HonorAmongSteves

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The poor don't pay taxes? by philnotfilin PoliticalDiscussion

[–]HonorAmongSteves -1 points0 points ago

any way you figure it, you aren't paying more percentage wise with a sales tax than an income tax. sales taxes are usually low - less than ten percent. even if you spend 100% of your income on taxable goods, you only pay that relatively low rate. most people don't spend 100% of their income on taxable goods, so their effective tax rate as a percentage of income is lower than the sales tax rate.

With state revenues down by $351 million, New Jersey Governor Chris Christie still wants tax cuts for the rich that will cost the state $1.3 billion a year. by LaBamba00in politics

[–]HonorAmongSteves 0 points1 point ago

Investing in a mutual fund is not investing in capital

You say this but you have yet to present an argument. Furthermore, I'm not sure why you are obsessing over mutual funds, they are just one type of investment vehicle.

All a mutual fund is, is a group of people pooling their funds together and hiring someone to manage those funds by purchasing securities. Securities - equity and debt - are investments. This process provides funds to whoever is selling securities - governments and businesses - who then in turn use these funds for many reasons, including the replacement or acquisition of additional capital.

High frequency trading accounts for about 75% of financial transactions, but high frequency traders account for only about 2% of firms

And what is the significance of this? Why should anyone care? You seem to think this carries some huge significance, when it's a relatively mundane factoid.

You complained that a fiat currency is "not backed by a tangible asset."

No I didn't, you did:

banks create money right out of thin air just like that. The assets aren't necessarily backed by any tangible good.

[...]

So the bank can lend out that $80 several times until it builds up a whole house of cards.

What are MFA's thoughts on Swatch watches like this one? by soondotin malefashionadvice

[–]HonorAmongSteves 0 points1 point ago

I have to second screagle, do not purchase a watch with a plastic crystal. Ideally, you'll want to find a watch with a sapphire crystal, with mineral being a cheaper alternative.

If you're looking for an affordable watch, I'd try looking at Seiko. Here's a decent chronograph for the price. Personally, I would go for something more like this - automatic, self winding, inexpensive if a little plain. You can replace the band with the money you save if you prefer something fancier.

I recommend you check out /r/watches brand and buying guides. They have really solid advice.

With state revenues down by $351 million, New Jersey Governor Chris Christie still wants tax cuts for the rich that will cost the state $1.3 billion a year. by LaBamba00in politics

[–]HonorAmongSteves 0 points1 point ago

The interest rates are low because of Fed policy.

Interest rates are decided by market forces that result from the supply and demand for loanable funds. You are right to say that Fed Policy can bring rates down, but that's not the only way interests rates can drop. For instance, if firms have excess cash, then they will try to loan it out (since there are costs associated with holding cash, as I explained in an earlier post). Flooding the market with loanable funds will cause interest rates to drop.

This is good for some companies (who want to borrow) but bad for people who want to save their money.

What do you think that the fractional reserve system is doing with that money that's better than what the government could do with that money putting people to work who spend their money in the real economy?

Do I think that market forces will distribute money "better" (for the economy) than the government? Yes, and virtually every mainstream economist agrees with me. That link talks about efficiency, which in economic terms means the maximization of goods and services (ie consumption) with a given set of inputs. Markets are more efficient than central economic planning due to things like the calculation problem.

Apple Computer has about 100 billion in cash reserves in the bank that it's just sitting on

Yes, because it actually takes time to manage and spend 100 billion dollars. They're not just sitting on it... the article you posted even mentioned that. They are actively searching for a way to spend it. A good portion will probably end up as a dividend paid to the shareholders, and the rest will be invested into something, either new Apple R&D or acquiring other companies.

With state revenues down by $351 million, New Jersey Governor Chris Christie still wants tax cuts for the rich that will cost the state $1.3 billion a year. by LaBamba00in politics

[–]HonorAmongSteves 0 points1 point ago

I'm glad you caught that. This strengthens my point.

You didn't make a point...

Even if the currency was backed by gold [...]

I'm not sure what you're driving at.

Now, back to my point about fractional banking, and how when corporations save, they are taking money out of circulation

This simply isn't true. Saving money fuels investment, and is an incredibly vital part of the economy. In fact, saving rates in the US are abysmal and we'd be better off with more saving. Just look at how much rates have fallen over the years.

In economics there is a concept known as the Golden Rule savings rate. The idea is at 100% savings there is no consumption (for obvious reasons), and at 0 savings capital depreciates without being replaced and there is also no consumption. So the optimal rate of savings is somewhere between the two extremes. It's believed that most nations generally have too little savings rather than too much.

The effects of high savings are pretty significant. Germany, Japan, and South Korea are all countries with historically high savings rates that were devastated by war yet rebuilt into economic powerhouses relatively quickly.

High frequency trading [...]

I don't know what you think HTF has to do with any of this.

Investing in a mutual fund is not investing in capital.

I also don't know where this statement came from.

Try to focus on one thing that you don't understand at a time.

Republican Challenge: Name one other first-world country that successfully practices American conservative ideas including complete privatization of services like healthcare. by Cyrusk4in PoliticalDiscussion

[–]HonorAmongSteves 2 points3 points ago

actually, it has to do with our rate of premature births. I'm on a phone or I'd link you, search the cdc website for it, they have an explanation.

With state revenues down by $351 million, New Jersey Governor Chris Christie still wants tax cuts for the rich that will cost the state $1.3 billion a year. by LaBamba00in politics

[–]HonorAmongSteves 0 points1 point ago

You have a gross misunderstanding of how fractional reserve banking works. the current reserve ratio is ten percent, for most purposes. that means for every dollar in reserves, a bank lends out 10.

controlling the reserve ratio is one of the tools the fed uses to set monetary policy.

yes, of course its not backed by a tangible asset. is this a surprise to you? the US dollar is a fiat currency.

maximizing consumption is the goal of any economic policy. it is meaningless and not very helpful to simply state that we need more consumption. the disagreement is in how to do so.

With state revenues down by $351 million, New Jersey Governor Chris Christie still wants tax cuts for the rich that will cost the state $1.3 billion a year. by LaBamba00in politics

[–]HonorAmongSteves 0 points1 point ago

this article backs up my point. it's not saying that companies are holding cash, it says how they have extra money to lend which is driving interest rates down.

ELI5: Tax returns by small_town_atheistin explainlikeimfive

[–]HonorAmongSteves 1 point2 points ago

This isn't helpful at all, but here's a relevant quote:

The hardest thing to understand in the world is the income tax.

Albert Einstein

[ELI5] Why didn't Google just buy the shit out of Facebook at that IPO? by 1r0n1cin explainlikeimfive

[–]HonorAmongSteves 0 points1 point ago

Because a lot of people thought that the bottom was going to fall out on the stock. They were kind of right, facebook tanked today, down ~11%.

With state revenues down by $351 million, New Jersey Governor Chris Christie still wants tax cuts for the rich that will cost the state $1.3 billion a year. by LaBamba00in politics

[–]HonorAmongSteves 1 point2 points ago

It's invested in companies that aren't hiring more people because there isn't any additional demand to buy their products.

I feel that you don't have a grasp of what demand means in the economic sense of the word. Demand is not "quantity demanded." Demand describes a quantity demanded for a given price level. If prices go down with no change in Demand, quantity demanded still increases. An increase in Demand would be an increase in quantity demanded with a stable price.

The way you used it doesn't really make sense. It's like saying that if the product were suddenly free, the same amount would be sold as at the current price since there is no "increase in demand."

So the companies sit on the cash.

Not likely. Sitting on cash is one of the worst things anyone can do to himself. There is a cost to holding cash - the rate of inflation, plus the interest foregone by not investing. Companies only sit on cash when the future is so unstable that they predict needing unusually large amounts of liquidity in the future. This is an artificial condition caused by, among other things, politics. Notably in the US, the main item causing companies to hold cash is whether the individual mandate portion of PPACA will be upheld or not.

We tried it your way for last decade

My way? I wouldn't call it that by a long shot. Perhaps you could clarify what you meant?

Time to try what worked in the 90s

What worked in the nineties? Did you forget about the Dot Com Bubble?

Republican Challenge: Name one other first-world country that successfully practices American conservative ideas including complete privatization of services like healthcare. by Cyrusk4in PoliticalDiscussion

[–]HonorAmongSteves 60 points61 points ago

I have a number of problems with your post. I will be addressing it as if you were trying to make an argument instead of asking a question (which is what you were doing). Your argument seems to be (and correct me if I'm wrong):

Liberal policies are better than conservative ones because all these countries have liberal policies. We know they have liberal policies because they have nationalized healthcare.

  • Your basic premise is not logically consistent. It's an argumentum ad populum. Whether liberal policies are better or not, your conclusion is not supported by your argument.

  • Nationalized healthcare is not a good indicator of overall policy. I will use economic freedom as a measure of conservatism/liberalism in policy. Countries that rank highly in economic freedom would have generally "conservative policies, such as low regulation and government intervention, free movement of capital and labor, free trade, etc.

Four of the countries you mention - Singapore, New Zealand, Australia, and Switzerland - are among the top 5 countries in economic freedom. The majority of the others (Canada, Denmark, Britain, Estonia, Germany, Japan, Netherlands, Sweden) all rank very highly in economic freedom, between 70 and 80 (the US is a 76, for comparison).

Here is the list I used. If you don't like it, here (tables and charts, opens in excel) is another list that happens to be peer reviewed. If you don't like either of these, provide another one. If you don't like economic freedom as a measure of policy, feel free to argue that as well.

  • You don't make any effort to demonstrate causality between the policies you advocate and the desirable qualities of your example countries. You don't consider other things these countries have in common - relatively homogeneous populations and relatively small populations. You don't consider their natural resources. You don't try to argue that your policies cause prosperity, and not that your policies are a product of prosperity. You don't try to argue that your countries are more prosperous than they could have been with a different policy. These are all things we must consider before we can make an educated judgment on the matter.

  • The countries you listed aren't necessarily doing well. Spain, Ireland, and Italy (notably, not among those ranking highly in economic freedom) have all experienced a great deal of economic instability in the past few years, at least partially due to their economic policies. Yes, they are not a majority, but their existence suggests that these policies do not work for every country that institutes them.

Warning to you gamers who get GameInformer through Gamestop's PowerUp program! Things are changing and we've been instructed not to tell you unless you ask! by GameStoppopotamusin gaming

[–]HonorAmongSteves 0 points1 point ago

Selling them a magazine subscription that's actually an email subscription. Changing the magazine subscription that they already have to an email subscription without telling them.

Do you favor socialism? Do you favor a collectivist approach? by GeneralPuddingin PoliticalDiscussion

[–]HonorAmongSteves 0 points1 point ago

This is not an "an-cap" idea. It's pretty much all of modern and mainstream economics.

Do you favor socialism? Do you favor a collectivist approach? by GeneralPuddingin PoliticalDiscussion

[–]HonorAmongSteves 1 point2 points ago

I've heard that a lot. But what is that statement actually based on?

Theoretically, this is based off the idea of markets being economically efficient. Efficiency in economics refers to producing the greatest amount of goods and services (real wealth) with a given set of resources or inputs. Markets are more efficient than any known alternative. There is obviously a lot of disagreement over the role of fiscal policy between Neoclassical Keynesian and Austrian/Chicago School/random-heterodox-economic-school, but fiscal policy (viz. stimulus) is by no means equivalent to a planned economy.

The reason that markets tend to be more efficient than planned economies is that there is a significant calculation problem when trying to allocate resources. There are so many variables and complex interactions that it is impossible for any person or group to effectively plan an economy. They are literally throwing everything to chance that is weighted heavily against them (as one is far more likely to get things wrong than to get them right).

Theory is all fine and dandy, but how does it stand up to the real world?

Well, economic central planning is responsible for one of the worst events in the history of the world in terms of loss of human life and suffering - The Great Leap Forward.

Likewise, you can see how countries such as East Germany and North Korea were far surpassed by their neighbors (West Germany and South Korea, respectively) despite the fact that in both cases they had the same culture, history, and natural resources. The main difference was the government and economic policies.

In general, economic freedom (free markets being the opposite of economic planning) is almost universally correlated with economic success and high measures of standard of living. Countries such as Singapore, Hong Kong, Australia, Canada, New Zealand, and Switzerland have very high standards of living and are some of the most economically free countries in the world.

Warning to you gamers who get GameInformer through Gamestop's PowerUp program! Things are changing and we've been instructed not to tell you unless you ask! by GameStoppopotamusin gaming

[–]HonorAmongSteves 1 point2 points ago

Through misleading their customers as to what they are buying. That's the thing people have a problem with, not the idea of digital distribution. I'm sure some people even prefer it.

Do you favor socialism? Do you favor a collectivist approach? by GeneralPuddingin PoliticalDiscussion

[–]HonorAmongSteves 1 point2 points ago

[bring jobs and people.who need them together]

markets have historically been far more effective at doing this than central economic planning.

Should Richard Nixon have been impeached? by ausdebin PoliticalDiscussion

[–]HonorAmongSteves 2 points3 points ago

he was pardoned

What book do you personally think everyone should read before they die? by mushroomgirlin AskReddit

[–]HonorAmongSteves 0 points1 point ago

The book was not satire in the least. This is a fringe belief not taken seriously by most historians.

http://www.reddit.com/r/AskHistorians/comments/sc5pn/was_machiavellis_the_prince_serious/

What book do you personally think everyone should read before they die? by mushroomgirlin AskReddit

[–]HonorAmongSteves 0 points1 point ago

The evil that men do lives after them
The good is oft interred with the bones

Pushing For A Progressive Consumption Tax; Because Milton Said So by JSeydl1788in Economics

[–]HonorAmongSteves 1 point2 points ago

You're asserting that the bottom 10% would be left without anything outside of private charity, which I contend isn't what Milton Friedman was advocating

"One recourse, and in many ways the most desirable, is private charity. It is noteworthy that the heyday of laissez-faire, the middle and late nineteenth century in Britain and the United States, saw an extraordinary proliferation of private eleemosynary organizations and institutions. One of the major costs of the extension of governmental welfare activities has been the corresponding decline in private charitable activities."

While Friedman goes on to mention that there are forces at work against private charity, in large impersonal societies, he does argue that private charity is one of the best methods by which to alleviate the situation of those in poverty.

What I gathered is that Friedman preferred it be temporary as he believed the condition of poverty, at least in places like the United States, would not exist forever.

"The extraordinary economic growth experienced by Western countries during die past two centuries and the wide distribution of the benefits of free enterprise have enormously reduced the extent of poverty in any absolute sense in die capitalistic countries of the West."

However, he also acknowledges that "temporary" government programs rarely are.

I admit I cannot find the exact quote I was referring to, but it stands out strongly in my memory (I know that's meaningless to anyone else). I suppose it could be confabulation, as I did find a similar sentiment about tariffs, but without an exhaustive search of Friedman's writings I'm reluctant to agree that the quote doesn't exist.

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