Will Analytical and Objective Thinking Guide America's Future Course?

What do you think about the problems of ignorance and apathy in our society?

I don't know, and I don't care--so what's the prob?

(Alas, that about sums it up...)

I don't want my vote to be "no," but I'm inclined to worry about that.

This comment is spot on and doesn't just apply to the USA.

GA Ed Weldon,

You identified much of the problem when you mentioned the thought process of a great deal of our society who is apathetic about what is happening to us. I say it that way because if people won't vote, either way, they deserve what they get and shouldn't complain when they get the shaft.

"Ignorance in our society is largely the result of too much prosperity and protection from the hazards of life."

There is a word picture of this process. It is called The Cycle of the Body Politic. The following is a brief description:

The concept of the cycle, beginning with bondage, is this: Bondage will lead to Faith that there is something better. In order to move out of Bondage you need Courage which comes from Faith. You have to make a decision to break free, which leads to Freedom. Freedom bestows Abundance (wealth). The danger here is to think that the government has established wealth - it is the individual, not government, which creates wealth. Wealth soon leads to Selfishness - people become self-centered. Clearly then, Complacency is next - I mean, really, is there anything better than self-satisfaction?

This is where the real danger sets in. People stop paying attention - they are not aware of what is going on around them and don't care to know. The "it won't happen to me" mentality sets in. Hello Apathy! "I'm not interested in politics", shows an open lack of concern for every aspect of being. All it takes is one hardship (economic crisis?) to get out of hand and soon the public is in Fear. Everyone then depends on someone else (usually the one who got us into the hardship) to fix the problem, as they have been out of the loop ("It won't happen to me!") and wouldn't know where to start. This, then, provides complete control to the fixer (agitator/regime) and the nation is led back into Bondage.

Expediency is rarely a good motivation for proper action taken. Most of the time we can make small decisions along the way to prevent the big decisions from having to be made. This fiscal fiasco has been a long time in the making by legislators on both sides of the aisle, and it won't be solved in the time frame that people would like it to be solved in. It will also hurt more than it would have if we had a proper view of the role of government to start with.

"My reading of history convinces me that most bad government results from too much government." Jefferson, Thomas

You state in the OP that "now that the crises has passed ...", I don't think it has passed it has just gotten worse with the ok to print $2.7 Trillion, or whatever the exact amount was, that we don't have. It will just make the solution to the problem that much worse and painful in the future.

Wow! I thought my world view was bleak. Most of what you say has been bubbling around in my head for quite a while but I've never been able to put it together quite as clearly as you just did. Thanks, and GA...I guess. Your reference to the Leadville mine reminds me of the railroads' strangle hold over California in the late 1800s. I guess what we are watching now is that tactic writ large.

"The Colorado legislature took 10 years to muster sufficient political strength to be able to legislate any safety rules and generations before it could do anything about the destruction of the upper reaches of the river."

I think it needs to be said that there is a significant difference between a small government and a useless or powerless government. Government doesn't have to be big to be powerful.

Chris

I agree, Chris. This all goes back to my post about honesty in government. The problem is the lack of honesty and the perpetuation of legalized bribery, a.k.a., campaign contributions.

I'm not liking the looks of things Ed.

I think the federal government has become far too large and overreaching, at way too high of an expense.

I think the states have followed suit with their citizens, and have come to depend on the federal government to help them do it.

I think far too many citizens have become dependent on some form of government assistance.......................they will vote for the people that promise to continue it.

I hate to sound cynical, but being a bit of a political junkie, as well as a bit of a numbers guy, as well as someone that likes to reflect on human nature........................the future looks fairly gloomy to me. I hope I'm wrong.

Unfortunately, in my lifetime, I have never seen analysis and logic fuel any political debate. I suspect that isn't going to change.

I

I'm not liking the looks of things Ed.

Neither do I. But I refuse to sit around and do nothing.....

I think the federal government has become far too large ...I think the states have followed suit with their citizens, ....too many citizens have become dependent on some form of government assistance.

I feel the way you do and, yes, I too am dependent (on Social Security). I've already taken out more than what I put in even allowing for interest. Could we live without it? I'm one of the lucky ones who could -- As long as my health stays good. I'd give up a lot of material things. But I've always maintained that I could be happy with nothing more than the basic life needs (food, shelter, defensible space) and a pencil and some paper. Look at some of the most primitive societies and you will see more happiness per person than we see in our own tribes with all our wealth.

Is the government too large? The answer could be the subject of a big book full of things we already know and things we probably don't want to know. Few would read it. One seldom mentioned point is that growth in population and demand for resources in most large nations is stretching the ability of governments to actually govern with their existing structures. One such phenomena is the growth of tribalism. That is happening right here in the USA. There are some in our nation who would like to see that go forward. In the business world it is much easier to negotiate with one "tribe" than with a giant "confederation".

In the worst scenario the "United States" breaks the bonds of the "Union" and degenerates into loose confederations of states (imagine for a moment a "Heartland States of America" sitting on all our mid-continent agricultural and mineral resources"). I sometimes imagine the smart money behind some of our media noise machines which scream patriotism, Constitution, founding fathers and all that when the real objective is to emasculate the essence of the USA, our federal government. Is this all about a transfer of power to the wealthy owners of multinational businesses? Are there people of such wealth and financial power as to be of questionable loyalty to any one nation behind much of this? I think we ought to go back and look at Vladimir Lenin and his tactics of a century ago. We may see some interesting parallels.

I hate to sound cynical, .......the future looks fairly gloomy to me. I hope I'm wrong.

It looks gloomy to me also. But I can't sit still and let it happen. We are not the only nation facing this. We have a lot of good things on our side. But we have handicaps. At once our freedoms are a two edged sword. I believe in the next 10 or 20 years our Constitution, especially our First Amendment freedom of speech, will be put to a test as the foundation of our system of government.

.......................they will vote for the people that promise to continue it. .... I hope I'm wrong. Unfortunately, in my lifetime, I have never seen analysis and logic fuel any political debate. I suspect that isn't going to change.

I think analysis and logic gain importance with the level of threat to our way of life. Most noteworthy was our entry into WWII. History quietly records the disagreement and dissent that existed in our nation between Hitler's invasion of Poland in 1939 and Pearl Harbor. December 8 got us to focus and agree on action. The problem with wars, and most any serious crisis, is that the intelligence upon which to base decisions is weak. And wars are costly.

I maintain that it will take a catastrophe to get our nation back on track. We've had four opportunities in the way of catastrophes in this century and have managed to sufficiently dampen the effects of all (911, Katrina, Wall Street 2008, and last week) Some may say all were wasted. It's reasonable to surmise that the Tea Party strategies of the past month or two were conceived to try and bring on an economic catastrophe that would be serious enough to galvanize America into action but not so serious as to threaten our destruction.

Somehow through all of this I can't believe that Americans who can calculate to the last penny how much should be in their weekly paycheck cannot see the biggest drain holes in our federal and state budgets and continue to cling to fairy tales about how to fix deficits and what are appropriate tax levels.

Ed Weldon

Hi Ed

Dear participants

I watched the American news yesterday, like every day, when and if I find the time. PBS that is, the only free to air we can get here in Australia. I am very concerned about the state of affairs because what happens in your Nation will have an influence on what happens here, hence me commenting.

I saw a guy, politician, can't remember his name but he was pleading with politicians not to go on holidays but to stay and do some overtime. If I were in a similar position I would do overtime until the cows come home and then a bit. I think it is completely irresponsible for elected members to take time off when the proverbial is hitting the fan and has done so for some time now.

What I can also see from here is that your President has great character, stamina and all the flak he is subjected to is not deserved. I also think that his chances of fighting the results of under or mis- or not at all educated and mass media indoctrinated population is a burden he will hopefully overcome. It amazes me that he is not putting his foot down, but that is democracy for you (us) I suppose.

I just hope, from the bottom of my heart, that some kind of consensus will be reached and your nation will come out the other end much stronger. The choice lies with you and your ability to keep your sights (wind screens) free of gunk which is clearly interrupting your view. This 'vehicle of yours' is traveling at high speed and the brakes have not been tested in a long time, if ever.

Please take care, we are all watching and I think that many of us none Americans wish that you can get this monster of a machine under control before it hits something and hurts a lot of innocent bystanders. I trust your President and admire his truly statesman like demeanor. I also think that the Bush years have created this and am surprised he and his cohorts are not put in front of a court.

I wish I could be more constructive but like I said, the daily news is just not enough to be in a position to make suggestions of whatever kind. I can only voice my opinion and I hope that I haven't hurt anyone's feelings by doing so. She'll be right is what we have said for many years, an Australian colloquialism, which has died a while back and we are in denial as well and it hurts me to admitting that.

I am surprised that this thread has not been shut down yet and hope it doesn't, so that I can get the chance of being educated by people like your self and others who have much better insight into what is happening.

She'll be right as rain Mate,

Ky.

OK, we now know what appears to be what Ron Paul has to say on this issue. Personally I think Thomas Jefferson's words are far more powerful.

But what are the thoughts of lighthasmass?

Ed Weldon

the math is always the same....

"When your Outgo is greater than your Income, then your Upkeep will be your Downfall." Unknown

Many forgot, but during WWII Argentina was California: 5th or 6th largest economy of the Earth. Both sides courted them, they remained neutral and wealthy. Then they discovered, they can VOTE public benefits.

Where are they NOW?

NOWHERE!

Interesting point about Argentina. I suspect there is an interesting study of the past 70 years there. Are we heading down the same path? Theirs was not a nice trip.

And what does government do that isn't a public benefit? The problem is always the fellow over there behind the tree who is more public than you or me.

We all want and get more than we are willing to pay for. 200 years ago that worked because the federal government ran primarily on tariff receipts. Now the difference is made up by borrowing. That is a guidepost for how much to cut costs and/or add revenue. That's the easy part. Where and how much is the tough part.

The other issue is the question of what is a sustainable level of national debt? And how long in years should we take to meet that objective? Action to eliminate the debt at this point may be as harmful as doing nothing to stop its growth, especially if the time frame is short.

Back to the original question. Can we begin to discuss specifics in something more objective than hyperbolic adjectives without all the decision makers running out to the room screaming "non starter"?

Ed Weldon

The discussion, especially the last few notes are telling. In my remarks I will be the messenger, not the message. If I bring up an opinion of mine, I will be plain.

First of all, real economics is a solid science, like physics, chemistry. The present discourse is purely political. It is about economics now, when the pigs will fly. I have read Keynes, the revered macroeconomist. Well, IMHO, he is a collection of rules allright, but there is nothing macro about him in a modern sense. On the other hand, he was a progressive. For some that is enough. BUT, that is then a political discourse, what we see today. In it, those not grounded in economic 101 will be at sea, and at mercy to the tuggers of their hearthstrings.

As we are here at an engineering site, a such physical model is appropriate. An electric motor is the simplest model. Idle, it runs, but does nothing for you. As you start loading it, you get more and more useful work out of it. Until it can give no more. The motor is saturated. You can force it, to no avail. It can stall, burn out. But, you get no more out of it. And there is the matter of stability. At low load it is unconditionally stable. At peak, no amount of manipulation matters any. Past that, the relationship goes into reverse, unstable. It tends to snap either to the low load stable regime, or stall. Now view it as an admittedly simple model of taxation, where you are the taxing state. As you study economics, it will turn out, all the described features exist with elaboration, as people are not a simple motor.

What portion can be extracted without stalling the economy? At extraction I mean it is taken away from you. The state then burns it, wastes it, makes pretty war with it, whatever. At ancient times max. 5% in good weather, in bad weather -?% (famines etc., see Somalia now). Modern, industrialized nations tolerate 15-20%. In good times at high end in bad times at the low end. At the same times blatantly ignorant politicians promise a never ending steady flow of goodies. So, what happens in a downturn? No reserves, borrowing. For obiect lesson, see any of the state's struggles with exactly that problem. It is not pretty! How to paper over temporarily? Borrow. With your own borrowing, you are responsible. The politician making the irresponsible promise is long gone into the sunset, leaving anybody else holding the bag.

What is the present rate of extraction in the US and Europe? 25% and higher. It is NOT SUSTAINABLE, no matter who tells you what. Temporary? In a long life I have never seen one. There is still a surcharge imposed during the Civil War in the 1860's. (Not a tax, a surcharge, it is now better, get it?). Here I need to remind you of Argentina. It took them some 40 years, but they arrived, and stay firmly on the bottom ever since. The Greeks are howling now. No matter, they are heading the same way. Any more volunteers for handling things by howling and such?

And don't even start me on the leadership. Some 98% of the congress is lawyers. Frequently they do not even know the law. Any other trade or science? Zippo, nada, niente, nyet. But they bloviate about anything under the Sun, believing their own marketing and fawning courtiers. Insert your version here. Responsibility? No matter your leanings, it is rare as a hen's tooth.

You care to learn solid economics from a very lucid teacher, in an as apolitical as possible environment? Go to Walter Williams at the George Mason university. His essays on Economy 101 are a delight.

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The late, great William Buckley political pundit, and general thorn in side said about politicians: I rather be ruled by the first 200 names in the (Boston) telephone book, than by Washington.

I'd hardly compare economics to physics. You are absolutely correct, though, that one cannot reduce people to machines, as the modern term of "human resources" in the corporate world hints at. It is time to take a look at fixing the revenue side of the "equation" before rushing to strip all social safety nets, imho. Removing import duties has resulted in massive trade deficits, loss of manufacturing and good jobs, but more corporate profit. Now both parties want more "free trade" agreements. Coincidentally, Panama will create a new tax haven from what I read in an article entitled "Trading Our Future: Tax Cheating and the Panama Free Trade Agreement" on www.businessinsider.com yesterday. It doesn't take a rocket scientist to predict the results from more of this.

It does occur to me that Root Cause Analysis is one tool that engineers use regularly to solve real problems. What would a formal CAPA report on our economy look like? It does often seem that these threads devolve into discussions of symptoms like 'the government spends too much money' or 'rich people are all greedy bastards', or 'modern day kids are shiftless bums'. I'll plead guilty to this. Then what? What number should we start from? I suggest we start with our trade imbalance. This seems more a cause than a symptom. Any ideas?

Sigh. The only surprise is that it took so long to downgrade...

If only they let "too-big-to-fail" to FAIL in 2008, we would be in a real recovery right now rather than trying to stick band-aids on a sucking chest wound.

Sunday night (PDT) into Monday will be very interesting... Obviously the downgrade after business hours on Friday was intentional.

Ed, speaking as a foreign viewer, the major perceived reason for the downgrade is politicizing of the debt/economic policy and mention of 'default'.

It's all rather analogous to having a domestic argument in front of your bank manager.

You may have the income and assets of the perfect borrower, who is just struggling at the moment, but: does he really want to get involved in such an unstable relationship?

no one is going to lend to a client who speaks of 'default' as a solution.

And a client talking of 'force of arms' to defend default, is just begging for an investment pull out.

Equally, I don't think anyone will waste money attacking over money, as radioactive assets aren't worth much on either side.

Those who saw the GFC coming, are now advising: strip what you can, "cut your losses" and let the US 'fall on it's own sword'

_{As opposed to trying to figure out when to 'buy in at the bottom', as was the strategy a few months ago.}

First, the hard basics.

A modern, technological society can tolerate a 15 - 20% government extraction of produced wealth. In good times the higher, in bad times the lower. Produced wealth, because the ore in ground has only, maybe, potential value. The steel and ship produced from it has real, tangible, taxable vale. The economic value creation is production. It may be unpalatable to some. But, redefining 2x2=7 instead of 4 does not make it so.

Let's now compare the way of spending. You as an individual can and do make some foolish decisions. YOU as an aggregate, average citizen makes remarkably sane decisions. Any single foolishness is limited by spouses, lending limits, bankruptcy laws (see student loan rules), etc. On the other hand people in government employ deal with other people's money. If they propose something grand, the glory is theirs, all present and future payments are yours and mine. People are vastly more careless with other people's money. Example. A few years ago California fought tooth and nail against public referendum on big programs. Referendum won. Then the people voted for most of the programs, not always for the most expensive version the state wanted.

Then there is the amusing notion of needed revenue enhancement. Well, I have plenty of "needs" too. What does that proposal does to it? And which part of the opening facts did you not grasp: we tolerate 15-20% extraction, the present one is a 25%, UNSUSTAINABLE.

Everybody, and every entity have to live within its means, or else. The "or else" usually means bankruptcy in some form (see chapter 7, 11 or 13 for private). A spate of articles try to maintain, that sovereign entities can safely ignore that. They are whistling in the dark. History is littered with failed states, mostly for economic foolishnesses. My favorite short list is Argentina, Brazil (failed and averted), Ireland (good direction, overextended), Italy, Spain, US (on the way, but not yet). As in Argentina, The ride is short and exciting, the suffering for all is long and enduring.

Not a good way to head to.

With progressive taxation, only those in upper brackets who can afford to contribute pay more than 25% federal income tax. Are you proposing that hedge fund managers will declare bankruptcy if they pay more than 25% in taxes? Those who make a living through investment pay only 15% presently. Now there is an opportunity for "an amusing notion of revenue enhancement"! Let's tax wall street at the same rate as the waitress or auto worker. Let me ask what you will do when the retirement age is raised, but many already find it nearly impossible to find jobs after the age of 50 due to higher insurance risk and an already sickly job market? For those not fortunate enough to continue to hold onto employment with insurance benefits, they will use Medicaid after becoming destitute. The natural attrition of retirees has historically also provided new opportunities for young workers, but now those opportunities will vanish, causing even more unemployment amongst the young who will turn to other means to support their needs, including Medicaid, Welfare and other government programs. Some will turn to crime out of desperation and law enforcement and judicial expenditures will rise. Have we actually reduced spending by cutting social programs? Here's a little anatomy lesson for economists: "The leg bone's connected to the hip bone. The hip bone's connected to the back bone...and so on and so forth :).

Specifier, please allow me to use your note as an obiect lesson. All you said is factual. At the same time, all shows, what is wrong with the present setup.

What I stated before is a 25% EXTRACTION OF WEALTH, NOT 25% TAX RATE. Not at all. An extraction rate includes visible, invisible, indirect taxes, fees, tax refunds at exports, corporate taxes (that you pay, invisibly at the first order), or any such, devious minds are capable to come up with. Example. Right now, corporate tax rate is high, but some favorite corporations pay 0$ taxes. THAT IS I am talking about. (To confuse you, corporations do NOT pay taxes. They COLLECT taxes from you for the government. Confused enough? Good!)

For your consideration, Russia has a flat tax. It works, as anything can work in that country. Relatively easy to enforce.

As to your litany of problems. When you finally do sit down, and figure out, what you can do with money NOT EXTRACTED by the government from your wallet, you will be pleasantly surprised. I ask you a simple question. What is more money for you: the money you keep? Or the money you pay in taxes, they keep some, bureacrats keep some for paychecks, redistribute some, and give back some of the remainder to you?

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There is no free lunch in this world. At least I have found none.

levelas -- I'm interested in your comments: "First, the hard basics. A modern, technological society can tolerate a 15 - 20%. government extraction of produced wealth....... And which part of the opening facts did you not grasp: we tolerate 15-20% extraction, the present one is a 25%, UNSUSTAINABLE."

You seem to place a lot of stock in those numbers. Can you share a credible source? Perhaps a summary of widespread survey data by independent survey organizations? A scholarly study of some objective historical data? Or perhaps are these numbers representative of positions of some subset of modern technological societies?

If the latter is the case then that subset should be identified and quantified. That done; I think any objective thinker will assign an appropriate weighting to the numbers given. Given recent events such a weighting should definitely have a factor representing the political power of the cited subset of participants in any sovereign nation's actions relative to taxation.

Ed Weldon

Analytically speaking; It seems to be way over 25% already

And; the reverse of "basics" seems to apply ref "technological society"

So I guess it's a case of; do you want to be Uzbekistan or USA?

Why are you responding to a table from Wiki in that manner?

I admit Wiki is not always totally reliable - but inferring I am a "iackass" for posting data which is 'inconsistent' with politically massaged unsupported numbers and erroneous sweeping statements on Russian tax structure, is hardly "Objective Thinking"

Post 31 was not written by Ed.

No flash, nor any such else on the "iackass" plea. It was a plea, as it sounded for anybody.. I got the % correctly, so will you, again. Partisan complaint nonwithstanding.

When I want to descend (the first time) on this thread into partisan callings, you will not be able to read otherwise. I did not, so please cease and desist.

A curiosity. What would be your % of optimum extraction, for argument's sake? That we know, where you stand on it before arguing can be started?

best regards

"A curiosity. What would be your % of optimum extraction, for argument's sake? That we know, where you stand on it before arguing can be started?" ….. leveles

First off I'd like to try and come up with a way of figuring "extraction" as a function of one of the regularly tracked measures of income tax data. The following link looks like a good data source, "Summary of Latest Federal Individual Income Tax Data", Table 1 for past figures on the distribution of tax return amounts.

http://www.taxfoundation.org/news/show/250.html

Another source is Table S-3, pg. 149 in the formal OMB Budget for FY2011 document:

http://www.gpoaccess.gov/usbudget/fy11/pdf/budget.pdf

Receipts Projection for 2011 from Table S-3 shows $1126B (billion) individual income taxes; $934B SSI, Medicare, Unemployment, other retirement; $293B Corporate income tax; $151B other receipts. So the total of these is $2504B. So this is 2.22 times the basic individual income tax. (I'm leaving out the $79B earnings receipts of the Federal Reserve since it doesn't come out of the pocket of taxpayers). So I might call the extraction factor 220% of individual income tax. A deeper analysis of past year data and future year projections would bring up somewhat different numbers but for the purpose of this discussion let's use 2.2 for a factor.

The reason why this is convenient is that table 1 from the tax foundation gives income tax data breakdown stats for 2008 (most recent year) which can be multiplied by the 2.2 factor to give extraction. So table 1 gives 12.24% average tax rate for all tax payers. Multiply by 2.2 and you get 26.9%. That's pretty close to your 25% and the 28% from 34point5's 2005 chart.

The one thing wrong with applying this 2.2 factor to some of the table 1 stats is that there is a substantial difference in SSI, Medicare, UI &other payments depending on AGI levels so it makes the extraction rates too high for high income people who don't pay and too low for low income people who do.

My question here is why is 25% unsustainable? Sure, we have individuals who are hammered by much higher percentage extraction rates. The answer to that is to take the unfairness like unbalanced deductions, credits and loopholes out of the tax code. But right now in the current budget/deficit debate lowering taxes does not seem to be an issue.

OK. At this point I don't have an answer to your question. I spent a good part of the evening doing research to come up with the above. Next I want to examine the budget in detail and form my own opinion of what to cut and what I personal would be willing to pay in extra extractions to maintain some programs in a balanced budget.

But failing that let's test with the latest proposed but unsuccessful compromise budget. That would be $4 in cuts for each $1 in taxes. Table S-3 gives a projected $1145B deficit for 2011. One $ out of $5 suggests $229B increase in extractions. That's 9.14%. This increases the rate to 29.4%. It increases the average income tax rate for all taxpayers from 12.24% to 13.35%. This kind of presumes uniform across the board cuts in government payments. And realistically that is a program that should take some years to keep from producing a catastrophic economic shock. That's as far as I want to go tonight.

Ed Weldon (anybody still with me on this?)

Go through the Federal Budget to see what is worth keeping and what to dump? That sounds like a good idea but an awfully big undertaking. Do you ever sleep? Do you need any help with the grunt work? Would you be interested in parsing out parts of the budget, or would explaining your criteria take more time and effort than the actual work?

I do have a concern that while it is necessary to know just where we are with our current tax rates, debt levels, and expenditures, that this knowledge will not bring us much closer to a solution to our economic problems. This is like using a measuring microscope to look at your dipstick. It doesn't matter if you are down .974 qt. or 1.173 qt. The solution to the problem is not to use a pipette to add oil (although you obviously need to). The solution is to find out if the oil is leaking or burning, and then deal with the underlying problem. I'm firmly convinced that the underlying problem that we face as a nation is that we have for decades been spending more on imports than we receive on exports. Government debt is a symptom of this underlying problem. The solution is to diagnose and (hopefully) correct the collective mental illness that has allowed us to go blissfully through the last few decades in a state of denial while this problem festered.

So while I agree that a clear picture of our national budget is necessary to unravelling the mess we have put ourselves in, I don't think it is sufficient. But it will at the very least provide a rational starting point for discussion, even if the root cause of the problem is that we are all daft.

Alan Greenspan today: "The U.S. can pay any debt it has because it always can print more money." !!!!

The same attitude of third world dictators and failed banana republics.

It is not exactly "Analytical and Objective Thinking" by one of the world's economic minds....

I saw that. He looked like Groucho Marx! He sounded like Groucho Marx!

Sorry, just another foreign observer here... but does that matter? Our governments and industries are all in the same card game. .. Or is it dominoes?

To reply to the thread, my take is "no". It is an insider game, and perhaps some rabbit will be pulled out of a hat by a (potentially analytical and objective thinking) staff person to a player, and upon the agreement behind doors, it will be sprung on us, we'll accept and carry on as if it were normal. But the analytical and objective thinking of outsiders is not going to affect that course of events (unless the idea is a really dandy rabbit that they needed, that they can pull out of their own hat).

I don't know what color the rabbit will be, but I expect the flavour will be "brand new deal". The play money business is really out of hand. And the globalization thing has made the value of physical items, evidently completely arbitrary. There is no actual value of things any more.

I realized the economy was doomed when I walked into a dollar store a couple of years ago, and saw seven dollar items selling for a buck. Analytic and objective thinking tells me we cannot resist a bargain, and the slowing of the economy makes it all the more appealing. The cost or "value" of items in the market is no longer objectively to be reckoned, because of the bizarre mix of currencies and economies in the 'global' whole.

I have no fantasies of having a say or being able to control or contribute to this situation. It's like a 98 pound gal on the Titanic, running to the high side to try and weight her back upright. Hell, a 300 lb bear couldn't do it. A restaurant full of bears couldn't do it. And frankly, it would be foolish of me, to spend seven dollars on an item I can buy for a buck. Especially with less money....

As for printing more, what the hell. This bar doesn't close at midnight. The losers are not thrown out until pockets and all else emptied, at "dawn". The duel follows at high noon, for high stakes. Only then, it's over.

"Contol of economic problems is always possible" Plenty Of Economists and Bankers

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Er, NO. And my engineering friends will "get it" right away, what I am about to state. Since I have to quote from the literature "out there", you may perceive some political blowby. Unintended, muddles the picture, ignore it.

Economists and central bankers always can control an economic problem. I even grant, that they can handle two simultaneous problem. And that leads to (over)confidence.

As the proverbial s**t hitting the fan is an animal of a quite different nature.

First, I will tell you about events in shipping as an analogy. If you do not get it before I finish, you owe me a drink. But, I do not hold my breath!

See Wikipedia: Perfect Storm, Rogue Wave, Lloyd's.

A few years ago some mathematicians (?!?) worked out a theory of exceptionally destructive Rogue Waves. To prove or disprove it, they traveled to Norway, to the only wave generating tank suitable to physically generate them. The Nova TV program (I think) made a hour long presentation. The very large destructive waves were generated right away, with some 100 times larger frequency, than previously thought. Lloyd's (of London) the world largest (re)insurer rewrote all its shipping insurances in light of these findings. All sane shipping companies changed their storm avoidance policies, as the new mathematical model explained most prior "misterious" disappearances of their ships.

Well, The math speaks about waves, but nothing about water. The waves could be anything, even financial. When too many factors come together, that is the time for the (fiscal) ship to lose control, and sink.

Prudent (nay, sane) people do not take chances with such stormy seas. And avoid people saying: It did not happen yet, why do we worry, it won't happen here, ever, they say: Trust me!

Famous last words. But Business and Economic schools do not teach the nonlinear differential equations of the Rogue Waves. Rather, they are stuck with the century old linear, piecemealwise ideas of Keynes's.

I am an engineer, with a decent, but nothing special salary. The "sanity check" in april on tax day was on my return: if my personal extraction appeared over 50% or under40%, I doubled my effort, and usually found an error. So, for this thread, I will use the bit under 50%, or for a back of the envelope calculations flat 50%. Some, maybe, possibly half of it will be returned to somebody (not to me) after all handling it and diverting from it in the government took their "share". So this is a representative cross section of how taxation actually works. And I doubt, that half of the money is returned to anybody. That amounts to an overall 25% extraction rate. The other half of that money is burned, wasted on selfpropagating bureacracies, overlapping uncoordinated, at times meaningless programs, pretty little wars, and other such circus and senseless diversions.

Wasting at that rate, and borrowing at the rate of 40 cents of every dollar we do not have is the definition of insanity. Trying to sanitize it by calling it a mortgage, or some such is self delusion. We have to pay the interest, before anything else. That amount is then not available for any other purpose. And the holder of the "mortgage" can call the shots, you may not like.

In view of the 50% actual extraction rate, it is wishful thinking to hang on to, and discuss the federal income tax alone. Charley Reese, an overall decent fellow wrote in his farewell address, that I borrowed:

Taxes and taxes

Charlie Reese's Final Column is a good read and a keeper. I agree with him. We can throw out all the "bums". Every two years we get another chance. And has anyone noticed that every two years we only accomplish a small part of that effort? Someone must be happy enough with what they do to send them back. Who is that somebody? Perhaps it's those somebodies over there behind the trees who don't get taxed as much as me and yee?

About taxes -- Now I personally like the idea of paying for what I consume rather than not getting it at all. The difference in my case is that my eyes are open wide enough to recognize what I'm getting and place some value on it.

Charlie Reese's final statement was "Not one of these taxes existed 100 years ago, & our nation was the most prosperous in the world. We had absolutely no national debt, had the largest middle class in the world, and Mom stayed home to raise the kids."

America was awash in prosperity 100 years ago because we had just come off a century of picking wealth out of a virgin "ground" and selling it to the rest of the world. All it cost us was some minor (in cost) conflicts or threats thereof that were sufficient to chase away the previous owners of the real estate as well as the sweat of crops of people of exceptional immigrant stock. People who had enough toughness and intelligence in their genes to leave everything behind and endure a long and difficult journey. And people who had an ethic of the nobility of hard work and personal achievement.

The natural resource wealth is gone and our population now consists of large percentages of people adapted to a life made easy. We can wax poetic about what once was; but any chance of our entire nation returning to that condition faces a world that is totally changed from what it once was. There's a new set of rules. It's time we set about working in that framework.

And if we don't do it together then "they" will have us and our lunch for their dinner. And also please note that "they" can play with a set of rules allowed by our own Constitution or whatever is left of it when they get done dismantling it.

By the way, leveles, your comments about your own situation make me think I still haven't got your meaning of "extraction" down in my mind.

Ed Weldon

You provided a fertile ground for reply. I chose for now the note: the natural resources are depleted now...Poppycock.

Buckminster Fuller proved decades ago and since, that the human mind is quite good in a linear dimension. It is bad in 2 dimensions, as area. It is abominable in three dimensions, as in volume. He had proven, that all the world's population can be packed into texas, with suburban comfort. Also, into a 1 mile cube, with the same comfort. He posed the same problem to his students. None could contradict. Why is it important? Because, trusting your senses, including common sense without a solid, detailed training is fraught with danger.

You are a multimillionaire, Ed, so are you and you and you. Now, you may think I have taken a leave of my senses. I did not. I changed the premises, that we all accept as invariable. They are not. Taking a cube under the home, and separating out the valuable metals (without expense) will make you an multimillionaire. The bad news is , that today it is not accessible. Next decade,yes. Your value? Eh, maybe, many millions. How come, you do not realize? Well, there is the rub. And that is quite real.

You need large amount really cheap energy to get there. With that, the dirt under your feet suddenly becomes valuable, and precious. With plenty of energy you can do anything. You may not even need the material freed. The energy freed is intoxicating.

Did I do that, to lead you down on the wrong garden path? No. But to show you, that the wrong assumptions will - invariably - lead to wrong results.

Bevare.

You seem to enjoy playing "the man of mystery", don't you? Though "assuming" can make an a** out of u and me, lack of common sense in logic is also very dangerous and trying to present every problem as "too complex" for anyone but the elites to comprehend is a common thread in most propaganda these days, imho. Corruption is the problem - the desire for more profit and power by the elite who have purchased the media and government. Do you have a solution for that in plain English?

Nothing fancy, go thru the exercises. You may learn something. To your benefit.

I have no interest, none, to short you, God knows.

Nor do I desire to short you. I believe my observation was quite civil. Time may be infinite; however, my time is not. Becoming mired in the process can preclude the goal - I have no desire to divide the distances of lines infinitely and the shortest distance between 2 points is a straight line. Granted, a straight line is not always possible, but adding unnecessary turns is also not productive. I have pondered this problem for quite some time and have concluded that a good start would be to encourage Americans to boycott Walmart - make an example of them. Why Walmart? Because of all the multinational corporations, they were and are one of the most influential in pressuring American factories to move overseas and convincing consumers that it's o.k. to put your neighbors out of work and exploit workers overseas as long as you can save 20 cents on those tube socks. Since money fuels the corruption, the only recourse is to stop fueling the machine that makes the cash flow to the corrupt. I'm sorry if I'm not Buckminster Fuller or Plato, but this is a concept that the average person can comprehend and put into practice.

the Walmart situation is more complicated than just the source of the products they sell

they are masters of logistic & inventory control

Walmart doesn't have warehouses,

walmart's vendors must provide products just in time

walmart dictates the prices they will pay

go find any american made product [lawnmower], compare you'll find the price is lower at walmart...

they went one better than Kmart, who had gone one better than sears

when walmart sets up shop, they work the local governmental system for all it's worth, harvesting every possible taxbreak & economic incentive...

even the labor situation isn't all it appears

hire on as a clerk, if you don't show enough inititive to ask for a promotion, remain a clerk forever

good luck boycotting the maker of a better mouse trap

Manufacturing has doubled since 1975, at the same time manufacturing jobs are down by a third.

I've helped, automation is like that

you're boycotting a symptom [business model], not getting to the root of the problem

taxes & trade policy make it profitable to use this business model

we need more participation in government, informed opinion,

not government by sound byte, twitter, face book...

In case you haven't heard, both major parties are in favor of more free trade and exploitation of workers. Why, you ask? Because their campaign contributors that use that business model have profited handsomely from it, despite the loss of the manufacturing base and jobs (which is irrelevant to wall street as long as profits continue). The politicians in both major parties preach "free trade" because the Walmarts of this world tell them to. The media is sponsored and owned by the same types. If I have to watch one more talking head from the American Enterprise Institute, I'll barf, lol. Anyone who attempts to propose alternatives like returning to import duties (which we've had since this country's conception until NAFTA, etal) or exiting the W.T.O., is muzzled. Just look at what they did to Nader - I'd suggest you rent the cd "An Unreasonable Man" if you'd like to see what happens to third party candidates who dare to question globalism. Look at how Kucinich was totally ignored and cut off during the debates and mocked on late night television for not looking like "Ken", for example. Lou Dobbs was fired from CNN for saying that illegal immigrants should be deported. The source of the campaign contributions is a start because most politicians certainly aren't going to change a system that is lining their pockets. It's the fox guarding the hen house. Revolution isn't going to happen if a Walmart boycott is too much to ask.

Thank you for the link to "gangsofamerica" from the word "corporation" in your post. This should be required reading for every U.S. citizen.

look what happened

after the latest bit of political theater

the can got kicked down the road & everyone went on vacation

if it were really a crisis, shouldn't work on a solution continue?

the brinkmanship has seemed to slow the economy even more

stocks & bonds down

government securities up

the debt is not the failure

lack of growth

the ongoing outsourcing of profits from our consumer market

U.S. Companies Pay World's Sixth-Highest Tax Rate, Study Finds

Global mega corps need to pay their share to support the infrastructure that make their very existence possible

Interesting. Time and time again I see reports on tax rate. Interesting, but irrelevant, like a sleigh of hand of a magician. What matters is the actual amount paid in taxes. Individals (who can) do it by deferring exercising shares rights as an example to pay much less. On the corporate side GM and GE (I think both, but certain one) paid the royal sum of $0, exactly.

Additionally, relocating to another country helps paying less , much less than here.

Now, did they escape from high taxes, taking iobs with them? Or did we drive them out with excessive demands? It is an uncomfortable question for some.

I haven't abandoned this topic. Just in the middle of a mad scramble dash to get ready for a vacation trip. Well seasoned by a last minute discovery of a sunken #2 exhaust valve on the 2.4 liter four banger in my 2000 Tacoma pickup cum one man RV and a miracle wrought by a machinist friend with a surface grinder.

Thanks for all the great comments, even the ones I didn't agree with were some of the best. Two weeks away I'll return and do answers. I daresay the world may turn upside down (for which I will accept no credit) while I'm out at Speed Week and away from all the talking heads. But I'm not going to worry about any of that. The desert has a way of isolating you.

Ed Weldon

It looks like I was an optimist concerning deficits and extraction rate.

George Will, a hardnosed columnist reports from London, that " the state devours 47% of the GDP", the national debt at 62%, nationalized healthcare 30%, and the largest employer. All royally unhealthy, and a bad example.

The british bad example