Healthy economy equals quiet bulletin board

[dai bread]

I've never understood why some people like to barter goods and services, not since currency was invented anyway. If someone won't pay me cash for my services, why should he want to pay me in trade goods? Cheaper? Not if I can help it.

[Shapley]

The theory is that the government has no claim upon, and thus no right to tax, a barter transaction. That is, since the government's fiat dollar was not involved, there is no obligation to 'render unto Caesar that which is Caesar's'.

I have no idea whether this has ever been challenged in the State court system. Logically, it would be difficult to track such a transaction, and their percentage of commerce probably so small as to make the effort to tax them not worthwhile. But, it would also be fairly simple to determine the 'fair market value' of most trade goods, and thus determine the tax rate for the transaction.

[Giant Communist Robot]

The theory is that the government has no claim upon, and thus no right to tax, a barter transaction. That is, since the government's fiat dollar was not involved, there is no obligation to 'render unto Caesar that which is Caesar's'.

Please! Ideas like this will land you in jail.

[Giant Communist Robot]

From today's Existing Home Sales report:

Lawrence Yun, NAR chief economist, said the recovery is in the process of settling into a higher level of home sales. “The recovery is happening though not at a breakout pace, but we have seen nine consecutive months of year-over-year sales increases,” he said. “Existing-home sales are moving up and down in a fairly narrow range that is well above the level of activity during the first half of last year. With job growth, low interest rates, bargain home prices and an improving economy, the pent-up demand is coming to market and we expect housing to be notably better this year.”

Key to this is job growth, which we know will remain puny. Just be grateful for some improvement.

[Giant Communist Robot]

The Conference Board, in spite of everything, expects moderate growth to continue. ECRI still says we are in a recession, or at least one is on the way real soon.

[Shapley]

As I recall, the ECRI has a different method of determining recessions, though I haven't the time to look it up right now.

[Giant Communist Robot]

As I recall, the ECRI has a different method of determining recessions, though I haven't the time to look it up right now.

They have their own proprietary set of indices; the construction and composition are a secret. After all, it's a service they sell. Anyway their call is not extraordinarily unlikely. Recent data show spending exceeding income--an unsustainable situation--and manufacturing, which has been the heart of growth, has flattened; jobless claims have come up a bit too. My view is a slowdown in the summer with a resumption of growth in the fall.

[jamiebk]

As I recall, the ECRI has a different method of determining recessions, though I haven't the time to look it up right now.

They have their own proprietary set of indices; the construction and composition are a secret. After all, it's a service they sell. Anyway their call is not extraordinarily unlikely. Recent data show spending exceeding income--an unsustainable situation--and manufacturing, which has been the heart of growth, has flattened; jobless claims have come up a bit too. My view is a slowdown in the summer with a resumption of growth in the fall.

Aw hell....no one does anything during summer vacation anyway...

[Shapley]

Recent data show spending exceeding income--an unsustainable situation--and manufacturing, which has been the heart of growth, has flattened; jobless claims have come up a bit too. My view is a slowdown in the summer with a resumption of growth in the fall.

Well, we're still seeing positive signs in our industry, suggesting continued slow growth. It's still fragile, and Summer usually does include a slowdown in new installations, but generates a steady flow of repair and upgrade work. Wear and tear are starting to take their toll on facilities that have limped along putting off necessary upgrades, to the point that they will soon be unaviodable, methinks. Many have scavenged shuttered facilities to augment their own capacity, upgrading them no more than necessary, but such usable facilities are becoming scarce.

It seems to me that for those of us who build things for folks who build things, we're going to see some increase in business merely as a result of the necessity of operating facilities to rebuild, restore, and renovate if they are to keep open. My own observations are that many have reached the limit of their frugality, and the three of the four 'w's at play here, wear, weather, and the will of God (the fourth one, war, fortunately not being a factor) are forcing expenditures whether they like it or not.

I'm 'cautiously optimistic' that we can go recession-free this Summer. If the ECRI wants to have on, that is their business, but I think we'll decline their invitation.

[Giant Communist Robot]

GDP came in "unexpectedly" below economists' forecasts; the media are omitting that the number meets the Federal Reserves' forecast. Interesting.

I understand there is some movement in Congress to change the CPI to chained figures--this is because (as most economists agree) that current CPI calculations are distorted and overestimate by .5 to .8 percent. Also there's something about the flexibility of the basket, too.

[dai bread]

The theory is that the government has no claim upon, and thus no right to tax, a barter transaction. That is, since the government's fiat dollar was not involved, there is no obligation to 'render unto Caesar that which is Caesar's'.

I have no idea whether this has ever been challenged in the State court system. Logically, it would be difficult to track such a transaction, and their percentage of commerce probably so small as to make the effort to tax them not worthwhile. But, it would also be fairly simple to determine the 'fair market value' of most trade goods, and thus determine the tax rate for the transaction.

"A taxable activity is an activity carried out continuously or regularly by a business, trade, manufacturer, professional, association or club. It includes any activity that supplies, or intends to supply, goods and services to someone else for a consideration (money, compensation, reward) but not necessarily for profit. We refer to these goods and services as "taxable supplies".


This from our Inland Revenue Department suggests that such a challenge wouldn't even get off the ground here. Note the words "compensation, reward." I will be astounded if U.S. legislation isn't similar. Just how the assessment is to be made isn't specified.

[Shapley]

I said it was the theory. The reality is different. Our laws are similar but, as I said, the amount of barter trade is so small as to be probably not worth the time to pursue.

The problem encountered is in how to put a price on such a transaction, in order to determine the amount owed.

One of the closest things to a barter 'business' of which I am aware is the 'book swap' business. My aunt used to run one. In these establishments, you can trade in two used paperback books for one different paperback book. Such stores a quite popular with the women that read those thin books with pictures of a half-naked Fabio on the front.

Now, in their case, they also sell the used books for cash, which puts a value on them. They also pay cash for them outright, which means they have a buying/selling price, and thus a 'profit' can be figured. So taxing them is relatively easy, and taxes are figured in this manner: if you acquired 200 books, whether by swap or purchase, and sold 100 books, whether by swap or sale, you pay taxes on that number of transactions.

Now, it's different if you swap someone a used tractor in exchange for a summer's worth of lawn mowing. It is difficult to put a value on either, even though both are traded routinely. The government would have a hard time proving that the lawn was mowed routinely, and how many such mowings occurred, and of proving that the transfer of the track was a swap and not a gift or a disposal. Thus, they likely would not pursue such a swap as finding the tax revenue to be much less than the cost of obtaining it.

[Haggis@wk]

ROBERT REICH: THE ANSWER ISN’T SOCIALISM BUT MORE WEALTH REDISTRIBUTION: Er, um, so wouldn’t that actually be more like communism?

You can’t make stuff like this up.

Apparently the key to economic improvement isn’t harder work, increased efficiency, or self improvement but more aggressive wealth distribution and …… more leisure time?

In Reich’s words, “The problem is not that the productivity revolution has caused unemployment or under-employment. The problem is its fruits haven’t been widely shared. Less work isn’t a bad thing. Most people prefer leisure. A productivity revolution such as we are experiencing should enable people to spend less time at work and have more time to do whatever they’d rather do.”

[Giant Communist Robot]

In Reich’s words, “The problem is not that the productivity revolution has caused unemployment or under-employment. The problem is its fruits haven’t been widely shared. Less work isn’t a bad thing. Most people prefer leisure. A productivity revolution such as we are experiencing should enable people to spend less time at work and have more time to do whatever they’d rather do.”

This sounds like political theater. I found this quote on his Wikipedia article from a New York Times interview:

"I don't believe in redistribution of wealth for the sake of redistributing wealth. But I am concerned about how we can afford to pay for what we as a nation need to do."

I think it's clear to everyone that raising taxes on the wealthy can't bring in enough; taxes will have to be raised all the way down to the middle class--at least if we are talking about funding the ideas of the Democratic Party. Is it better to burden the country with taxes in order to meet the goals of a few party leaders or to redefine with a less ambitious government role and allow us our personal goals?

Honestly, the visions of a progressive utopia seem like a heroin addiction.

[Giant Communist Robot]

ECRI is continuing their call for recession this year. Maybe they're right. They point out that current growth in personal income looks like it always does before a recession. The lion's share of indicators suggest moderate growth; these could be wrong if the statistical adjustments are distorting the data. Personally I feel there are good reasons for the adjustments, and it seems unlikely so many would be wrong at the same time.

[Shapley]

... and it seems unlikely so many would be wrong at the same time.

Isn't that what they said about the Maginot Line?

[Giant Communist Robot]

Remember, ECRI made their recession call last September. So it's a case of " their model actually does see this event a year in advance?' or "do the unique circumstances of this economy pose unforeseen problems with modeling the future?"

[Shapley]

I think there are always unforseen problems with modeling the future, whether in economics, climatology, or politics (or anything else for that matter).

[Giant Communist Robot]

Conference Board Index of Leading Indicators has been slowing and has now turned negative. Coincident Index holds steady. Philly Fed Survey shows contraction in area manufacturing, in contrast to the growth shown in the Empire State Survey. No good footing for accelerating growth, just more stagnation. The Fed still opposes QE3, the political situation in EU is still festering, and ECRI is trumpeting a call for recession. Interesting times we live in.

[Shapley]

...the political situation in EU is still festering...

Either the Fed has given up trying to force the dollar down consistent with the Euro, or it's become evident that their control is slipping, as the dollar continues to strengthen agains the Euro. I think this will prove beneifical to the U.S., but probably does not bode well for the EU. Oh, well. Gotta take care of the home front first.

Our European suppliers have stopped quoting in Euros. The provide us the quotations in US dollars (to save us the trouble of converting, they explain). Methinks their expecting the Euro to continue dropping, and they see the dollar as the more stable entity.