US Politics - 51 threads to the election!

[Tormund Ukrainesbane]

Firstly, why is there no Federal Reserve in a free market? You people keep spouting this, but nothing about the Federal Reserve precludes a free market.

You must be joking.

The Federal Reserve is a price control. It is in fact the most important price control. They set the price of money. Failure to see this is a fundamental flaw in your economic perspective. The fed dictates the interest rate (the price) of all the money produced, and is itself the source. They have a monopoly on this product and service.

Anyway, none of this illiminates the core issues that caused the crash. New financial instruments aren't created by government intervention or the like, they are created spontaneously by the market in order to figure out more ways of making money with money.

Things like CDS, for instance, were created to allow investment by usually groups in less secure assets then they usually are allowed to invest in. And they weren't made by government, they were made by the financial sector all on it's own. (and in fact, they managed to 'convince' government not to interfere in the market at all)

CDOs, Mortgage-backed Securities, CDSs, Rating Agencies, etc. There's nothing in a "free market" that precludes or prevents their existence. They, in fact, are products of the market, absent government intervention. Hell, the main issue with many of these is that they went completely UNregulated.

Financial instruments are only part of the cause. If you have derivatives worth a few hundred million or a couple billion at the top you merely have a small problem. The problem arose when you ended up with several trillion. Where, oh where, did those funds come from? From the Federal Reserve of course. They offered these banks free money (which they would be stupid not to take) and pumped up their size and value well beyond what a market would bear. And everyone who wanted to buy all these products also lined up at the money trough of the fed and found a willing lender at oh-so-low interest rates.

You can argue government intervention helped make it worse (a rather dubious argument in many cases, but no matter the evidence, there's a few of you who can't give up the "Fannie/Freddie did it!" bullshit), but there is nothing about the basics of what caused the crash that wouldn't have just as easily occured in a "free market". Nothing therein procludes the activities that crashed the world.

Fannie/Freddie have still taken more bailout funds than all the big banks combined. Yet again you miss the point of additional (non-market) demand inflating prices (which in turn, makes derivatives and their like more attractive).

I mean, fuck, there's been financial crisises as long as there's been finance. Financial crashes predate government involvement in finance.

So why have government involvement in finance seeing as we get crashes with or without it? I really enjoy how the standard for a free market is "nothing can go wrong ever". While this is not applied to anyone else. A free market does not insure against swells and ebbs in national or global finance, it merely removes the risk of moral hazard and curtails the severity of said swells and ebbs. By eliminating the most distorting factors in the market, it makes the corrections that inevitably take place due to malinvestment and inefficiency less arduous.

[Shryke]

You must be joking.

The Federal Reserve is a price control. It is in fact the most important price control. They set the price of money. Failure to see this is a fundamental flaw in your economic perspective. The fed dictates the interest rate (the price) of all the money produced, and is itself the source. They have a monopoly on this product and service.

And you still haven't explained why this negates the "free market". Which you might actually want to give you definition of. You keep assuming this must be true, but have given no reason.

Financial instruments are only part of the cause. If you have derivatives worth a few hundred million or a couple billion at the top you merely have a small problem. The problem arose when you ended up with several trillion. Where, oh where, did those funds come from? From the Federal Reserve of course. They offered these banks free money (which they would be stupid not to take) and pumped up their size and value well beyond what a market would bear. And everyone who wanted to buy all these products also lined up at the money trough of the fed and found a willing lender at oh-so-low interest rates.

And again, even if you accept this, it still doesn't cause the crash. Only the free and conscious choice to do things like package shitty mortgages and rate them AAA does that. You are making my point for me here. All you are arguing is that the government helped make the crash bigger, not that it caused it.

Even when you are trying to refute my point, you still can't because your own formulation specifically requires the private sector to make shitty financial decisions. There's no government intervention there, just plain old free market failure.

Fannie/Freddie have still taken more bailout funds than all the big banks combined. Yet again you miss the point of additional (non-market) demand inflating prices (which in turn, makes derivatives and their like more attractive).

And yet their non-conforming loans are not defaulting at anywhere close to the private subprime rate. Fannie and Freddie weren't creating demand, the people trying to invest in mortgage-based financial products were.

So why have government involvement in finance seeing as we get crashes with or without it? I really enjoy how the standard for a free market is "nothing can go wrong ever". While this is not applied to anyone else. A free market does not insure against swells and ebbs in national or global finance, it merely removes the risk of moral hazard and curtails the severity of said swells and ebbs. By eliminating the most distorting factors in the market, it makes the corrections that inevitably take place due to malinvestment and inefficiency less arduous.

Because the crashes are far worse and more frequent without regulation. Seriously, your ignorance of history is showing here. Depressions and crashes were incredibly common the further you go back. I quoted earlier Adam fucking Smith, pretty much the father of economics, talking about the necessity of banking regulation because back in the 1700s they were having issues with banking crashes.

Or we could just look at what just fucking occured, where a lack of regulation and oversight led to a horrible, world-wide economic crash. But one that notably, was much less harsh on countries with tighter financial regulations.

You are making ridiculous and flat out false assumptions that are contradicted by facts and the historical record. Corrections were MORE arduous and MORE frequent with less financial regulation.

[Shryke]

http://money.cnn.com/2011/11/21/news/economy/payroll_tax_holiday/

With the super committee's failure, lawmakers are now facing a year-end legislative challenge that could have an outsized impact on the economy.

At issue: Whether to extend the payroll tax holiday, or let it expire.

Employees normally pay 6.2% on the first $106,800 of their wages into Social Security, but this year they've only been paying 4.2%. That tax break, however, is set to expire Jan. 1.

Failing to extend it would amount to raising taxes during a rough economic patch -- something that President Obama would like to avoid.

The super committee was expected to address the extension in its negotiations, but the group announced Monday it had failed, and the issue remains outstanding.

If lawmakers don't extend the tax break, many Americans will be getting less money in each paycheck starting in January.

Also, there's this gem of pure idiocy:

Jeff Sessions, the ranking ranking Republican on the Senate Budget Committee, told the Washington Post that the national debt was "a greater threat to us" than the weak economy.

Oh dear god.

[Atreides]

Well Iran's president was friends with Venezuela's president and those countries cooperated some, and that's Islamist+Socialist. So there you have it, solid proof. (if you're crazy) Now having not watched the debate, I don't know if this is what he was getting at. But I can only assume, because nothing else would make any sense at all.

[lokisnow]

Why does this bother you? Just that you figure he won't have the same blog format that he had at thinkprogress?

iirc, slate links usually start to load, then are overtaken by a screen-sized window advertisement. I find this annoying. It's not as bad as Silver taking 538 to the NYT, as best I can tell he hasn't bothered to do his senate race coverage nor extend his groundbreaking and stunning HoR coverage he did for the 2010 election. :(

[ants]

Frum seems incapable of recognizing that making health care a new entitlement -- which is inherent in the first bolded statement -- has never been a position acceptable to most of the GOP.

So does this mean the GOP's official position is that people who can't afford healtcare either hope they get it from charity or die in the streets?

[Ser Scot A Ellison]

Shryke,

What do you think:

http://cnnmoney.mobi/primary/wk_article?articleId=urn:newsml:CNNMoney.com:20111123:gold_eurozone:1&category=cnnm_international&pagesize=10

Is Europe going to save the Euro by returning to the Gold standard?

[Hereward]

Shryke, What do you think: http://cnnmoney.mobi/primary/wk_article?articleId=urn:newsml:CNNMoney.com:20111123:gold_eurozone:1&category=cnnm_international&pagesize=10 Is Europe going to save the Euro by returning to the Gold standard?

The article doesn't mention returning to the gold standard.

[Ser Scot A Ellison]

Hereward ,

What else do you call using bullion to support the Euro?

[Verboten]

They're after our turkeys! Pam Gellar has valiantly raised the warning about stealth halal Turkeys. Those dang Muslims, eating so many Thanksgiving turkeys that companies are even starting to cater to them! The utter horror.

Thanks, Mrs. Gellar, for making my afternoon.

I know an organic farm that has become richer and larger due to the fact that they can now sell more turkeys all year long due to their ties with the Muslim community.

ETA: Honestly the 'support small businesses' angle is probably the only way to argue with these people.

[Hereward]

Hereward , What else do you call using bullion to support the Euro?

What the article calls it, using gold as collateral for the debt, not the currency itself.

[Ser Scot A Ellison]

So, the gold is being used to back the Euro but the Euro isn't being pegged to the value of gold. Isn't that still moving away from fiat currency?

[Tormund Ukrainesbane]

And you still haven't explained why this negates the "free market". Which you might actually want to give you definition of. You keep assuming this must be true, but have given no reason.

If you can't understand why price fixing the money supply prevents a free market then there really is no point to the discussion. Honestly I'm blown away, I gave you more credit than that.

[Hereward]

So, the gold is being used to back the Euro but the Euro isn't being pegged to the value of gold. Isn't that still moving away from fiat currency?

No.

[Ser Scot A Ellison]

Testing to see if this thread stays on page two of GC.

[Nukelavee]

I avoid this topics, mostly because I really don't have that much knowledge of the American system, etc.

But...I read a very interesting article yesterday, about how Jean Cretien, a former Canadian PM, dealt with Canada's fiscal issues a decade or so back, and how it does or doesn't relate to America's current issue.

http://cnews.canoe.ca/CNEWS/Politics/2011/11/21/18997606.html

Basically, he just said fuck it, time to cut EVERYTHING, screw my political future.

The piece also points out where the Canadian system makes that kind of action easier than America's: Because there was no way to prevent him from doing it, with a majority government, it comes down to the Queen being the only check on him, and, well, like she notices anything over here.

[Shryke]

Shryke,

What do you think:

http://cnnmoney.mobi...nal&pagesize=10

Is Europe going to save the Euro by returning to the Gold standard?

For your question, no. One of the biggest issues with the Euro right now is that it's acting like the gold standard. The restriction in the money supply is what is putting governments like Italy at risk.

Your article seems to be suggesting instead to, basically, sell their gold (really, use it as collateral on a loan) in order to raise money.

[Shryke]

If you can't understand why price fixing the money supply prevents a free market then there really is no point to the discussion. Honestly I'm blown away, I gave you more credit than that.

And yet you continue to be unable to explain how. It's like you don't actually understand the point you are attempting to argue.

Give me your definiton of a free market and then explain why the Fed negates that model.

Until you do that, you are just blowing smoke out your ass.

Shit, nothing can be as obvious in this argument as you claim when you won't even define "free market".

[Former Lord of Winterfell]

Amazingly, Michelle Bachmann actually sounded quite reasonable last night on some aspects of the foreign policy debate, likely due to her position on the Intelligence Committee. She's not normally one for nuances of any sort, but she was last night. Still a definite no-go for me overall, though.

Cain just sounded more like someone trying to bullshit his way through something he didn't really understand, and Perry again seemed like the slow kid at the spelling bee.

Huntsman got far more time and attention than I can recall in any of the other debates.

[Tormund Ukrainesbane]

And yet you continue to be unable to explain how.

Because if I have to explain how price control and free market are different, then the rest of the conversation just isn't worth having. Particularly if that price control is the medium of exchange. It's such a simple concept that it boggles the mind that you don't understand it.