TPS

I assume you must know a little about investing? The market leads economic activity, usually. Based on my prediction about a stronger second half, which was based on the way I view macroeconomics, I weighted my portfolio 100% equities. It's as simple as that. On the other side, I know a lot of money managers who were no more than 50% into equities this year.

i can try to dig up my analysis for 2010, if you are interested. My analysis this year had very little to do with politics, other than the the impact on the first half from contraction army policies. I'd certainly be interested to know who else went 100% into equities this year and why? I'm sure Tasker is sitting on his gold investments waiting for hyperinflation... speak of the devil, pray tell, what investments generated you lofty performance? I didn't think gold had a good year...

for my failed economic theories... Based on my ignorant views (at least according to my many fans here--Magox, Tasker, 3rd, et al), back in January I predicted the economy was going to finally pick up during the second half of the year (so far, 3.6% in Q3), at least until after the tax increases (Payroll and ACA) and sequester spending cuts had their way in the first half. Based on that prediction, I went 100% equities, mostly small and mid cap funds (2/3), the rest in emerging markets, income-growth, and resources. Yesterday put me over 30% for the year. I'd like to thank the Fed, John Maynard Keynes, and Hyman Minsky. I hope the gold bugs, ObamaScarers, and deficit fear mongers did as well... Cheers to another good year (at least for the first half) in 2014!

Sorry it took so long to get back to this...Your example supports why it's important to focus on "relative numbers" not absolute. If the interest today is $400 bil, that would put it at 2.5% of $16 trillion GDP. Suppose it did hit $1.2 trillion in 20 years or so, a 300% increase. If GDP grows at a faster rate, then the relative interest expense declines. Say GDP goes up by 400% ($64 tril) over that period, the interest expense would fall to less than 2% of GDP. this is why most economists focus on the shares of the budget as a % of GDP. Usually you separate the interest component from the total spending and taxes, the latter known as the primary budget. Regarding the size of government, pick any number you want as a share of GDP, say 20%. Then assume we want to make sure the primary budget is balanced, so we will bring in revenues = 20% of GDP too. As long as nominal GDP grows faster than the nominal interest rate on the outstanding debt, the interest burden will decline as a % of GDP and relative to total spending by the government. I'll use the numbers already given. 20% of $16 trillion GDP gives G=$3.2 trillion. (Just for the sake of making it clear, let's assume the primary def is balanced. The FY 2013 deficit was $660 bil and you say the interest exp is $400 bil, so it's really about $260 bl). The interest expense is $400 bill or 2.5% of GDP. Total spending from this example is $3.2 + $0.4= $3.6 trillion. The interest payment as a % of total G spending is 11.1%. Ok, 20 years later the interest expense is $1.2 trillion (300% increase). Government spending and taxes are both 20% of GDP, which I'm assuming increased by 400%, so it's now $64 trillion. G spending as 20% of GDP = $12.8 trillion + $1.2 tril interest = $14 tril. The interest expense has now declined to 8.6% of government's total spending (and 1.9% of GDP). Are we worse off? Would you not look at corporations in the same way? Since they are growing over time, who cares about their nominal interest payment? What's important is their interest expense ratio. While my example is not precisely realistic, it does express the most important variables to focus on once you balance the primary budget, the growth rate of nominal GDP relative to the nominal interest rate on the government's debt. The keys to stabilizing the government's finances over time are 1) make sure we balance the primary deficit over time; and 2) the growth rate of NGDP is >= the nominal interest rate on debt. There is no doubt that we will have to make sure we can balance the primary budget going forward (over the business cycle, not every year), then as long as the interest rate < the growth rate, the D/Y ratio will fall over time. To preempt an argument, If you want to argue that interest rates will be higher, then you will need a mechanism. If it's inflation, then that's also driving NGDP higher, so they offset.

LoA is tops, but One of my other favorite O'Toole films, Lord Jim.

Wonder if super M fits in that category....?

would you evaluate a business by its interest expense independent of its income? Would a bank? An investor? If you want to fix the discussion to your bias beforehand, that's up to you. Everyone else pays interest from their income.

Doesn't anyone here on the right understand the need to look at the Debt/income ratio? Debt/Asset ratio? Interest expense ratio?

I always get a kick out of conservative arguments that are impossible to verify with data.

If I'm counted as a "lib," I didn't make a moral argument. Though, the level of inequality in this country is immoral...

Firms treat those just like any other cost, and pass them along in prices as you imply. These make it more difficult on smaller businesses than large. As I've said about regulations in general, they act to make small business less competitive because they can't distribute the costs like larger companies can. Regardless, the share of profits in the economy has increased, and the wage share has decreased.

In addition, this is not simply about reducing poverty, it's also trying to remedy the rise in inequality that's a result of policies that began in the 1980s. Policies that de-regulated finance (and other industries) and increased globalization shifted power in favor of capital over labor, profits over wages. As I stated in my last post on this topic, workers' bargaining power has been decimated, so all of the gains from productivity have gone to capital. This generates a "demand gap" over time, because even though we are able to produce more, workers' earnings are stagnant. Some results from this over time: the US has the worst inequality among the advanced economies; workers/households increased reliance on debt to maintain living standards; an economy prone to asset bubbles and speculation as the more money that goes to the top means more money searching for financial investment outlets. The end result of these policies was an accumulation of private sector debt = 300% of GDP, which exceeded the 240% level in 1929. The private sector debt ratio was relatively stable around 120% of GDP from 1960-1980, then began a steady rise to the peak of 300% in 2008.This rise in private sector debt "masked" the underlying long term weaknesses in the economy caused by the shift of income from wages to profits. Conclusion: you can't fix this problem by continuing the policies that try to raise profits without raising demand for products. An increase in the minimum wage is one way to raise all wages relative to profits. It may not be the best way, but it's definitely needed in an economy where the main problem is demand, not supply.

i think he wants something NOT from PPP. Unless you want to argue about that?Try this J: http://people.stern.nyu.edu/nroubini/SUPPLY.HTM From dr. Dooms teaching web site. Includes links to both sides for further reading.

your basic idea is sound. Proponents argue that the income effect tends to be slightly greater than the cost/price effect, so there's a net gain in jobs over time. The more important issue is that it will tend to raise all wages since the floor is higher. It's needed because labor has been given the shaft for the past 30 years, as all productivity gains have gone mainly to capital and profits, leading to the rise in inequality. Graphs like those contained in the link below tell the story. Despite the constant efforts on the right to push "supply-side" profit-led growth strategies, the current problem is a lack of demand, not profitability. If the government pursued a full employment policy, workers would have greater bargaining power, and the forced increase in wages wouldn't be as necessary. http://www.washingtonpost.com/blogs/wonkblog/wp/2013/07/17/higher-productivity-used-to-mean-higher-wages-has-that-broken-down/

The Bush deficits were caused by both tax cuts and increased spending. I was focusing on the contribution to each deficit from the revenue side. You can do the same for the spending side. No article off the top of my head. I'll do a little search when I have some time. One way to correct for any issues there, focus on the IRS data and average tax rate paid out of AGI (adjustable gross income).Avg rate = taxes paid/AGI. This measures the average tax paid regardless of employment level. That rate will change from either a change in the amount of income in each marginal bracket (eg rising inequality raises the avg tax rate), or a change in rates. The average from 1993-2000 was 14.3%; the average from 2001-2008 was 12.7%. Both periods saw income shifting to the top by 5-6% of total AGI, so the drop in the average can be attributed to the drop in rates. The average difference over the period is 1.6%, which is a little better than the 2% average from using the "official" unemployment number.

hey, you can read his stuff on wiki, or so he says...

welcome to the world of economics...Full employment is defined by most economists as a level of "unemployment" consistent with stable inflation, the so-called "non-accelerating inflation rate of unemployment", NAIRU. If that level is 5%, then full employment is defined at 95% employed, so the actual level of employment can be "less than, equal to, or greater than" full employment.

yes, true, if we made everyone a CEO imagine all of the bad behavior...

why didn't I think of that solution! If everyone simply improved themselves then everyone wouldn't need to have a minimum wage job. If everyone were rich, then we wouldn't have any poor. Maybe we could solve all of our problems by making everyone a CEO? Geez, this simple...

That's an easy one, they vote for dems because the dems give them $. Unlike the 1% who vote for the reps because they give them $.

I thought I answered it in this thread, maybe not well, but it's in here somewhere... SSers argued that tax cuts would increase growth so much that they would eventually pay for themselves and balance the budget. Keynesians say SS policy is simply Keynesian policy of using increased deficits to expand the economy, but that lowering tax rates will increase the government's "full employment" or structural deficit over the cycle. Keynesians argue that if you permanently cut taxes or permanently increase spending, there will be a change in the structural deficit. Now the only way that one can evaluate different fiscal policies is at the same stage of a business cycle. As 3rdtard would say, it's not fair to compare revenues in 2001 to revenues in 2000 because 911 caused the economy to slow. Bush also raised spending after 911, and there was a housing bubble, so what was the ultimate source of growth and therefore revenues? All. So, the only way to evaluate the impact of a change in tax regimes is to look at the % of revenues generated at similar stages of the economy. The best way is to compare is to evaluate different tax regimes at what we would consider full employment, or equivalent stages of the business cycle. Are the lower tax rates generating an equivalent amount of revenue as the previous tax rate regime. Again, the only way is compare if we are generating more taxes our of a given level of income or not--%s. Here are three points of comparison between the 1990s and 2000s: 1994/2003; unemployment rates 6.1/6.0; revenues as % of income collected 18/16.2 1995/2004; U=5.6/5.5; revenues = 18.5/16.1 1998/2007; U=4.5/4.6; revenues = 19.9/17.6 As we all know the government was running a surplus before the tax cuts, in fact even during 2001 there was a surplus. The Bush tax cuts and increased spending on wars were very expansionary, but they increased the structural deficit by an average of 2%/year of GDP over his tenure. Conclusion: cutting taxes are a good way to expand the economy at less than full employment--any Keynesian will tell you that; but don't close your eyes to the fact that those tax cuts won't increase deficits over time.

That is precisely how tax (and spending) policy should be configured--taxes should decline when we're at less than full employment and rise when inflation increases beyond what's deemed generally acceptable (and not just by finance... ;-)

I'm not sure about CA, but NY's increase excludes workers making tips, unless adding average hourly tips to an hourly wage is < the minimum. Cooks at any decent restaurant will make more than the minimum. The only part of a restaurant's workforce impacted are the dishwashers...

Fixed to include the PPP majority...

Well, really about the opening analogy... http://www.commondreams.org/view/2013/12/09-0