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The UK is going to be interesting for a while

TheOriginalHappyGoat

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Parliament officially gave the PM permission to begin the process of leaving the EU. Well, technically it's not official until the Queen gives Royal Assent, but that's a mere formality, of course, as she would only refuse Royal Assent on the advice of the PM, who obviously supports it, and depending on whom you ask, the Queen may or may not support Brexit herself, anyway.

That said, the process brings more turmoil to Her Majesty's primary realm, as Nicola Sturgeon has ended months of waffling by publicly calling for a new Scottish independence referendum sometime in late 2018 or early 2019. Last year, after the Brexit vote (which Scots voted against by over 20 points), support for independence ticked over 50% for a while, before dropping back down again. Early this year, as the Brexit process has begun steaming forward, polls have bounced around, but remained very close.

May rejected Sturgeon's call, but delayed notice to the EU for a few weeks, perhaps a signal that she'd rather make an attempt at peace with the Scots than have a direct face-off over independence on the heels of Brexit's finalization (for which Sturgeon planned her proposed timetable very wisely).

Should be interesting watching this develop. As for the Queen? She's already the monarch of 16 legally separate realms. What's the big deal with adding one more?
 
Such a stupid decision.

At least electing Trump has some limitations -- worth a gamble for some. But leaving the EU, similar to some Americans wanting to hold on to their currently threatened 'culture' (nice euphemistic coded word) will only be a threat to the younger generation's options.

May thinks she has leverage negotiating with the EU is akin to wanting out of a marriage and thinking you have all the leverage. You don't.

Short term emotional satisfaction for a small group but long term loss. The working poor and unemployed are similar to the rural Trump supporters, life is pretty shite anyway, so its not much of a gamble.
 
Parliament officially gave the PM permission to begin the process of leaving the EU. Well, technically it's not official until the Queen gives Royal Assent, but that's a mere formality, of course, as she would only refuse Royal Assent on the advice of the PM, who obviously supports it, and depending on whom you ask, the Queen may or may not support Brexit herself, anyway.

That said, the process brings more turmoil to Her Majesty's primary realm, as Nicola Sturgeon has ended months of waffling by publicly calling for a new Scottish independence referendum sometime in late 2018 or early 2019. Last year, after the Brexit vote (which Scots voted against by over 20 points), support for independence ticked over 50% for a while, before dropping back down again. Early this year, as the Brexit process has begun steaming forward, polls have bounced around, but remained very close.

May rejected Sturgeon's call, but delayed notice to the EU for a few weeks, perhaps a signal that she'd rather make an attempt at peace with the Scots than have a direct face-off over independence on the heels of Brexit's finalization (for which Sturgeon planned her proposed timetable very wisely).

Should be interesting watching this develop. As for the Queen? She's already the monarch of 16 legally separate realms. What's the big deal with adding one more?

It is interesting that the elasticity in the ties that bind humans together is snapping just about everywhere. We have Brexit (and Scoxit?). A few years ago people in Texas were set to form their own country, now Californians. There are separatist movements just about everywhere. Is this cyclical, we are about 75 years from the last big nationalist wave and its something that just happens in that sort of time frame? Is technology pushing us apart? Or is the realization that we are all just like Mongo, "just pawn in game of life" too much for our egos to take so we desire to break down into our separate villages?

To me, Scotland had a bite at the apple a couple years ago and voted to stay. These things need some temporary permanence to them, makes little sense to have a separation vote every year or every time one loses a vote.
 
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It is interesting that the elasticity in the ties that bind humans together is snapping just about everywhere. We have Brexit (and Scoxit?). A few years ago people in Texas were set to form their own country, now Californians. There are separatist movements just about everywhere. Is this cyclical, we are about 75 years from the last big nationalist wave and its something that just happens in that sort of time frame? Is technology pushing us apart? Or is the realization that we are all just like Mongo, "just pawn in game of life" too much for our egos to take so we desire to break down into our separate villages?

To me, Scotland had a bite at the apple a couple years ago and voted to stay. These things need some temporary permanence to them, makes little sense to have a separation vote every year or every time one loses a vote.
I think it's generational. Most of the people who subscribe to trickle down economics, didn't live through the roaring 20's. Most of the people who support right to work, didn't see people lose their job, because they got hurt in a factory. Most of the people who want to privatize social security, didn't see old people wondering where they'd get their next meal.

Global income inequality, and a deep lack of historical knowledge, are some key problems. We are headed back to the 20's. Commoners are beginning to lash out.

Figure-3-e1455723924591.png
 
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I think it's generational. Most of the people who subscribe to trickle down economics, didn't live through the roaring 20's. Most of the people who support right to work, didn't see people lose their job, because they got hurt in a factory. Most of the people who want to privatize social security, didn't see old people wondering where they'd get their next meal.

Global income inequality, and a deep lack of historical knowledge, are some key problems. We are headed back to the 20's. Commoners are beginning to lash out.

Figure-3-e1455723924591.png

We call them plebs.
 
Global income inequality, and a deep lack of historical knowledge, are some key problems. We are headed back to the 20's. Commoners are beginning to lash out.

So what would change things? Ban the stock market, a primary driver of income inequality? Increase marginal rates for the top 1% to 90% again? If globalization is already here, how is that going to work without global coordination?

Aside from those questions, it's silly to compare the current state to the 20s or before. Poor now isn't what it used to be. In the 20s, people were concerned with finding food. Today, you can get government subsidized cell phones for heaven's sake, food and shelter be damned.
 
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So what would change things? Ban the stock market, a primary driver of income inequality? Increase marginal rates for the top 1% to 90% again? If globalization is already here, how is that going to work without global coordination?

Aside from those questions, it's silly to compare the current state to the 20s or before. Poor now isn't what it used to be. In the 20s, people were concerned with finding food. Today, you can get government subsidized cell phones for heaven's sake, food and shelter be damned.
Life is better for the poor because we have created a social safety net. Is our goal to see how many people we can fit into these programs? 8 out of 10 adults on Medicaid live in a working household. Should our motto be let's make it 9? 900 billion in tax breaks for the wealthy. 800 billion in cuts to Medicaid. We have to diagnose our problems before they can be solved.

Reaganomics didn't raise all boats. It's not outlandish to suggest we go back the other way now. It might not be as easy as raising rates, but where there's a will, there's a way. Our president suggests he can tax specific products/companies, if companies outsource. That opens a big can of worms.

The average American worker hasn't seen a real wage increase since the 70's, while productivity has increased steadily. It's as much about functionality, as it is fairness. GDP averages 1% less when top marginal rates are below 70%(iow, when excessive wealth is left unchecked). I'm not against rich people, but excessive wealth creates many problems.

How come we don't see inflation? Interest rates have been historically low, for a historically long period of time.
 
Life is better for the poor because we have created a social safety net. Is our goal to see how many people we can fit into these programs? 8 out of 10 adults on Medicaid live in a working household. Should our motto be let's make it 9? 900 billion in tax breaks for the wealthy. 800 billion in cuts to Medicaid. We have to diagnose our problems before they can be solved.

No, I'm anti-welfare and this post confuses me. You are complaining about the social safety net, but are proposing raising tax rates. Are you suggesting that a good portion of those new revenues wouldn't be going directly towards increasing the size and scope of the social safety net?

Reaganomics didn't raise all boats. It's not outlandish to suggest we go back the other way now.

I'm not necessarily a supply sider, but explain how slowing economic growth is a sustainable approach? It's a nonpartisan consensus that increasing tax rates decreases economic production (GDP). So, my point is, if we have an economy slugging along at 2%, what effect will higher tax rates have? Is that sustainable and does that increase the fear of deflation?

How come we don't see inflation? Interest rates have been historically low, for a historically long period of time.

Suppressed aggregate demand, as Rockfish would put it. The fiscal side never ponied up with infrastructure investment as it was expected and because of the unprecedented economic uncertainty post-recession, businesses aren't investing and spending like they used to.

In other words, I think we both agree that there are structural problems. I don't have an answer, but I haven't seen anyone else come up with one either. These are complex problems.
 
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No, I'm anti-welfare and this post confuses me. You are complaining about the social safety net, but are proposing raising tax rates. Are you suggesting that a good portion of those new revenues wouldn't be going directly towards increasing the size and scope of the social safety net?



I'm not necessarily a supply sider, but explain how slowing economic growth is a sustainable approach? It's a nonpartisan consensus that increasing tax rates decreases economic production (GDP). So, my point is, if we have an economy slugging along at 2%, what effect will higher tax rates have? Is that sustainable and does that increase the fear of deflation?



Suppressed aggregate demand, as Rockfish would put it. The fiscal side never ponied up with infrastructure investment as it was expected and because of the unprecedented economic uncertainty post-recession, businesses aren't investing and spending like they used to.

In other words, I think we both agree that there are structural problems. I don't have an answer, but I haven't seen anyone else come up with one either. These are complex problems.

Switch gears for a second.

Our fed is considering raising interest rates. Couldn't our government raise tax rates and put 100% of the revenue towards debt reduction and accomplish about the same thing regarding the money supply, while also reducing the debt? The Fed holds approximately 12% of that debt. Wouldn't this make more sense?
 
Switch gears for a second.

Our fed is considering raising interest rates. Couldn't our government raise tax rates and put 100% of the revenue towards debt reduction and accomplish about the same thing regarding the money supply, while also reducing the debt? The Fed holds approximately 12% of that debt. Wouldn't this make more sense?

Couple of things:

1) The Fed is only able to control monetary policy and is not able to partake in fiscal policy decisions (e.g. raising taxes, allocation of tax dollars, debt levels). I think, Congress, from a fiscal perspective, if they did chose to raise tax rates, should use the additional proceeds to reduce new debt issuance, particularly if new issuance is at higher costs after anticipated yield increases.

2) The Fed said it was going to hold debt to maturity, but I'm not sure it matters. I believe (not certain) that the coupons received by the Fed go back to the Treasury anyway. My sense is that the majority of this debt is lower-cost debt anyhow, so the net benefit would be small for the US Treasury.

3) The Fed no longer targets control over the money supply aggregates, it only has the ability to use rates. So, even if you could hypothetically get fiscal and monetary policy aligned, the Fed would need to utilize rate changes (pricing) to affect the monetary supply outstanding.

http://www.frbsf.org/education/publications/doctor-econ/2003/january/monetary-policy-1970s-1980s/

In summary, I would be in favor of small increases in marginal rates if there was a guarantee that it would be used to reduce future debt issuance (which would likely be at higher costs - expecting 2-3 Fed hikes this year). Practically, your scenario isn't really feasible based on the current operating capacity of the various branches, from what I can tell.
 
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How come we don't see inflation? Interest rates have been historically low, for a historically long period of time.

Here's the key reason that inflation has remained low throughout the economic recovery.

fredgraph.png
 
I'm not necessarily a supply sider, but explain how slowing economic growth is a sustainable approach? It's a nonpartisan consensus that increasing tax rates decreases economic production (GDP). So, my point is, if we have an economy slugging along at 2%, what effect will higher tax rates have? Is that sustainable and does that increase the fear of deflation?



Suppressed aggregate demand, as Rockfish would put it. The fiscal side never ponied up with infrastructure investment as it was expected and because of the unprecedented economic uncertainty post-recession, businesses aren't investing and spending like they used to.
These are very complex problems. As you know, in economics, things are all relative.
Couple of things:

1) The Fed is only able to control monetary policy and is not able to partake in fiscal policy decisions (e.g. raising taxes, allocation of tax dollars, debt levels). I think, Congress, from a fiscal perspective, if they did chose to raise tax rates, should use the additional proceeds to reduce new debt issuance, particularly if new issuance is at higher costs after anticipated yield increases.

2) The Fed said it was going to hold debt to maturity, but I'm not sure it matters. I believe (not certain) that the coupons received by the Fed go back to the Treasury anyway. My sense is that the majority of this debt is lower-cost debt anyhow, so the net benefit would be small for the US Treasury.

3) The Fed no longer targets control over the money supply aggregates, it only has the ability to use rates. So, even if you could hypothetically get fiscal and monetary policy aligned, the Fed would need to utilize rate changes (pricing) to affect the monetary supply outstanding.

http://www.frbsf.org/education/publications/doctor-econ/2003/january/monetary-policy-1970s-1980s/

In summary, I would be in favor of small increases in marginal rates if there was a guarantee that it would be used to reduce future debt issuance (which would likely be at higher costs - expecting 2-3 Fed hikes this year). Practically, your scenario isn't really feasible based on the current operating capacity of the various branches, from what I can tell.
I agree. With regards to #3, my point is that you could have a similar affect of changing the monetary supply outstanding, by reducing discretionary income, through slight increases in marginal tax rates. I understand that would be a congressional act, and not a likely occurrence given the climate.
 
I agree. With regards to #3, my point is that you could have a similar affect of changing the monetary supply outstanding, by reducing discretionary income, through slight increases in marginal tax rates. I understand that would be a congressional act, and not a likely occurrence given the climate.

Right, but the problem becomes, what are the consequences? If we reduce discretionary income and are reliant upon an economy that is composed of ~71% consumer spending, what does that do to economic output/growth?
 
Here's the key reason that inflation has remained low throughout the economic recovery.

fredgraph.png
Exactly. Getting money into the hands of the working poor, up through the upper middle-class, would be the quickest remedy, imo. The free market solution to the redistribution of wealth has been tepid at best.

If you look back at '07, look at what products were inflated- stocks, real estate, and commodities. That to me is an indication that excessive wealth exsists, and is a problem. If that money would have been more equally distributed, you would have had more demand and those investments would have had greater underlying value. There needs to be a little more balance than exsisted then.
 
Right, but the problem becomes, what are the consequences? If we reduce discretionary income and are reliant upon an economy that is composed of ~71% consumer spending, what does that do to economic output/growth?
You take it from the top. It doesn't have to be outrageous and it doesn't have to be all at once.
 
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You take it from the top. It doesn't have to be outrageous and it doesn't have to be all at once.

It's still a retardant to economic growth and output. It's mathematical to prove this out, which is why you actually have consensus among economists. Again, I'm not saying it isn't a logical idea, I just think the timing and current pace of growth isn't supportive.

Exactly. Getting money into the hands of the working poor, up through the upper middle-class, would be the quickest remedy, imo. The free market solution to the redistribution of wealth has been tepid at best.

I'm confused about where you actually stand on these issues. On one hand you say this and on the other "Life is better for the poor because we have created a social safety net. Is our goal to see how many people we can fit into these programs?". To me, the latter implies you are against the notion of expanding welfare.

If you look back at '07, look at what products were inflated- stocks, real estate, and commodities. That to me is an indication that excessive wealth exsists, and is a problem. If that money would have been more equally distributed, you would have had more demand and those investments would have had greater underlying value. There needs to be a little more balance than exsisted then.

If we look back at 2007, you'd see exactly what I'm pointing out is missing currently, and that is monetary velocity. Throughout the Bush tax cut years, we still experienced significant increases in velocity, which drove economic activity. Even as GDP growth has increased post-recession, we haven't seen any recovery in the velocity of money in the economy. Therefore, I'd suggest this period is quite different than pre-recession.

Are those same assets not somewhat inflated at present (equities and real estate, not so much commodities)?
 
I'm confused about where you actually stand on these issues. On one hand you say this and on the other "Life is better for the poor because we have created a social safety net. Is our goal to see how many people we can fit into these programs?". To me, the latter implies you are against the notion of expanding welfare.
I'm for helping the working poor, especially under current circumstances...the rising tide? TANF, is much harder to defend. I'm in favor of requirements to remain eligible after a certain period of time. I agree with your view about having children. No one benefits when children are added to the equation.

I would like to point out that TANF benefits haven't really grown has a percentage of GDP. Many of our safety nets are distressed because of our government's poor fiscal policies...not the Fed's.

If we look back at 2007, you'd see exactly what I'm pointing out is missing currently, and that is monetary velocity. Throughout the Bush tax cut years, we still experienced significant increases in velocity, which drove economic activity. Even as GDP growth has increased post-recession, we haven't seen any recovery in the velocity of money in the economy. Therefore, I'd suggest this period is quite different than pre-recession.

I found this blog post while doing research. It does a decent job of explaining my point of view.

http://wisdomofhands.blogspot.com/2016/03/the-velocity-of-money.html?m=1


Are those same assets not somewhat inflated at present (equities and real estate, not so much commodities)?
Yes they are. Commodities trailed last time around too.
 
I'm for helping the working poor, especially under current circumstances...the rising tide? TANF, is much harder to defend. I'm in favor of requirements to remain eligible after a certain period of time. I agree with your view about having children. No one benefits when children are added to the equation.

I would like to point out that TANF benefits haven't really grown has a percentage of GDP. Many of our safety nets are distressed because of our government's poor fiscal policies...not the Fed's.

I found this blog post while doing research. It does a decent job of explaining my point of view.

http://wisdomofhands.blogspot.com/2016/03/the-velocity-of-money.html?m=1

Yes they are. Commodities trailed last time around too.

We agree that the problems are fiscal policy related, not monetary policy related. And who's blog was that? It was terrible.

If you want to read a great summary of Monetary Velocity and its drag on economic growth, check out this piece by the St. Louis Fed:

https://www.stlouisfed.org/On-The-E...elocity-Tell-Us-about-Low-Inflation-in-the-US

"The velocity of money can be calculated as the ratio of nominal gross domestic product (GDP) to the money supply (V=PQ/M), which can be used to gauge the economy’s strength or people’s willingness to spend money. When there are more transactions being made throughout the economy, velocity increases, and the economy is likely to expand. The opposite is also true: Money velocity decreases when fewer transactions are being made; therefore the economy is likely to shrink.
...
And why then would people suddenly decide to hoard money instead of spend it? A possible answer lies in the combination of two issues:

  • A glooming economy after the financial crisis
  • The dramatic decrease in interest rates that has forced investors to readjust their portfolios toward liquid money and away from interest-bearing assets such as government bonds"
If you increase taxes, that directly impacts the GDP portion of the equation (P*Q). Therefore, to actually reap benefit from increasing taxes on the wealthy and giving it to the poor, you'd need an a more than equivalent pop in V to make up for the decline in P&Q.
 
If you increase taxes, that directly impacts the GDP portion of the equation (P*Q). Therefore, to actually reap benefit from increasing taxes on the wealthy and giving it to the poor, you'd need an a more than equivalent pop in V to make up for the decline in P&Q.
I think you're accidentally misstating something here. It doesn't make any sense to suggest you can make up for a decline on the right side of that equation by increasing something on the left side of the equation, or it becomes unbalanced. Perhaps you intended to speak to the relation of V to M?

Please note, I'm not suggesting you're wrong about anything. You know way more about monetary policy than I do. It's just that you're making a math error, so I think you might have simply made a typo or skipped a step somewhere.
 
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I think you're accidentally misstating something here. It doesn't make any sense to suggest you can make up for a decline on the right side of that equation by increasing something on the left side of the equation, or it becomes unbalanced. Perhaps you intended to speak to the relation of V to M?

Please note, I'm not suggesting you're wrong about anything. You know way more about monetary policy than I do. It's just that you're making a math error, so I think you might have simply made a typo or skipped a step somewhere.

Well, I was thinking about the equation from an MV=PQ standpoint. If, the intention is to suggest increased tax rates will lead to higher velocity by putting that money into those that spend a larger portion of their income, then it needs to account for the detrimental impact on PQ.

The nonpartisan Tax Foundation found:

Most of the recent studies distinguish by type of tax, rather than using some broad measure of taxes. The most prominent exception is by David and Christina Romer,[5] who look at the overall U.S. federal tax burden as a share of GDP since World War II. They analyze the narrative record of federal tax changes, including presidential speeches, congressional reports, etc., to identify legislated “tax shocks,” such as efforts to reduce an inherited budget deficit or promote long-run growth. This technique allows them to minimize the statistical problem of reverse causality by removing from analysis legislated tax changes that are the result of economic changes, such as countercyclical actions and those tied to government spending. They find much larger negative effects of taxes as compared to earlier studies that lump all tax changes together. Particularly, they find that a tax increase of 1 percent of GDP lowers real GDP by about 3 percent after about two years. The largest effect is from tax changes meant to promote economic growth, and the main channel is investment. These results are robust to various specifications, including controlling for the state of the economy, monetary policy, and the behavior of government spending.

Now, if you are lowering GDP by some percentage point, I'm suggesting the velocity would need to be higher to not only offset the tax increase, but also provide a benefit to GDP. I have no idea if anyone has studied that yet.

Alternatively, you could look at it as a reduction in real GDP would have a detrimental impact on V by reducing the numerator and holding the denominator constant. So wouldn't that offset any potential expected pickup in V? Perhaps Digressions is correct about the change in M, but I have no idea on how that will change relative to what we are talking about.
 
Well, I was thinking about the equation from an MV=PQ standpoint. If, the intention is to suggest increased tax rates will lead to higher velocity by putting that money into those that spend a larger portion of their income, then it needs to account for the detrimental impact on PQ.
That's what I figured you were getting at. I don't think you should assume that everyone realizes V=PQ/M and VM=PQ are the same thing. :p
 
We agree that the problems are fiscal policy related, not monetary policy related. And who's blog was that? It was terrible.

If you want to read a great summary of Monetary Velocity and its drag on economic growth, check out this piece by the St. Louis Fed:

https://www.stlouisfed.org/On-The-E...elocity-Tell-Us-about-Low-Inflation-in-the-US

"The velocity of money can be calculated as the ratio of nominal gross domestic product (GDP) to the money supply (V=PQ/M), which can be used to gauge the economy’s strength or people’s willingness to spend money. When there are more transactions being made throughout the economy, velocity increases, and the economy is likely to expand. The opposite is also true: Money velocity decreases when fewer transactions are being made; therefore the economy is likely to shrink.
...
And why then would people suddenly decide to hoard money instead of spend it? A possible answer lies in the combination of two issues:

  • A glooming economy after the financial crisis
  • The dramatic decrease in interest rates that has forced investors to readjust their portfolios toward liquid money and away from interest-bearing assets such as government bonds"
If you increase taxes, that directly impacts the GDP portion of the equation (P*Q). Therefore, to actually reap benefit from increasing taxes on the wealthy and giving it to the poor, you'd need an a more than equivalent pop in V to make up for the decline in P&Q.
Yes, it's totally fiscal. My take on your original Velocity of M1 graph is:
1)V=PQ/M. M was increased through QE, and rightfully so. So you should expect V to fall since you are increasing your denominator, and increasing it by a good margin. But that doesn't explain the entire decrease and stagnation.

2)PQ can't rise because, as stated in the blog, the middle-class and below got hit the hardest. They still haven't recovered. The class that recovered can't figure out what to do with the money. There are very few, if any, "sound" investments. And the investments that are made, generally stagnate the flow of money, because there's no underlying demand.

3) http://www.financialsamurai.com/the-average-savings-rates-by-income-wealth-class/
The reason 90% of Americans have very little to no savings, is because they've spent all their money...right? Your link asks why would people want to hoard money now? 90% or more don't want to. They would just like to have a wage increase. And if we can figure out a way to put money into their hands, I bet they'd spend that too. That flow upward is the V. The V stops when the M is parked, and always has.

4)When you say raising taxes has an adverse affect on GDP, and it can be calculated, doesn't that calculation need to take into account, what is done with the revenue raised, and be given a time of reference? I will try to find the statistics again, but I remember reading that GDP is historically on average a full percent lower during the lower marginal tax rate years vs the higher marginal tax rate years. I don't believe it took into account other things that could distort the integrity of that stat, such as the EITC. It also doesn't take into account that the net effect it has had on our budget/debt.

5)Money is relative:
A. If someone hands you a dollar, and no one else receives a dollar, you've gained a dollar.
B. If someone hands you a dollar, but everyone gets a dollar, you've gained nothing.
C. If someone hands you a dollar, and 90% of everyone else a dollar, but 10% of the people receive 100 dollars, you've gone backwards.

6)Money Supply: Assume we are stranded on an island with 10 fellow coolers and had to start an economy. If we each had a 99 cents in our pocket, a coconut might cost 5 cents. But if we each had 99 dollars in our pocket, that same coconut would cost between 5 to 10 dollars.

In summary, what we have is the maturity of a supply-side economy. It will be boom to bust, until our fiscal policy is structured correctly. I'm not arguing for communism, or 90% rates, we are just out of balance. I'm sorry to ramble but I got distracted a couple of times.

Note: I added 5 and 6, because the lack of understanding regarding those basic economic concepts, helps to explain why so many people vote against their own economic interests, and that is something that has been discussed on the cooler before. We have been in 5 C for 35 years.
 
Well, I was thinking about the equation from an MV=PQ standpoint. If, the intention is to suggest increased tax rates will lead to higher velocity by putting that money into those that spend a larger portion of their income, then it needs to account for the detrimental impact on PQ.

The nonpartisan Tax Foundation found:

Most of the recent studies distinguish by type of tax, rather than using some broad measure of taxes. The most prominent exception is by David and Christina Romer,[5] who look at the overall U.S. federal tax burden as a share of GDP since World War II. They analyze the narrative record of federal tax changes, including presidential speeches, congressional reports, etc., to identify legislated “tax shocks,” such as efforts to reduce an inherited budget deficit or promote long-run growth. This technique allows them to minimize the statistical problem of reverse causality by removing from analysis legislated tax changes that are the result of economic changes, such as countercyclical actions and those tied to government spending. They find much larger negative effects of taxes as compared to earlier studies that lump all tax changes together. Particularly, they find that a tax increase of 1 percent of GDP lowers real GDP by about 3 percent after about two years. The largest effect is from tax changes meant to promote economic growth, and the main channel is investment. These results are robust to various specifications, including controlling for the state of the economy, monetary policy, and the behavior of government spending.

Now, if you are lowering GDP by some percentage point, I'm suggesting the velocity would need to be higher to not only offset the tax increase, but also provide a benefit to GDP. I have no idea if anyone has studied that yet.

Alternatively, you could look at it as a reduction in real GDP would have a detrimental impact on V by reducing the numerator and holding the denominator constant. So wouldn't that offset any potential expected pickup in V? Perhaps Digressions is correct about the change in M, but I have no idea on how that will change relative to what we are talking about.
I would suggest we've never been this far before, but the closest thing we've seen is the 20's, and we all know how we got out of that. Tax hikes and an incredible amount of infrastructure. Obviously, this time around the Fed kept us from those depths.
 
I've got the UK in my Final Four in my bracket. Oh wait, this thread isn't about basketball?!? I thought that's all that matters today and tomorrow?
 
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Nicola Sturgeon says Scotland will pursue EU membership after independence

http://www.independent.co.uk/news/u...-membership-back-of-queue-spain-a7638101.html

At least the Scots are the smart ones in that they know who puts the butter on their toast.

You have so many English/Welsh who voted out of EU and then shocked to find out later that their various funding or projects will be halted or eliminated when they leave the EU.
 
Nicola Sturgeon says Scotland will pursue EU membership after independence

http://www.independent.co.uk/news/u...-membership-back-of-queue-spain-a7638101.html

At least the Scots are the smart ones in that they know who puts the butter on their toast.

You have so many English/Welsh who voted out of EU and then shocked to find out later that their various funding or projects will be halted or eliminated when they leave the EU.
This is going to be an interesting debate. On the one hand, Scotland gains benefits being part of the UK. On the other hand, they'd gain benefits from staying part of Europe, and there is no doubt they'd love to gain control of all that off-shore oil/gas.
 
This is going to be an interesting debate. On the one hand, Scotland gains benefits being part of the UK. On the other hand, they'd gain benefits from staying part of Europe, and there is no doubt they'd love to gain control of all that off-shore oil/gas.

Most Scots feel they were cheated out of the UK budgets when most of its North Sea oil revenues were sent to London and to support the UK -- when they desperately needed the money for scottish urban renewal programmes. My understanding is that the North Sea O&G are on the downward end of sliding scale in terms of how many years they have left to produce. Going deeper and deeper or smaller pools of reserves.

The Welsh I think have the best deal out of the EU. They dont have much natural resources to offer besides sheeps and coal in the past. Plus they are less ethnocentric than the Scots.

Brexit was driven by the English but to execute it would threaten the existence of the UK. An emotional decision that will have some major economic repercussions.

Side note: one of my best friends sold his place in Surrey and bought a fix-a-upper farm house in Brittany like four months before the Brexit vote. Will be pretty screwed in a couple of years in terms of healthcare etc unless the UK gov't can negotiate a dual citizenship/PR for Brits living abroad. But what would be the benefits to their host countries?
 
This is going to be an interesting debate. On the one hand, Scotland gains benefits being part of the UK. On the other hand, they'd gain benefits from staying part of Europe, and there is no doubt they'd love to gain control of all that off-shore oil/gas.

from what i've read scotland is receiving way more in UK $ than they are paying into the pool in taxes...
 
Parliament officially gave the PM permission to begin the process of leaving the EU. Well, technically it's not official until the Queen gives Royal Assent, but that's a mere formality, of course, as she would only refuse Royal Assent on the advice of the PM, who obviously supports it, and depending on whom you ask, the Queen may or may not support Brexit herself, anyway.

That said, the process brings more turmoil to Her Majesty's primary realm, as Nicola Sturgeon has ended months of waffling by publicly calling for a new Scottish independence referendum sometime in late 2018 or early 2019. Last year, after the Brexit vote (which Scots voted against by over 20 points), support for independence ticked over 50% for a while, before dropping back down again. Early this year, as the Brexit process has begun steaming forward, polls have bounced around, but remained very close.

May rejected Sturgeon's call, but delayed notice to the EU for a few weeks, perhaps a signal that she'd rather make an attempt at peace with the Scots than have a direct face-off over independence on the heels of Brexit's finalization (for which Sturgeon planned her proposed timetable very wisely).

Should be interesting watching this develop. As for the Queen? She's already the monarch of 16 legally separate realms. What's the big deal with adding one more?

Here's Morgan Stanley and Oliver Wyman on the anticipated impact on the financial industry

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Brexit is slowly killing the UK economy. Here's a good list of issues they have to sort through that they obviously didn't consider (although many warned them about):

As a British EU negotiator, I can tell you that Brexit is going to be far worse than anyone could have guessed

http://www.independent.co.uk/voices...one-guessed-a7858586.html?cmpid=facebook-post

Here is a question, what happens to one's social security if they stop their American citizenship? I have a buddy who has gone off the deep end on Calexit. I think the concept is revolting.

Anyway, it seems for a lot of Californians that would be a terribly idea from the standpoint of Social Security. Assuming my thought that one loses it if they cease American citizenship is accurate. I see no reason the other 49 states would be magnanimous in any Calexit negotiations.
 
Here is a question, what happens to one's social security if they stop their American citizenship? I have a buddy who has gone off the deep end on Calexit. I think the concept is revolting.

Anyway, it seems for a lot of Californians that would be a terribly idea from the standpoint of Social Security. Assuming my thought that one loses it if they cease American citizenship is accurate. I see no reason the other 49 states would be magnanimous in any Calexit negotiations.
If you renounce you still get SS checks based on what you paid in up to that point. If a state leaves, I assume that would be a part of the negotiations.
 
Bump.

Brexit’s biggest campaign donor 'investigated by National Crime Agency over links to Russia'
Emails reportedly show Arron Banks was offered three Russian business deal
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https://www.independent.co.uk/news/...d-leaveeu-national-crime-agency-a8425321.html

Brexit’s biggest campaign donor is reportedly being investigated by the National Crime Agency (NCA) over alleged links to Russia.
The NCA was handed emails belonging to multimillionaire Arron Banks, co-founder of the Leave.EU campaign, revealing previously undisclosed meetings between the businessman and the Russian ambassador in London, according to The Times.
The emails reportedly show Mr Banks was offered three Russian business deals in the build up to the Brexit vote, including a gold mine in west Africa and a stake in Russia’s state-owned diamond mining organisation Alrosa.

What a coincidence -- the Russians are involved?

 
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