Why should I support Romney?

Mr. Gas Bag -

Or may I call you Grumpy?

I understand your implicit argument, which is that the Fed precipitously has expanded the money supply beyond the economy's growth rate - therefore this fact alone proves that it has debased the currency, price level notwithstanding. We'll wait to see how this works out.

As you know, I don't mean to minimize the importance of monetary policy. My points in this thread are (1) that error in fiscal policy is of far graver concern at this moment. And (2), that one of the presidential candidate's will approach this problem as a responsible adult - or, at least, as an adroit politician - and the other candidate is clueless and reckless. Therefore it makes sense to prefer one over the other.

Okay, GGB. Refreshed by the evening’s slumber, having walked the dog and prowled the yard, I am ready to answer your questions, to the best of my ability (because with all due respect, they’re vague as hell).

This, by the way, will be my only response to them, for the simple reason that it appears that nothing anyone else says matters to you.

Did our economy grow...Yes/No
Your question is indeterminate. Economies rise and fall; there are periods of growth and recession. For the sake of discussion, let’s start the clock in 1950 and use Gross Domestic Product as our yardstick. In that time, US GDP has most certainly grown – and usually steadily. In this chart we see several sharp recessions, but the overall growth is very much in the plus column.

Per capita GDP has risen as well. These are constant-price calculations, meaning that inflation is (imperfectly, but somewhat) factored in.

So yes, over time, the economy has grown. More recently, of course, it has suffered a sharp recession and a thoroughly anemic recovery – a recovery I would argue is constrained by the Obama admin’s (and the Congress's) policies.

There y'go. 122 words.

Did we pump out trillions of dollars...Yes/No.
Another indeterminate question. No context, no timeline, and no definition of what the expenditures were actually for. If your question boils down to “did we pump out trillions of dollars on things that I, Grumpy Gas Bag, personally think were stupid,” the answer is OBVIOUSLY yes.

If the question boils down to “did we pump out trillions of dollars on things that eagleisland personally thinks were stupid,” take comfort in the fact that my answer is yes, as well. You’ll find no support from me for wasteful government programs, or for those which actively encourage people to become dependent upon government.

101 words.

How in any way shape or form is that not debasement? 150 words or less.
One can spend a lot of money and not debase the currency, GGB. Obviously, that isn’t what’s been happening. The debasement lies, at its core, in the fact that the United States now borrows more than 40 cents on each dollar it spends – all too often, by doing the equivalent of printing money. As Economike so clearly notes, that’s a problem with fiscal policy, not monetary policy.

Both are important. I agree with Economike that fiscal policy, at least at present, is by far the more serious issue.

Whaddya know. 83 words. Pity that I’m not engaging with your nonsense any more on this thread – I could probably get ‘em down to 5 or 10.

I have worked long and hard in programming....I would suggest since logic is the language of what I do.
You may not want to go there.
What role does logic...mathematical logic...play in your daily life...

GGB, on a closing note, I’ll observe that you appear to have a tendency to hear hoofbeats outside and assume there’s a zebra in your yard. I’m not talking about mathematics. I’m talking about argumentation theory.

If you think that fiscal policy is more important than monetary policy, ok, I'll go along with that. However, is it prudent fiscal policy to continue to raise the debt ceiling given the amount of debt that has accumulated over the years, along with the unfunded liabilities(Social Security, and Medicare). When does the nonsense end? BTW, both Obama and Romney will support raising the debt ceiling.

Economike,

I am both grumpy and a gas bag...I do like to ask a question at times.

Thanks for coming back...

I think that you are correct on the fiscal question..we can quibble on the nature of degree...on the monetary side...until that goes pear shaped...and it could be quick...I lived through the 70's...I know what inflation smells like...I don't like what I am seeing.

"that error in fiscal policy is of far graver concern at this moment."

What your statement comes down to at this point is that we are...as a nation...

Broke.

We are in a place...I had always hoped we would never be...

I am an absolutley hard fiscal conservative...

We need to starkly change the direction of this country...

We are broke...

We can't do this anymore.

Am I wrong?

Thanks,

Mr. Island,

How quaint...a chart that goes back to when I was six.

Mr. Island you are out of your depth.

If the question boils down to “did we pump out trillions of dollars on things that eagleisland personally thinks were stupid,

It wasn't we...It was the FED...printing dollars...I would suggest you read Rothbard on "The Mystery of Banking". There are many that will fight on the edges, but his description of debasement is good.

Economike has come back..maybe you should back off.

Bag.

Mr. Grumpy Gas Bag -

Yes, I agree with you that the United States is broke or, to be more precise, is on track to be broke at some point in the near future. That will be the day when credit markets start treating the U. S. like Greece and that day will happen because our government fails to reform itself. This is a problem of unsustainable fiscal policy.

I suspect we also agree that the Federal Reserve is able to exercise more power than a limited mission of monetary stability would require. Perhaps, like Three Pipe Problem, you think the Fed should be abolished. I think such a course of action shouldn't be dismissed out-of-hand. I note that a lot of effort has been wasted here - given the topic of this thread - on the side issue of monetary policy.

That Romney, as well as Obama, is in favor of raising the debt ceiling doesn't give me the creeps. Romney's position on the debt ceiling vote reveals that he's not a grandstander or a radical, but not much else. The debt ceiling vote is a side-show, a meaningless but necessary formality that only confirms after-the-fact that the Congress has already spent too much. As Milton Friedman wrote, The spending is the tax. Real fiscal reform requires reducing federal spending as a proportion of the national product.

Yes, we starkly need to change the direction of this country. I'm not touting Mitt Romney as an ideal fiscal conservative, but I'm confident he's a far, far better choice than Barack Obama.

All I can say about the previous post by EconMike is unbelieveable. I've never read anything that is more riduclous than the words he posted above. Good luck with your choice of Willard BTW!!!!

All I can say about the previous post by EconMike is unbelieveable.

Heh. If I were as inarticulate as this, I wouldn't advertise it.

I've never read anything that is more riduclous than the words he posted above.

What a coincidence! I was just now saying to myself "I wonder what Hatchcar thinks?" And with a superlative recommendation like this, I feel as though I've won some sort of prize.

Good luck with your choice of Willard BTW!!!!

Thanks. By the way, how do you decide to vote? Do you toss a coin for the candidates on the ballot, or do you write-in Mickey Mouse?

hatchcar and Grumpy Gas Bag will love this article from Capitalism Magazine, (Alan Greenspan vs. Ayn Rand)

What this means is: “I am shocked that lending institutions actually fell for the trap I set for them when I inflated the money supply.” And, of course, the whole purpose of his inflating the money supply was to get them to behave just the way they did–to increase loans. So he is in shocked disbelief that faking the supply of credit actually had financial consequences.

"And with a superlative recommendation like this, I feel as though I've won some sort of prize."

Hey I'm not ready to give that prize up, there had better be more than one!

Have to agree with emike about the debt ceiling raising and just being so much political theater. It would be similar to me getting my monthly visa bill and saying why this is ridiculous, I'm not going to pay it.

As far as voting for Willard goes, what do I put down for Mickey's address Florida or California?

Have to agree with emike about the debt ceiling raising and just being so much political theater. It would be similar to me getting my monthly visa bill and saying why this is ridiculous, I'm not going to pay it.

That's a good analogy, Mike G. The money's already spent, so there's no point arguing whether to pay the bill.

Economike,

Yes, I agree with you that the United States is broke or, to be more precise, is on track to be broke at some point in the near future. That will be the day when credit markets start treating the U. S. like Greece

Debt has now grown larger than GDP.

We are broke.

The crash will happen when others finally have to accept the fact that we have driven them down too...and at a point..that they can no longer afford to carry us...It is the definition of "dead man walking"

I suspect we also agree that the Federal Reserve is able to exercise more power than a limited mission of monetary stability would require.

The FED is a "private bank". It is a "private bank" that has the power to turn the dollar into trash...The question here is not has the FED turned the dollar into trash...The important question is how did it get that power? It was given..by the government...I don't want to put the FED out of existence...I want to remove the power...

I would be interested in seeing a small paragraph. Tell us what shapes your thought...Keynesian, Chicago..Friedman..

It is interesting that you put the balance as Obama v Romney...The national convention hasn't happened yet...

There is a point about counting chickens before they hatch...that is deeply economic..

Friedman was wrong...spending is not the tax...We borrowed that...The tax is in the debasement.

...and thanks for coming back.

I don't know much. But I think we can have a good conversation.

Debt has now grown larger than GDP. We are broke.

Grumpy Gas Bag-

You are entitled to conclude that "we are broke" but the debt/GDP ratio isn't a compelling proof. If Smith's mortgage is greater than his annual income, is he broke? Not necessarily.

I don't want to put the FED out of existence...I want to remove the power...

We agree.

Tell us what shapes your thought...Keynesian, Chicago..Friedman..

I don't have the depth of knowledge to be of any particular school. I am foremost influenced by the Austrian idea that all economic decision-making is individual. I am broadly influenced by the classicals - mostly Hume, Smith, Bastiat, and Ricardo - by the Chicagos - Frank Knight, Friedman, Coase, James Buchanan - by the Austrians - Menger, Hayek, Mises. Also by Smith's friend Edmund Burke, who was not an economist but had a great influence on Hayek. And modern interpreters - Sowell, Henry Hazlitt, Jude Wanniski.

Friedman was wrong...spending is not the tax...We borrowed that...The tax is in the debasement.

A little moderation in your emphasis would become you. Public borrowing IS a tax. This concept is known as Ricardian equivalence. If by debasement you mean inflation, yes, debasement is a tax but it's not the only form of taxation. A government can raise revenue in three ways: direct taxation, borrowing, or inflation. Borrowing is a deferred tax increase; Ricardo's theory is that people aren't fooled by government borrowing; they anticipate the taxes imbedded in the debt and act accordingly. Whenever a government spends money, it creates a corresponding tax liability one way or another.

The thread took this turn because Romney is seen as the same as Obama vis a vis the central bank and monetary policy.

The take away in the article I linked from Capitalism Magazine is that it's foolish and harmful to entrust policy makers to be smart enough to steer the US economy. Yet that is the impossible mission of the Fed, given it by Congress (and the American people) in a dual mandate to get the money supply right and to boost employment.

Watching the financial news this morning, we see that oil is falling, gold is falling, silver is falling, copper is falling, and the yield on the 10 year Treasury bond is near its all time low.

We know wage growth is anemic - not a sign of galloping inflation.

Meanwhile the US dollar is said to be "firming."

None of which proves anything, but does indicate that in a global economy, the US economy is still seen as the safer haven.

Yes, the Fed has a lot to do with all these trends, as does the news unfolding in Europe.

I would argue that the results we're seeing are partly due to the Fed's strategy to prop up US employment, part of its "dual mandate" from Congress.

This is also what gave us (still gives us) the artificially low interest rates that played such a huge role in the housing bubble and its aftermath.

Am I gloomy if I say that I recall in autumn of 2008, oil was falling, the dollar was firming, gold fell, and soon we were in the depths of a terrible recession?

Eagleisland, it is interesting to see what charts looks like when inflation is fully accounted for rather than partly. Shadowstats doesn't have a free GDP per capita chart but here is a GDP growth chart - http://www.shadowstats.com/alternate_data/gross-domestic-product-charts

Grumpy. Don't expect anyone who has not programmed a computer to understand the logical rigor that it teaches. Especially economists, the best of whom rarely check their equations against anything.

Mainemom, I think your previous post is a good one. To restate your insight re: Greenspan in a different way, a command economy is never going to perform like a free economy. This is why I support monetary and Fed reform over fiscal reform. Fiscal reform doesn't work, because it doesn't happen. This is a feature of the current model, which is why we need serious reform. In the recent past we have only gotten different tradeoffs between tax and debt. That will continue under Romney, if we can believe his own statements. The best we can hope for is a slight reduction in the magnitude of growth of the destructive processes.

I see the difference between those who emphasize monetary and fiscal policy as the difference between long-term and short-term thinking, respectively. It is a rational position to emphasize fiscal policy, because the crisis on our hands "now", at any given time, will demand attention.

I believe Austrians would tell us that we will -- eventually -- see major inflation as a result of the tripling of the money supply under Obama. I have no doubt that the same voices will, at that time, say that we will need fiscal policy reform as a priority.

All - I thought this was interesting given the Romney vs. Obama debate -- Mitt the Mighty Job Creator

Even the Objectivist author of the Capitalism Magazine article concedes,

"It is not a compromise to accede to the majority vote in a constitutionally limited republic."
And then he goes on to say, "But Greenspan was not doing that, not merely acknowledging the political impossibility of abolishing the Fed, he was endorsing the Fed, running it (badly), and arguing for its necessity, as in his 1995 paper."

So, yeah, there are those of us who know that the intervention of the Fed is a form of central planning and that it inevitably causes harm, but we accede to the law of the land as established by our constitutionally elected representatives, and we think it's politically impossible to abolish the Fed, at least for now.

Hence we use other criteria to evaluate presidential candidates.

This long thread on why to vote for Romney or not has turned into a debate on theoretical economics. But there is more than economic policy to consider. One of the most troubling aspects of Republican policy of the last twelve or so years has concerned the transformation of the conservative GOP into a military interventionist War Party. Such a direction got the US into Iraq, costing over 4500 American lives and into an eleven year occupation of Afghanistan, costing about 1100 more and counting. It also cost us trillions to no avail.

There is now news supplied by a columnist that the head of Neo-Con central, Bill Kristol, editor of The Weekly Standard, Fox News luminary, and former aide to VP Dan Quayle, is bragging that all the anti-interventionist elements of the Republican party have been repudiated and driven out, including former President Bush I, James Baker, Brent Scowcroft, and such figures in the 21st century as Pat Buchanan, and most lately, Ron Paul.

Kristol, says the report, on March 16th appeared at the B'nai Jeshurun synagogue in the Upper West Side of Manhattan where he bragged of his influence purging the GOP of its "Old fashion Arabist" (anti-Israeli) elements and re-making the party. His final prediction: Sen Joe Lieberman, the Senate's biggest advocate of military interventionism, will be Secretary of State in a new Romney administration and carry on Bush II's policy of military interventionism in the Middle East toward Syria and Iran. Except for war, Lieberman votes like Socialist Bernie Sanders.

If true, this is a very good reason NOT to support Romney. Such a policy has brought military and economic ruin to America and destroyed the GOP in the 2006 and 2008 elections, giving us Barak Obama. I pray its not true and that some of the Ron Paul delegates going to Tampa will help convince Romney its the wrong path to follow. Their support of him should be made contingent on Romney promising to follow a more realistic, prudent, and conservative military and foreign policy and repudiating the follies of the Neo-Cons which have harmed the GOP and America.

See article: http://www.vdare.com/articles/how-bill-kristol-purged-the-arabists

I would argue that the results we're seeing are partly due to the Fed's strategy to prop up US employment, part of its "dual mandate" from Congress.

This is also what gave us (still gives us) the artificially low interest rates that played such a huge role in the housing bubble and its aftermath.

mainemom -

I substantially agree with you, as usual.

There's no question that the Fed has contributed to our current stagnation, as I choose to call it. Normally, the Fed's wholesale expansion of the monetary base would trigger a rise in nominal GDP, which in theory is the Fed's mechanism for supporting employment.

In theory, a temporary increase in the supply of dollars would incent people to spend, but presently the demand for dollars remains high. The Fed's policy of paying interest on bank reserves explains this in part. Of course, paying interest on reserves counteracts the intended effect of stimulating (nominal) demand. This suggests that the Fed's unofficial intention has been to prop up the banks: to keep inflated financial assets inflated.

In Austrian terms, one would say that a continued credit expansion has prolonged a wholesale malinvestment in housing and has hampered the recalculation (that is, the redeployment of capital into more valuable uses) necessary to initiate the expansion we would expect following a recession. But the Fed is not all powerful; short term, it can affect interest rates but cannot create them.

Meanwhile, in the real economy, a robust recovery is underway. Business investment is up, profits are up, and capacity utilization is up. The private economy is poised for a major expansion. What's holding it back? Here's Brian Wesbury -

What we have on our hands is a sustainable, self-reinforcing economic recovery. It could be better. What’s holding it back is bad policy choices coming out of Washington, DC. Government spending is robbing the economy of potential, and uncertainty about future taxes and regulation is a wet blanket.

Employment is always lagging indicator of business activity. In the current economy, the Obama administration has prolonged unemployment not only by creating additional costs for productive activities in general, but in creating specific costs for employment - in particular the various mandates included in Obamacare. These are fiscal problems largely created by the current administration.

Fiscal reform doesn't work, because it doesn't happen.

Three Pipe Problem -

Here's a link to three consecutive posts I made on a previous thread. Read at your leisure. In particular, check out the graphic linked by Greg Mankiw. I'll wait for you.

One way to think about fiscal policy is to describe the proportion of the economy controlled by government. When government appropriates a larger share of private income, fewer choices remain to private individuals to spend and invest as they choose and, crucially for the long term, the greater the costs imposed on productive activity. Fiscal policy affects economic growth. Fiscal policy affects the freedom of individuals.

If you look at the historical side of the graph titled "President Obama's proposed budget path" you will note an unprecedented rise in government spending with the arrival of the Obama administration, a rise which places fiscal policy on a track toward sovereign default. Government's unfunded liabilities for Social Security, Medicare, so-called entitlements, and the uncertainties and costs imposed by Obamacare all figure into the mix. And yet, a fiscal reform doesn't look impracticable; heck, a return to government spending levels of, say, the Bill Clinton years would do the trick. Why anyone would imagine that fiscal reform is impossible is a mystery to me. But then, I can remember the 'eighties.

I'm going to make a prediction here: fiscal reform will happen, not because it should, but because it must - the alternative is sovereign default in one form or another. And I'm going to make another prediction, a more hopeful one: fiscal reform will work, not because it must, but because the American electorate will not choose the Eurosclerotic future depicted in "President Obama's proposed budget path." And the electorate faces this choice next November.

One of the most troubling aspects of Republican policy of the last twelve or so years has concerned the transformation of the conservative GOP into a military interventionist War Party.

Jeffersonian -

A cynic might ask "How is this different from Obama's Democratic Party?"

So, yeah, there are those of us who know that the intervention of the Fed is a form of central planning and that it inevitably causes harm, but we accede to the law of the land as established by our constitutionally elected representatives, and we think it's politically impossible to abolish the Fed, at least for now.

Agreed. If it's politically impossible to reform fiscal policy, why would anyone think that it's politically feasible to reform monetary policy?

"Agreed. If it's politically impossible to reform fiscal policy, why would anyone think that it's politically feasible to reform monetary policy?"

But the two walk hand in hand, so both must be changed. That is the point of the End the Fed chant, how can the congress have its feet held to the fire, when you have the FED buying so much of US Treasuries. The FED perpetuates the irresponsibility of the Congress on fiscal policies by keeping artificially low the interest on the debt. If the Congress had to pay for its debt interest on real terms, those rates would quickly reform fiscal policy.

As Emike points out it is apparent that the FED's main concern is propping up the banks and the US government and not employment, the Fed's policies encourage malinvestments or banks reinvesting no interest money into assured treasury low interest, and do not encourage the protection of savings and investments for the majority of Americans or the catch all phrase sound money.

The FED perpetuates the irresponsibility of the Congress on fiscal policies by keeping artificially low the interest on the debt.

Mike G. -

I follow what you're driving at here, but permit a quibble.

The Fed doesn't have the power to hold down the interest rate on government debt. That interest rate is dictated by the global credit market.

Can you see how this circumstance changes the emphasis between fiscal and monetary concerns in your post?

Ok, it has finally sunk in that I need to change my feelings towards Mr. Romney. As of this moment, I will endorse Mr. Romney for President.
Here's a link that explains the reasoning behind my decision.
http://www.dailypaul.com/236937/why-i-am-endorsing-mitt-romney-for-presi...

"That interest rate is dictated by the global credit market."

That is the point of what the FED has the ability to do more effectively than let's say the Eurozone banks.

My understanding is that when the eurozone came to be, that as part of the agreement was that there would be stricter control over monetary policy than compared to the FED. This is one reason that the eurozone has reached a crisis before the US, they can't just print their way to cover their bad economy.

You will admit that there is less of a desire for China to and Japan to buy our treasuries, our debt, they are looking at our balance sheet and reassessing the future in getting paid back. Many countries no longer want to trade amongst themselves in US dollars because of the probable devaluation of it.

Many have to wonder what is monetary manipulation vs dollar worth and of course the dollar has so much worth compared to other currency just because of our military prowess and past world acceptance. Certainly fiscal responsibility and natural resources have a huge part in determining who you want to bet on, and often you have to bet on the biggest influence in the room, until he dies of a heart attack

BTW Mike G, China and Japan will soon be trading sans US dollars, and India will soon be buying it's oil from Iran with Gold!!!

Hatchcar

Yes the more we discuss monetary policy and fiscal policy and foreign policy the more I'm reminded what a choice lies before us "in the most important election of our lifetime".

How many times have I heard that line of bull before? What will be the line in 2016??? I hope you looked at the link and got a few chuckles out of it.

It has been fascinating to be a part of this.

The top line of this thread is why vote for Romney?

The long line of posts points to the singular fact that Ron Paul has defined the discussion....We are talking about the FED...Top most issue in the Romney Campaign...No...Any campaign brought this up....?

Monetary Policy...top most in the Romney Campaign...Then again maybe not....I can't think of a campaign that has brought up monetary policy...or then again maybe one.

I think what has been demonstrated by this thread is that the reason to vote for Mitt Romney is his total lack of ability to drive the discussion.

I will not count Ron Paul out until the last round of voting in Tampa...That will be the only round that counts...We can all fish from there.

Economike:

You are entitled to conclude that "we are broke"

China and Japan no longer trade with each other in dollars....We have just passed the crest of first hill of the rollercoaster...I worked at a point in time at an Amusement Park....with a 100 year old wooden coaster...The ride is given from that point.

What do we have to back it up?

Debt....

Mainemom,

You are correct.

The take away in the article I linked from Capitalism Magazine is that it's foolish and harmful to entrust policy makers to be smart enough to steer the US economy. Yet that is the impossible mission of the Fed, given it by Congress

That is in a sentence why the FED fails.

Your point about inflation is an interesting one. Austrian Economics ties inflation to debasement. Other schools tie it to rising prices...one debasement is a cause...the other rising prices is a symptom...not the only symptom....when prices should correct the injection of more dollars...debasement...can slow that...making the correction slower...less valid...hold us in a longer fall.

http://nbcpolitics.msnbc.msn.com/_news/2012/05/30/11960423-obama-defense...

Romney Lite?

"The American Enterprise Institute, on Wednesday to deliver the message that the Obama administration is determined to avoid the automatic cuts which take effect in January, and is pushing ahead with a strategic pivot from Iraq and Afghanistan to the Pacific Rim." snip end

Strategic? pivot? shoot Obama shoot the Rim is open.

This is pure neocon thought from Obama and what does Romney promise not to nation build ala Bush in 2000?