Putin: USA Is A Parasite on World Economy

Quote from MarketMasher:

Increasing taxes on wealthy Congressmen and Senators will hurt the economy. :D

But maybe that's where the tax rate should be increased 1000%.

You know...to pay for the negative externalities they create. :D
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Great idea! and we might go so far as to install time clocks in the House and Senate and make them punch in and out. They can have one ten minute smoke/bathroom break in the morning and another in the afternoon. Oh, and they should be subjected to random drug tests and police back ground checks. Any that are convicted sex offenders have to wear a sign stating such. Oh hell, lets go all the way and just adopt the WalMart model for their employment. :D
 
Quote from Gubinec:

Piezoe, great post, but how does one insure that whatever currency is adopted as a reserve, the stewards of that currency don't abuse that status and follow the same road as the US?
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You can't.

If history teaches us anything, it is that stewards of a currency WILL abuse it. It is as inevitable as gravity.

My suggestion (not directed at you) would be less complaining about the reality, more planning for the inevitability.
 
Quote from piezoe:

Entire screed edited for brevity and sanity's sake. Seven paragraphs of Krugmanite tripe to show how one can recite unsubstantiated platitudes and demonstrate the post hoc ergo propter hoc fallacy multiple times..
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It's really not worth the time to respond, but let's just take one section:

Quote from piezoe:

"Job growth is related to economic health and/or large government expenditures and borrowing. Periods of twentieth century job growth were accompanied by high marginal tax rates. One of the highest periods of job growth, the 1950's, was accompanied by very high marginal tax rates."
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Ask Putin how well it worked to rely on gov't borrowing and expenditures for a robust economy in the old country.

Every dollar the gov't "borrows" is taken from the private sector--either from taxes or out of thin air (which will have to be paid by later generations or inflated away). The gov't has no inherent resources. It takes and typically misallocates via taxes and borrowing.

As for the 50s, the soundbite that ultra-high tax rates were responsible for prosperity is a crock. First of all, there were more loopholes, deductions, shelters, etc. back then, and practically no one in the upper brackets paid those exact rates. Moreover the famous "90%" rate was for people making $300K+ (a huge sum back then), and you probably had to make much more than $300K to hit that bracket. In addition, other taxes (state, local, property, gasoline, tobacco, hidden, etc.) have grown by leaps and bounds since the 50s, affecting all classes.

Regardless of tax rates, if you step back and look at the bigger picture in the 50s, government was smaller-MUCH smaller-than it is now. Tens of thousands of new pages of regulations now strangle many people wanting to start a new business--or just stay in business. Taxpayers didn't support Medicare or the myriad of "free" housing, medical, education, food stamp, etc. programs. No wonder they didn't have our huge debts to pay off!

As for ultra-rich not really creating jobs, I guess Rupert Murdoch's 53,000 employees are just being deceived? That may be an extreme example, but not when you consider thousands of other top-bracketers who employ others either directly or indirectly through investments.

I'll take that any day over 100,000 "shovel ready" jobs involving digging ditches and then filling them back up again.
 
Welcome MK! I agree with you in many respects, but it seems you may be reading remarks with such an ideological bias that you miss some of the fine points. For example I did not say, as you assert: ...that ultra-high tax rates were responsible for prosperity...

What I did say is that the politician's claim that high tax rates hurt job creation is nonsense. All the evidence is to the contrary.

I did not say anything about being in favor of high taxes, though I do support both a rollback of the Bush II cuts and a phased-in, but very significant decrease in defense spending. A less careful reader might assume I am in favor of tax increases. I'm not! I'm in favor of undoing the mistake made in the Bush II era. That mistake was to reduce revenues without first reducing spending.

I agree with you, government has become way to intrusive. In fact, if you went back and looked up some of my posts Re: the Patriot Act and the U.S. response to 9/11, you would know that.

Glad to agree with you my friend.

(Where we undoubtedly would have very strong disagreement would, I'm sure, be on the issue of social security.)
 
There is some truth to saying that high marginal tax rates can lead to economic growth. Take for example high capital gains taxes. This encourages those with excess savings not to shift them around in stocks but to committ them to production and hard assets where they can escape the tax, thus leading to job growth. Trickle down economics works only if the money is invested in the economy, and more specifically into new businesses. Taking your millions and putting them in Google stock does very little. I would imagine that high corporate taxes would encourage the company to have low profits, and thus again reinvest in its operations.

But today the idea goes that you don't want to tax things that you want more of. So don't tax corporations because that's a penalty on successful entrepreneurs! Somehow I wonder if this rationale is really true. How many would-be entrepreneurs say "no, I can only make $1 million in profit a year instead of $2 million, I won't start a business".

I don't even know what the reason is for not taxing capital gains. Hurting the elderly on fixed incomes? Then it should only apply to those of modest means.
 
Is Walker another KGB agent? I don't think so:
The US is only a few years away from reaching the same debt levels that pushed Greece to the brink of ruin, former comptroller general and head of the Comeback America Initiative David Walker said.

As the ratio of its debt to gross national product eclipsed 100 percent and surged toward 150 percent, Greece has twice in the last two years nearly defaulted on its debt. Only successive bailout packages from the European Union and International Monetary Fund prevented catastrophe.

When tolling up all the US debts , including huge unfunded liabilities to Social Security and Medicare, the US is on dangerous ground, Walker said in a CNBC interview.

"We are less than three years away from where Greece had its debt crisis as to where they were from debt to GDP," he said.

The US is nearing the 100 percent threshold which historically shaves about one percentage point off GDP, which was just 1.3 percent for the second quarter and 0.4 percent for the first quarter.

With the recent increase in the debt ceiling and continued higher budget deficits at the federal level, the US is on course for its own crisis, Walker said.

"We are not exempt from a debt crisis," he said. "We're never going to default, because we can print money. At the same point in time, we have serious interest rate risk, we have serious currency risk, we have serious inflation risk over time. If it happens, it will be sudden and it will be very painful."

He spoke as Congress is putting the final touches on approving an increase in the $14.3 trillion debt ceiling, a move deemed critical to avoiding a default. Standard & Poor's has warned it still may revoke the coveted triple-A rating for US debt, a move that some fear would increase interest rates and further add to the economic slowdown.

While Walker said credit agency downgrades are generally a "lag indicator"—meaning that they look backwards rather than forwards—the Greece situation should stand as a template for where the US could be heading in terms of credit.

Though the US has the lowest average interest rate and lowest duration on its debt of any developed nation, it faces significant rate risk if it continues on the same path.

Greece now pays nearly 15 percent interest on its 10-year notes, while Italy pays 6.13 percent and Spain 6.38 percent. The latter two peripheral euro nations also face serious debt problems though not on a scale with Greece.

"We should recognize that this could be a leading indicator for us," Walker said. "You can see what happens to interest rates if you lose confidence. They can go up very dramatically."
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