[Steve_American]

Rancid wrote:
Would you agree that Macron is sort of the sacrificial lamb for reform in France? Will some of the reform endure beyond Macron's tenure? Or will it all be reversed?

Further, is there an argument to be made that some of these reforms are just the bad tasting medicine that France needs to take?

B0ycey replied:
Reform is the bad tasting medicine we all need to take. Is it really frugal to spend above your income? Macron is trying to make France competitive but also affordable. I doubt he is sacrificing himself. He just falls on the same sword all his predecessors did before. That is, France needs reform but nobody wants to pay for it.

@B0ycey,
Clearly you are not an MMTer.
The problem in France is that the EU Treaty only allows a very small budget deficit. If a nation has a larger trade deficit, there it all goes out of the nation.

A good look at economic history shows that nations do the best when their money supply is growing. Under a gold standard, this means when it has a gold or silver mine. America did pretty well when gold flowed into it from the new mines in the west. Ancient Athens when its silver mines were producing. Europe when American gold flowed into Spain and then out again to the rest of Europe. Etc.

Fiat currency makes this easy. As long as the Fiscal Conservatives are there to keep it from getting out of hand there will be no inflation. There must almost never be a surplus except to stop high inflation. There must otherwise always be a deficit large enough to keep the economy moving. So, you can have reform and not have anyone "pay for it".

[B0ycey]

@B0ycey,
Clearly you are not an MMTer.
The problem in France is that the EU Treaty only allows a very small budget deficit.

Until the Eurozone is a monetary system of equal responsibility, is there another way? I suspect there is only so many more Eurozone crashes until this becomes a reality due to initial overspending. But that is another topic all together.

Although I will say that despite being a fan of Keynes, MMT never takes account of inflation. By all means increase debt in social projects to increase GDP, but not to subsides over spending. It is counterproductive and only leads to inflation by flooding the market in Franc (Euro).

[Rugoz]

Reform is the bad tasting medicine we all need to take. Is it really frugal to spend above your income? Macron is trying to make France competitive but also affordable. I doubt he is sacrificing himself. He just falls on the same sword all his predecessors did before. That is, France needs reform but nobody wants to pay for it.

Macron is an idiot.

Abolishing wealth taxation, why? One can make a good argument that wealth taxation is more efficient than capital income taxation, hence if anything he should shift from the latter to the former. All he does is make himself unpopular. The same thing with carbon taxes. Most countries design them to be revenue-neutral, because that makes them politically acceptable.

Finally, since the protests began, he regularly pours oil into the fire by saying something arrogant. As if he can't help himself.

[Steve_American]

Until the Eurozone is a monetary system of equal responsibility, is there another way? I suspect there is only so many more Eurozone crashes until this becomes a reality due to initial overspending. But that is another topic all together.

Although I will say that despite being a fan of Keynes, MMT never takes account of inflation. By all means increase debt in social projects to increase GDP, but not to subsides over spending. It is counterproductive and only leads to inflation by flooding the market in Franc (Euro).

Well, there you are flatly wrong.
I have seen with my own eyes writings by MMTers about inflation. And have seen youtube videos too.
You may disagree with their views, but they do explain why inflation will or will not happen. What sorts of situations result in high inflation.
And the Fed., and Japan, and many nations target an inflation rate of 1% to 2%, so hopefully you meant inflation of more than 3% or so.

[skinster]

[RhetoricThug]

Watch out for major noospheric shifts

There's a media blackout. Unlike Arab spring, intelligence agencies refuse to fuel yellow vests.

The protest bug is spreading like a social contagion.

Some 200 million workers on strike against India’s Prime Minister Modi

India will come to a halt today and tomorrow as at least 200 million workers in the public sector, services, communications and agriculture stage a strike across the country organised by ten labour unions opposed to a new labour law that would undermine the rights of workers and unions.

The Indian government approved the new legislation on 2 January. The strike will be a de facto verdict on Prime Minister Narendra Modi and will provide an opportunity for millions of workers to protest against high prices and high levels of unemployment.

John Dayal, general secretary of the All India Christian Council, told AsiaNews that the event was exceptional, "one of the largest ever organised in the country, planned in advance in every detail." In his view, the most important thing is that it "is taking place on the eve of general elections that will mark the fate of the prime minister".

Protesters have blocked several cities, clashes have broken out and damages have been reported. A 57-year-old woman died in in Mundagod, a city in northern Karnataka, during a local protest.


http://www.asianews.it/news-en/Some-200 ... 45915.html

The L.A. Teachers' Strike Highlights Growing Division On Who Decides: Parents or Government?

The Los Angeles teachers’ strike is in its third day, with no end in sight and only about a quarter of the L.A. Unified School District’s 600,000 students attending classes, which are being taught by substitute teachers.

The strike by the 31,000 members of United Teachers Los Angeles, the union that represents not only teachers, but also nurses, counselors, and librarians, is ostensibly about higher pay and more benefits. That a teachers union, in California of all places, would need more pay and benefits is curious. After all, government unions—especially the teachers unions—enjoy enormous clout in California, from the governor’s office to the Democratic supermajority in the legislature down to local school districts.

https://www.forbes.com/sites/chuckdevor ... ee5f3f46b7

Egypt banned the sale of yellow vests. Are the French protests spreading?

Wearing high-intensity yellow vests, protesters demonstrated for weeks in Paris and other French cities against a planned fuel tax increase and other economic issues. Protesters in Iraq, Bulgaria, Israel, Taiwan and other countries recently took to the streets in yellow vests as well. Fearing similar protests the Egyptian government in December banned the sale of yellow vests.

https://www.washingtonpost.com/news/mon ... bb101bb87b

The record-breaking government shutdown is putting the US at risk of a major cyberattack

The partial US government shutdown is thought to be putting the nation at serious risk of cyberattack, as many employees who monitor the nation's defense systems are not at work.

In an email to Business Insider, a spokesman for the Cybersecurity and Infrastructure Security Agency, part of the Department of Homeland Security, admitted that officials have "ceased a variety of critical cybersecurity and infrastructure protection capabilities" during the shutdown.

https://www.businessinsider.com/governm ... ing-2019-1

IF the global economy enters a recession, you need to prepare yourself for widespread social disruption.

[Rancid]

IF the global economy enters a recession, you need to prepare yourself for widespread social disruption.

I'm going on a stock shopping spree if a recession hits.

[skinster]

Didn't know about Egypt but the teachers' strikes in LA and the same in India made my heart flutter, which is probably not a good thing, health-wise.

[chrisw]

IF the global economy enters a recession, you need to prepare yourself for widespread social disruption.

How do you define "social disruption"?

[RhetoricThug]

How do you define "social disruption"?

A general disruption (localized then spreading after the initial shift/shock in the noosphere) in the flow of goods and services. Labour strikes, wandering political movements, followed by fiscal non-compliance (taxation issues, Gov bailout plans). Social disruption could be triggered by monetary policies or hyperinflation. Moreover, various economic bubbles (housing market, student debt, etc) could trigger social disruption. A climate catastrophe could trigger large scale disruption, if say there's a food shortage and the cost of food sky-rockets. Let us not forget about a pandemic. Health scares affect budgets. Man-made technological disasters (think cyber attacks or network infrastructure glitches, perhaps currency manipulation) can potentially devastate global markets as well.

If there's a "standard model" of economic distribution in which the global economy operates, that standard model can be disrupted by a number of things. The global economy is a distribution network, and the largest nations (let's say by GDP) depend on one another. Hence why global debt is a tangled web. If you don't believe this simple statement, investigate the last recession. The housing bubble, namely the mortgage market, sent shock waves through the global economy when it burst.

I will define social disruption as a general disruption in the flow of goods and services which ultimately compose the standard model of the global economic network.

[Rancid]

A general disruption (localized then spreading after the initial shift/shock in the noosphere) in the flow of goods and services. Labour strikes, wandering political movements, followed by fiscal non-compliance (taxation issues, Gov bailout plans). Social disruption could be triggered by monetary policies or hyperinflation. Moreover, various economic bubbles (housing market, student debt, etc) could trigger social disruption. A climate catastrophe could trigger large scale disruption, if say there's a food shortage and the cost of food sky-rockets. Let us not forget about a pandemic. Health scares affect budgets. Man-made technological disasters (think cyber attacks or network infrastructure glitches, perhaps currency manipulation) can potentially devastate global markets as well.

If there's a "standard model" of economic distribution in which the global economy operates, that standard model can be disrupted by a number of things. The global economy is a distribution network, and the largest nations (let's say by GDP) depend on one another. Hence why global debt is a tangled web. If you don't believe this simple statement, investigate the last recession. The housing bubble, namely the mortgage market, sent shock waves through the global economy when it burst.

I will define social disruption as a general disruption in the flow of goods and services which ultimately compose the standard model of the global economic network.

]

This didn't happen during the great recession. Why would it happen now in what most people believe will be much light/easier recession?

[RhetoricThug]

Obviously I'm not an expert... But why do you think the global economy can continue to grow and carry on unchecked? Will the U.S. raise the debt ceiling again and again and again, ad infinitum? Do you think the biosphere can handle exponential growth?

]This didn't happen during the great recession. Why would it happen now in what most people believe will be much light/easier recession?

Worldwide attitudes (especially modernized nations) will be different, and climate events will become more dramatic/costly. Not sure how global deficit spending can continue... In America, in particular, the Democrats create new programs while the Republicans cut taxes, both policies add to national debt.

Every president borrows from the Social Security Trust Fund. The Fund took in more revenue than it needed through payroll taxes leveraged on baby boomers. Ideally, this money should have been invested to be available when the boomers retire. Instead, the Fund was "loaned" to the government to finance increased spending. This interest-free loan helped keep Treasury bond interest rates low, allowing more debt financing. But it must be repaid by increased taxes when the boomers do retire.

https://www.thebalance.com/the-u-s-debt ... ig-3305778

Debt is yet another problem for baby boomers. On average, they’re more than $110,000 in the red, a burden more than 50 percent higher than the amount carried by people born in the 1930s.

One-third of homeowners over the age of 65 were still paying off a mortgage in 2012, compared with less than a quarter of people in 1998 — and the median amount they owed nearly doubled to $82,000 from $44,000.

Meanwhile, the number of people aged 60 and older with student debt quadrupled between 2005 and 2015, to 2.8 million from 700,000.

https://www.cnbc.com/2018/11/07/one-thi ... e-58-.html

It's unlikely America will ever pay off its debt. It doesn’t need to while creditors remain confident they will be repaid.

Most creditors don’t worry until sovereign debt is more than 77 percent of GDP, according to the World Bank. As of March 30, 2018, the U.S. public debt was $15.4 trillion and GDP was $20.4 trillion. That made the U.S. public debt-to-GDP ratio 75.5 percent, just below the tipping point.

https://www.thebalance.com/will-the-u-s ... ff-3970473

Furthermore, other countries continue to lend to Merica because...

Current Foreign Ownership of U.S. Debt

In October 2018, China owned $1.14 trillion of U.S. debt. It's the largest foreign holder of U.S. Treasury securities. The second largest holder is Japan at $1.023 trillion. Both Japan and China want to keep the value of the dollar higher than the value of their currencies. That helps keep their exports affordable for the United States, which helps their economies grow. Despite China's occasional threats to sell its holdings, both countries are happy to be America's biggest foreign bankers. China replaced the United Kingdom as the second largest foreign holder on May 31, 2007.

https://www.thebalance.com/who-owns-the ... bt-3306124

Why These Countries Are Dumping U.S. Treasuries and What It Means for the Dollar

According to the latest published data, China and Japan dumped U.S. Treasuries the most in August. China reduced its holdings for the third straight month,and its holdings are off from the peak seen in 2017. Japan became a seller in August, with its holdings now at the lowest level since August 2011 and Saudi Arabia were buyers of U.S. debt in August. The broader trend has been clear in 2018. China, Japan and Russia are all sellers vs. Saudi Arabia as buyers. This has driven the global share of USD reserves to its lowest since 2013.

Russia's central bank has sold some $85 billion of its $150 billion holdings of U.S. assets from April through June, as the U.S. placed sanctions on its country and businesspeople. According to the recent data released by the International Monetary Fund (IMF), the percentage of U.S. national currency in the global central bank reserves declined to 62.3% in the second quarter, while holdings in the euro, yen and yuan gained as allocations changed.

https://realmoney.thestreet.com/article ... ans-dollar

I guess DEBT is one of the great wonders of the world.

It's so mysterious and complex, I'm in awe of the great DEBT.

[Rancid]

Worldwide attitudes (especially modernized nations) will be different, and climate events will become more dramatic/costly. Not sure how global deficit spending can continue... In America, in particular, the Democrats create new programs while the Republicans cut taxes, both policies add to national debt.

There's a strong argument to be made that government debt isn't as big of a problem as people make it seem. Many economist claim that what's more important is that corporate and personal debt are in check. In fact, corporate and personal debt are lower now than it was before the 2008 recession.

[RhetoricThug]

There's a strong argument to be made that government debt isn't as big of a problem as people make it seem. Many economist claim that what's more important is that corporate and personal debt are in check. In fact, corporate and personal debt are lower now than it was before the 2008 recession.

Oh, okay. I'll email planet Earth and tell it to chill out. Doctor $$$ bags said the growth is benign.

Again, why do you think the global economy can carry on unchecked?

[Rancid]

Again, why do you think the global economy can carry on unchecked?

Don't get me wrong. I think a recession will happen eventually. I just don't believe it will be as earth shaking as some would claim. In many ways, the global economy is in better shape now than just before the 2008 recession.

I am extremely mildly optimistic about the future. I intend to go on a stock shopping spree when the next recession hits.

[RhetoricThug]

I am extremely mildly optimistic about the future. I intend to go on a stock shopping spree when the next recession hits.

Pick one. Nevertheless, I get it, you're optimistic and an opportunist.

Gov bailout funds stopped the recession from becoming a depression.

BTW, Intragovernmental debt and public debt make up the national debt. Public debt is larger than intragovernmental debt. Low interest rates manipulate the figures. We increased the money supply and borrowed from the future, Rancid.

Now, 10 years after the collapse of Lehman Brothers, we’re seeing the results of the grandest central-bank experiment in history. On the surface, it looks like mission accomplished. In the U.S., the unemployment rate is near a 48-year low, the S&P 500 Index recently reached another all-time high and consumers are about as confident as they’ve been this millennium. But dig a little deeper, and you’ll find that this road has been paved with debt, debt and more debt — and that it’s a one-way street.
https://www.bloomberg.com/graphics/2018 ... nd=premium

Lastly, the unemployment rate can be low, but it desn't mean real wages keep up with the cost of living.

[Rancid]

Gov bailout funds stopped the recession from becoming a depression.

BTW, Intragovernmental debt and public debt make up the national debt. Public debt is larger than intragovernmental debt. Low interest rates manipulate the figures. We increased the money supply and borrowed from the future, Rancid.

Now, 10 years after the collapse of Lehman Brothers, we’re seeing the results of the grandest central-bank experiment in history. On the surface, it looks like mission accomplished. In the U.S., the unemployment rate is near a 48-year low, the S&P 500 Index recently reached another all-time high and consumers are about as confident as they’ve been this millennium. But dig a little deeper, and you’ll find that this road has been paved with debt, debt and more debt — and that it’s a one-way street.
https://www.bloomberg.com/graphics/2018 ... nd=premium

Lastly, the unemployment rate can be low, but it desn't mean real wages keep up with the cost of living.

Let me ask you this. How much debt is too much? What's the number? No economist can call out a specific number, or even take a good guess at one.

I don't deny that some sort of economic collapse can happen, but I just don't see how the next recession will be that collapse.

[B0ycey]

Let me ask you this. How much debt is too much?

When supply outstrips demand.

[Rancid]

When supply outstrips demand.

That's a little too vague of an answer. supply and demand for what exactly? Moreover, when? how?

[B0ycey]

That's a little too vague of an answer. supply and demand for what exactly? Moreover, when? how?

Currency is worth as much as someone else is willing to exchange for it Rancid. Flood the market with it and the price crashes.

Also, if I am going to be frank, I would even go as far as to say the Dollar is already over valued. Demand for it being a reserve currency and being the currency used for commodity exchange keeps it inflated. But one day, no doubt during a crash, hyperinflation awaits the Dollar and the financial system will reset itself at the expense of the capitalist. But of course, I could just be a doomsayer. Time waits to find out.