TCS Daily


Unfinished Business Can Stimulate, Too

By Jens F. Laurson & George A. Pieler - February 11, 2009 12:00 AM

The world waits breathlessly for a final stimulus plan from President Obama and Congress, but we need only look back a little to identify a few win-win initiatives that could help boost the economy.

Last year the Bush administration came to a deadlock over the Air Force's contract bids for its new refueling tanker. In the Boeing vs. Northrop-Grumman/EADS competition, the Air Force found superior merit in the latter bid, but Boeing, the General Accounting Office, and many in Congress found technical deficiencies in the competition. The upshot was that Defense Secretary Bob Gates put the contract on ice. Mr. Gates, wouldn't you know, remains in the Obama administration, so he should be very much on top of the issue.

It's important to know that whether Boeing or Northrop-EADS gets to build these tankers, U.S. jobs will be created; the only question is where. EADS (Airbus) is in Europe, of course, but it has made clear it would expand its manufacturing presence in the United States. As some Boeing work would be done overseas (mostly in Asia) there should be no issue of 'where the jobs go'.

Needless to say, when the world's political leaders seem united in their determination to pump out as much government funds as possible to revive the economy, it only makes sense to first fund projects for which need has already been established. This is particularly so in the U.S., where most stimulus hopes are focused. Indeed, there is a mounting debate in Washington over the Obama administration's reluctance (so far) to use DOD funding as a means of stimulus.

It is curious to note that a few defense analysts now say the refueling tanker is not an urgent priority, and indeed may reflect twentieth century military priorities; not twenty-first. The President, however, doesn't seem to agree with that: yesterday the White House identified key defense procurement priorities, and the Air Force refueling tankers are right up there.

No doubt, there is much fresh jockeying for position on this and other procurement priorities. It may be unfair to note that Secretary Gates is a Kansan, where Boeing has a strong presence, and that Obama's new national security adviser, Gen. James Jones, was on Boeing's board until December. Gen. Jones will presumably have considerable power over not just security policy, but nuts-and-bolts matters like defense budgeting. That means he could be a bigger player in procurement matters than the NSC head normally is. If so, a case could be made that he should recuse himself from all matters related to Boeinh, which would surely be consistent with President Obama's early signals of a commitment to high ethical standards for White House staff.

Either way, the important thing is to go ahead with the tanker procurement with an objective, independent review of the merits of the competing plans (updated from last year's, of course). Not only does stimulus cash have to be used with maximum efficiency (otherwise it's just wasteful, which doesn't create jobs; just debt); a commitment to fair, objective, unbiased procurement policies can help erase the taint of protectionism that unfortunately marked last year's debate on the refueling tanker contract. It has to be about the best thing for the Air Force, the best thing for the American people, and the most efficient use of taxpayer funds. By sending at least a small signal of economic openness at this critical time, President Obama and his team can take an important step towards relieving concerns that he is 'soft' on protectionism, particularly in the wake of the 'Buy America' provisions of the stimulus bill. The world needs America's open economy -- and grasp of market virtues -- now more than ever. That's why the tanker contract, normally a matter for technocrats alone, can have positive resonance far beyond the norm.


Jens F. Laurson is Editor- in Chief of the International Affairs Forum. George A. Pieler is a Senior Fellow with the Institute for Policy Innovation.

119 Comments

The rest of the story
Accusations of something being slightly amiss have been flying thick and fast over this lucrative refueling contract, and whether it is to be awarded to Boeing or to Northrop-Grumman. And in this potentially toxic environment, Bob Gates has quite wisely decided to stand pat until someone else gets their fingerprints on it. He's no babe in the woods in these matters.

In fact those of us with intact memories can recall that not too many years ago there was a similar attempted refueling contract award.. one that turned out to be a humongous boondoggle and was scuttled once it reached the light of day. So I thought I'd get a little background on this latest resurfacing of the issue.

The very first thing I find is that these same two.. Laurson and Pieler.. have inserted another op-ed in Forbes Magazine. Interesting reading:

http://www.forbes.com/2008/05/20/airbus-pork-contracts-oped-cx_jlgp_0521airbus.html

It seems to be quite an issue with them. So the next thing I turned to was SourceWatch, to see who exactly is the Institute for Policy Innovation, and what do they do for a living. And I find this:

http://www.sourcewatch.org/index.php?title=Institute_for_Policy_Innovation

It's an advocacy outfit, founded by **** Armey. Which leads me to ponder the precise distinction between advocating and lobbying. And in fact, it got me pondering the exact distinction between **** Armey and Trent Lott.

Trent Lott? What's he got to do with this? Well, it turns out he has been hired by Northrop-Grumman to make sure they're the ones who end up with the contract. Or rather, the Breaux-Lott Leadership Group:

"The campaign of John McCain, the Republican candidate for President, played a critical role in scuttling an earlier version of the contract given to Boeing over a corruption scandal. McCain recently had to fend off attacks from Boeing’s politicians over the EADS lobbying ties of some of his top advisors. It was revealed that the lobbying firm of the co-chairman of his campaign, former House member Thomas Loeffler, received $220,000 from EADS in 2007. Several other former EADS lobbyists for Loeffler’s firm are also now part of McCain’s campaign team.

"Wayne Berman, vice-chair of McCain’s campaign, is a partner at Ogilvy Government Relations, which earned $240,000 from EADS in 2007. The chairman of Young Professionals for McCain, Kirk Blalock, is also a partner in the governmental lobbying firm Fierce, Isakowitz, and Blalock, which received $320,000 from EADS in 2007, and is full of people with direct experience working for and with politicians. Prior to taking up his lobbying position, Blalock worked under President Bush as special assistant to the President and deputy director of the White House Office of Public Liaison.

"Both Boeing and Northrop Grumman/EADS have enlisted the support of other lobbying firms with high-level political connections to press their case to lawmakers that they might not already have in their pockets.

"Northrop Grumman has hired the Breux-Lott Leadership Group, headed by former Democratic senator John Breux and former Republican senator Trent Lott. ... "

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x3077905

If this all sounds vaguely incestuous, it is. Kind of makes you wonder what all the fuss is about, doesn't it?

Is this article advocating Boeing, Northrop or both? My guess is the principals in this matter would just like to see all this money go to someone deserving. And that whoever wins, some of that money's going to get back into the proper pockets.

Why isn't DoD spending as good as any other spending?
Even the libs say we need to have a larger Army.

Spending is spending.
Air Force needs tankers. Who cares who gets the contract?

None of this will matter when 200% hyperinflation hits later
US Inflation Could Hit 200%: Dr. Doom
CNBC.com
| 06 Feb 2009 | 03:28 AM ET

The US risks being hit by Zimbabwe-style hyperinflation and there are signs that the world's biggest economy risks turning into a banana republic, Marc Faber, author of the Gloom, Doom & Boom report, told CNBC's "Asia Squawk Box."

"In the US, we have a totally new school, and it’s called the Zimbabwe school," Faber said. "And it’s founded by one of the great leaders of this world, Mr Robert Mugabe, that has managed to totally impoverish his own country. And that is the monetary policy the US is pursuing."

The government's increased intervention in the economy is likely to slow down economic growth because history shows that every time the private sector shrinks to make way for the government sector, the economy suffers, he said.

Asked whether the US risked being faced with 200 percent inflation, Faber answered: "Well, not yet. Not yet. But I think eventually. If I look at government debt in the US, and debt in general, I think the only way they will not default physically on their debt is to inflate."

The Federal Reserve's policy of printing money and the government's intervention in the economy might undermine the US's economic and political clout, Faber warned.

"Well, I wrote two years ago a report entitled 'Is America becoming a banana republic?' And there are some features that characterize banana republics- totalitarian states, very strong government intervention into the economy, and the polarization of wealth," he said.

"And we have all these trends occurring in the US. We are not yet there. And in theory it could be reversed, but I doubt it will be," Faber added.

Here's why that won't happen
First, we now have 11,600,000 people unemployed. Let's say they were making $35K in annual wages before they lost their job.

The number of involuntary part-time workers, who would work full time if they could find it, is 7,800,000. So let's say the amount of income they're losing is $18K annually.

Crunching the numbers, this represents $406 billion plus $140 billion, or $546 billion in lost wages. So just during 2009 we can safely inject a half trillion dollars into the consumer-slash worker sector of the economy, merely to bring it back up to par.

http://www.bls.gov/news.release/empsit.nr0.htm

Your Marc Faber article is one of the most monumentally stupid analyses I've seen. You must have many such special sources for your peculiar brand of expertise.

Sweetheart deals
One kind of spending that's not as good as other spending is when government funds get sidetracked into defense contractors' pockets. Heaven forbid THIS particular refueling contract is as graft ridden as the last one. But here's what we found last time when we lifted the rug:

"In 2001, the United States Air Force wanted to begin replacing 500 of its aging refueling planes. The plan began with a sweetheart deal, buried in the fine print of the 2002 defense-authorization bill. The Air Force was to lease 100 Boeing fuel tankers at a cost of $26 billion — $6 billion more than the cost of buying them outright, according to an estimate by the White House Office of Management and Budget.

"If that sounds like a bad deal, it’s because it was. It never occurred, thanks to loud and persistent protests from Sen. John McCain (R., Ariz.). And now that McCain is a candidate for president and Boeing’s rival has won the contract, Democrats are effectively complaining that he didn’t let Boeing rip off the taxpayers."

http://www.freerepublic.com/focus/f-bloggers/1983264/posts

Note that the story is from one of your favored sources.

So this would be billions wasted on sending fat cats to luxury golf courses in Fiji. A bit different than the current bill being passed, that does things like move billions to the cash strapped states so they can keep prison guards and state troopers on the payroll this year.

Not all spending's the same. Nor in fact are all "libs" the same. You tell us that "even the libs" want a larger army. Quite possibly some do.

Who are they?

Since you take pride in your ignorance (of concepts), YOUR definition of INFLATION would be good Roy
Zyndryl's definition of inflation is most likely:-

"A persistent increase in the level of consumer prices or a persistent decline in the purchasing power of money, caused by an increase in available currency and credit beyond the proportion of available goods and services"

Your post talks of loss of (monetary) income. There was no mention of (1) the goods and services these now income-less unfortunates were making and providing (2) whether those things were needed by other producers AT THE PRICE they (the now income-less unfortunates) were producing them and (3) whether those things could have been (or can now be) produced at a much lower cost.

HOW does it help if we just inflate the available money by half a trillion dollars, without understanding and answering those questions? If those goods and services were of a REGULARLY and CONSISTENTLY needed NATURE to other producers at a cost they (the other producers) can afford, so MANY of these unfortunates wouldn't have been out of work today.

But hey, we can ALL bury our heads in sand declaring that such type of conceptual knowledge is beyond our species’ "grasp" (after all, there are NO “essential differences” between Man and Beast and why can’t Man run his affairs in the same way (“instinct” driven) that the Beast “runs” its life) and go ahead as usual, merely because the PEOPLE who are forcibly running our lives are now different.

By the way, what do you mean by "merely to bring it back up to par"?

Do you mean status quo ante? But the prosperity of status quo ante WAS an illusion, a bubble, as the current events prove. Or you think that real prosperity existed in the US of A in the “reign” of the 43rd POTUS?

Defense contractors employee thousands of highly skilled people
Since you support spending stimulus plans, why is spending on defense any different than welfare or any other spending?
How many crocked politicians and lobbyists are involved in civil engineering projects? Ever hear of the Big Dig? What a corrupt mess in the heart of Boston with the full support liberal politicians.
That type of corruption is acceptable?

Incest
Yeah, I am sure there is intense lobbying going one. However, I find it really amusing you would cite the democratic underground as a source.

Going after Republicans when the democrats are the definition of corruption is pretty funny. The democrats are the most corrupt bunch to live up to Obama himself.

The genesis of real wealth
This post is actually much better than your usual word salad. I hope it marks the start of a trend.

My definition of inflation is something like what you cite. For me the emphasis is on a dollar's buying power, as opposed to just the number of them in circulation. But let's go with what you've given us.

How many dollars have the Fed bestowed upon us, in the indirect form of lending imaginary ones to banks, on the assumption that they will then be lent out to the economy at large? That's one number.

And how many of those dollars have instead become tangled up in securitised assets, which we've suddenly realized only have putative, and entirely mythical value? That's quite another number.

You have your eye on the genesis of new dollars.. or should I say "dollars" in quotes. But you should also keep an eye on the drop in value of asset-based securities. The net effect we're seeing now is DEflationary.. that is, we're seeing a reduction in the number of realizable dollars out there, not an increase.

The concept to keep in mind is that when you trade actual dollars in exchange for an investment, you have NO dollars left. You only have that investment. And its worth moves up and down, as the eye of the beholder reckons it.

Right now the value of a truly humongous mass of investments is so nearly zero that no buyers can yet be found for them.. at any price! And so, the following is a true statement:

All those dollars that went toward investing in those investments ARE NOW GONE. Nothing's going to bring them back. They're like a stack of hundreds you kept in your mattress.. and then the house burnt up.

In other words the total money supply has been REDUCED. and so we are in what every economist should recognize as being a deflationary period.

More dollars, placed this time into the right hands, would help get us out of this mess. Personally I would give or lend none of them to any banks. Those are the wrong hands. I would let all those investment banks fail, and start over again with fresh wealth in the hands of working people. Because it's only when such money is spent that it creates REAL wealth, in the form of genuine profits, on the books of our manufacturing corporations.

"By the way, what do you mean by "merely to bring it back up to par"?"

By par I mean conditions of relatively full employment.

It's all the same to you?
Sure, defense industries support entire cities. That's why we have to occasionally wage war against defenseless countries, so as to provide the justification for our inventory buildup of destructive toys.

But at the same time, unscrupulous defense contractors rake off huge sums of money in scamming the public. And that is what Boeing was about to do the last time this con game was about to be perpetuated on us. So that if we're going to act in the public interest, we need to assure ourselves that (a) this refueling contract is really necessary, not just on some lobbyist's wish list, and (b) money well spent on the thing being purchased.

Yes, there's corruption in every other aspect of public life. The thieves go where the money is. But to me that's a reason to be vigilant, and to ferret out thievery in every aspect of public spending. Your point seems to be to throw up our hands and say What's the use? We're all lost.

The one does not justify the other. I merely note that whenever we can detect the presence of lobbyists we can assume that a lot of money is changing hands beyond what is required just to provide refueling service.

Trust.. but verify!
Corruption is corruption. For me, to make it merely a matter for partisan bickering is to miss the point entirely.

When we had a Republican administration in Washington, the antics and exploits of Duke Cunningham and his pals were a subject for Beltway fodder. And now that the baton has passed to the Ds, you can be certain that any Democratic wrongdoing will be promptly reported by the so-called liberal media every bit as avidly.

As for my citation of information in the Democratic Underground, it happens that just this morning I cited an article from Free Republic. I'm of the opinion that no matter what the source, information contained in any publication can be-- and should be!-- verified by the person reading it. I assume you've done so by now, and have found it to be accurate as written.

If we're not just going to fall prey to superstition and dogma, we always need to perform our own verification.. as I'm trying to do now with a comment of yours. You say "The democrats are the most corrupt bunch to live up to Obama himself." Which I assume means you're aware of some area where Obama has been found guilty of corrupt behavior.

Please share it with us all. Thanks in advance.

More unscupulous bridge repair, highway repair....
Across the country every major construction company has some sweet heart deal with the local government entity.

But you still want to shovel money at them?

Again, what difference does it make, spending is spending.

Who will verify?
No one in media will even look into how BHO could thrive in the cesspool of Chicago politics with no stink.

exist whenever the govt is involved
Why is it bad when money ends up in a defense contractors pocket, but good when the money ends up in a building contractors pocket. Or the pocket of the local union boss?

I'm guessing that roy would be happier if the defense budget was zero'd out.
In roy's world, the US is never justified in defending itself.

In roy's world defense contractors getting rich is the greatest of all evils. (Other than changing the amount of various trace gasses in the atmosphere)

However, there is no corruption in govt, that's not rooted in the defense dept.

roy's utter ignorance never ceases to amaze me.
He actually believes that there is a relationship between lost wages and the money supply.

Roy, there is one, and only one source of inflation. That is when the supply of money increases faster than the supply of goods available to buy with that money.

The supply of goods is falling because production is falling, yet the money supply is exploding. That means that inflation is just around the corner.

That's why interest on long term debt has been going up in recent weeks. Lenders also know that more inflation is coming.

I've got no problem with defense...
...it's the offense that offends me.

In fact, every last thing in your post is wrong. Defense contractors certainly don't have a lock on corruption. But they're certainly entrenched.. and have been since the start of their Cold War.

And when business is slow, they're certainly not above starting the occasional war. For practise for the troops, and as an example to the others.

What do you think **** Cheney was doing when he was running our foreign policy? What an immense coincidence, that his company profited so handsomely from his decision to wrongly claim Saddam was in league with Osama. And manufacturing those nonexistent WMDs.

There is NO crime on this earth worse than being a war criminal. However, that said, legitimate defense is certainly a necessity for any modern state.

If insults were convincing arguments...
...you'd be the king. But they're not, and you're not.

I'm very familiar with your doctrinaire theory of inflation. It's Austrian School thinking. What I'm saying is without reference to that phenomenon.. other than to point out how the money supply increases on the one hand as more loans are issued by the Fed, while it is destroyed on the other hand by being exchanged for valueless assets that can't be turned back into the same amount of money.

You can't measure one quantity without taking into consideration the other.

In contrast, the money I'm talking about is the money circulating in our consumer-based economy. It's the amount available to consumers to put into purchases. And that money, I will remind you, is the source of all legitimate profit.. assuming you go along with the idea that businesses should be run at a profit.

When there's not enough of that kind of money in circulation, as we're seeing at the present time, the total volume of purchases is reduced. As a result, considering the law of supply and demand, merchants lower their prices in order to attract that smaller quantity of available cash.

I like to call that phenomenon deflation. But you can call it whatever you like.

The obverse is that during times when consumers are flush, such as the early 1970s, and there's hefty sums of cash in the general circulation, it bids up the price of consumer goods. And that, I like to call inflation.

You can bicker about the words. But you know just what I'm talking about.

How about using public money to pay for abortions? Especially black baby abortions?
50% of black babies are aborted with the approval and I am sure much public funding.
http://www.cdc.gov/mmwr/preview/mmwrhtml/ss5407a1.htm

So you approve of government funded racial genocide?

THAT was just top o' the moron, Roy
Of all the brain-dead stupid things you've written, I think that one tops them all.

Just because the money is not spend on those salaries doesn't mean it somehow MAGICALLY DISSAPEARS FROM THE MONEY SUPPLY.

"Your Marc Faber article is one of the most monumentally stupid analyses I've seen."

Uh...look in the mirror, Roy!

Supreme Idiocy! That's not an insult, but appropiate use of real term.
"For me the emphasis is on a dollar's buying power, as opposed to just the number of them in circulation"

The two are intricately linked, Roy. The 'buying power' or value of the dollar erodes the more that are introduced into circulation.

In Weimar Germany, the workers were paid multiple times a day and had to carry the cash home in wheel barrels! Why? Because otherwise the workers stopped working because they weren't making enough money to justify it, it was losing value so much and so fast.

Zimbabwe is another example. In both cases, economic output has diminished and unemployment is sky-high.

Then, the Weimar government was limited in how much it could print with the printing presses. Today, with 95% of our base money in the form of electronic Fed Funds, the government is only limited by how many times its Fed lackies can hit the return key, basically.

"All those dollars that went toward investing in those investments ARE NOW GONE"

HOW? And WHERE did they go? They are NOT GONE and never were gone. The money WENT IN to those investments. The money WAS NOT DESTROYED. None of it was at all.

"In other words the total money supply has been REDUCED. and so we are in what every economist should recognize as being a deflationary period."

The total money supply has not been reduced. That is total bullsh-t, Roy!

Oh man! You are just incredible. No wonder you voted for Obama. My cat has a better understanding of economic basics than you do.

What insults did MarkTheGreater say?
Everything said was accurate to the letter. You have been displaying utter ignorance, Roy.

Now, you may find that insulting...too bad. You can't disprove your ignorance. Your credibility is completely shot.

I mean, it's one thing to know get Say's Law. But to not understand inflation and then brag about how 'smart' you are, that's really, really, really bad.

"other than to point out how the money supply increases on the one hand as more loans are issued by the Fed, while it is destroyed on the other hand by being exchanged for valueless assets that can't be turned back into the same amount of money"

WHERE is it being destroyed, Roy? WHERE? It isn't. It is being EXCHANGED. That is not destroyed. Only the Fed destroys money and little kids who put coins on railroad tracks.

When Homer Simpson bought those pumpkins in January and they rotted in his backyard -- thus becoming worthless assets, was the money he used the buy those pumpkins DESTROYED? No, it was circulated in the economy. If he had lost the money in Vegas instead, would that have been destroyed? No, the casino barons would be richer folks and Nevadans would continue to enjoy low taxes.

Hey Roy! When I buy a Super Slurpee at Quickie Coronary for $2.75, is that money likewise DESTROYED just because I digested the Super Slurpee and thus its value is destroyed?

Hey Roy! You know that Money Multiplier BS you keep spouting? How is it possible for the money to be multiplied if it is destroyed during any economic transaction that you arbitrarily just don't happen to appreciate for some bizarre reason?

"When there's not enough of that kind of money in circulation, as we're seeing at the present time..."

There is NO SUCH THING as 'that kind of money' Roy. It is all the same and it sloshes around in the economy like goulash in your stomach.

"But you know just what I'm talking about."

Hahahahahahahahahahahahahahahaha! We know as much as any other sane person would from the ravings of a mad man would be more accurate to say.

roy actually believes that money that isn't paid in wages disappears.
But then roy is desperate to find a way to justify his religious beliefs.

The problems of today are not due to not enough money in circulation, they are due to govt removing the incentive to invest.

OK, you have no problem with the defense dept, as long as it isn't used.
As to corruption being entrenched in the defense dept, I'd love for you to actually try and prove that.

Just declaring that someone has an opinion different then yours is not evidence of corruption.

As to your claim that these defense contractors start wars?
Roy, your level of self delusion rivals that of Obama himself.

Are you unable to do that for yourself?
There's your problem, marjon. You're waiting for some trusted parental authority to tell you what to think. And then to verify his conclusions for you, so you can trust him.

Re Obama's career in Chicago politics, there's a wealth of material out there on his early career. A staggering amount of material. From what I've seen, he rose above the rest of them by staying above the fray. But naturally I don't want to influence you. Try reading it for yourself.

So your premise, "No one in media will even look into how BHO.." etc, is false. This material has been well explored.

I don't see what you're saying here
You'll have to spell this out for me. You say "50% of black babies are aborted with the approval and I am sure much public funding."

So then, if five million black babies have been born this past year, are you saying that another five million have been aborted? I don't find that anywhere in the CDC article.

Then you say "with the approval". With the approval what? That's a fragment of a thought, not a whole one.

Then you say "I am sure much public funding". When what you mean is "I am not sure. I'm just guessing." Otherwise it would have appeared in the article.

Or are you just trying to say, but wording it poorly, that half of the babies aborted during the study period were black? Because if so, that's not correct.

Here's what your reference actually says: "In the 37 reporting areas for which race was provided classified according to the same categories used in previous years, approximately 54% of women who obtained legal induced abortions were known to be white, 36% black, and 8% other; for 3%, race was not known."

Keep at it, supposedly great person. Your concept still needs some work.

Also, what difference does it make?

It's prima facie
If you're telling us corruption hasn't been entrenched in the Defense Department for the past lifetime, I'd like to see you try to prove THAT. It's just about the most commonplace statement you can make about our government.

"As to your claim that these defense contractors start wars?"

**** Cheney started the past two wars.

**** Cheney is a defense department contractor. As Halliburton CEO he stepped down to become our VP.. while continuing to be regularly paid by his company for services yet to be rendered.

Halliburton affiliate KBR profited mightily from the two wars he started, wasted immense sums of public money on no-bid, open-ended cost-plus contracts. And was hardly chastised for any of its open and flagrant abuses of contract procedure.

Would you like more? There's MUCH more.

So where's the money?
"The total money supply has not been reduced. That is total bullsh-t, Roy!"

We don't have it. The banks don't have it. And the people we paid it to whenever we bought investments don't have it any more either. All they did with it was to go out and buy more hedgy investments.

That money's gone. No one has it any more.

All you're going on is theory. The money, in your closed system, never leaves.. because whenever you buy an investment you give the actual money to someone else. It makes all kinds of sense.

But in real life all they did with it was to put it somewhere themselves. And the sum total of all those places all those people put all that money has lost its value. Greatly. As a result there are FEWER DOLLARS available than there were before. Many fewer.

People can still talk about that iceberg of submerged wealth as though it still exists because they're careful not to try to sell it. That's the ONLY reason we still have any major investment banks claiming solvency. Because if they were to trade any of their supposed assets on the market they'd be lucky to get pennies on the dollar.

It's like buying a race horse and your horse dies. You still have the physical horse all right. But the "race" part, the part you paid all that money for, is no longer there.

Maybe you'd do better thinking of money as being a simple medium of exchange.. as opposed to being a store of value.

man, you are delusional roy
1) Chenney didn't start any wars. Additionally, he's the VP, not a defense contractor.

As to Haliburton profiting from the wars. So what. That's not evidence that they started the wars.

If this is the best that you can come up with, you have gotten more pathetic as time has gone by.

I didn't buy a hamburger this afternoon. Money supply shrinks by $3.95.
At least it did in whatever world roy inhabits.

If the media looked, no one cared or wanted to report.
Yet the same media had to fabricate stories about GWB.

You implied DoD is offensive and killing poeple. (A good offense IS the best defense.)
Government funds are allocated to genocide in the USA by promoting and funding abortions.

BDS takes time to recover from.

The media held off on printing the true stories
"Yet the same media had to fabricate stories about GWB."

Hardly. For example, Flyboy Bush, on hiatus from having to join the armed services, was never seen by anyone at his Alabama N.G. assignment. Yet no one in the media dared call attention to it.

Give us one "fabricated story" they published.

The question at the root of it
"WHERE is it being destroyed, Roy? WHERE? It isn't. It is being EXCHANGED."

At every turn, the people accepting money in return for dubious assets put their gains into other assets. Then all the assets owned by everyone in the game lost value.

All that money changing hands has just been converted into a swirl of smoke. It's not there any more. The only part that's been saved out is whatever was converted into sales commissions, bonuses and other cash earnings. Plus, of course, the gains accruing to those originators of bad paper, the ones who started the chain letter.

Note that much of it has not yet been formally declared worthless. It has just not been sold, so is technically only illiquid.. one degree better as investment-grade paper than, say, Czarist railway stocks.

If the government invents some debt to purchase it, the cash used to buy it will then enter the economy... where there was NO CASH before.

The money's gone. It didn't just go elsewhere in the economy.. other than those broker earnings I refer to above. It's like a box full of dollar bills, buried in the ground.

Rathergate
"The action was prompted by the report of an independent panel that concluded that CBS News failed to follow basic journalistic principles in the preparation and reporting of the piece. The panel also said CBS News had compounded that failure with a “rigid and blind” defense of the 60 Minutes Wednesday report. '

http://www.cbsnews.com/stories/2005/01/10/national/main665727.shtml

The Class Grades are In
Its very clear that Roy received no grade in Econ 101, because he never attended a single class. Have you ever considered that if everybody things you are ignorant, it might be just true?

the money is still there, Roy. Prove that it isn't.
"That money's gone. No one has it any more."

Prove it. I asked before yet you punted. I am asking again. You're the one who keeps claiming he provides data and proof to what he says. Prove that.

"The money, in your closed system, never leaves.. because whenever you buy an investment you give the actual money to someone else. It makes all kinds of sense."

Yeah, because it happens to reality, not theory. Observable fact. Again, show me how the money was 'destroyed' Roy. Please, provide proof.

"And the sum total of all those places all those people put all that money has lost its value."

So, that is lost value...not lost money. The money is still in circulation, Roy.

"As a result there are FEWER DOLLARS available than there were before. Many fewer"

PROVE IT! Where's the data that shows that the Federal reserve removed that money from circulation? Where is your proof that money is created and destroy based upon asset value? C'mon, Roy! Back up your assertions like you claim you do (but don't).

"People can still talk about that iceberg of submerged wealth as though it still exists because they're careful not to try to sell it"

Wealth is not money, Roy. So, whatever people you talk to that think otherwise are just as deluded as you are.

"But the "race" part, the part you paid all that money for, is no longer there"

No, the money went to the guy who sold you the horse.

Do you EVEN THINK about what you say as it applies to the other BS you've spouted...like the 'money multiplier' nonsense? Your money multiplier can't happen if the money you are counting on circulation keeps disappearing into thin air during every transaction like you just maintained it does. Which is it, Roy? Money disappears or it 'multiplies' throughout the economy? Both assertions are false, btw. But you're the one who makes them and swears by them. So, just to play along and pretend we are all on Planet Roy, let's assume that money doesn't just circulate but is either destroyed or multiplies in any given transaction. But which it it Roy? Because you are now saying BOTH.



"Maybe you'd do better thinking of money as being a simple medium of exchange.. as opposed to being a store of value. "

Money can be a store of value. But the examples of value you keep keep bringing up aren't money..they are assets. Your horse isn't money. Houses aren't money. Hedge fund investments aren't money.

But what is whackiest of all: YOU keep being the one who denies that money is a medium of exchange. Mediums of exchange are like catalysts -- they don't get destroyed in the reaction, Roy.

Do you EVEN read what you write, Roy?

I'll take that and raise you another point
BTW, Roy? You reading this? Good...explain this one to me. When you play poker or Monopoly with a group of people, how come the 'money' doesn't disappear even though people lose their shirts?

And, if what I've been saying is just 'theory' then how is it that reality proves said theory in all the world's poker and Monopoly games every time, Roy?

Now, back to MarkTheGreater's observation:

"The problems of today are not due to not enough money in circulation, they are due to govt removing the incentive to invest."

Zyndryl's addendum: "...and due to the govt increasingly removing they incentive to even pay debts or mitigate risks in more and more decision making. Those who are too scared to invest are some of the last prudent people left these days."

I asked for PROOF, not more BS.
"At every turn, the people accepting money in return for dubious assets put their gains into other assets"

Please provide references to sources other than yourself for that assertion.

Also, please explain how the builders and plumbers and inspectors and realtors all got paid for providing all that overpriced housing [dubious] assets since -- according to you -- the home building industry 'put their gains into other assets instead'.

" It's not there any more."

Prove it..Again, other sources please. Your credibility is shot right now.

"Plus, of course, the gains accruing to those originators of bad paper, the ones who started the chain letter."

So, that doesn't prove it was destroyed. That only proves that people lost their shirts. That's all.

"Note that much of it has not yet been formally declared worthless. It has just not been sold, so is technically only illiquid.. one degree better as investment-grade paper than, say, Czarist railway stocks."

So? WHAT DOES THAT HAVE TO DO WITH THE MONEY, ROY? Please pay attention to your point and stick with it. For your reference, your point (unproven still) is that the money spent on Things Roy Doesn't Approve of DISAPPEARED. It's 'not there anymore' -- your words! Where did it go? How was it 'destroyed'?

"If the government invents some debt to purchase it, the cash used to buy it will then enter the economy... where there was NO CASH before"

Wrong. The government invents the cash to buy the very real debt, Roy. Not the other way around. Also, they are putting it into the circulation with all the other money STILL THERE even though you apparently are blind to said fact.

That means inflation, Roy.

"The money's gone. It didn't just go elsewhere in the economy"

Bull! Prove it's gone, Roy! Prove it! Because you can't. The money is still there. It did just go ELSEWHERE in the economy. You just seem to illogically believe that money not being spent how you think it should be is 'gone from the economy'. It is not gone from the economy. It is only gone when the Fed removes it. Period.

"It's like a box full of dollar bills, buried in the ground."

It is not 'like' but 'is', Roy. That is exactly what it is doing, in large part. At least, the money that isn't fleeing overseas or going into gold right now or T-bills right now. But it is not 'gone' and it is not removed from circulation.

The greater harm by far is our war on Islam
You know, we do put an awful lot of unwanted dogs and cats to sleep each year. If we didn't we'd be up to our armpits in them.

And I don't see all those people sanctimoniously wagging theit tongues about genocide adopting any unwanted babies themselves. Do you? They're content just to look down their long noses at women making hard choices about pregnancies with no good future.

My own morality says that there's little harm terminating a life that's only a few cells along the long road toward becoming human. But we devote billions of defense dollars to eliminating fully developed life, that just happens to be living in places we've declared to be war zones.

The civilian toll in our brand of warfare is horrendous.. and would cling like an indelible stain to anyone's conscience if he truly had one.

Buried treasure
You say "WHAT DOES THAT HAVE TO DO WITH THE MONEY, ROY? Please pay attention to your point and stick with it. For your reference, your point (unproven still) is that the money spent on Things Roy Doesn't Approve of DISAPPEARED. It's 'not there anymore' -- your words! Where did it go? How was it 'destroyed'?"

You've described how money used to buy a bad debt isn't destroyed, it just passes into the seller's hands. All well and good. However you haven't yet addressed the tremendous sums of money that are now buried.. uselessly tied up in tainted investments that can't now be sold. And can NEVER be sold for more than a portion of their value.

I know you're loath to ever admit I'm right. And I don't expect any such concession right now. But I at least want you to understand that that money is GONE. And that no more than a fraction of it is ever coming back.

If it were not so, and somewhere there were end recipients of that cash who had found something other than investments in which to lodge their gains, there would now be TRILLIONAIRES. But they're not anywhere to be found.

The brokers who wheeled those deals are all quite rich. But they've only retained some of the commission earnings from the sales. The proceeds from the sales themselves have been parked in more investments. That money is buried and even if and when it gets dug up again, it'll still mostly be worthless.

So how can this mass of created money be an inflationary force when our economy has contracted? There's less money in circulation and more of it buried in very, very bad debt. Bottom line: less available money.

So let's put the shoe on the other foot. I showed you mine. Now you show us yours. If the money still exists, where is it?

Don't just give us your theories. Show us the actual money.

Islam is at war with us.
Just ask those insurgents in Afghanistan.

BTW, they are killing more civilians than the USA military.

The USA spends billions developing precision weapons to minimize civilian casualties. It would be much cheaper to act like our enemies and indiscriminately drop big dumb bombs and let God sort them out.

This is your big misconception
"Islam" is not at war with us. Never has been.

On September 10, 2001, a vanishingly small number of Muslims worldwide were activist, fundamentalist terror troops. Today, certainly, the number is far greater. But that's only the fault of our failed strategy in containing Islamist terror activity. We have made ourselves immensely less popular with the vulnerable recruit population: young, disaffected Muslim males.

One prime reason for this increase in popularity has been people like you, acting on the premise that Islam is the enemy.

When we invaded Afghanistan, the Taliban was highly HIGHLY unpopular. Everyone there was prepared to than Allah that the Americans had arrived.

They don't feel that way any more. They blame us for the widespread corruption, the abundance of drugs and dearth of other employment opportunities, the failure to create democratic institutions and FIRST AND FOREMOST, the lack of security. So the reason the Taliban are now winning again is not that they're any better. It's that WE have failed.

We have failed the Afghan people in every category. They are worse off in every way than they were back in 2001. By relying on the same old militaristic strategy, Obama is committing the same mistake his predecessor made.

You're still not showing us the money
So where is it? Is it in the banks? Is it under the mattress? Is it in the hall cuspidor? You're asking me to prove a negative, but you're the one who has to show us the money.

Not in theory. In real life. If the money is still there, how come our buying power has suddenly dropped? And how come everybody's getting laid off because there are no custimers in the stores?

And how come there are no loans, because there's no money in the banks?

I have been at pains to show you that it's not just assets that are missing, it's the money itself. It's tied up in illiquid assets with no value. That means it will NEVER AGAIN BECOME TRANSLATED INTO CASH. It's gone. It no longer exists. Kaput. Fini. Nada mas.

If you can find this not-missing money, it should be easy to point to it. In what form does it exist? And why isn't it being used any longer to propel the economy? A good explanation is in order.

Show. Us. The. Money.

2. "But what is whackiest of all: YOU keep being the one who denies that money is a medium of exchange."

Dead wrong. I've been showing up in this forum for a long time now. And I have always, ALWAYS said that money is a medium of exchange. It's not a store of value. It's a leaky sieve we use to bail, to keep ourselves above the water line. It's not really a thing in itself, but only a means toward the end of effective goods distribution.

More red herrings
"So, just to play along and pretend we are all on Planet Roy, let's assume that money doesn't just circulate but is either destroyed or multiplies in any given transaction. But which it it Roy? Because you are now saying BOTH."

No, I'm saying neither. Because neither happens.

When money is distributed in some places it has what we call a multiplier effect because it passes through more hands, enriching more people along the way by allowing them each to BUY MORE STUFF. It's not necessarilymore money.. but it's well placed money.

Disrtibuted into other hands, this same money can be lost to all.. as it is at the present time. No one gets to use it, because it's buried in worthless paper. You can't sell the stuff to get your money back out. And the guys you bought it from can't do so either.. because they in turn bought more bad paper with it.

So a greater proportion of the proceeds of all those paper sales resulted in the money being lost for the pruposes of further use (circulation). For all practical purposes, this money no longer exists.

Money that appears as wages, on the other hand, has a beneficial effect on the economy because it spurs the production and distribution of actual goods.. and so stimulates the retention and creation of more jobs.

It has to be applied in the right place. Manure's very useful stuff when it's applied to your garden. But on your cereal it's not that great.

You're hung up on it being the same number of dollars on the Fed's ledger. But if they're unavailable to anyone, we have no real money in circulation. And if they're changing hands on a daily basis, commerce is being effectively stimulated by an abundance of dollars everywhere.

Who are 'they'?
Afghanistan is made up of many ethic tribal groups that don't get along very well.

"They don't feel that way any more. They blame us for the widespread corruption, the abundance of drugs and dearth of other employment opportunities, the failure to create democratic institutions and FIRST AND FOREMOST, the lack of security. So the reason the Taliban are now winning again is not that they're any better. It's that WE have failed."

The USA and NATO should leave, now, and let the Taliban take over, again.

some of Roy's problems with money
If we consider the following facts about Roy it is no surprise that he doesn't understand money. He has shown in the past that he believes in the discredited 'labor theory of value', a marxist concept. He also keeps harping on about the fallacy of 'aggregate demand' as proposed by Keynsians. Neither does he believe in any sort of free markets, but he keeps advocating for 'planned economies', even 'world government', fiat curreny, and huge deficits like the current Obama "let's even have a bigger debt policy" that he's about to pass.
Thus we keep hearing him talking nonsense like if money doesn't go towards wages, it disappears; or if it is invested in something he doesn't believe in, or understand, he thinks the money has disappeard. But you guys who keep telling him, and giving all sorts of examples to the contrary do not phase him, as no contrary evidence has towards any of his wacko ideas over the years on this TCS forum.
Now I'm really going to drive him crazy because I propose to him that EVEN all the billions that people gave to the Madoff ponzi guy, HAS NOT disappeared. If it had disappeared the government wouldn't have put his firm in liquidation, and have even kept the exact details secret.
Officials don't say it has disappeared Roy, and they even have some hundreds of millions of it already returned.
I think his basic problem is that as a socialist he just believes that common people aren't as rich as he thinks they should be. He thinks it's not fair, or just that some are richer than others. Or maybe it's just sour grapes that so many are richer than him.

Are 'they' Pastun, Tajik, Hazara, Uzbek, Aimak, Baluchi, Kyrgyz, ...
Turkmen, Nuristani, Pamiri, or.....?
http://www.nationalgeographic.com/landincrisis/ethnic.html

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