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Blah blah blah. Smaller government. Free markets forever. End the Fed. Go back to a gold standard. Ron Paul repeats his hackneyed talking points and tries hard to talk over Paul Krugman, but a few words from Krugman expose just how intellectually bankrupt Ron Paul really is.
Mike Smith's profile photoU-Ming Lee's profile photoDave Levine (Sex Toy Dave)'s profile photoJames Salsman's profile photo
And here I was thinking Krugman supported the policies of Emperor Diocletian. And the Byzantines didn't fight wars apparently.
Thanks for sharing this- excellent clip. Some of Ron Paul's ideas are good- stop waging war on the world, don't criminalize drugs- but his whole concept of government and money would lead to disaster.
And the system you trust has not brought the whole frign world to collapse? it is just starting..and when the dollar will be the greatest fall ever as everything is based off this fiat system....which was designed to fail as it transferred wealth for paper everywhere enriching few destroying many. No Ron Paul would collapse the system..true...but the longer it takes to collapse..the worse the consequences...
+Mike Smith Although I feel that Ron Paul's prescriptions will not work, this doesn't imply that I trust the system. In fact, the system is very problematic. But fixing the system does not necessarily mean that one has to completely dismantle it in the hope that some new, better solution will emerge from the ashes.
You and I may disagree with Ron Paul's prescription, but he is not intellectually bankrupt. The federal government has a terrible record of delivering value for money, and Ron Paul wants it out of the way. It's not such an unreasonable idea.
+James Salsman Inaccuracies are not necessarily lies. The other side of the aisle isn't stupid. We're all hoping for what's best for the country, even if we sometimes disagree on the path to get there. Take a deep breath, count to 10, and inject some civility into the discussion.
The mans record speaks for itself..he walks his talk..the others have served special interests and failed to keep the oaths they have taken to the constitution, not Ron...just review his vote record...
+Dave Levine You misinterpreted the (granted, ambigious and questionably grammatical) sentence. Krugman is saying that everyone's income is someone else's spending, and therefore "collective" income is always equal to and not greater than collective spending. Does that explain it?
+James Salsman Total spending does not equal total income when we save or borrow.   Investing money reduces the amount available for you to spend.  And borrowing money allows you to spend more that your total income.
Since "collectively" we borrow more than we save in the US, our spending has been higher than our income for many years.
+Dave Levine firstly, you buy investments, spending money at a bank for an account balance, or at a broker for stocks and bonds. That's income for the bank or the security issuer. But you are thinking about this as individual-centered instead of in the economy-centered way in which Krugman is stating the equality. Nobody gets any income that isn't someone else's spending, no matter how much borrowing or saving is going on. Also, it's not really correct to suggest that debt service has been higher than most times in recent decades:
When I buy Google stock, that is not income to a bank.  The money i use to buy the stock goes to the person who sold me the shares.  That person did not get "income" but a "return on investment".  (Income can come from stocks in the form of dividend).  Google does not see any of that money.  The person who got a return on his investment say spend or re-invest it his "returned" money.  My investment or stock is my personal money not to be touched by the bank.  I may pay the bank for trading and checking services, but they have no claim on my investment.

That link you gave was dead.  Try this one:
The chart on the right clearly shows US public and private debt is higher than it has been in the last several decades.
+James Salsman  I was commenting on your statement "it's not really correct to suggest that debt service has been higher than most times in recent decades."  Which is untrue.  wwII is not "recent decades" and certainly wasn't "most times".
Nevertheless, this is a distraction from my point which is that borrowing money allows spending to not equal income.  Thus, Krugman's statment that spending must equal income is clearly wrong.
+Dave Levine when a lender loans you money, it's not income in the taxable sense, but it is income because it is money that you recieve before you can spend. Every dollar someone recieves is a dollar that someone else spent, right?
+James Salsman  Borrowed money is not "income" in any sense. You can't count borrowed money as income because it is not income, its debt!  This is basic economics, accounting, and finance.  Investment too is not spending both  in definition and in how it works in the economy.
Face it, you and Krugman don't understand economics :)
+Dave Levine have your semantics your way. Sorry I am unable to explain to you what Krugman meant, but I think you know. I'm more interested in why you think the national debt at 1/3 what it was after WWII relative to GDP is a problem -- Treasury bond interest rates have never been lower. Household debt is back under control, too, or is still not working for you?
+James Salsman  "Income" and "borrowing" are not "my semantics".  They are clearly defined terms in economics.
Income is money you have earned through investment and are free to keep and use as you please
Borrowed money is money that you are supposed to return with interest at a future date.
To equate those terms to each other not only violates basic economic principals, it offends the character of those who work hard to earn an income.
+James Salsman Regarding your question about why I think the US has too much debt.  The US, southern europe, and japanese governments are kept alive by their central banks printing money and buying their debt.
This means they have too much debt.
+Dave Levine If that were a problem, why isn't there inflation in those regions? Why does the free market give those governments such low interest rates on their borrowing? Why has the market been giving the US negative real (inflation adjusted) interest for more than two years now?
If that were a problem, why isn't there inflation in those regions?
Nixon took us off the gold standard in 1972, but it wasn't until 1979 until his printing came through the whole economy.  

 Why does the free market give those governments such low interest rates on their borrowing?

The free market isn't.  the goverments and central banks are openly manipulating rates lower.  This is their stated policy.

Why has the market been giving the US negative real (inflation adjusted) interest for more than two years now?

Banks are rated triple AAA if they put all their money in government bonds.  In order to clean up their balance sheet, they buy US treasuries.  
I am done chatting.  I was just defending my video about krugman. not interested in teaching you about marco economics as well.  thanks :)
+Dave Levine well I wanted to ask you: There are 1.6 million homeless kids in the US, up from 1.2 million three years prior. How much inflation do you think it would be worth to get those numbers under 1 million?
+Dave Levine no, but I think we agree that printing fiat money can create both jobs and inflation, assuming it's spent on infrastructure, education, preventative healthcare, etc. (actually that kind of spending is _not_ infationary, but I'm trying to agree with what I think your premises are.) I'm wondering about your personal ethical outlook: what rate of inflation would it be personally worth it to you to get the number of homeless kids under 1 million?
+James Salsman  printing money does not create jobs.  Central banks are printing moeny and giving it to banks who continue to cut jobs.  They also give it to the government who mostly transfers the money. The government does employ some people, but most jobs and wealth are created by individuals and corporations.   
Inflation makes running a business more difficult and robs the value of salary to workers.  Thus, inflation hurts job growth and overall economic health.  Look at how inflation world wide has caused starvation and uprisings.

Let me ask you: How many pizza's would you throw in the ocean to get the number of homeless kids under 1 million?  I guess you can answer it, but throwing any number of pizzas in the ocean will not get kids a home.  And this is not an ethical question.
our wealth was created before we printed debt...we had prosperity BEFORE 1913..became #1 with sound money...not this Ponzi you support.
If you read publications like the American Economic Review, the Quarterly Journal of Economics or the Economic Journal, you'll find that the period before 1913 (read the issues from that period) were also fraught with economic and monetary instability. If you look them up, for example, there are entire issues dedicated to debates around bimetallism.
+Mike Smith wealth has been created for centuries.  Homes, tools, land, clothes have been around for centuries.  My point is that printing money does not create wealth.
A ponzi scheme is a scheme in which someone takes money and claims to invest or hold it, but spends it.  This is no different than social security or most of the promises our government has made to us.
+U-Ming Lee that is true.  It was common back then to have recession with a decline of 7-8% followed within 2 years of growth of almost 15% or more!  More volatility is especially tough for poorly run banks and debt ridden governments, but for nimble and intelligent entrepreurs, individuals with needed jobs, and for those with cash savings, it can be quite exciting.  Before 1913 we had more volatility but also faster long term growth, but more importantly, we rewarded the people who created wealth and those who did the wrong thing lost power quickly.  Further we had the emergence of the middle class, a more even distribution of wealth, and currency that gained in value over 100 years rather than lost 95%.

Our attempts to smooth out downturns can have its benefits, but attempts to completely ignore major problems like we have done for the last 15 years in the end just makes all the volatility come in one giant burst and continuing to ignore reality simply gets more and more expensive.

I do believe there can be a mix of creating stability without completely ruining the economy as our current bank/government policy is doing.  Nevertheless at this point, we have so many giant financial problems of which our leaders are in complete denial of, there is no more money or time to "smooth out the problem" over time.  The end of the ponzi scheme is near . . . and ponzi schemes rarely crash slowly.
+Dave Levine well, that's not really answering the question, is it? As for your question, why not use those pizzas to pay for infrastructure, education, and preventative healthcare? All of those expenditures should be paid with debt, because they all pay off far in excess of interest. 

One thing I'm sure we agree on is that inflation is equivalent to a regressive form of taxation because it devalues all currency equally. Let's say a one-time wealth tax (e.g. was used to pay off the national debt and invest in infrastructure, education, and universal preventative care instead. Because of the nature of such a tax, it would be almost entirely on paper. What would your objections be to that method of eliminating the national debt and avoidable future expenses, if any?
you missed my point.  But i see what you are trying to say.  You are saying, The fed prints money and gives it to the government and spend it on "infrastructure, education, and preventative healthcare" which is a good investment and so the economy gets better and homeless children are saved.  Sounds nice, but is not how it works. 
Our health care system, education system, banking system, and housing market are all in shambles thanks to the government. Not only has government spending and regulations not produced the value you claim. It is in the process of destroying those industries it claims to be helping.  
You really can't deny that our banking, housing, health care, and education are horrible. Nor can you deny the government has gone to great lengths to manage those industries.  Accept it, they failed and they are bankrupt. Let the losers accept their losses and lets try another way.
Printing money only keeps the losers in power for longer . . . but not forever because losers are losers and they will not turn things around no matter how much money is printed and handed to them.  
+Dave Levine is our infrastructure horrible because of some intrinsic reason, or because we've been neglecting it? And horrible relative to what? We're still in the top 30 in most measures of quality of life and achievement, and we're still the richest nation in the world. Do you really think things are so screwed up that they are beyond repair? What is the evidence?
+James Salsman  Our Federal government and many states have trillions in promises and debt that they can not pay and those debts grow daily.  Calling the US is rich is like saying some guy with a good job who is spending lots of money but has 12 credit cards maxed who will never pay them off is super rich.  Lets see when the banks figure out he won't pay the cards off and how they react before we call him rich.
The US has many strong corporations and a great infrastructure from our rich history, but our government is beyond repair because it has trillions of promises that it can not keep and people like you don't even realize 1/10 of the size of this problem.  
Like I said before, i don't have time to teach you economics, but stop listening to politicians and study the math. Its just numbers. 
the government has income of 2 and spending of 3. and they owe 15.  Each year the 15 gets higher because neither dems nor repubs have a plan to balance the budget at all.  
The other issues is that the 15 is borrowed mostly on short term rates that are artificially low (0-2%).  I doubt the Fed can keep rates low for that much longer  (they print money to keep rates low, but printing eventually causes inflation which increases rates).   It is a financial time bomb of major proportions.
The fact the government is a poor manager of housing, banking, telecom, post office, etc is really a side show to the real disaster in the markets collapsing under too much phoney paper printed by the Fed.
+Dave Levine I just can't take seriously the idea that debt less than a third relative to the GDP of what it was after WWII -- and before the longest period of US overall growth and prosperity -- is somehow crippling. Is there any evidence in support of that position which doesn't depend on nominal instead of real figures for slight-of-hand?
+James Salsman   We got into this argument originally when I pointed out that Krugman is wrong.  Your defense for him was that spending income and spending debt are the same thing.  This makes it clear that you don't even understand basic economic terms.
The difference between the US situation now and the US in 1950 is enormous on many levels, But I am not going to be able to explain that to you through this thread without you having a basic understanding of economics nor finance.  Sorry :)  
+Dave Levine I agree, you are unable to explain your position. I doubt we agree on the reason why.
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