+ a central bank whose mandate is limited to inflation
+ the lack of a treasury
+ the lack of a harmonized tax system
+ the crippling deficits in democratic control that make it very hard to turn the will of the people into policy
+ etc

The last point is of particular interest if you look at Greece as a shock & awe induced suspension of democracy. Many nations are held in a permanent state of emergency through the war on terror, while Greece's permanent state of emergency was imposed through debt.

Previous governments did what they were told by troika officials, with parliament left aside and judicial decisions left ignored. The return of democracy into some parts of the system caused rather vicious reactions from both the press and European officials. Just look at what Martin Schulz or Jeroen Dijsselbloem said about Syriza officials in the last few days.

Debt is a tool powerful enough to suspend democracy in a heartbeat, even quicker than our famous war on/of terror.

Parliamentary decisions are superceded by transnational treaties and obligations. And if you take the thought one step further, you end up at TTIP/TTP/CETA/TISA. If Greece demonstrates that democratic decisions at a national level still overrule transnational treaties, governments lose a scapegoat for unpopular decisions ("treaty X demands it of us"). Should Syriza manage to end the state of emergency, to return control over the decision back to the elected bodies, it will become infinitely harder to impose draconian or even just highly unpopular measures.

But I digress. Twin Euro blocks (South/North) were part of the discussion, just like parallel currencies in troubled nations. A German exit is still being discussed as well, but I don't think its advocates within Germany thought it through. Switzerland just uncoupled its Swiss Francs from the Euro and it did a real number on their exports. A new DM would appreciate like a Saturn V, instantly shattering German exports. Without a massive increase in wages to compensate through domestic demand, Germany would bleed jobs left, right and center. A fullblown recession.

I'd say it would take very little to stabilise the union, even in its currently flawed configuration. Krugman had a piece this morning, calling one of Syriza's core demands reasonable. And judging by what I have read over the last five years or so, it is. He said Germany would be crazy if they demanded payment on full, no reliefs. And that's where it shows that he cannot follow the media or the political discussions in Germany to any meaningful degree, language barrier and all. Public discussion on economics in Germany stands completely separate from the rest of the world.

Ignorance, stubbornness, cultural bias, a feedback-loop of media and politics, group pressure -- we have everything. And the fact that Germany has been comparatively successful in the face of this crisis makes it practially impossible to pierce this bubble. We're doing fine, our way must be correct, everyone else is wrong.

QE certainly isn't perfect. Giving liquidity to banks in theory should give them an incentive to loan it out (they earn more by doing that rather than sitting on it or putting it in super safe assets like Treasuries). However, they have generally erred on the conservative tack, partly also because their capital requirements (how much cash/equity they have to sit on) was raised. Companies that have done well and not received bailouts have also hoarded cash rather than invest because of uncertainty around the economy.

Meanwhile stock market valuations have soared because of a lack of other assets to put it in. Many of these cash holdings from corporations and banks have been dumped in Treasuries. This has reduced the return from Treasuries to a miserable amount. Meanwhile commodity prices have also tanked. That pretty much left stocks, which are arguably now inflated in price (and historically overvalued) largely as a result of the QE money handed out to banks.

What oritteropo says is very correct, if any poor or middle class person had opened a brokerage account and dumped their money in an S&P or Nasdaq tracking fund at or near the bottom of the 2009 market, they would have tripled their money or more. The option was certainly available and affordable to anyone.

The problem was that there were arguably limited alternatives. What the Australian government here did, which was far more effective (and completely avoided any recession) is simply gave out cash to everyone. Unlike QE money which just sat around in safe assets this got spent (largely to pay off debts, but this would have to happen anyway and sped up a recovery).

The issue was, this was fiscal policy, and we could easily afford it because we had (and still have) very low debt levels. A country like the UK could not so easily do this, certainly not many of the troubled European countries. The US arguably could have because with the USD being such a crux global currency, there is virtually no chance it would have led to a currency crash or brought about serious worries about being able to service their debt levels (even if they are high).

@Lawdeedaw

If you're studying something like engineering, there is a high likelihood that you will retain employment that will pay off a student loan over the next 10-20 years. Even if it's not your first preference, you will be employed somewhere with a reasonable income with such technical skills.

The government can play a useful role in amortizing your income. There's really no reason to be frugal and Starbucks aside, policy that forces you to work long hours in a dead-end job while studying to make ends meet is counter-productive as it reduces your long-term income. Not being able to even enrol because you're too poor, despite how smart you may be is also hugely destructive. This is why study assistance subsidies are such good policy. Them aside, you still have to clothe, house and feed yourself anyway.

Even if you say that there will be dropouts, fails, people who complete degrees with no job demand, you simply adjust up the interest rate you charge everyone for student debt to account for that loss. Then you have a mandatory contribution from any income you make above X amount that the student has to repay after they conclude their study. This way students can't simply retain a large debt with a low interest rate forever and subsidise everyone else by paying theirs off.

Also to incentivise correct course choice, you subsidise courses with skills in short supply/in demand more than those with good job prospects and a generally high expected income.

This is pretty much what we have in Australia under the HECS system.

http://en.wikipedia.org/wiki/Tertiary_education_fees_in_Australia#HECS

It would be great if the US had something similar (because designed well it pays for itself), but the cultural obsession much of the country seems to have with total laissez faire, 'pull yourself up by your own bootstraps', even when it's not good policy makes it impossible.

Considering right now US Treasury bond rates (government borrowing rates) are at 60 year lows, it's doubly stupid.

On the other hand, apparently the US Government lost $11.2 billion on bailing out GM. They *spent* 50 billion bailing them out, the 11.2 billion is just how much dried up and blew away entirely.

Maybe if we'd have just let some of those corporate juggernauts fail, as should happen in a REAL free market, we'd actually have seen more progress. I'm thinking of, say, Tesla -- that got a $465 million loan from the gov. and paid it off in full 9 years early.

Not so long ago -- within my lifespan -- the government actually *broke up* giant corporate monopolies like Bell telecom. Now we can't throw money at them fast enough. I guess lobbying "works".

Thanks mate, very nice comment of you.

Always like to hear different viewpoints, makes me consider ideas I hadn't and also bulk up my own point of view, so all good

I suppose they're all specific specialities of the broader business field, I would also add accounting but they are very broadly interrelated. For example in bank lending decisions, discounted cash flow estimations (finance) which are reliant on income statement and balance sheet information are just as important as IS/BS audit expertise (accounting) which assesses the credibility of their reporting. This is especially true for smaller, privately owned entities (who obviously can't rely on public equity, so are generally bank reliant). Large publicly listed companies have much more stringent auditing requirements already, and public disclosure means that they are highly open to scrutiny.

Economics beyond 101 basics is generally is more of an academic niche. The macroeconomic side looking at large scale GDP, inflation, employment etc., is relied upon in government, treasuries and policy think tanks. Large listed companies would certainly have a dedicated in-house team for consultations. Medium sized companies might contract dedicated industry research consultant firms, but outside of that their use is quite limited.

The microeconomic side is industry specific looking at competitive behaviour inter-firm, with suppliers and customers. It's generally a more wishy washy field which introduces some amateur psychology via behavioural economics and game theory. It's more of an academic field really. I can imagine large multinationals with few competitors employing them or hiring consultants. We have a near duopoly here in supermarkets and I can see them using microeconomic theory in pricing decisions for example.

"it just sounds like a return to feudalism."

How so specifically? An agrarian culture based on farmland ownership?

It sounds to me that your imagination is getting the best of you. Creative, but not at all what I am describing. Somalia is a failed state, and a socialist failed state at that. However, as you know, things from medical services to life expectancy to infrastructure to child mortality to crime all dropped in the 20 years in which Somalia had no functioning government. Things got better not worse. Why do you think that is?

Saying a free market would be like Somalia is like saying that a government-regulated market would be like North Korea. There are other issues to consider.

Libertarianism does not posit that a free market automatically means a perfect or even a great society. But it does posit that a free market system will ease poverty, increase wealth, and ensure peace at a faster pace than a statist one. At whatever level a culture/society starts at, they will improve and be better off in a free market rather than under state rule. Somalia started off in a mess, caused by its failed state circumstances. You cannot seriously expect to go from one day to the next, eliminate the state, and expect that overnight all that damage will sort itself out just because now -- a day later -- there's no state. You have to rebuild and accumulate wealth over time. And Somalia did remarkably well considering the mess it started from.

A society like the US, which is much better off (for the time-being!), would improve even more, rather than deteriorate, with less or even no government. But of course, if a meteorite wipes out DC overnight, that does not mean overnight improvement. After all, the government has wiped out many private institutions that would need to be in place to take over from the government in providing the services they put out of business.

On the other hand, the road towards more state control (which you, strangely continue to support and defend) leads to more deterioration of the society/culture. The US is doing better because of all the capital it accumulated during the century in which it functioned under little government intervention with regards to its economic matters. That wealth has been badly squandered, and now Americans are living off what remains, slowly but surely bankrupting the country though more government interventions, currency inflations, needless war, bailouts, surveillance, ad infinitum.

But make no mistake: whatever wealth the US as a nation has came about though free exchange in commerce, and was not the result of government regulation. The more government interferes, the slower the growth, until now it has reached the point where there is no growth, only debt. (The Treasury should be renamed the Department of Debt, because it has no money, only debt -- just like a majority of Americans.)

In sum: Somalis are improving. Americans are not. Whoever you are, I assure you, you started off in a much better place than the average Somali did. But look at their rate of change!


EDIT: Somalia also did not have a "free market" when it came to warlord gangs. Unless people had a choice as to which warlord to hire for protection or not, then that is not a free market when it comes to protection services. If allegiance to a particular warlord was voluntary, then you could more honestly make the claim that they had a "free market." Still, the situation is improving. And I think it would have improved faster had there not been the (UN-fueled) expectation of a future centralized government, had the UN not been financing groups towards this end, and had they not been incentivizing gangs to fight each other for position in a future "government."

There is nothing "free market" about forced conscription. I don't know why you would even say that.

Fuck this video. Repeat; FUCK THIS VIDEO.

This country needs less ignorance, not more. It pisses me off to no end, that a sizable chunk of this country somehow thinks that not raising the debt limit is a viable thing to do. This video does nothing but play into that.

All raising the "debt limit" does is allow the treasury to cover the money that congress has ALREADY spent.

An accurate allegory would be to compare the "debt limit" to paying your credit card bill at the end of the month, because, bitch, you already spent that money.
Not paying your credit card bill isn't going to help your finances, it IS going to ruin your credit.

You want lower debt, fine. Raise taxes or don't spend so much in spending authorizations. But not paying the debts you already agreed to? Fucking stupid.

The case I remember was the Liberty Dollar - http://en.wikipedia.org/wiki/Liberty_Dollar (also mentioned in the wiki article you posted).

That guy was convicted of http://www.law.cornell.edu/uscode/text/18/485 and others counts - basically conspiracy to undermine the legitimacy of the US Treasury.

Certainly since bitcoin is digital, you couldn't get arrested for the "making your own coins" but it could still pose a problem.

In-game currencies have no cash value, and never claim to be "legal tender". All EULAs for MMOs forbid "mining" and reselling of in-game property outside of the game. Therefore the game companies are off-the-hook for users' actions.

Actually, they were answering her question very clearly and I guess she doesnt have the capacity to understand what they were telling her. Basically, Cohen's group can only impose fines. There are other groups that can shut down banks. Cohen was well within his right to not speak for another group that he does not work for. He was also very smart for not speaking hypotheticals because it may or may not line up with what their organization feels. Warren is basically interrogating the wrong person for those opinions. She needs to be asking those questions of Lew, the head of the Treasury Dept.

Comment hidden because you are ignoring dag. (show it anyway)

To be fair to these guys - sounds like she should be asking these questions to the Justice Department if the Treasury doesn't have the statutory authority to prosecute - and that's a good question - why Doesn't Eric Holder pull these guys in?

The answer may at least partially be that these crimes were committed overseas - harder to prosecute and extradite for American laws being broken in places where these are not even crimes perhaps. It's messy.

Arm yourself with knowledge, people, or succomb to ignorance found in conspiracies..

Facts: Yes, the Federal Reserve banks are privately owned, but they are controlled by the publically-appointed Board of Governors. The Federal Reserve banks merely execute the monetary policy choices made by the Board. In addition, nearly all the interest the Federal Reserve collects on government bonds is rebated to the Treasury each year, so the government does not pay any net interest to the Fed.

Facts: No foreigners own any part of the Fed. Each Federal Reserve bank is owned exclusively by the participating commercial banks and S&Ls operating within the Federal Reserve bank's district. Individuals and non-bank firms, be they foreign or domestic, are not permitted by law to own any shares of a Federal Reserve bank. Moreover, monetary policy is controlled by the publically-appointed Board of Governors, not by the Federal Reserve banks.

Fact: Independent accounting firms conduct full financial audits of the Federal Reserve banks and the Board of Governors every year. The Fed is also subject to certain types of audits from the Government Accounting Office.

Facts: The Federal Reserve rebates its net earnings to the Treasury every year. Consequently, the interest the Treasury pays to the Fed is returned, so the money borrowed from the Fed has no net interest obligation for the Treasury. The government could print its own currency independent of the Fed, but there would be no effective safeguards against abuse of this power for political gain.

Facts: The Federal Reserve banks have only a small share of the total national debt (about 7%). Therefore, only a small share of the interest on the debt goes to the Fed. Regardless, the Fed rebates that interest to the Treasury every year, so the debt held by the Fed carries no net interest obligation for the government. In addition, it is Congress, not the Federal Reserve, who is responsible for the federal budget and the national debt.

Facts: Kennedy wrote E.O. 11,110 to phase out silver certificate currency, not to issue more of it. Records show Kennedy and the Federal Reserve were almost always in agreement on policy matters. He even signed legislation to give the Fed more authority to issue currency.

Facts: McFadden was incorrect regarding the Fed costing the government money. However, later economic analysis agrees with him that Federal Reserve policy blunders had a substantial role in causing the Depression. However, his implication that this was done deliberately has no basis in fact. Moreover, for a dozen years prior to his rant, McFadden had been the chairman of the House subcommittee that oversaw the Federal Reserve. Why didn't he do anything to reform or abolish the Fed while he had the chance?

Facts: The banking system is indeed able to create money with a mere computer keystroke. However, a bank's ability to create money is tied directly to the amount of reserves customers have deposited there. A bank must pay a competitive interest rate on those deposits to keep them from leaving to other banks. This interest expense alone is a substantial portion of a bank's operating costs and is de facto proof a bank cannot costlessly create money.

Fact: The term 'lawful money' does not refer to gold or silver coin, but to types of money which the government would permit banks to use when tabulating their reserves. These types of money included, but were not limited to, gold and silver coin.

Unless things change DRAMATICALLY, the US economy is fucked. Royally, utterly, totally, devastatingly fucked. And the rest of the world with it.

Rich pricks raping the treasury at the expense of the middle class......middle class? hah..whats that? There are only the haves, and have nots...If you dont have, you best be cleaning my toilets, or trimming the hedges in my garden, cause thats all you peasants are worth.

Fucking disgusting.

Comment hidden because you are ignoring dag. (show it anyway)

http://www.pc.gov.au/research/visiting-researcher/productivity-slump
http://www.theaustralian.com.au/national-affairs/treasury/productivity-gap-holding-back-growth-as-survey-ranks-australia-second-last/story-fn59nsif-12
26439881599

http://www.smh.com.au/business/the-economy/australia-needs-productivity-jolt-mckinsey-20120816-249ye.html


>> ^kymbos:

Ok Dag, you got an independent reference for your productivity comment, or is that just based on your observations? Because the only people I see proclaiming that Australian labour has low productivity are people like Rinehart - rich people who would benefit from paying people less. I have seen no good evidence of low Australian labour productivity.>> ^dag:
To be fair - I didn't hear her say that Australians should be paid $2 per day.
And this might sting my Australian mates - but productivity is low in Australia. I'm in Canberra - which is probably low productivity HQ for the whole country.

False, the court has ruled many times that the sixteenth amendment grants the federal government the right to collect a direct income tax. Arguments to the contrary have been routinely ruled as frivolous resulting in additional frivolity fines for wasting the court's time. That's how dumb these arguments are.

The IRS is just a bureau of the treasury. The treasury doesn't need a law telling it how it can organize itself. So long as it operates within the scope of its powers, it can create any bureaus it wants. Congress passes income tax rates any time they pass a tax bill, often with the annual budget (with the powers granted to it by the sixteenth amendment to the constitution). The IRS is part of the executive and thus is charged with enforcing congress' laws. It's as simple as that. These arguments hold no water whatsoever.

>> ^MonkeySpank:

I agree!
I know of the Snipes story. It's sad.
I would value everyone's opinion with regards to this, but personally, I think this is a non-law that is strictly enforced.
>> ^skinnydaddy1:
Right. Ok As nice as this sounds if you try not to pay you could end up in jail. There have been thousands of people who have tried it and thousands are now having to deal with the consequences of that stupidity. Wesley Snipes is one such person.

http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/108xx/doc10871/historicaltables.pdf

See 1998-2001.


>> ^bmacs27:

@heropsycho
ARGH!!! You're doing it again. Money the general fund owes to the payroll tax is still part of the total debt. Just because the government owes it to itself doesn't mean you get to take it out of your calculations as your factcheck.org article has. Public debt is not the only important factor.
Here are the total US debt figures from the treasury department:
09/30/2000 5,674,178,209,886.86
09/30/1999 5,656,270,901,615.43
09/30/1998 5,526,193,008,897.62
09/30/1997 5,413,146,011,397.34
09/30/1996 5,224,810,939,135.73
09/29/1995 4,973,982,900,709.39
09/30/1994 4,692,749,910,013.32
09/30/1993 4,411,488,883,139.38
09/30/1992 4,064,620,655,521.66
If he actually ran a surplus don't you think that number should have dropped at some point?