inflation in the 70's when it was political death. I think he said something to the effect, that he would let the prime rate of lending go to 20% if that is what it took to kill inflation. Alot of people give Reagan credit for getting inflation under control but it really was Paul Volcker. Even now, people should listen to this sage.
Corporate oligarchies can only exist with the support of the government gun. In a free (Capitalist) society, everyone is free to set up a competing business. If a corporate thug bullies a small business, it's an initiation of force, punishable by the court system, enforced by police arresting the corporate thugs.
Right now, the government are the thugs, and they're in the back pocket of the corporations. This is the tit for tat that came out of government regulating corporations. The corporations wanted consideration in return. So they were allowed to become monopolies by the nature of the government regulating new competitors out of the market.
Right now, the government are the thugs, and they're in the back pocket of the corporations. This is the tit for tat that came out of government regulating corporations. The corporations wanted consideration in return. So they were allowed to become monopolies by the nature of the government regulating new competitors out of the market.
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