Healthy economy equals quiet bulletin board

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Re: Healthy economy equals quiet bulletin board

Postby Shapley » Thu May 16, 2013 8:26 am

The budget deficit is dropping faster than aticipated, thanks to spending cuts and revenue increases (largely due to the end of the payroll tax cut).

Federal tax revenues are up 16 percent this year compared to 2012, helping power a major drop in the federal deficit, according to the latest estimate Tuesday from the Congressional Budget Office.

CBO’s numbers show that even with Congress gridlocked, the budget picture is improving, thanks in large part to spending cuts negotiated over the last two years that are beginning to kick in, along with tax increases lawmakers negotiated at the beginning of the year.



Through the first seven months of fiscal year 2013 the government has taken in $132 billion more in individual income taxes, $52 billion more in payroll taxes and $24 billion more in corporate income taxes.

Meanwhile spending has dropped $11 billion, thanks in large part to defense cuts and expiration of some part programs such as the Wall Street bailout.

Entitlement programs continue to grow, however, with Medicare, Medicaid and Social Security totaling $65 billion more so far this year.

In April alone the federal government ran a $112 billion surplus.

CBO issues a preliminary estimate of the federal budget every month. The Treasury Department will issue exact figures later this month.


Keep in mind that the federal government usually runs a surplus in April, since that is when most income taxes are filed.
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Re: Healthy economy equals quiet bulletin board

Postby Shapley » Thu May 16, 2013 8:32 am

The trade deficit also fell, buoyed largely by the reduction in crude oil imports mentioned in the other thread. The trade deficit with China also fell. Exports also fell, so it's not a matter of exporting more.

WASHINGTON (AP) — The U.S. trade deficit narrowed in March for a second month as the daily flow of imported crude oil dropped to the lowest level in 17 years. The deficit with China hit a three-year low.

The overall trade deficit decreased to $38.8 billion, an 11 percent drop from February’s $43.6 billion, the Commerce Department reported Thursday.

Exports fell 0.9 percent to $184.3 billion as sales of machinery, autos and farm products all declined. Imports fell 2.8 percent to $223.1 billion, led by a 4.4 percent drop in foreign petroleum. Crude oil imports averaged just 7 million barrels per day, the lowest since March 1996.

A smaller trade gap can boost overall economic growth as American companies earn more from overseas sales while U.S. consumers and businesses spend less on foreign products.

For the first three months of this year, the trade deficit is running at an annual rate of $507.7 billion, 5.9 percent below last year’s deficit of $539.5 billion. Economists are looking for the deficit to narrow slightly this year, in part because they expect continued gains in U.S. exports.
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Re: Healthy economy equals quiet bulletin board

Postby Giant Communist Robot » Sun May 19, 2013 11:47 pm

BigJon wrote:RnR's work still shows that high debt to GDP is a drag on that economy's growth.


Offhand I could see this, if the interest rates were high (due to crowding out). But they're not.
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Re: Healthy economy equals quiet bulletin board

Postby Giant Communist Robot » Tue May 28, 2013 3:32 pm

BigJon wrote:RnR's work still shows that high debt to GDP is a drag on that economy's growth.


R&R took some empirical data and used it to come to an abstract conclusion. From the structure of their argument they should have used a disclaimer stating the results were only probable. Then they should have gone through each of the factors and discussed them. They didn't, of course. Their conclusion has a clear deductive ring to it. In fact, the above quote is wrong: R&R said debt>90% of GDP=GDP growth of -.1%. They were specific.

Actually, I find complaints about computational errors and cherry-picking of data to be quibbles. For me, the structural problem of their argument (inductive argument with a deductive conclusion) is a big deal. But I've been wrong before. Let's assume R&R are right--our debt:GDP has been above 90% for some time now; have we been seeing that negative growth in GDP? The figures come out later this week. Are any R&R True Believers expecting the figure to be -.1%?
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Re: Healthy economy equals quiet bulletin board

Postby Shapley » Tue May 28, 2013 4:22 pm

According to the Treasury's "Debt to the Penny" website, the current debt stands as follows:

05/24/2013
Current Debt Held by the Public: $11,868,333,732,925.83
Intragovernmental Holdings: $4,867,090,538,332.04
Total Public Debt Outstanding: $16,735,424,271,257.87

Total US GDP, In Current Dollars, is identified by the Bureau of Economic Analysis as being $16,010,000,000

It may sound nit-picky, but the true Debt-to-GDP ratio should, it seems to me, be measured in actual public debt, not public debt plus intergovernmental holdings (money the government owes to itself). If that is the case, then the actual ratio is about 11,868/16,010 or about 74%. Thus, whether Reinhart-Rogoff are correct or not is still not being testing. I do not know on what nature of debt they based their analyses, though.

The reason I exclude intergovernmental holdings is that such debt can be erased legislatively without a sort of seisachtheia. That is to say, Social Security and Medicare 'trust funds' (which comprise the bulk of the intergovernmental 'lenders'), are merely legislative gimmicks which can be altered with a simple vote, which would have no true impact on the public, merely a psychological one.

The payroll taxes which support Social Security and Medicare are paid into the Treasury the same as any other tax. The government, however, keeps a record of those that are acquired through the taxes attributed to thos programmes, and counts it as "trust funds". The taxes are then "loaned" to the government to pay its bills, and interet is charged. The interst, which is payed by the government through taxes, is paid to the government, and then reloaned to the government. Ultimately, it makes little difference to the recipients whether the money that backs their checques comes from the "trust fund" or from yesterday's income tax receipts, as long as the checque clears. If the government abolished the "trust funds" tomorrow governmental debt would drop by over $4 trillion dollars, and it need not impact one single Social Security or Medicare checque. All it would do is remove an accounting gimmick.

That is why I question the inclusion of the "intergovernmental holdings" in the total debt, they do not really exist.

If the government defaults against itself, who is harmed, as long as it continues to pay its debts to others?
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Re: Healthy economy equals quiet bulletin board

Postby Giant Communist Robot » Tue Jul 16, 2013 3:07 pm

That is why I question the inclusion of the "intergovernmental holdings" in the total debt, they do not really exist.


It certainly makes the number look smaller. Still, the government isn't necessarily going to hold those until maturity; they may sell them on the open market. It depends on how they'll assess economic conditions.

I can't take R&R seriously! No one on the entire planet has ever found a causal link between high debt and depressed GDP, not even R&R themselves have anything to suggest. If two items have a correlation but no causal link wouldn't you say that's spurious? I would. Maybe there is a lurking variable, but as I say no one has found it. This looks like confirmatory bias based on right wing political philosophy. My belief is that when one makes broad and general claims about the economy you need some logical connection--here we only have mathematical.


I might have mentioned earlier that I've fallen in love with Fisher's interest rate ideas and now use them for everything. They work OK--their appeal is that they give a unified approach. For example, rates forecast a GDP figure of 1.95%; the actual number came in at 1.8%. Is that close enough for you? I don't know how to feel about that, but what's really important is that the rates did forecast a decline. And they suggest a further decline is on the way. They also show some deflationary pressure in the CPI. And there is some relationship between rates and the market, too. All things begin with rates.

I've read some chatter about seasonality in the market. I ran those numbers myself and found nothing of statistical significance. It does look a little like there is some flattening of things during the summer.
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Re: Healthy economy equals quiet bulletin board

Postby Shapley » Tue Jul 16, 2013 4:16 pm

I think you did mention Fischer's before, but I've not read up on it, so I'm in no position to debate it one way or the other. When I have time, I may look at it and see, but your grasp of statistics is far better than mine, and mine grows weaker every day (as does my typing, judging from my last post...) :)
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Re: Healthy economy equals quiet bulletin board

Postby Giant Communist Robot » Wed Jul 17, 2013 12:53 pm

From the Liberty Fund. While I often disagree with Libertarians, here I'm grateful for the service they provide free to the public. You won't find Irving Fisher or Adam Smith on Al Gore's websites.
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