^NetRunner,

The Gross National Profit is indeed the GDP - National Debt. The National Debt is the aggregate publicly held debt I believe. Here is the link where I got it for some more info: http://www.treasurydirect.gov/govt/reports/pd/mspd/mspd.htm. I do not have the figures for private debt or entitlements but would like to add those if possible.

I can plot the National Debt as a % of the GDP which will produce the same graph as the one posted by joedirt. Looking at Graph 1 you can see they are in rough agreement as they kind of tell the same story just in different figures: the profit margin was rising between 1950-1980 and 1995-2000, and was decreasingly slightly from 1980-1995 and 2000-2009.

I'm not sure about the unemployment data as it wasn't labeled either U3 or U6. The government really doesn't make this data very easy to find or use. The data I got was just off the BLS page, and I am guessing it is U3 as it wasn't called the broader unemployment rate.

As far as new data requests:

1. Taxes collected as a % of GDP vs. % growth rate of the GDP vs. % growth rate of GNP.
GNP is practically identical to the GDP so I didn't bother plotting it. However I will plot the Federal Receipts (taxes collected) versus GDP as I already have that data.

2. Top marginal tax rate % vs. the % difference between mean and median income.
Good Idea, I'll scrounge up the top marginal tax rate unless you already have a link to data.

3. Government spending as a % of GDP vs. Non-government spending as % of GDP vs. U6 unemployment
I started adding this data on friday, pretty scary!

4. Government budget deficits as a % of GDP over time
Is this the plot linked by joedirt of National debt / GDP or do you want the (Federal Outlays - Federal Receipts) / GDP?

5. The price of oil, both nominal and adjusted for inflation (just for kicks)
Just gotta scrounge up the data tables.

6. The Dow Jones Industrial Average over time, both nominal and adjusted for inflation (S&P too, if it's different in any meaningful way).
I was going to add this, but didn't because I think the current practice of associating the stock market with the economy is very simplistic. Still as you have requested it I will add it.

Good suggestions. I'll get the plots added in the next couple days.

imstellar, in the first chart, how are you defining Gross National Profit? Is it GDP - National Debt? Is National Debt only Government debt, or aggregate public/privately held debt? If the former, can we see the latter?

In the second chart, which unemployment statistic are you using? The Fed's U3, or U6? If it's the former, I'd love to see interest rate vs. U6 unemployment.

joedirt already provided a chart of the National (Government) Debt-to-GDP ratio from a source I've quoted a few times. Do the official stats back it up? I think they will, but it's still good to make sure we're working on a common set of data.

As far as more charts for the type of discussions we usually get into, I'd also like to see:

• Taxes collected as a % of GDP vs. % growth rate of the GDP vs. % growth rate of GNP.
  
• Top marginal tax rate % vs. the % difference between mean and median income.
  
• Government spending as a % of GDP vs. Non-government spending as % of GDP vs. U6 unemployment
  
• Government budget deficits as a % of GDP over time
  
• The price of oil, both nominal and adjusted for inflation (just for kicks)
  
• The Dow Jones Industrial Average over time, both nominal and adjusted for inflation (S&P too, if it's different in any meaningful way)

That's a tall list, but I'd also love to see these data for the Great Depression years too.

That's all I can think of for the moment as far as interesting data to look at.

Who writes this shit?

California Assembly Bill HR 36 Relative to Pluto's planetary status

WHEREAS, Recent astronomical discoveries, including Pluto's oblong orbit and the sighting of a slightly larger Kuiper Belt object, have led astronomers to question the planetary status of Pluto; and

WHEREAS, The mean-spirited International Astronomical Union decided on August 24, 2006, to disrespect Pluto by stripping Pluto of its planetary status and reclassifying it as a lowly dwarf planet; and

WHEREAS, Pluto was discovered in 1930 by an American, Clyde Tombaugh, at the Lowell Observatory in Arizona, and this discovery resulted in millions of Californians being taught that Pluto was the ninth planet in the solar system; and

WHEREAS, Pluto, named after the Roman God of the underworld and affectionately sharing the name of California's most famous animated dog, has a special connection to California history and culture; and

WHEREAS, Downgrading Pluto's status will cause psychological harm to some Californians who question their place in the universe and worry about the instability of universal constants; and

WHEREAS, The deletion of Pluto as a planet renders millions of text books, museum displays, and children's refrigerator art projects obsolete, and represents a substantial unfunded mandate that must be paid by dwindling Proposition 98 education funds, thereby harming California's children and widening its budget deficits; and

WHEREAS, The deletion of Pluto as a planet is a hasty, ill-considered scientific heresy similar to questioning the Copernican theory, drawing maps of a round world, and proving the existence of the time and space continuum; and

WHEREAS, The downgrading of Pluto reduces the number of planets available for legislative leaders to hide redistricting legislation and other inconvenient political reform measures; and

WHEREAS, The California Legislature, in the closing days of the 2005-06 session, has been considering few matters important to the future of California, and the status of Pluto takes precedence and is worthy of this body's immediate attention; now, therefore, be it

Resolved by the Assembly of the State of California, That the Assembly hereby condemns the International Astronomical Union's decision to strip Pluto of its planetary status for its tremendous impact on the people of California and the state's long term fiscal health; and be it further

Resolved, That the Assembly Clerk shall send a copy of the resolution to the International Astronomical Union and to any Californian who, believing that his or her legislator is addressing the problems that threaten the future of the Golden State, requests a copy of the resolution.

>> ^Psychologic:
^ Everyone has opinions on what should be cut and what shouldn't, but that doesn't mean that we can keep the deficit spending going without bad things happening.
If you cut spending then you upset people who supported the areas you cut. If you raise taxes then you run the risk of inhibiting the economy and convincing businesses to relocate to less restrictive countries. If you leave the deficit spending in place then you can eventually destroy the economy and/or currency.
I'm curious as to which direction the government will choose (perhaps one not listed), but I think Schiff is very close to the truth about the dangers of our current policies.


If they're to be believed, it's supposed tremendous increases in efficiency coupled with a rise in spending on underfunded sectors while simultaneous engineering investment in other new areas.

In regards to your other post before, regarding inflation and currency depreciation - my thoughts

To add to that, the potential, inevitable problem with cutting spending in a moment of crisis such as now is creating a downwards depressionary spiral. If that happens to substantially diminish later tax returns because of a litany of companies going bust, then current fiscal prudence would have done little other than confirming the inevitable and worsening the budget deficit still. Fiscal policy, while an anathema to ideologues who oppose any form of intervention has been a consistent and effective means governments have used to prop up economies in moments of downturn.

These government officials are idiots when it comes to business. Barney Frank is the biggest dope of all. Look at the budget deficits they're running. The pot is calling the kettle black.

Bonuses are a necessary part of the business world. If you want to have better employess than the next guy, you've got to give them better incentives.

Economic downturn or not, the rules don't change.

"O'Neill said he tried to warn Vice President Dick Cheney that growing budget deficits-expected to top $500 billion this fiscal year alone-posed a threat to the economy. Cheney cut him off. "You know, Paul, Reagan proved deficits don't matter," he said, according to excerpts. Cheney continued: "We won the midterms (congressional elections). This is our due." A month later, Cheney told the Treasury secretary he was fired."

Source

The cons got us into this mess and the last thing they're going to do is either admit it or keep their fat mouths shut.

The stimulus is not really written to address the topics you mentioned since writing a bill like that would make the US into the USSR, the bill is two fold the way I see it, it aims to help those in dire need now (unemployment insurance and food stamps) and it is written to spur on investment spending in the long term through fiscal expenditure (infrastructure spending). The aim is to increased aggregate demand in the whole economy in the short term and reduce the job losses.

Now people instantly say why don't we just give tax cuts and this will give the same effect? It has been done already and it didn't work, you had a large tax cut in 2008 that did nothing to alleviate the economic crisis we face today. People simply saved or paid off debt which does not generate economic activity. e.g. from Krugman in Jan.2008

Instead, what seems to be happening is that the Bush administration refuses to sign on to anything that it can’t call a “tax cut.” Behind that refusal, in turn, lies the administration’s commitment to slashing tax rates on the affluent while blocking aid for families in trouble — a commitment that requires maintaining the pretense that government spending is always bad. - Stimulus gone bad

The same thing will happen again if tax cuts are given, at the same time the tax cuts would be essentially government income that is written off and only adds to the budget deficit.

This is where monetary policy of controlling the economy through the money supply basically could not avert the problems we face today, the Fed is keeping interest rates low but you do not see increased economic activity due to lack of consumer/business confidence in the economy as a whole. We face a liquidity trap, the banks and financial institutions are simply unwilling to make any kinds of loans to spur economic activity.

You can read more about the exact steps summed up nicely at NYT since am not going to rewrite everything http://topics.nytimes.com/topics/reference/timestopics/subjects/u/united_states_economy/economic_stimulus/index.html

Will this work and make the US spurt flowers tomorrow? No. The economy will keep spiraling down, since effects like this take years to transmit through the entire economy. Remember that the Housing bubble, sub prime mortgages and other issues were highlighted nearly 2 years ago before the actual effects started being seen. But this bill will help Americans in need now.

Blankfist doesn't really know what he is talking about, and is buying into the conservative blame game, it was deregulation in the derivatives market that helped created this crisis, all Greenspan needed to do at one point to prevent alot of this is say the words "Housing bubble" - http://www.videosift.com/video/Klein-Blames-Greenspan-Deregulation-for-Economic-Crisis

We will see how it pans out. However am with Krugman and Stiglitz, I don't think it goes far enough at all, the program needs to be much larger. In Krugman's words:

According to the CBO’s estimates, we’re facing an output shortfall of almost 14% of GDP over the next two years, or around $2 trillion. Others, such as Goldman Sachs, are even more pessimistic. So the original $800 billion plan was too small, especially because a substantial share consisted of tax cuts that probably would have added little to demand. The plan should have been at least 50% larger.

Now the centrists have shaved off $86 billion in spending — much of it among the most effective and most needed parts of the plan. In particular, aid to state governments, which are in desperate straits, is both fast — because it prevents spending cuts rather than having to start up new projects — and effective, because it would in fact be spent; plus state and local governments are cutting back on essentials, so the social value of this spending would be high. But in the name of mighty centrism, $40 billion of that aid has been cut out.

Just wait a few months for this stimulus to be ineffective, the Republicans come out and politicize it, criticize it saying it didn't work because it was stupid and we needed more tax cuts. But is a difficult situation, you got large government debt on one hand, and you need a large stimulus on the other. How do you reconcile those.

He is certainly investing in good things, but I'm still curious how he plans to do so without increasing the budget deficit.

I don't really like giving my views on these topics -- everyone is so biased by ideologies that it's almost impossible to sift through attacks and just bullshit.

Over the past six months I've spent many late nights trying to figure out what is happening to the US, and how it's going to affect my life in Australia. Our government seems to be following suit (create money, bail out failing industries, announce huge budget deficits).

Isn't it time to ask the question - is it worth 'stimulating' an economy that seems to be fundamentally flawed?

We, in western countries, have lived in probably the most leveraged state in history. Not just banks, the entire society. We used this leverage to purchase and consume goods made abroad, and to fund a service sector economy that is crashing now.

Now all this money that can't be paid back has to be written off. It can't be paid back. The leverage that existed because of this capital is gone.

Paulson and Bernanke pulled off a deft maneuver with the original TARP package.

There would have been a complete collapse of the American economy if they didn't act. The elephant in the room is simple though - what actually is the American economy?

It's a consumer and service sector based economy. Very little real goods are actually produced. The US has run a trade deficit since 1975.

There isn't a viable economy to stimulate. Even the automotive industry, considered the pinnacle of American manufacturing, burns cash at rates that render it unable to compete in a global market.

I've only read 200 pages of the act so far, and it seems like (excluding the TARP packages) it is the biggest transference of wealth from taxpayers to whomever the government decides in all time. It's a quick fix that will keep the government in power thanks in part to keeping a lot of people employed... by the government. A new social contract will emerge as written by Rahm Emanuel in his book "The Plan".

The whole saga has shown the world -- or at least myself, just what I suspected about America all along. The 'values' that they proudly proselytize to the world don't mean a god damn thing when a real test shows up.

Sadly, the next two years will probably sound the death knell for capitalism in my life time.

Cliffs:

a) America's economy is fake and nothing can 'save' it, it needs to be reinvented
b) America is bankrupt and will eventually default on it's debt to the rest of the world
c) Primarily, the manipulation of the Fractional Reserve Banking system caused the problem

Thoughts?

PS. I apologize if this is a little all over the place, I'm writing it between meetings at work.

If foreign financial institutions who have funded the US foreign and budget deficit lose faith, what do you think's going to happen to the US dollar?

>> ^DrPawn:
Who's going to pay for the NEW energy? There is a reason why we are dependent on the OLD energy. Its cheapest. I am an Obama fan but he sure avoids telling us the real costs here. Like how much exactly we are going to pay for these ideas. And also how far in debt we will be in 8 years.


In 100 years, which do you think people will condemn us more for? Burning all the fossil fuels on the planet, and releasing the results into the atmosphere, or running up budget deficits to numbers that will seem quaint to them?

In World War 2, we ran up debts to 120% of our GDP, our historical record high for debt ratio. That would be about $17 trillion today, nearly double where we are now.

What was the gross debt at the end of the war and the New Deal? $257 billion dollars.

Is it a lot of money? Sure. Should we make sure it's invested wisely? Absolutely.

Besides, investment in green tech probably won't require anything like what it's going to take to clean up after Bush's disastrous financial policies.

At least a clean energy source would be a reliable revenue stream for a long time to come.

That's why prudential supervision of investment institutions and not just of traditional banks is so important and why the credit crunch has ballooned out so immensely for the most part over a fairly insignificant but irresponsibly, immensely highly leveraged sub-prime mortgages. As for the reserve bank printing money, I would still argue that above all that keeping them separate from the treasury and the political authority is paramount. History has shown that particularly if political pressure is placed on monetary policy it creates runaway inflation. As far as monetising debts, of course large scale monetisation will bring hyper-inflation, but equally a country highly in budget deficit may plausibly be forced to depreciate it's currency to finance an otherwise insurmountable burden. As for low steady levels of inflation, they are almost impossible to eliminate and in some ways are necessary to maintain an efficient economy.

Your questions are important and it's right and good that you should ask them. My answers are deficient but sincere.

And what about principles and ideals? What about being above such barbaric acts?

There are times--mercifully few--where principles and ideas are suspended and barbarity is the order of the day. Survival is literally bestowed to the strongest, the side more determined to prevail.

Sitting in (hopefully) comfortable chairs, discussing things online is a luxury afforded us because other men and women are guarding the gates. When the bullets run out, they go to bayonets. We have forgotten the price of freedom.

You seem to be saying we should match our enemies' crudity blow by blow; a tactic, I'll point out, that will only further validate their actions to them.

You're making a dangerous assumption that this enemy thinks as we do. They do not. Nowhere in the caves are jihadists arguing that if they use homicide bombers on their own people and murder journalists the West will retaliate in kind.

Jihadists can't be reasoned with...to provoke a war with any country that could level them is suicidal. Had a country claimed credit for 9-11, that country would no longer exist. Yet that's what they've done. Insanity.

If you were to give jihadists a block of their own land with the exact same resources as another group, they would find reasons to attack the other group. You would have better luck asking a rabid dog not to bite anyone than you would convincing these folks they're wrong.

Despite the fact they leave us no choice but to destroy them utterly, the West has shown remarkable restraint. There is no comparison between what they do and what we have done.

It's all rather pointless to debate because sooner or later New York will be Nuked York. I can't even say we'll respond with the proper fury then.


Back to something resembling my original topic; I wonder if you'd tell us who you think was a great president? In fact, let's make it more interesting...

- Greatest President of your lifetime and why you believe such.

Reagan. The only President on either side who believed government worked for the people, not the other way around. Everyone, including the poor, was better off when the tax rates were slashed.

- Greatest President of all time and why you believe such.

Every President faces different crises and was a product of his age. Also, it's hard to compare war Presidents with others. Washington deserves the most props.

- A liberal or progressive President whom you admire.

JFK, but the answer is somewhat of a copout, because he wasn't in office for long.

It is a paradoxical truth that tax rates are too high and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now ... Cutting taxes now is not to incur a budget deficit, but to achieve the more prosperous, expanding economy which can bring a budget surplus."

– John F. Kennedy, Nov. 20, 1962, president's news conference

"Lower rates of taxation will stimulate economic activity and so raise the levels of personal and corporate income as to yield within a few years an increased – not a reduced – flow of revenues to the federal government."

May I remind you that liberals can choose from almost any president on either side of the aisle for the last 50 years. With the exception of Reagan (where A Dem Congress did the expansion) all of them have expanded government beyond its intended scope and purpose. For crying out loud, Nixon created the EPA!

You are right, both China and Japan wouldn't really benefit on exchanging their dollar reserves and buying up into the Euro. Since they would be essentially losing their value by buying into the Euro. The Euro is politically unstable given that the EU keeps expanding and lacks a cohesive multinational economic policy, instead of tracking one economy you are tracking all the members of the EU, economic shocks are less predictable.

But then they risk holding on to dollar reserves that are quickly dwindling in value, the question is how long will they continue to buy into a currency that is quickly losing it's value? In essence they are basically stuck and locked in, if they start to offload their reserves they do not benefit at all.

But then there is the question of rising US national debt and paying them off that interest rate and if people will still lend money to the US government to offset its debt obligations, for which I suggest reading this:

"So long as somebody is willing to keep loaning the U.S. government money, the debt is largely out of sight, out of mind.

But the interest payments keep compounding, and could in time squeeze out most other government spending — leading to sharply higher taxes or a cut in basic services like Social Security and other government benefit programs. Or all of the above.

A major economic slowdown, as some economists suggest may be looming, could hasten the day of reckoning.

The national debt — the total accumulation of annual budget deficits — is up from $5.7 trillion when President Bush took office in January 2001 and it will top $10 trillion sometime right before or right after he leaves in January 2009.

[........]

For now, large U.S. trade deficits with much of the rest of the world work in favor of continued foreign investment in Treasuries and dollar-denominated securities. After all, the vast sums Americans pay — in dollars — for imported goods has to go somewhere. But that dynamic could change.

"The first day the Chinese or the Japanese or the Saudis say, `we've bought enough of your paper,' then the debt — whatever level it is at that point — becomes unmanageable," said Collender.

A recent comment by a Chinese lawmaker suggesting the country should buy more euros instead of dollars helped send the Dow Jones plunging more than 300 points.

The dollar is down about 35 percent since the end of 2001 against a basket of major currencies.

Foreign governments and investors now hold some $2.23 trillion — or about 44 percent — of all publicly held U.S. debt. That's up 9.5 percent from a year earlier.

Japan is first with $586 billion, followed by China ($400 billion) and Britain ($244 billion). Saudi Arabia and other oil-exporting countries account for $123 billion, according to the Treasury.

"Borrowing hundreds of billions of dollars from China and OPEC puts not only our future economy, but also our national security, at risk. It is critical that we ensure that countries that control our debt do not control our future," said Sen. George Voinovich of Ohio, a Republican budget hawk."

From AP News- National Debt Grows $1 Million a Minute

Clearly quantumushroom is a politically genius, through quoting the New York Post he has defeated all our arguments. The New York Post, owned by Rupert Murdoch, a stuanch supporter of the republican party (the man loves Reagen so much he forced FOX News to cover his incidental birthdays).

Never mind that Murdoch's Post has been criticized from the beginning for its lurid headlines, sensationalism, and blatant advocacy. Nor that according to a survey conducted by Pace University in 2004, the New York Post was rated the least credible major news outlet in New York, and the only news outlet to receive more responses calling it "not credible" than credible.

Never mind the fact that the story is written by the always unreliable Amir Taheri, who in 2005/2006 has faced charges of fabricating and falsifying stories. Never mind that Amir Taheri actually works for the Benador Associates which is a public relations firm and speaker's bureau that promotes expert writers and speakers focusing primarily on U.S. foreign policy in the Middle East, particularly those from a neoconservative point of view.

===============================================================================================

Now for Economics part of this part which besides all the BS is the one I want people to understand fully and see beyond the actual lie, because this is a bipartisan issue and will affect you, your kids and your grandkids. The video states that the '$260 Billion dollar budget deficit represents 2% of our 13 Trillion dollar economy'. Now unless you just believe what you see, you will see that number looks awfully small, because in reality that doesn't count the GROSS FEDERAL DEBT which stands currently at more than $8.5 trillion.

According to David M. Walker, head of Government Accountability Office, an investigative arm of Congress that audits and evaluates the performance of the federal government. He along with Diane Lim Rogers, a liberal economist from the Brookings Institution, and Alison Acosta Fraser, director of the Roe Institute for Economic Policy Studies at the Heritage Foundation, a conservative think tank say that their basic message is this: If the United States government conducts business as usual over the next few decades, a national debt that is $8.5 trillion could reach $46 trillion or more, adjusted for inflation. This is because we spend nearly a billion dollars a day in Iraq, and the first baby boomers become eligible for Social Security in 2008 and for Medicare in 2011, the expenses of those two programs are about to increase drastically because of demographic pressures.

More information and a live clock of US Debt is avialble here at http://www.brillig.com/