physasst Posted March 16, 2012 Share Posted March 16, 2012 Is China poised to surpass the United States to become the world’s largest economy? The International Monetary Fund recently predicted that the size of China’s economy would overtake that of the U.S. in terms of purchasing power parity (PPP) by 2016. But a recent co-authored study by Robert Feenstra, an economist at the University of California, Davis, shows that global economic leadership would pass to China in 2014. And, even more radically, Arvind Subramanian of the Peterson Institute of International Economics argues that China actually surpassed the U.S. in PPP terms in 2010.source: http://globalpublicsquare.blogs.cnn.com/2011/06/02/when-will-china’s-economy-overtake-america’s/ From your article: But China would surpass the U.S. in a relatively short period of time even if we measured both countries’ economies in nominal terms. Assuming that the Chinese and U.S. economies grow, respectively, by 8% and 3% in real terms, that China’s inflation rate is 3.6% and America’s is 2% (the averages of the last decade), and that the renminbi appreciates against the dollar by 3% per year (the average of the last six years), China would become the world’s largest economy by 2021. By that time, both countries’ GDP will be about $24 trillion, perhaps triple the size of the third largest economy, either Japan or Germany. This is more along the lines of other projections I have seen...Also, that was written last June. A lot has already changed. Chine isn't going to see 8% growth now. At least not at the moment. Link to comment Share on other sites More sharing options...
physasst Posted March 16, 2012 Share Posted March 16, 2012 deficits dont matter? ok, lets look at what you said about the long term.... when do you see us paying down the deficit thats being run up?.... yeah, paul krugman thinks deficit spending is the way to go, but he's got no credibility. wait until inflation hits us and keep telling yourself that printing money is the way to go. wait until the bill to service the debt is more than what we spend on defense every year and tell us deficits dont matter. thats right, servicing the debt... you know, interest. the long run IS now, look around. The point is, you don't necessarily need to pay them down. Inflation can actually decrease debt. Not only that, but we can outgrow our debt.... Keynesian principles haven't been tried really, not ever..... We've never increased marginal rates in times of prosperity, and only under Clinton did we make a serious attempt to pay down the deficit. Instead, we do the opposite. Cut taxes in times of prosperity and continue to deficit spend continuously....Keynesian principles would argue that the economy is essentially in a constant flux....boom and bust cycle (IE; recessions are a normal part of the economic cycle)..while Classical economists argued that recessions should never occur. We need deficit spending now. But not indefinitely. Also, I would put Krugman's Nobel prize in economics as proof of his "credibility". Paul and I don't agree on everything, but he's not an idiot. Hell, even conservative economists like Morici understand deficit spending is necessary now. We need to raise marginal rates (55% would be ideal) and it's been shown that people won't change their spending habits at the margin until taxes reach 84% (+/- 3%)... The entire nonsense about cutting taxes is ridiculous. You ever wonder why you never SEE the Laffer Curve that supply siders favor? You ever wonder why no one shows it? First off, it's a curve, it's not linear. You cannot continue to cut taxes and increase revenue...it's a ridiculous argument...my friend Bruce Bartlett has told me even in Reagan's admin they knew that it was a joke. He has said that the peak of the Laffer Curve (the ideal spot for marginal rates to optimize revenues) is at 55%. Have we seen 55%? Not since the 70's. When Arthur designed the curve the marginal rate was 76%...which was too high. But we are way too low now. Also, Mike Kimel (a friend and co-author on some stuff) has researched this and found that economic growth in the US....REAL GDP growth was optimized with tax rates at the margin of 65%. What this tells me, is that marginal rates should be somewhere between 55-65% when you factor in the Kimel Curve with the Laffer Curve. I think you are referring to hyperinflation, but we aren't there. In fact, I'd rather see some inflation right now. We've been deflationary for a while, and interest rates and tax rates are as low as they can go.....We've fallen into an essential liquidity trap and don't even know it. BTW, Krugman has published some of the most extensive economic research on liquidity traps in the world. While he sometimes becomes overly political, which can affect his credibility, his economic knowledge and credentials are without question. BTW, a fun historic fact is that our country has only paid it's debt off once....in 1835. And we subsequently had a massive depression (longest in American history) in 1837. Correlation does not equal causation, but it's something to be noted. http://www.npr.org/blogs/money/2011/04/15/135423586/when-the-u-s-paid-off-the-entire-national-debt-and-why-it-didnt-last Link to comment Share on other sites More sharing options...
physasst Posted March 16, 2012 Share Posted March 16, 2012 deficits dont matter? ok, lets look at what you said about the long term.... when do you see us paying down the deficit thats being run up?.... yeah, paul krugman thinks deficit spending is the way to go, but he's got no credibility. wait until inflation hits us and keep telling yourself that printing money is the way to go. wait until the bill to service the debt is more than what we spend on defense every year and tell us deficits dont matter. thats right, servicing the debt... you know, interest. the long run IS now, look around. The point is, you don't necessarily need to pay them down. Inflation can actually decrease debt. Not only that, but we can outgrow our debt.... Keynesian principles haven't been tried really, not ever..... We've never increased marginal rates in times of prosperity, and only under Clinton did we make a serious attempt to pay down the deficit. Instead, we do the opposite. Cut taxes in times of prosperity and continue to deficit spend continuously....Keynesian principles would argue that the economy is essentially in a constant flux....boom and bust cycle (IE; recessions are a normal part of the economic cycle)..while Classical economists argued that recessions should never occur. We need deficit spending now. But not indefinitely. Also, I would put Krugman's Nobel prize in economics as proof of his "credibility". Paul and I don't agree on everything, but he's not an idiot. Hell, even conservative economists like Morici understand deficit spending is necessary now. We need to raise marginal rates (55% would be ideal) and it's been shown that people won't change their spending habits at the margin until taxes reach 84% (+/- 3%)... The entire nonsense about cutting taxes is ridiculous. You ever wonder why you never SEE the Laffer Curve that supply siders favor? You ever wonder why no one shows it? First off, it's a curve, it's not linear. You cannot continue to cut taxes and increase revenue...it's a ridiculous argument...my friend Bruce Bartlett has told me even in Reagan's admin they knew that it was a joke. He has said that the peak of the Laffer Curve (the ideal spot for marginal rates to optimize revenues) is at 55%. Have we seen 55%? Not since the 70's. When Arthur designed the curve the marginal rate was 76%...which was too high. But we are way too low now. Also, Mike Kimel (a friend and co-author on some stuff) has researched this and found that economic growth in the US....REAL GDP growth was optimized with tax rates at the margin of 65%. What this tells me, is that marginal rates should be somewhere between 55-65% when you factor in the Kimel Curve with the Laffer Curve. I think you are referring to hyperinflation, but we aren't there. In fact, I'd rather see some inflation right now. We've been deflationary for a while, and interest rates and tax rates are as low as they can go.....We've fallen into an essential liquidity trap and don't even know it. BTW, Krugman has published some of the most extensive economic research on liquidity traps in the world. While he sometimes becomes overly political, which can affect his credibility, his economic knowledge and credentials are without question. BTW, a fun historic fact is that our country has only paid it's debt off once....in 1835. And we subsequently had a massive depression (longest in American history) in 1837. Correlation does not equal causation, but it's something to be noted. http://www.npr.org/blogs/money/2011/04/15/135423586/when-the-u-s-paid-off-the-entire-national-debt-and-why-it-didnt-last Link to comment Share on other sites More sharing options...
physasst Posted March 16, 2012 Share Posted March 16, 2012 So if government takes more of people's money, GDP goes up? Mmmhmmm. Just by taking it and redistributing it through the beauracracy? I beg to differ. When tax rates fall, government receipts go up. Prosperity follows significant tax cuts, and economic explanation follows that. Raise taxes and kill prosperity. Even the Europeans are realizing this, and are in a mad scramble to introduce austerity because there's nothing left to take. They should just be spending more money now that their backs are against the wall, right? Well, krugmans says yes. When tax rates fall, government receipts fall. Even the staunchest supply side economists admit that. Hell, Dave Stockman has said repeatedly that they couldn't control spending in the Reagan WH and lowering tax rates while increasing defense spending was the "looniest idea" he'd heard. Reagan's own staffers didn't even believe that nonsense. Reagan did raise taxes 11 times you know....including the largest tax raise since WWII at the time. He cut taxes as well...initially.... It's not linear. You see a 30% stimulative effect (28-31%)....but you still lose 70 cents on every dollar.... That's NOT increasing government receipts. There does become a point at which taxes induce people to not work, or certainly not work harder. That's at about 84% at the margin. The Europeans are doing fine. Italy has a strong economic foundation and will recover. Portugal may not, but again, like Greece, it was headed for trouble no matter what. The Europeans aren't cutting taxes. They're cutting spending because many of them, Germany notwithstanding, aren't seeing fast enough growth to outgrow their debt. Also, depends on what part of Europe. Poland for example, did the stimulus right. They spent a HUGE sum of money and kickstarted their economy. They had over 6% growth last year. Our situation is completely different. We can raise taxes. With the exception of the corporate tax, which I think should be cut. Income rates need to go up.....gradually. Start with a 3-5% increase, and increase annually with a target of 45% at the margin to start. Corporate rates need to go down by 5% Capital Gains rates need to go up. Like Reagan did. He saw capital gains rates were too low and raised them to 28%. I think they should be 30%. Still lower than the margin. Prosperity follows tax cuts....really? wow. You might want to rethink that. The Bush cuts for example cost us 1.8 trillion between 2003 and 2011. Where was the prosperity? Voodoo economics indeed. http://www.forbes.com/sites/petercohan/2011/05/03/do-tax-cuts-create-jobs/ http://www.angrybearblog.com/2011/11/kimel-curve-and-kitchen-sink-part-2.html Link to comment Share on other sites More sharing options...
physasst Posted March 16, 2012 Share Posted March 16, 2012 So if government takes more of people's money, GDP goes up? Mmmhmmm. Just by taking it and redistributing it through the beauracracy? I beg to differ. When tax rates fall, government receipts go up. Prosperity follows significant tax cuts, and economic explanation follows that. Raise taxes and kill prosperity. Even the Europeans are realizing this, and are in a mad scramble to introduce austerity because there's nothing left to take. They should just be spending more money now that their backs are against the wall, right? Well, krugmans says yes. When tax rates fall, government receipts fall. Even the staunchest supply side economists admit that. Hell, Dave Stockman has said repeatedly that they couldn't control spending in the Reagan WH and lowering tax rates while increasing defense spending was the "looniest idea" he'd heard. Reagan's own staffers didn't even believe that nonsense. Reagan did raise taxes 11 times you know....including the largest tax raise since WWII at the time. He cut taxes as well...initially.... It's not linear. You see a 30% stimulative effect (28-31%)....but you still lose 70 cents on every dollar.... That's NOT increasing government receipts. There does become a point at which taxes induce people to not work, or certainly not work harder. That's at about 84% at the margin. The Europeans are doing fine. Italy has a strong economic foundation and will recover. Portugal may not, but again, like Greece, it was headed for trouble no matter what. The Europeans aren't cutting taxes. They're cutting spending because many of them, Germany notwithstanding, aren't seeing fast enough growth to outgrow their debt. Also, depends on what part of Europe. Poland for example, did the stimulus right. They spent a HUGE sum of money and kickstarted their economy. They had over 6% growth last year. Our situation is completely different. We can raise taxes. With the exception of the corporate tax, which I think should be cut. Income rates need to go up.....gradually. Start with a 3-5% increase, and increase annually with a target of 45% at the margin to start. Corporate rates need to go down by 5% Capital Gains rates need to go up. Like Reagan did. He saw capital gains rates were too low and raised them to 28%. I think they should be 30%. Still lower than the margin. Prosperity follows tax cuts....really? wow. You might want to rethink that. The Bush cuts for example cost us 1.8 trillion between 2003 and 2011. Where was the prosperity? Voodoo economics indeed. http://www.forbes.com/sites/petercohan/2011/05/03/do-tax-cuts-create-jobs/ http://www.angrybearblog.com/2011/11/kimel-curve-and-kitchen-sink-part-2.html Link to comment Share on other sites More sharing options...
physasst Posted March 16, 2012 Share Posted March 16, 2012 We are energy poor and yet the smart folks directing are supposed to be who kids the likes of which we've not seen. Had we drilled here and now three years ago, we'd see resources coming on line about now. But our betters in the white house and the senate thougt better for us, and now we are stuck in litteralville dealing with the consequences of financial engineering. Thanks for the economics lesson, energy prices are still going up, prices on everything else are going up with that, jobs are scarce, and our president is talking about how the Chevy volt is going to save the day. What are you talking about? We have the highest rate of drilling in the US....ever....right now. And expanding all the time. But oil is finite. Hell, my family has land and mineral rights in an oil field in North Dakota. They might be drilling on family land here soon.. But it has to be done responsibly right? We can't just split a guys chest open for a cough, correct? Fracking is starting to be implicated with some pretty serious environmental concerns...like the rancher the other night on CNBC whose ground water is contaminated "with chemical substances most likely used in the process of fracking" according to the lab that analyzed his water. And there are others. I'd love for them to drill on our land and get some money out of it. But not if it's going to contaminate the ground and ruin the environment. That cost is too high for me. We have the highest rate of oil production right now that our country has ever seen......But I'll put you down as against clean energy...got it... Link to comment Share on other sites More sharing options...
physasst Posted March 16, 2012 Share Posted March 16, 2012 We are energy poor and yet the smart folks directing are supposed to be who kids the likes of which we've not seen. Had we drilled here and now three years ago, we'd see resources coming on line about now. But our betters in the white house and the senate thougt better for us, and now we are stuck in litteralville dealing with the consequences of financial engineering. Thanks for the economics lesson, energy prices are still going up, prices on everything else are going up with that, jobs are scarce, and our president is talking about how the Chevy volt is going to save the day. What are you talking about? We have the highest rate of drilling in the US....ever....right now. And expanding all the time. But oil is finite. Hell, my family has land and mineral rights in an oil field in North Dakota. They might be drilling on family land here soon.. But it has to be done responsibly right? We can't just split a guys chest open for a cough, correct? Fracking is starting to be implicated with some pretty serious environmental concerns...like the rancher the other night on CNBC whose ground water is contaminated "with chemical substances most likely used in the process of fracking" according to the lab that analyzed his water. And there are others. I'd love for them to drill on our land and get some money out of it. But not if it's going to contaminate the ground and ruin the environment. That cost is too high for me. We have the highest rate of oil production right now that our country has ever seen......But I'll put you down as against clean energy...got it... Link to comment Share on other sites More sharing options...
Planteater Posted March 16, 2012 Share Posted March 16, 2012 physasst- so the current marginal tax rate is 35% and is set to jump to 39.6% next year. Are you saying we should be at 55%? That would put even the poor people in this country paying somewhere close to 30% . That would mean as a new PA, making an assumed $80,000 a year- I would be taxed somewhere around 40%. No thank you. Maybe I am misunderstanding you/taxes....I hope so. PAMAC- thank you. Link to comment Share on other sites More sharing options...
Planteater Posted March 16, 2012 Share Posted March 16, 2012 physasst- so the current marginal tax rate is 35% and is set to jump to 39.6% next year. Are you saying we should be at 55%? That would put even the poor people in this country paying somewhere close to 30% . That would mean as a new PA, making an assumed $80,000 a year- I would be taxed somewhere around 40%. No thank you. Maybe I am misunderstanding you/taxes....I hope so. PAMAC- thank you. Link to comment Share on other sites More sharing options...
physasst Posted March 16, 2012 Share Posted March 16, 2012 physasst- so the current marginal tax rate is 35% and is set to jump to 39.6% next year. Are you saying we should be at 55%? That would put even the poor people in this country paying somewhere close to 30% . That would mean as a new PA, making an assumed $80,000 a year- I would be taxed somewhere around 40%. No thank you. Maybe I am misunderstanding you/taxes....I hope so. PAMAC- thank you. Never said it would be popular. But that's what the data shows. I could care less about beliefs or ideologies. Data is what matters. But I know that people won't like it. Doesn't mean it shouldn't be done. 84% is where the spot is...This is a gated article, but this is where the data is. http://www.nber.org/papers/w17860 This is the problem in this country, and why I think that we need to mandate at least 3 years of economics in high school. NOT just salt water theory, but fresh water as well. Our populace is so grossly misinformed and uneducated on economics that it makes me want to hang my head in shame. Do I favor government cuts in spending, sure, I think that the government should cut military spending by 50% (yes, I am a vet myself) and increase spending on health care and education dramatically. Again, economics informs this. People will say I am a "big government type" but labels only seek to detract from the message. The bottom line is a healthy, educated workforce will grow the economy faster than anything else. Check out Mark's new organization "No Labels".... http://nolabels.org/ BTW, do you understand why higher marginal rates lead to greater economic growth? It's really quite simple. NO one wants to pay higher rates. So what will people making money at the margin do with their earnings? They re-invest them. They invest in their companies, into others, and attempt to defer taxation. They GROW the economy. When marginal rates are low, they save.....there is no incentive to re-invest. It's really simple, mathematically AND historically, if you want to increase investment, increase employment, encourage start ups, and grow the economy.......raise marginal tax rates. Link to comment Share on other sites More sharing options...
physasst Posted March 16, 2012 Share Posted March 16, 2012 physasst- so the current marginal tax rate is 35% and is set to jump to 39.6% next year. Are you saying we should be at 55%? That would put even the poor people in this country paying somewhere close to 30% . That would mean as a new PA, making an assumed $80,000 a year- I would be taxed somewhere around 40%. No thank you. Maybe I am misunderstanding you/taxes....I hope so. PAMAC- thank you. Never said it would be popular. But that's what the data shows. I could care less about beliefs or ideologies. Data is what matters. But I know that people won't like it. Doesn't mean it shouldn't be done. 84% is where the spot is...This is a gated article, but this is where the data is. http://www.nber.org/papers/w17860 This is the problem in this country, and why I think that we need to mandate at least 3 years of economics in high school. NOT just salt water theory, but fresh water as well. Our populace is so grossly misinformed and uneducated on economics that it makes me want to hang my head in shame. Do I favor government cuts in spending, sure, I think that the government should cut military spending by 50% (yes, I am a vet myself) and increase spending on health care and education dramatically. Again, economics informs this. People will say I am a "big government type" but labels only seek to detract from the message. The bottom line is a healthy, educated workforce will grow the economy faster than anything else. Check out Mark's new organization "No Labels".... http://nolabels.org/ BTW, do you understand why higher marginal rates lead to greater economic growth? It's really quite simple. NO one wants to pay higher rates. So what will people making money at the margin do with their earnings? They re-invest them. They invest in their companies, into others, and attempt to defer taxation. They GROW the economy. When marginal rates are low, they save.....there is no incentive to re-invest. It's really simple, mathematically AND historically, if you want to increase investment, increase employment, encourage start ups, and grow the economy.......raise marginal tax rates. Link to comment Share on other sites More sharing options...
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