New Bill to Propose major tax changes to help the Economy?

Stimulus to help from entering a depression, bail outs to help from entering a depression, QE1 and QE2 to help us out of the recession, Possible QE3 to help unemployment in the future, And now Newly proposed major tax cuts and extensions to help our weak and fragile economy recover. Sure hope the Government knows what its doing. But if I had to guess Keynesian Economics of spending our way out of this mess might not be working as many had hoped for.


Link to CnnMoney New Tax Bill Stimulus

Spending Someone else's Money on Someone Else...

Although I do not agree with every theory of Milton Friedman's I do think his explanation on how inefficient Government Spending can be is very true.

The 4 ways to spend money

Congress has a deadline to extend the deficit

Congress must come to an agreement before saturday to extend funding to the already overwhelming government deficit.  Many fear that without the extension that more government employees could lose their jobs and more government programs could get cut.  However congress has been in this predicament many times in the past and has always favored an extension but i shouldn't have to point that out the deficit is almost at 14 trillion.  So who cares right we will deal with our debt issues when the time comes?


Today's economic problems are not about what we are doing now.  They are about what we have already done for past few decades. The mistakes we have made were the ideas to inflate credit to excessive levels in the hope of creating Wealth. We continue to bail out the top 3% of the rich and create programs to help the poor.  We watch as the middle class continues to disappear. The FED makes credit easy, and America borrows.  This borrowing inflates the money supply, which later inflates the prices and salaries.  To combat inflated prices we passed laws for minimum wages.  To combat rising costs we create more government programs to help those in need.  With government programs we fix prices so they never decrease.  We continue to repeat this over and over again; tax increases and decreases give illusions of reasonable income so government can continue to borrow and waste money.  We have destroyed the flexibility of free markets and continue to do so when it tries to tell us otherwise. 


We've borrowed from the future always expecting to figure the “big problems” out later. The future is here the future is today!  Its always been said that we were leaving debt for our kids and grandkids to figure out but its become more of a reality that we have created debt for ourselves to figure out. The value of money continues to lose its wealth overtime a hidden tax that no one takes into account.  We are merely borrowing and spending to sustain our unsustainable life styles. This is like trying to pay your credit bills with more borrowed money. Consumer economy is a myth. When the multinational corporations are done robbing America, they will simply move out to suck the blood of other growing nations. They are working hard to create consumer culture elsewhere around the globe, and they want to take as much as they can and pay as little as possible. In America consumers consume, go into debt and become poorer.  Someday if we don’t realize how to correct our bad habits the Governments Free Lunch of a free nation will be over. 

Economic thoughts and Opinions

I feel that recently with all the talk on fed that it is surprising to hear that some economist believe the Fed is not pumping enough money into the system to help a recovery.  How is creating trillions of new dollars out of thin air going to help our country in the long haul? How does increases on taxes for job creators encourage job growth? How many times for how long should unemployment be extended?  If creating more Demand really helps a recovery then why don't we just have the Government give EVERYONE some money so it can create new WEALTH and the economy can flourish.

 "14 trillion dollar deficit but who cares lets give puppies to everyone so they can be happy." -Hugh Jidette

What we should do is create Supply and in order to that we need to encourage Savings and creating jobs through sound investment.  We should cut down on the Government Spending, encourage job creators to stay in the U.S. so they can make profits and keep most of them.  Lets stop assuming that we can stabilize economy with Government spending and that peoples choices can be predicted nothing is perfect but nothing also works better than the free market system.  Let things run there course we continue to try to fix our economic problems and artificially keep prices from falling but this never works and makes things worse.  Our government has a spending problem! i said it they have a spending problem.  How much money are we going to charge on the China Visa Card, Japanese Master Card, Brazil Discovery Card and American Express Cards we have??  Eventually were only going to be able to pay off the interest on this debt each year at the rate of current Government spending.  And at the rate of the FEDERAL RESERVE the dollar is  gonna be able to buy a down-payment on a candy bar ten years from now.  Maybe the Government should seek one of those debt help hotlines and only be given a Paypal card so we can only spend what we take in.

Deficit Reduction/Debt Celling-Ron Paul

Unemployment Rate at 9.8%

The Federal Reserve's dual mandate has not created more jobs for the U.S. and policy makers are not helping the cause.  Its my personal opinion that congress is wrong to want to tax higher rates to those who make more money especially in this fragile economy.  In doing this we are sending a message that we the Government punish job creators and those willing to take large risks to create businesses.  You can argue that those who make over 250,000 may be better off than those who make less but in the long run is 250,000 dollars a year going to have the same purchasing power ten years from now?  Soon at this current rate 250,000 will someday be around the middle class average income, assuming we have a middle class in the future.

Here is interesting article by Peter Schiff economist and CEO of Euro Pacific Capital

Fewer Jobs and More Stimulus

Emergency Overnight Loans made by the Federal Reserve after 2008

Just how bad were some of the Financial Institutions suffering during 2008 to 2009.  Well after the 600 billion dollar bailout the Fed also announced that it had made a special loan program available from 2008 to 2009 in hopes of preventing another financial collapse from any investment bank during that time. This special overnight loan program allowed banks to receive large and I mean large amounts of emergency loans from the Federal Reserve.  Of course the banks would take the loans with the notion they would pay back the Fed plus a minuscule amount of added interest.  It turns out that with this loan program the Fed made over 9 trillion dollars in overnight loans and that is just scary number and truly shows how fragile are banking system got in 2008.

Here is the article from CNN Money describing who received what amount of loan and how many loans were processed. 

CNN Money Reports Fed Overnight Loans Program

Government Plans to Cut back on More Government Jobs Where does Unemployment Stand

Click the link BloomBerg News to read more.

BloomBerg Article on Government Job Cuts

Don't Raise the Debt Ceiling! by Ron Paul

As of November 7th, the total U.S. public debt outstanding reached an astonishing $13.7 trillion. This means that although Congress just raised the debt ceiling to $14.3 trillion back in February, the new Congress will face another debt ceiling vote almost immediately next year. Otherwise, the Treasury will not be able to continue issuing debt to fund government operations.

The upcoming vote will provide an interesting litmus test for the new Republican congressional majority, especially those new members closely identified with Tea Party voters. The debt ceiling law, passed in 1917, enables Congress to place a statutory cap on the total amount of government debt rather than having to approve each individual Treasury bond offering. It also, however, forces Congress into an open and presumably somewhat shameful vote to approve more borrowing.

If the new Congress gives in to establishment pressure and media alarmism about “shutting down the government” by voting to increase the debt ceiling once again, you will know that the status quo has prevailed. You will know that Congress, despite the rhetoric of the midterm elections, is doing business as usual. You will know that the simple notion of balancing the budget, by limiting federal spending to federal revenue, remains a shallow and laughable campaign platitude.  -For more of the article click on the link below...

November 30, 2010

Dr. Ron Paul is a Republican member of Congress from Texas.

Don't Raise the Debt Ceiling! by Ron Paul

Who likes to Take Your Money?!

Why does American Media Measure Economic Growth with Shopping for the Holidays

Once again the American Media such as NBC and MSNBC are showing "economic growth" in numerous videos of Black Friday shoppers and eager spenders this weekend.  Unfortunately to often is the idea that the economy is coming around being reflected as a result of gift shopping and endless buying.  But this is not economic growth and wealth is not being created.  The American people are simply buying items that are not manufactured or made in the U.S.  

Countries like China are happy to continue making products for us to buy but jobs are not being created for Americans in this process.  This definitely doesn’t encourage savings either and many Americans have very little to spend to begin with.  Most buyers are using credit cards and simply buying things they don’t need.  And those who are using real money may only have it because they are no longer paying a house mortgage because we know the financials have not recovered or simply relying on unemployment subsidies to fund useless purchases. Not to mention many Black Friday shoppers are not buying gifts for others but simply for themselves hoping to receive a good deal?

 I’m not discouraging buying gifts for the holidays or even spending in general but how many flat screen t.v’s, snuggie’s, and ipods does one household need.  Americans need to save money and slow down on credit borrowing.  Through savings maybe the U.S. can began to create real wealth and lead to Return of the Entrepreneur Kings.  

Happy Thanksgiving! Why is it that the U.S, Recovery is slower than the Rest of the World

It seems as though the U.S is on a much slower pace to recovery than other parts of the world. It may be that many people in general are beginning to learn about the Federal Reserve’s ways of “FIXING” the economy with low interest rate policies, which give those who save very little return on interest and give the illusion that borrowing is easy and affordable because there is more wealth available.  Even businesses, now aware of the dangers of a low inflation- sparked economic bubble, may clearly be refusing to fall for the age-old boom-bust trap.


Then again it could clearly be a lag effect that hasn't quite gone into work yet.  We clearly know the banks have yet to recover from their investment losses and with many homes and properties on foreclosure or short sale its a continued loss on their books just hiding within their balance sheets. For many buyers they have began to notice the hassle with dealing with banked owned homes.  The CPI has not changed significantly but its my prediction that as the PPI continues to go up companies will soon have to raise prices therefore costing us the consumer more.  With FED interests rate still remarkably low people may soon began to take risks with starting up companies and creating jobs.  My only fear is that if things do get better we as Americans will began to follow into the same mail invested traps as the past.  Causing even a larger economic downturn. It will be interesting to see how long interest rates remain relatively low.


Here is a brief article by Peter Schiff explaining his theory on why the Dual Mandate by the Fed doesn't even matter.  


http://www.businessinsider.com/debate-over-dual-mandate-2010-11

Humphrey-Hawkins Full Unemployment Act of 1977 (Full Employment and Balanced Growth Act)

During the 1970s unemployment and inflation levels began to rise, creating fears of an economic recession. In the past, the country's economic policy had been defined by the Employment Act of 1946, which encouraged the federal government to pursue "maximum employment, production, and purchasing power" through cooperation with the private sector. Some Congressmen, dissatisfied with the unclear wording of this act, sought to create an amendment that would strengthen and clarify the country's economic policy…

The Act's sponsors embraced conventional Keynesian economic theory (our country’s favorite theory of economics), which advocates forceful government spending to increase economic demand by impacting GDP. In particular, Keynesian theory asserts that the government can minimize the distress of business fluctuations by compensatory spending, intended to sustain or inflate investment levels by government spending and promote long term growth with the economy.

Consistent with Keynesian theory, the Act provides four measures to create temporary government jobs to reduce unemployment, as was attempted during the Great Depression.

1.     Full employment

2.     Growth in production

3.     Price stability

4.     Balance of trade and budget.

Somewhat contradictorily, the Act also encouraged the government to develop a sound monetary policy, to minimize inflation, and to push toward full employment by managing the amount and liquidity of currency in circulation.  Overall, the Act sought to formalize (and to expand Congress's role in) the economic policy process, as governed by the Federal Reserve and the President.

- Unfortunately inflation and deflation of the money supply and manipulation of interest rates are the Federal Reserves only options to try to meet these strict requirements.  I’m not sure but these options don't sound like there meeting the long term goals of promoting consistent growth for the economy...

Free Lunch theory explained

After talking with a friend and looking over a highly debated question asked in his Economics class I thought it would be good to repost a popular video explained by Milton Friedman on the topic "Free Lunch" explaining there is no such thing as a free lunch.

Big Ben Bernake still defends his decision on the 600 billion dollar pump

Cnn released an statement from Ben Bernake Federal Chairman of the Federal Reserve defending the Fed's decision to buy up to 600 billion dollars in treasuries.  Claiming that it has worked in the past and will create more jobs.

http://money.cnn.com/2010/11/18/news/economy/Bernanke_Frankfurt_defense/index.htm?source=yahoo_app

I'm not sure where Big Ben is getting his statistics from but what happen to the trillions of dollars the Fed already pumped into the system promising the same economic growth and new jobs and what perspective of past years is he looking at.  Cause it’s obvious in the short run things seem find when dot.comers were making tons of money by going public in the stock market and even when housing prices seem to sky rocket up to 4 times their original value but when you look at time from a long run perspective things are always not fine.  These so called mail investments never flatten off like every investor thinks and almost always plummet in value.  And who is left to fix the problems in the end the same group of theorists who hold believe in strict fiscal policy to maintain an economy is needed.  I bet today if John Maynard Keynes were alive he might be appalled at the degree at which government impacts the country’s Gross Domestic Product.  One thing we should all know by now is yes its great when the Government says it wants to subsidize programs for people but in reality it is not.  The Government never gets a good deal out of anything! War contracts for weapons, buildings, spoons, food, Medicare prescription plans, Medicaid etc...  Do you think the government gets quantity discounts, do you think the government gets quality product or services, do you think the government gets bang for its buck.  Your answer should be no because no one individual or company cares about treating the government like a loyal consumer.  Once congress or the Fed have made their decision their business is guaranteed for these programs or companies it becomes a done deal and "nothing is more permanent than temporary government program"- Milton Friedman.  I guess the point I’m getting to is that the Government acts has though it has so much to give but in reality Government has nothing and the only way it gives to you and I is by taking from you and I and in the end causing prices to shoot up! There is no such thing as perfect economic system but let’s just look at history and decide what is best for us.  Less government and more private sectors always leads to better jobs, deals, prices, and stable growth.

Here is hilarious but simple explanation for Quantitative Easing

Here is My favorite rap video on Economics

Fear the Boom and the Bust

Here is a quick link on the Recent announcement of the Federal reserve's plan on stimulating the economy.

http://curiouscapitalist.blogs.time.com/2010/11/03/will-the-feds-600-billion-plan-be-big-enough-to-revive-the-economy/

The fed said last Wednesday that it will buy $600 billion in Treasury bonds over the next eight months in a bid to boost the sluggish recovery by expanding the money supply. The action, known as quantitative easing, is intended to lower long-term interest rates for mortgages and other loans, boost the stock market, and increase inflation to be nearer to the 2 percent level the Fed unofficially targets.

Obama said in defense of this decision "The Fed's mandate, my mandate, is to grow our economy. And that's not just good for the United States, that's good for the world as a whole," Obama said Monday. "The worst thing that could happen to the world economy . . . is if we end up being stuck with no growth or very limited growth. And I think that's the Fed's concern, and that's my concern as well."


What are your thoughts on the Fed's latest decision.??

Cut Spending starting in 2012?

It's hard to believe that President Obama would want to cut spending on anything considering all the healthcare talk these past few years not to mention the bailouts.  But with all things to consider could we have afforded to let the banks fell? You think that by now after 70 years we could truly analyze the problems of the great depression and even though the problems today are not like the ones in the past, we should by now have some idea on how to keep the economy from spiraling down.  However Obama is not going to have a choice but to cut spending we have a deficit we cannot maintain.

Its seems like our only hope of stimulating the economy is by looking to the federal reserve who from there look to one man Ben Bernake and like his predecessor Alan G. his only solution is to create more money..  In itself this is a broken system because no one man should have the power to try to solve such an unpredictable problem.

Fortunately the fiscal commission announced today a proposal by Senator Simpson and Senator Bowls to cut the spending deficit by 4 trillion dollars beginning in 2012.  This kind of talk sounds real familiar oh ya Ron Paul has been talking about this for over twenty years.  Well I guess when you run a credit bill like the U.S. government you have to start thinking when do we run out of money?? Unfortunately both senators are being highly criticized but that is to be expected no one wants their funds cut.

Well here is the link to an article explaining the cuts in spending a few important ones are: cut in defense spending, domestic spending and raising the Social Security age... They even propose changing the tax code to lower percentages including corporate taxes and simplifying tax expenditures... but I’ll just have you read the article.

like always post some feedback very interested on your thoughts on the matter.


http://money.cnn.com/2010/11/10/news/economy/fiscal_commission_prelim_report/index.htm?source=yahoo_app




video links


http://money.cnn.com/video/news/2010/11/10/n_fiscal_comm_simpson.cnnmoney/

Currency Manipulation

Accusations of currency manipulation are causing tension between the U.S and China it will be a hard hitting topic in this week's G-20 gathering in Seoul.

So what is currency manipulation? And why does it matter?“By selling its own currency and buying up foreign reserves like the U.S. dollar, China has essentially pegged the yuan's value to the dollar instead of allowing it to move freely in foreign exchange markets.” 

Here is the rest of the article. 

http://money.cnn.com/2010/11/10/news/economy/what_is_currency_manipulation/index.htm?source=yahoo_app

House fails to extend Unemployment Benifts

Today the House failed to pass a bill that would have given the unemployed three more months to file for extended jobless benefits.  The legislation would have extended the deadline to file for federal unemployment benefits to Feb. 28, sparing 4 million people from falling off the rolls. The deadline is currently Nov. 30.   Congress just this year alone has already extended unemployment benifits 4 times allowing for the unemployed to file into a new tier four consecutive times.  Which cost the Government 34 billion dollars. With our current economic situtiation many Americans have lost their jobs and certainly do need help but when do we draw the line as far as how long benifits should last and at what cost? 

http://money.cnn.com/2010/11/18/news/economy/unemployment_benefits_extension/index.htm?source=yahoo_app

Follow this link to watch CBS interview with Rand Paul

http://www.youtube.com/watch?v=nJ5MvW4PsTE


What do you think about what Rand Paul has to say about fixing the national debt.