Mitt Romney's halo

[Eric Myrvaagnes]

Maybe I was missing your point, but I have not missed my point.

Finally, this discussion has provided me with a wonderful quotation to take out of context! 

[Bryan Conner]

Most would certainly agree that spending beyond one's means, in general and over a prolonged period, is certainly not prudent, smart and responsible. And, on an individual level, it would be hard not to agree with it. But, and this is a big one, when the whole nation does that, as Americans do, is it still only a matter of individual responsibility? When it is considered un-American and unpatriotic not to "shop till you drop," "keep up with the Joneses," buy newer, bigger, better. When "spend, spend, spend" is considered as patriotic as apple pie, is it still just a matter of individual responsibility? Oftentimes, what is common sensical and individually responsible behavior is not necessarily the most beneficial for the group/system as a whole (for theoretical underpinning, see the work of the Nobel Prize Laureate John Nash - or see the movie The Beautiful Mind with Russell Crowe)

You are wrong. All Americans do not believe that it is unpatriotic to shop till you drop.  All Americans do not try to "keep up with the Joneses".  Please do not make such broad, sweeping statements that are not based on facts.  You do not know all Americans.  I know lots of Americans that are debt free.  Now, if you can produce facts to back up your statement that when the entire population of the nation known as the USA spends beyond their means, in general and over a prolonged period of time, I will give you credit.  But, I know for a fact that you have absolutely proof to support this.  You are only typing hot air. 

[Chairman Bill]

As an antidote to the political bickering & arguing  , I wonder whether this is something we can all agree is just deeply, deeply stupid, offensive, and something that should guarantee this politician (Charlie Fuqua) never gets to be much more than a foot-note in the history of failed political careers

Arkansas Times

The maintenance of civil order in society rests on the foundation of family discipline. Therefore, a child who disrespects his parents must be permanently removed from society in a way that gives an example to all other children of the importance of respect for parents. The death penalty for rebellioius children is not something to be taken lightly. The guidelines for administering the death penalty to rebellious children are given in Deut 21:18-21:

[Slobodan Blagojevic]

You are wrong. All Americans do not believe that it is unpatriotic to shop till you drop.  All Americans do not try to "keep up with the Joneses"...

I guess those who do not, already moved to Germany, heh?

But you are right. If there is only one American in 300 million that fits your description, I would be technically wrong. I should have said 99%. Or, to avoid that dreaded percentage, perhaps 90%. Would that work for you? How about 2/3? Could I get away with at least 51%?

[Slobodan Blagojevic]

...Now, if you can produce facts to back up your statement that when the entire population of the nation known as the USA spends beyond their means, in general and over a prolonged period of time, I will give you credit...

Happy to oblige, Bryan!

Let's see what kind of evidence you would accept. How about anecdotal, just for a warm-up:

“Americans seem to have the feeling that it is wimpish to save,” said David Wyss, chief economist at Standard & Poor’s in New York. From the article "U.S. savings rate hits lowest level since 1933"

Ok, I get it, you do not like anecdotal evidence. So lets try an international comparison, where Americans historically have the lowest savings rates among peer countries, as per OECD (see the attachment International below, source here).

I see now how sitting in Germany might have given you a distorted perspective on savings though ;-)

Actually, given that different reports use different sources and methodology, it is interesting to note that a respectable U.S. source indicates a negative savings rate in 2005 and 2006 (meaning households spent more than they earned). See the attachment Negative below (as per this article)

Do I hear you saying: "Wait a sec, you can not consider two years to be 'prolonged period of time'"? Fair enough. So lets look at another indicator, again from a respectable U.S. source (Federal Reserve Bank of San Francisco, as per this article - see the attachment Debt below):

"U.S. household leverage, as measured by the ratio of debt to disposable income, reached an all-time high of 130% in 2007." Meaning American household debt was 30% higher than income. In other words, American households owe more than they earn. The trend started in the 21st century and lasts to this day. i.e. 10-12 years. That is a "prolonged period of time" in my view. Most reasonable people would agree that you should not owe/spend more than you earn (i.e., live beyond your means), as any difference would ultimately have to come from the family heirloom (i.e., savings).

Yes, America lives on credit (and runs on Dunkin').

Do you need more proof?

[Jeremy Roussak]

As an antidote to the political bickering & arguing  , I wonder whether this is something we can all agree is just deeply, deeply stupid, offensive, and something that should guarantee this politician (Charlie Fuqua) never gets to be much more than a foot-note in the history of failed political careers

Arkansas Times

And in an attempt to lighten this phenomenally tedious bickering, see here.

Jeremy

[Slobodan Blagojevic]

 After watching the Onion video, my 13-year daughter just... rolled her eyes

[Bryan Conner]

Happy to oblige, Bryan!

Let's see what kind of evidence you would accept. How about anecdotal, just for a warm-up:

“Americans seem to have the feeling that it is wimpish to save,” said David Wyss, chief economist at Standard & Poor’s in New York. From the article "U.S. savings rate hits lowest level since 1933"

Ok, I get it, you do not like anecdotal evidence. So lets try an international comparison, where Americans historically have the lowest savings rates among peer countries, as per OECD (see the attachment International below, source here).

I see now how sitting in Germany might have given you a distorted perspective on savings though ;-)

Actually, given that different reports use different sources and methodology, it is interesting to note that a respectable U.S. source indicates a negative savings rate in 2005 and 2006 (meaning households spent more than they earned). See the attachment Negative below (as per this article)

Do I hear you saying: "Wait a sec, you can not consider two years to be 'prolonged period of time'"? Fair enough. So lets look at another indicator, again from a respectable U.S. source (Federal Reserve Bank of San Francisco, as per this article - see the attachment Debt below):

"U.S. household leverage, as measured by the ratio of debt to disposable income, reached an all-time high of 130% in 2007." Meaning American household debt was 30% higher than income. In other words, American households owe more than they earn. The trend started in the 21st century and lasts to this day. i.e. 10-12 years. That is a "prolonged period of time" in my view. Most reasonable people would agree that you should not owe/spend more than you earn (i.e., live beyond your means), as any difference would ultimately have to come from the family heirloom (i.e., savings).

Yes, America lives on credit (and runs on Dunkin').

Do you need more proof?

No, I do not need more proof that you were incorrect in stating that all Americans are spending beyond their means, in general and over a prolonged period of time.  You did that nicely for me!  Thanks.

Slobodan, I do not disagree that a lot of Americans have spent beyond their means.  They have, I was one of them.  I stated that I know a lot of Americans that are debt free and very conservative with money.  But, I also know Americans that over spent and under saved.  I was only addressing your falsehood that ALL Americans over spend and under save. Saying statements such as this fit the definition of being prejudiced.  None of the facts that you presented uphold your original statement that ALL Americans live such a lifestyle.  Thanks for your help in clearing up this matter.  

And sitting here in Germany has not given me a distorted view on savings.  Do I detect a hint of trolling here?     Or is this a typical question that comes from a jealous, east European, former (or current) socialist mentality?  Because, as we all know, ALL people born in east Europe are clearly jealous of a very successful economy.    (The previous statements in this paragraph are only sarcasm)

[kencameron]

(The previous statements in this paragraph are only sarcasm)

And, unfortunately, a good illustration of the usual impact of sarcasm on the credibility of its perpetrator. I was going to suggest that you gentlemen could maybe agree on the proposition that the USA leads the world in both public and private indebtedness, but brief research suggested that isn't actually true, at least on some measures. Maybe we could get back to photography, a love for which I am sure we all have in common.

[Bryan Conner]

And, unfortunately, a good illustration of the usual impact of sarcasm on the credibility of its perpetrator. I was going to suggest that you gentlemen could maybe agree on the proposition that the USA leads the world in both public and private indebtedness, but brief research suggested that isn't actually true, at least on some measures. Maybe we could get back to photography, a love for which I am sure we all have in common.

I agree, Ken.  I want to make it clear that I am not a person who lumps people into one large group.  I do not for one second believe my statements about a person from east Europe being socialist, or jealous etc.  I believe that Slobodan is only trolling and I was weak (stupid) enough to take his bait.  For that, I apologize.

[jeremypayne]

Yes, America lives on credit (and runs on Dunkin').

Do you need more proof?

Household Debt Service to income ratios peaked in late 2007.  These ratios had been running up steadily since the Gulf War recession.

Part of the headwind holding us back from trendline growth is the 'curse of savings'.

While for each individual household savings make sense right now, in aggregate this drop in consumption and rise in savings is holding back aggregate demand.

This is why it makes sense to run deficits and support aggregate demand with fiscal stimulus. 

We can either borrow to feed the goose that lays golden eggs, or we can eat it.

[jeremypayne]

.  I believe that Slobodan is only trolling and I was weak (stupid) enough to take his bait.  For that, I apologize.

What's with all the drama queens on the forum these days?

Slobodan is having a conversation about the topic at hand ... He's an economist, not a troll.  I also have a professional and academic background in finance and economics.

You are certainly allowed to participate, but you might want to study up a bit before you start throwing such phrases around like: "you are wrong".

[MikeB55]

What's with all the drama queens on the forum these days

Sighs.

I too am detecting a trend, unfortunately it's not an economic one.

Mike

[Bryan Conner]

What's with all the drama queens on the forum these days?

Slobodan is having a conversation about the topic at hand ... He's an economist, not a troll.  I also have a professional and academic background in finance and economics.

You are certainly allowed to participate, but you might want to study up a bit before you start throwing such phrases around like: "you are wrong".

So, you agree with Slobodan?  You think that all Americans spend more than they earn?  You think that all Americans believe that shop until you drop is a sign of patriotism?

[RSL]

. . . the 'curse of savings'.

While for each individual household savings make sense right now, in aggregate this drop in consumption and rise in savings is holding back aggregate demand.

This is why it makes sense to run deficits and support aggregate demand with fiscal stimulus. 

We can either borrow to feed the goose that lays golden eggs, or we can eat it.

Well, that's J.M Keynes's theory. And it's been disproven over and over again. That "curse" represents capital, which is what, over time, raises productivity and the whole economy. On the other hand if the velocity of that huge stock of funny money Bernanke's created ever gets high we're all going to need wheelbarrows full of money to buy our groceries.

[jeremypayne]

So, you agree with Slobodan?  You think that all Americans spend more than they earn?  You think that all Americans believe that shop until you drop is a sign of patriotism?

I think you are playing childish games with words while we are trying to have a discussion.

[jeremypayne]

Well, that's J.M Keynes's theory. And it's been disproven over and over again. That "curse" represents capital, which is what, over time, raises productivity and the whole economy. On the other hand if the velocity of that huge stock of funny money Bernanke's created ever gets high we're all going to need wheelbarrows full of money to buy our groceries.

I'm not sure what proof you think you have that (all else equal) increased savings does not reduce consumption and therefore reduces aggregate demand.

You are again repeating the Casandra calls of the republican party over the last several years ... it is as if reality was not happening in front of your eyes.

[Slobodan Blagojevic]

So, you agree with Slobodan?  You think that all Americans spend more than they earn?  You think that all Americans believe that shop until you drop is a sign of patriotism?

Can you please stop this nonsense of a straw-man argument, putting words in my mouth and misquoting me? Can you please point out my quote that uses the phrase "ALL Americans," especially in the sense that you use it, meaning "each and every one"?

[RSL]

I'm not sure what proof you think you have that (all else equal) increased savings does not reduce consumption and therefore reduces aggregate demand.

You are again repeating the Casandra calls of the republican party over the last several years ... it is as if reality was not happening in front of your eyes.

I never said that increased savings don't reduce consumption, Jeremy, but you're assuming it's a zero-sum game where the choice is between sticking your money in a sock and blowing it. Depends on what you mean by saving. If I'm an investor in Honda and Honda spends my investment (saving) on a press that makes better hoods and fenders cheaper, what I'm doing is increasing productivity, which, in the long run, is the only thing that lifts the economy. Same thing's true if my "saving" is in a bank that in turn lends it to a startup business.

In any case, my beef is with Keynes's idea that government spending can jack up an economy. It's a ridiculous idea prima facie. The government has no money. Every dollar it spends comes from the taxpayer, the guy who represents the real economy. If I take a buck from Peter and give it to Paul the transfer doesn't jolt the economy. Furthermore, since Paul is destitute and Peter isn't, it's pretty clear that Peter has a better clue about how to spend a buck than has Paul.

The Keynesian multiplier theory never has worked in practice and never will. That fact has nothing to do with political parties or Cassandra, and the reality I see happening in front of my eyes is a national disaster created by a group of Keynesians who refuse, or are too stupid to learn from experience.

[stamper]

Quote

If I'm an investor in Honda and Honda spends my investment (saving) on a press that makes better hoods and fenders cheaper, what I'm doing is increasing productivity, which, in the long run, is the only thing that lifts the economy.

Unquote

Can't Honda go to a bank and get money to buy a press? In the UK the Tories - arch capitalists - are planning for a bank set up by the government to provide cheap money which means reluctant private investors are bypassed. The problem in the UK is Russ that investors like yourself aren't investing and sitting on their riches which means that government action is needed to get the economy going. More than one way of skinning a cat?