Tuesday, November 23, 2010

Tea Party Senator Mike Lee on Raising the Debt Ceiling: "No Way"

Here's a link to ABC news video of a short interview with so-called "Tea Party" Senator Mike Lee (R-UT) on his views on the US national debt.

In it the ABC News reporter challenges the Senator with the prospect of cutting the over $1T annual flow of balances that currently make up the deficit, and the Senator indicates that he is ready to vote to seek those types of spending cuts "for our future grandchildren"; and literally falls prey to the deception of inter-generational accounting. (Hey Senator, can I use your time machine some weekend! LOL!)

This "Tea Party" Senator is either a moron or just grossly misinformed about economics to the point of what should be criminal negligence. (Probably the latter.)

If these people succeed in their current goals to destroy another 10% or so of our economy by implementing these levels of cuts when we reach the limit of the current authorized debt ceiling, it may be that we have another 4 months or so to enjoy the American way of life.



28 comments:

Tom Hickey said...

Well, Matt, to put a positive spin on it, we may be seeing the approach of the mother of all shorting opportunities. Looks like a decent Christmas may be developing which will be seen as bullish. That should drive prices up high enough for a really nice profit on the short side when the fiscal bomb explodes in Congress. After that it might be a good idea to go to New Zealand to avoid the fall out.

hiljaa said...

http://www.youtube.com/watch?v=kl7OpKO0evg

Peter Schiff's Admiration For 'Intellectual Dynamo' Sarah Palin's 'Really Good Stuff'

another 2 stupid teabaggers.

Matt Franko said...

Tom, Ive been trying to research what happened back in 94 when the GOP shut it down and I dont necessarily see any discernable pattern at least in the S&Ps.

I guess back then it turned out to be all bluster and the fiscal transfers might have been reduced a bit but then they were re-established.

This time if it's the same thing then probably same result, but it's hard to gauge whether the TP types will REALLY shut it down this time or REALLY hit fiscal outlays as hard as this guy is apparently actually considering.

We're going to have to keep a close watch on it in a few months....

bubbleRefuge said...

I think tea party is a middle class spasm caused by a lack of pro-middle class policy. The middle class is mad, but they are not sure who to be mad at so they blame the government. IMHO, the tea party doesn't have the right leadership. Seems to me its a sign that the political leadership in this country is moving from the kleptomaniacs of yore to the ignoramuses, albeit charismatic ones, (ala peter shiff) we see now.

Marty Steinberg said...

With all 5 intellectual super dynamos of this country busy spending all their time on this blog, ignoramuses are taking over.

Matt Franko said...

JC,
I dont know if youve ever seen this video by Bill Still (MIke has posted a couple of his videos in the past).

Secrets of Oz.

It is a little on the conspiracy theory side (and oddly has P Schiff in it even though B Still advocates against gold/silver backed "money") and is a bit out of paradigm, but if you look past this stuff it does make the case that at one time, moving away from metal and/or debt-backed currency so to speak was VERY POPULIST in the USA.

Where have these TP idiots gone off the rails this time? Non-issue of debt WAS very populist going way back in our country's history apparently as was repudiation of gold. It shows the intellectual shallowness of these people if nothing else. They are true dupes/morons. ...Doomed to make the same mistakes, etc..

Resp,

hiljaa said...

Matt, the 'Secrets Of Oz' is a terrible movie - it attempts to reconcile past and present economies and currencies when the circumstances are completely different.
Its also very boring and the production is very amateur.

Matt Franko said...

hijaa,

I know...I know....I said Still is out of paradigm in this movie....he is probably not wealthy so the production quality is the best he could afford, many people think the documentary format is boring but there is only so much you can do with this type of material (It's not going to come off like "Iron Man 2")...

Im just looking at the basic historic record like Romans, Tally Sticks, Lincoln issuing greenbacks when the banks balked, William J Bryant, etc... just pointing to the populism that existed around those issues...

The TP "populists" of today probably would agree with a return to "gold standard" and certainly pay mind to govt issued "debt" securities rather than advocate for the elimination of their issuance...that kind of thing...

These TP people today are dupes. Its really sad to look at a guy like this Senator Lee (who is probably otherwise a smart person) in this video trying to destroy the economy when Im sure he thinks he is advocating for the 'right thing"...

Resp,

welfarewarfare state said...

Robert Rubin was quoted recently as saying that the raising of the debt ceiling next summer could trigger a crisis in the bond market. We sahll see.

bubbleRefuge said...

Robert Rubin was quoted recently as saying that the raising of the debt ceiling next summer could trigger a crisis in the bond market. We sahll see. Robert Rubin is part of the kleptocracy that has been running this country. Its the same 'fear' argument that was used to bail out wall street for gambling away their businesses. We have been brainwashed into believing that financial problems are real problems.

DoggeyStyleMikey said...

What artificial lending standards are you talking about?!?!?!!?!?

googleheim said...

krugman is way more in paradigm.

notice that scotland is not on the piigs list

could have been if the UK government wasn't in paradigm ...

googleheim said...

Doggy Style Ding Bat :

The artificial lending was the Real economy during Bush years.

The WMD CDO's were an illegal form printing money and overvalued the real economy.

And now due to the distortions that this artificial lending spree of reprocessed debt spam mad cow feed - the economy was warped and filling the gaps with new debt ceiling is the only way to put a realistic bound on the floor.

welfarewarfare state said...

bubbleRefuge,

The kleptocracy ( I prefer to call them political capitalists) benefits from a centralized, fiat-based monetary system. The financial services sector likes the Fed because artificially low interest rates create a far larger financial services sector than otherwise would exist. These political capitalists fear free markets and honest money. They much prefer corporatism (mandates, subsidies, public-private parterships, protective regulations, and state sanctioned cartels), central plannning, and fiat paper that can be manipulated.

The people who benefit from a fiat paper system are the people that get the newly created funny money first: mutual fund managers, commercial banks, investment banks, hedge funds, and sectors where govt. subsidies are high, i.e. health care and education. They get to use the money to claim goods and services out of the economy before the money has lost any of its purchasing power. It would be akin to a barter economy where instead of them trading me their apples for my oranges, they instead just take my oranges. This is part of the reason that these sectors are so much larger as a percentage of the economy than they were pre-Fed.

You are an unwitting accomplice of the political capitalists. The political capitalists thrive when your ideology is dominant.

Cheers!

bubbleRefuge said...

Ok WS. We are finding some common ground. I agree with the reality but not the causality. I don't think its because of fiat money per say. Although I think you may be right in that its easier for the kleptocracy to operate under fiat than fixed/convertible currency regimes. A few more points:
1) Local government excess is getting reigned in right now because local government themselves operate a kind of fixed currency regime. Spending comes from taxation and borrowing not currency issuance. So this supports your point.
2) In a fixed currency regime both the thieves and the good Samaritans are hurt. In a fiat regime both the thieves and the Samaritans do better than otherwise.
3) Ideally, we clean up the parasite that Big Finance is. Eradicate the lobbying etc. Next, we execute fiscal policy in a responsible way that ensure full employment with price stability by investing in public infrastructure that makes sense and benefits all based upon democratic processes. This is what the tea party needs to focus on in my humble opinion.

welfarewarfare state said...

bubbbleRefuge,

Your are identifying commodity money as necessarioly fixed when it need not be so. A big problem in the 19th century was the fixed ratio (a kind of price fixing) between gold and silver. I think the government's role should simply be to regulate fraud in currency. They can simmply attest to the metal weight of a coin, and punishes counterfeiters. i don deee why it is taken as a given that a sovereign have monopoly powers to create money.

Everyone benefits from a commodity money. Let people choose their favored money just as they are allowed to choose theri favorite toothepaste and coffee and we will finally get good money.

bubbleRefuge said...

Commodity money will limit the level of fiscal policy ammunition in the arsenal. Fiat money is unlimited. This doesn't mean it should be abused. In fact the level of fiscal policy is up to the democratically elected policy makers who answer to the public to decide. The level of fiscal policy should by commodity supplies.

bubbleRefuge said...

Oops. The level of fiscal policy should not be limited by commodity money supply

welfarewarfare state said...

bubbleRefuge,

It is just those limits that commodity money places on government that protect the individual. Increasing the credit money supply to artificially lower interst rates creates an ephemeral prosperity that misleads market actors in the short run. The "growth" that comes from juicing an economy with cheap money isn't real. Resources, labor and material, are misallocated, wild speculation can ensue,consumption spending acceleartes at the expense of saving, and excessive debt will be taken on. At some point the truth is reavealed and people will have to retrench as will government following phony booms-whether they be mini-booms or large ones.

welfarewarfare state said...

ONe last thing...

Does anybody have any thoughts about the events in Ireland over the last 5 years? The Irish economy used to be called the "Irish miracle." They too had a housing bubble courtesy of cheap money and artificially low interest rates, and now they are paying the price. Thoughts?

bubbleRefuge said...

It is just those limits that commodity money places on government that protect the individual. Increasing the credit money supply to artificially lower interst rates creates an ephemeral prosperity that misleads market actors in the short run Yes MMT people agree that private credit induced booms are not sustainable by themselves.
The "growth" that comes from juicing an economy with cheap money isn't real. It is real. Real or not is a matter of opinion. Its just not sustainable because the private sector eventually runs out of income to service debt. Resources, labor and material, are misallocated, wild speculation can ensue,consumption spending acceleartes at the expense of saving, and excessive debt will be taken on. Like I said, this is due mostly to fraud and gaming the political system not fiat money. Albeit its probably easier to create an environment of fraud in a fiat money system in my opinion. Although, there was fraud during market booms prior to great recession and that was on gold standard. Also you are wrong saying saving somehow leads to appropriate investment. Howso?

bubbleRefuge said...

ONe last thing...

Does anybody have any thoughts about the events in Ireland over the last 5 years? The Irish economy used to be called the "Irish miracle." They too had a housing bubble courtesy of cheap money and artificially low interest rates, and now they are paying the price. Thoughts?

Since they don't have a sovereign fiat currency and independent fiscal authority, like the US does, they are stuck. Theoretically the best thing for Ireland would be to establish a sovereign currency.

welfarewarfare state said...

bubbleRefuge,

They are lucky they don't have a fiat currency that they control. How can increasing the credit money supply and artificially low interest rates possibly be the solution to a problem caused by cheap money and artificially low interest rates? Hair of the dog only "works" for alcoholics. It will only paper over the problem in the short run at the expense of a much sicker economy later. I view the phony boom as the sickness and the recession as the cure where the imbalances of the phony boom are addressed.

The debt will either have to be monetized, defaulted on, or payed back. The debt needs to be liquidated. They need to take their foul-tasting medicine now or they are going to get a depressed economy for many years to come. Ireland can do themselves a big favor and not take the advice of U.S. policy makers.

TomatoBasil said...

State sales and income tax collections are increasing more rapidly of late, with a few states no longer predicting deficits for 2011. The federal government should be experiencing similar results, especially with employment improving and people falling off the unemployment and SSI disability roles (which has been substituting for welfare and experienced huge growth the last couple years). Maybe the resulting smaller deficits will temper the Tea Party resolve to force a default or a cessation of check writing by treasury using this debt ceiling non-sense. They will claim credit for reducing the size of the deficit and reining in spending while the economy does it for them.

googleheim said...

All this discussion is hog wash.

If Ireland is to be the new Ireland, it will have to be a "state" in the EU just like California or Illinois are in the USA.

It has become a statelike entity for a reason.

If Texas and a couple of southern states starting issuing Confederate dollars, then we would not have the USA anymore.

Therefore, WelfareWarfare and Bubble are both not logical.

First the EU was established, then credit flowed into Ireland like candy to a diabetic.

Germany started this and controlled this and if they are so smart, puritan, protestant, and non-keynesian then Germany should have prevented this from happening.

Germany is in retreat now with denial, Anti-semtic denial.

They reflected Greece's rebellion as well as Scotland's towards suing Goldman Sachs in New York and away from Frankfurt and Brussels.

Germany's Merkle declares "multi-culturalism is dead" which is anti-semitic since they were approaching diversification, pluralism, and openness as an attonement for WWII. Instead, it's dead now ? So is reparations for the jews who only get $400 / month plus the ones who live in abject poverty in the Eastern Europe even today in cardboard houses ?

Austrian school is dead instead, Fred.

bubbleRefuge said...

chill goog, I said theoretically!

welfarewarfare state said...

googleheim,

Once again you have succeded in completely buthcering what I advocate.
I don't want Texas issuing its own fiat currency. I want a commodity money chosen by individual acting in the market. I want a separation of state and money.

Asls, we are Greece, Portugal, Spain, and Ireland in a few years time. Except are crisis will be on a far grander scale because our imbalances are so much greater than the others. The dollar's status as reserve currency has allowed us to create imbalances that would have never been possible to accumulate at the current level absent our priviliged (cursed?) position.

googleheim said...

Hi WSWS

We ( USA on Federal level ) are not like the PIIGS.

We are like USA.

The states are like the PIIGS though : california, illinois, and whichever state running massive debts.

THe Fed USA will loan money which will circulate and be paid back and fill the holes supposedly.

In algebra we are taught to + 1 - 1 on the numerator so we can virtually reorganize without adding anything since + 1 - 1 = 0.

In quantum physics we can create photons as long as we destroy them within a given quantum planck time frame such that the conservation of matter and energy is not violated.

Adding monies and retracting them is a risk but it can be done such that nothing is essentially destroyed or created.

I prefer creative creationism than creative destructionism.