Calif. wildfires are caused by 40 or so years of misgovernment. Economic theory being used is false. - Politics Forum.org | PoFo

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#15046014
The current wildfires in Calif. demonstrate again that for the last 40 or so years America {and the other Western nations & Japan} have been misgoverned.

Many of you here blame the Baby Boomers for this. Well, I have news for you. For the 1st decade at least the 2 previous generations outnumbered the Baby Boomers at the polls. So, it wasn't just the Baby Boomers, or even mostly the Baby Boomers.

In fact, the problem wasn't the mass of the people. The problem is the current theory of economics that most everyone believes. And, this includes almost everyone here on this site. Economists attempt to prove their theories deductively because they can't do controlled experiments. The problem with *all* deductive proofs is hiding in the assumptions used. If even one of them is false the proof is useless. And, economists use obviously false assumptions and then make a claim that that the conclusions are good enough to make policy recommendations to politicians. Then, they ignore the evidence that after the policy was put in place the results were not at all what was predicted. This last thing is strong evidence that the Theory being used is not at all “good enough”.

The current economic theory being used by politicians has many flaws. I want to start with 2 of them.
1] It says the the US Gov. {and all like gov. which does not incl. those in the eurozone} is like a mom & pop corner store. That it must get dollars before it can spend dollars. It says that taxes fund the Gov. it says that running a surplus {the same as having a profit for the store} is a good thing.***
2] It says that that the US national debt must be paid back some day. It says the only way to do this is to collect more from taxes than the Gov. spends, “you can't borrow your way out of debt”. Therefore, we can't let the national debt grow too large.****

Based on your postings here on this site, you-all mostly agree with both of those claims. If those clims are false then you are just as much to blame for the misgovernment of America as the Baby Boomers you hate, because the problem is that most people have been brainwashed into believing those claims.
. . . This is so, because those claims have starved the American economy of sufficient income for 40 years. This is so, because *all* deficit spending automatically becomes someone's income and when he spends it someone else's income, etc., etc. Income gets spent or saved. If it is spent it adds the the GDP. If it is saved it is a drag on future increases in the GDP. This is why the US Gov. must deficit spend every year to replace what people save {and other leakages} or else the GDP suffers. If the GDP suffers then tax receipts decline.

The current wildfires in Calif. illustrate the $4T in deferred infrastructure improvements or repairs that the US as a whole has not made over the last 40years. This was caused by the prevailing economic theory making the voters resist taxes and deficit spending. This has not only been a problem for the infrastructure but it has also denied the people of additional income to make their lives better.
. . . The current economic theory has 2 other faults. It says the anti-trust laws are too limiting on big business and if they are reaxed then everyone will benefit. This has not turned out to be true.
. . . The 2nd one is that policies have been put in place for labor law that have resulted in real after inflation wages being flat since 1975. And, inflation has not been compute d correctly either. For most people it has been higher than the Gov. office has claimed. So, most people who live on wages have been squeezed between the actual inflation and their flat wages.

All this was not necessary. TINA is a lie. There Is an Alternative. It has not been used because the media has brainwashed the population with a false economic theory. If you still believe this theory, despite my and other's efforts, then you are as much to blame for the current mess America is in as everyone else.


.** . I can make a long list of examples where the predicted result didn't occur.
1] Trump's recent tax cuts were supposed to result in 6% GDP growth, which didn't come close to happening.
2] All the Repud tax cuts for the last 35 years fall in this category.
3] The austerity in Europe was supposed to being back prosperity, it hasn't. The EU is in a long term recession.
4] Japan has deficit spent for 25 to 30 years and its current national debt stands at 236% of GDP, the highest ratio in the world. The theory predicted that this would lead to high inflation, to high interest rates when gov. borrowing crowed out private borrowing, and soon lead the Japanese gov. to be insolvent. NONE of these results have occurred over the 25+ years of their deficit spending, and the Banj of Japan actually buys most of the bonds sold so it is the same as simply spending the cash into the economy. The theory says that this is going to result in hyperinflation very soon, but inflation is almost 0%.
5] From 2000 through 2006 Mainstream economists were saying that the policies that they had recommended and had gotten put in place had ended the business cycle and there would not be another crash. That if there was a problem it was with the “huge” US national debt. Then came the GFC/2008 and proved that the theory was false. The crash was not caused by th national debt, it was caused by private debt getting so high that too many of the borrowers could not make the next payment.
.*** . The US Gov. is not like a small store because the Gov. can and often does create more dollars whenever it needs them. In 2008 & 2009 the Gov. and/or Fed. Res. created {according to a reply to a FOIA request} $27T {yes $27T} dollars and lent or gave them to US banks, foreign banks, and other people. I have no knowledge of how much of that has been paid back. I assume it is over half and maybe close to 90%, but I know it isn;t 100%. See below for another huge difference.
.**** . The US national debt is not going to be paid off, ever. It can't be paid off. It doen't need to be paid off. The US can roll the bonds over or pay them with magic dollars as they come due because it can create dollars whenever it needs them. Doing this IS FAR LESS DAMAGING to the world's economy than not paying them when they come due.
. . . What the so called national debt IS REALLY is all the dollars of deficit spending that the US Gov. has spent and not taxed back yet. It is currently {look at it from the POV of the holder, now} the assets of the holder's. Using the taxing power to take these assets of the holder's away directly or indirectly is going to have the same macroeconomic effect as defaulting on the debt.
. . . Note, here I'm referring to the damage it would cause to the American and the world's economy, not the effects on each bond holder. The damage would occur because of macroeconomic forces or effects. Sucking $21T {an estimate of the current natl' debt} out of the world's economy in one day or over 50 years would destroy the world's economy, any way it is done.

Another data point I will point out is ---
I have posted a blob post by Prof. Bill Mitchell that Presidents of several Central Banks {BOJ, ECB, RBA, NZ res. bank, BOE, etc.} have said repeatedly that in a next economic downturn the gov. of their nations need to use fiscal stimului because monetary stimulus will be ineffective because interest rates are already near 0%.
. . . What this data point says is that monetary control of the economies has not actually worked that well and certainly will not work when interest rates are already at 0%.
#15046330
The US debt position is based on exorbitant privilege. It isn't sustainable.

I have nothing wrong with deficit spending for infrastructure, including for the California wildfires.

The politics of spending appropriations supersedes it.

A trillion a year of debt servicing, with continually ballooning federal debt, is a crisis situation. I know you disagree. The debt can't grow forever. It's certainly on a pace to grow until a collapse though. It won't be long until the national debt is 30 trillion. Then 40 trillion. How long can this go on? There's going to be a reckoning at some point.
#15046337
My experience with California wildfires is from 2003 and what was known as the Cedar Fire. At the time, it was the largest fire in California history.

The fire was driven by Santa Ana winds, and the conditions for a fire were certainly not unexpected. Dry, windy and low humidity are not the fire fighter's allies.

Probably the biggest problem in fighting the fire was that communication between agencies was almost non-existent. While you might think that spending money on modern communications equipment (ie: infrastructure) would've taken care of that, the reality is that the ability to not communicate wasn't the real problem. The problem was that the agencies involved didn't realize they couldn't communicate until it was too late.

The Cedar Fire came within a 1/4 of a mile from my home, which was located in the town of Santee (or, as I like to call it, "Santucky"). We were evacuated, and it was actually the decision of a local fire captain, who had one truck in the bay to handle other emergencies (car accidents, etc), that saved our entire subdivision. He loaded his crew onto his one truck and drove into the hills behind our homes and covered them with fire retardant. The next morning you could see the line where the flames stopped. Had he not done that our homes likely would've been lost; about 120 in total.

After the fact, the city fired him for his actions, claiming that he put residents in potential danger by creating a situation where there would be no available fire truck to respond to other emergencies. About 400 of us crammed into City Hall at the next City Council meeting and demanded he be rehired. He was.

There were some aircraft that could've been used, but they were already dedicated to another fire. The problem was that the conditions near those fires were so bad that the aircraft couldn't be used to fight those fires (there were, if I recall, 7 or 8 separate fires burning at the time) but, because those aircraft were already dedicated to those fires, they could not be used to fight any other fire, including the Cedar Fire.

That's a policy problem, not a money problem.

Military helicopters at MCAS Miramar could've been used for water drops, but there were issues with using military aircraft to fight the fire. Only after Congressman Duncan Hunter's house burned to the ground was there a strong push to use military aircraft (which never happened).

Again, that's a policy problem and not a money problem.

Another, albeit it less impactful, contributing factor to the fire, aside from the Santa Anas, was the underbrush that helped fueled the fire. I suppose it could be argued that it wasn't cleared regularly because of money constraints, but most experts at the time believed that, due to the immense size of the fire, the underbrush was only a minor contributing factor and that the fire was so big the timber would've sustained it regardless.

Fires don't get fought by throwing money at them. They get fought by having the right policies in place, the right equipment available to fight them and people who don't have their hands tied by bureaucratric bullshit to fight them...
#15046341
Crantag wrote:
Will it be the chicken, or the egg?



It will be the Trump.

Reserve status is reserved for important allies. It's kept because of the strength and stability of the currency.

Trump is harming all 3. There is a lot of inertia in this sort of thing. But Trump has started the avalanche. I don't know when it will hit you, but unless the next president is kinda amazing, it's a question of when, not if.
#15046354
Rancid wrote:is it possible to have a reserve currency that is not tied to a specific government?

The short answer is no. Why, you ask?
It is because the Chartalists are right. The value of a currency is derived from the FACT that the Gov. demands that taxes be paid only in that currency.
A fiat currency that isn't issued by a Gov. with taxing power is not going to have enough value to be a reserve currency. And, if it is not a fiat currency then you are back on something like a gold standard.
#15046360
Crantag wrote:The US debt position is based on exorbitant privilege. It isn't sustainable.

I have nothing wrong with deficit spending for infrastructure, including for the California wildfires.

The politics of spending appropriations supersedes it.

A trillion a year of debt servicing, with continually ballooning federal debt, is a crisis situation. I know you disagree. The debt can't grow forever. It's certainly on a pace to grow until a collapse though. It won't be long until the national debt is 30 trillion. Then 40 trillion. How long can this go on? There's going to be a reckoning at some point.

As I sort of explained in the OP, there is no such thing as a "national debt" in a fiat currency issued by a nation that has the 3 required elements of a sovereign currency. Instead that figure is just the amount of deficit spending that has not been collected back with taxes. It is the currency assets of the people {incl. people acting through a corp.} of that nation.
If the interest payments get out of hand the nation can reduce them by just using currency to pay some bonds as they mature and stop selling new bonds.
The constraint that does exist is the constraint of real things that the money is used to buy. If the economy can produce enough real things and services for the people to buy then there is little inflation. If the economy can't or doesn't produce enough things then there will be inflation.
BTW, most modern central banks want to see between 1% and 2% inflation year after year after year. Is this sustainable in your mind?
Currently the GDP of most nations is being fed by a growth in private debt. This is not sustainable in my mind. It is what caused the GFC/2008.

OTOH, ACC is a real problem and economic growth is one of its causes. I'm hugely worried about the climate crisis, not a financial crisis.
#15046394
Crantag wrote:The US debt position is based on exorbitant privilege. It isn't sustainable.

I have nothing wrong with deficit spending for infrastructure, including for the California wildfires.

The politics of spending appropriations supersedes it.

A trillion a year of debt servicing, with continually ballooning federal debt, is a crisis situation. I know you disagree. The debt can't grow forever. It's certainly on a pace to grow until a collapse though. It won't be long until the national debt is 30 trillion. Then 40 trillion. How long can this go on? There's going to be a reckoning at some point.

OK, fine borrow for infrastructure.
But, the devil is in the details.
For example, I would argue that spending on educating the next generation is infrastructure. Also, spending to keep the workers alive after you have paid to educate them, that is pay for the national healthcare system. And I haven't even spent a dollar on what most people see as infrastructure.
Just these 2 items are more than 20% of the GDP and I'd estimate that deficit spending rarely needs to be more than 10% of GDP.
If my labels & estimates are correct, then the limit to just "infrastructure spending" is quite meaningless.
#15046431
Steve_American wrote:OK, fine borrow for infrastructure.
But, the devil is in the details.
For example, I would argue that spending on educating the next generation is infrastructure. Also, spending to keep the workers alive after you have paid to educate them, that is pay for the national healthcare system. And I haven't even spent a dollar on what most people see as infrastructure.
Just these 2 items are more than 20% of the GDP and I'd estimate that deficit spending rarely needs to be more than 10% of GDP.
If my labels & estimates are correct, then the limit to just "infrastructure spending" is quite meaningless.

No disagreement here. Healthcare and education spending are also among the sorts of spending that create the most jobs, which in turn generate taxes.
#15046438
late wrote:It will be the Trump.

Reserve status is reserved for important allies. It's kept because of the strength and stability of the currency.

Trump is harming all 3. There is a lot of inertia in this sort of thing. But Trump has started the avalanche. I don't know when it will hit you, but unless the next president is kinda amazing, it's a question of when, not if.


IMHO as long as Russia and China keep being the cruel and untrustworthy (to their own people at least) and Europe is as weak and troubled as it is now, what the anti-Trump people predict here is NOT going to happen.
#15046440
Patrickov wrote:
IMHO as long as Russia and China keep being the cruel and untrustworthy (to their own people at least) and Europe is as weak and troubled as it is now, what the anti-Trump people predict here is NOT going to happen.



This is a long time coming, it will be the result of the inevitable failure of empire more than anything else.

However, Trump is speeding the devolution.

As I said earlier, there is a lot of reluctance to change. But another unpopular war that adds trillions to the debt, or a crisis like we had a decade ago, then you might get a flight from the dollar.
#15046442
late wrote:This is a long time coming, it will be the result of the inevitable failure of empire more than anything else.

However, Trump is speeding the devolution.

As I said earlier, there is a lot of reluctance to change. But another unpopular war that adds trillions to the debt, or a crisis like we had a decade ago, then you might get a flight from the dollar.


The prediction here (HK that is) is that China will fold / collapse first and there will be at least 1.4 billion people to help the dollar stay up.

I am not saying the US is not failing, but there are apparently worse empires out there.
#15046448
To all of the people who replied {except Crantag & Rancid},
I said the economic theory you believe and which is expounded by the economists you are quoting when they predict what you say they predict IS TOTALLY and COMPLETELY FALSE.

Do you reply to that? No, you assume I'm wrong and ignore me.
I don't think that you are being nice when you do this.
The entire theory you learned in college is false. Every prediction it makes is useless.
The national debt is not a debt. It is all the dollars that have been deficit spent and not taxed back. It can not be paid back. It doesn't need to be paid back. It only needs to be paid as each bond comes due. And as they come due each can be paid by borrowing the principal and the interest or it can be just paid off with magic money from the magic money tree. That is dollars that the US Gov. creates with keystrokes on a computer. What you all think is a debt is the assets of the American people who got them in exchange for their work or some thing the Gov. bought from them.
. . . The whole "national debt" nonsense is a holdover from the days 50 years ago when the world was on the gold standard. At that time the US Gov. needed to worry about a run on the gold supply of the US. This is no longer possible or relevant. The US created $27 trillion in 2008 & 2009 and gave or lent it to the world's banks and other people. This created no inflation and no damage to the credit of the US. Why can't you-all grok these facts?
. . . You need to open your mind and look at reality.

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