Americans Not Overtaxed, Tea Parties Politically Motivated - Reagan Advisor

[Iriemon]

Since inflation is a tax caused by excessive government spending, tabulate CPIs since 1958 and add that to determine rate.

1. It's not caused by excessive government spending. There is no correlatio between inflation and spending.

There is a direct corollary between inflation and spending. The more that is spent that isn't taxed is converted into treasury bills, and sold to whoever's foolish enough to buy them, normally the Chinese and Saudis. Whenever these treasury bills don't sell, the Federal Reserve buys them. Since the Federal Reserve has no money or resources of its own, it generates the money to buy those t-bills artificially, thus an increase in the money supply, which by definition is inflation. The Fed just monetized $1.2T of debt and t-bills just the other week when the fiasco about AIG bonuses was made. The consequence of inflation is seen through higher prices, and asset bubbles, should inflation be severe. So, yes, spending yields inflation.

There's no corollary between inflation and spending. Neither of the two big spenders of recent times, Reagan and Bush were characterized by inflation rising along with greater spending. In fact despite Reagan's big spending increases, inflation went down.

The Fed doesn't buy Treasuries when they don't sell. It buys them when it wasnt to increase the money supply.

And what consequence of inflation? There's been no problem with inflation since Carter appointed Volcker in 1979 and he cracked down on the money supply, beating down inflation in the early 80s. The inflation rates of 2% have been intentional.

Any proof of your claims other than you own say-so?

2. Inflation is not a tax. It doesn't go to the government and you don't pay it.

It is a tax. The government directly controls the rate of inflation through the rate they increase the money supply. This is used to finance spending. It is very much a tax, and a very regressive one at that. The tea party protests were largely against the inflation tax that was coming because of all these deficits, as well as more direct taxes.

I don't pay it. The govt doesn't get it. It is only affects those with fixed incomes, like those on minimum wage, one of the few things not indexed, for some strange reason.

The tea parties were about inflation? Is that what the Boston colonists were upset about, inflation?

And the modern tea parties are all upset about inflation that is running, what, about 1% annually now? I missed the "Whip inflation now" signs in the photos.

 

[mash107]

Since inflation is a tax caused by excessive government spending, tabulate CPIs since 1958 and add that to determine rate.

Inflation is not a tax, though it is a problem.

However, wages after inflation have been growing for most people since then, so it is not relevant to this discussion.

Since the government controls the money supply, why isn't it a tax?

 

[Iriemon]

Since inflation is a tax caused by excessive government spending, tabulate CPIs since 1958 and add that to determine rate.

Inflation is not a tax, though it is a problem.

However, wages after inflation have been growing for most people since then, so it is not relevant to this discussion.

Since the government controls the money supply, why isn't it a tax?

Because 1) I don't pay it and 2) it is not something received by the Govt.

Inflation essentially penalizes those on fixed incomes. Conversely, it benefits those who have fixed expenses. That may or may not be the Govt and it may or may not be businesses or individuals.

If I owe $300k on my house, and with inflation my wage doubles, I think its great. If I'm leaving on a fixed income CD, I think it sucks.

Same with the Govt, though arguably with a huge debt (fixed expense) and a flexible income (revenues go up with incomes) the Govt will benefit from inflation by reducing the relative size of the debt.

But that comes mostly at the cost of lenders (ie China) not necessarily individuals.

So if you want to look at gainers/losers as a "tax" you could say that China would be paying a big chunk of the tax.

 

[mash107]

why is it that so many of you see cutting taxes as a root cause of the current situation, but you never cite rampant wasteful government spending as equally if not more responsible for our lot today?

And why is it that only income taxes seem to count. What about sales taxes, gas taxes, hotel taxes, meal taxes, alcohol and cigarette taxes, taxes on utility bills etc etc etc etc

the only answer is to cut government spending. do that and taxes will be lower and you will be able to make the choices of what to be able to do with your own money.

Yeah, it's like a McDonalds employee charging $5,000 on a drug habit every month, and blaming his income for the disparity.

 

[Iriemon]

why is it that so many of you see cutting taxes as a root cause of the current situation, but you never cite rampant wasteful government spending as equally if not more responsible for our lot today?

And why is it that only income taxes seem to count. What about sales taxes, gas taxes, hotel taxes, meal taxes, alcohol and cigarette taxes, taxes on utility bills etc etc etc etc

the only answer is to cut government spending. do that and taxes will be lower and you will be able to make the choices of what to be able to do with your own money.

Yeah, it's like a McDonalds employee charging $5,000 on a drug habit every month, and blaming his income for the disparity.

Course if he got a job making $5,000 then he wouldn't have a problem, would he?

 

[BaronVonBigmeat]

There's no corollary between inflation and spending. Neither of the two big spenders of recent times, Reagan and Bush were characterized by inflation rising along with greater spending. In fact despite Reagan's big spending increases, inflation went down.

The Fed doesn't buy Treasuries when they don't sell. It buys them when it wasnt to increase the money supply.

And what consequence of inflation? There's been no problem with inflation since Carter appointed Volcker in 1979 and he cracked down on the money supply, beating down inflation in the early 80s. The inflation rates of 2% have been intentional.

Any proof of your claims other than you own say-so?

We've changed the way we measure inflation couple times since the Carter administration. There are lies, damned lies, and statistics, as Benjamin Disraeli said. For example, they don't look at housing prices going up and call it inflation. They decided to substitute "imputed rent", what the house would rent for. Which is amazingly dishonest, because most people don't rent their houses, and the market price of a rental house is kept down when buying a house is made artifically easy by government policy. There are other games they play, such as throwing out a rise in the price of beef, because people will substitute chicken (and then beans, presumably). Google "misleading inflation numbers" or "CPI nonsense" or similar terms and there's about a million stories explaining this better.

Inflation is an increase in the money supply. And money supply growth did not particularly slow during most of Reagan's administration, or Clinton's administration (there was a brief pause in the early 90's). There is no such thing as a free lunch.

I don't pay it. The govt doesn't get it. It is only affects those with fixed incomes, like those on minimum wage, one of the few things not indexed, for some strange reason.

Umm yes you did pay it, if you are an average american. If you have lots of real estate holdings, perhaps you actually gained from it. If the government didn't benefit from it...they wouldn't do it. It effects everyone whose primary income is from wages, since wages are "sticky" (slow to change), and benefits people whose assets values are inflated.

Over the last 25 years or so, we've seen housing, health care, college education, etc. (read: things that can't be outsourced to China) become increasingly unaffordable. But we don't recognize it as such, because those things are purchased infrequently. The prices of goods at Wal-Mart have been more or less flat (thanks to chinese imports); but we buy from Wal-Mart every week, so we assume that inflation is reasonable. It must be the greedy health care providers and oil companies and so forth that are gouging us.

 

[BaronVonBigmeat]

Having said that--yes it's ridiculous that people are protesting against big government all of a sudden. Where were they when Bush and the republican congress passed the prescription drug benefit? Where were they in the late 90's, when the republican congress passed budgets that were even bigger than what Clinton requested? Government has grown like cancer under republicans and democrats alike. I wonder how many talk show hosts know that much of the "Reagan" deregulation initiatives actually began late in Carter's term?

 

[Iriemon]

There's no corollary between inflation and spending. Neither of the two big spenders of recent times, Reagan and Bush were characterized by inflation rising along with greater spending. In fact despite Reagan's big spending increases, inflation went down.

The Fed doesn't buy Treasuries when they don't sell. It buys them when it wasnt to increase the money supply.

And what consequence of inflation? There's been no problem with inflation since Carter appointed Volcker in 1979 and he cracked down on the money supply, beating down inflation in the early 80s. The inflation rates of 2% have been intentional.

Any proof of your claims other than you own say-so?

We've changed the way we measure inflation couple times since the Carter administration. There are lies, damned lies, and statistics, as Benjamin Disraeli said. For example, they don't look at housing prices going up and call it inflation. They decided to substitute "imputed rent", what the house would rent for. Which is amazingly dishonest, because most people don't rent their houses, and the market price of a rental house is kept down when buying a house is made artifically easy by government policy. There are other games they play, such as throwing out a rise in the price of beef, because people will substitute chicken (and then beans, presumably). Google "misleading inflation numbers" or "CPI nonsense" or similar terms and there's about a million stories explaining this better.

Inflation is an increase in the money supply. And money supply growth did not particularly slow during most of Reagan's administration, or Clinton's administration (there was a brief pause in the early 90's). There is no such thing as a free lunch.

I agree there is controversy over how inflation is calculated. But if you can't rely on the CPI numbers, how can you say there is any inflation?

I don't pay it. The govt doesn't get it. It is only affects those with fixed incomes, like those on minimum wage, one of the few things not indexed, for some strange reason.

Umm yes you did pay it, if you are an average american. If you have lots of real estate holdings, perhaps you actually gained from it. If the government didn't benefit from it...they wouldn't do it.

Unless there was some economic benefit to it, like keeping the economy running smoothly and avoiding deflation.

It effects everyone whose primary income is from wages, since wages are "sticky" (slow to change), and benefits people whose assets values are inflated.

They may or may not be sticky, but they do change and respond to inflation.

Over the last 25 years or so, we've seen housing, health care, college education, etc. (read: things that can't be outsourced to China) become increasingly unaffordable. But we don't recognize it as such, because those things are purchased infrequently. The prices of goods at Wal-Mart have been more or less flat (thanks to chinese imports); but we buy from Wal-Mart every week, so we assume that inflation is reasonable. It must be the greedy health care providers and oil companies and so forth that are gouging us.

How do you know over all inflation is up? I can buy a PC now much cheaper than I could 20 years ago. Same with other electronic gear, and all kinds of stuff.

 

[Iriemon]

Having said that--yes it's ridiculous that people are protesting against big government all of a sudden. Where were they when Bush and the republican congress passed the prescription drug benefit? Where were they in the late 90's, when the republican congress passed budgets that were even bigger than what Clinton requested? Government has grown like cancer under republicans and democrats alike. I wonder how many talk show hosts know that much of the "Reagan" deregulation initiatives actually began late in Carter's term?

Govt outlays as a % of GDP have remained relatively steady over the past 50 years. In 1962 it was 18.2%. In 2000 it was 18.2%. It's generally been in the 18-21% range. There were a couple higher years during Reagan's term and couple lower years in the earlier 60s, but overall government measured as how much it spends relative to the economy hasn't changed that much.

 

[BaronVonBigmeat]

How do you know over all inflation is up? I can buy a PC now much cheaper than I could 20 years ago. Same with other electronic gear, and all kinds of stuff.

Look at M2 or MZM at the St. Louis federal reserve website. It's more or less flat until you get to 1971, when Nixon abandoned the last vestiges of the gold standard. Note: I am using the older, traditional definition of inflation, which is simply an increase in the money supply.

There are problems if you just look at price changes and call that inflation. If a price goes up, is that due to supply restriction? (ie, the price of oil during a mideast war) Or was it an increase in the money supply. Likewise, deflation is not always bad. If it's a contraction of the money supply, well yes. If it's the result of a competitive marketplace and producers passing on productivity gains to consumers in order to gain market share, then it's a good thing. This is how the standard of living goes up.

Your example of PC's and other electronics is a good example of this. The rate of progress in computers outpaces the growth in the money supply. (This happens in other industries, just not as fast, and not enough to offset the increase in the money supply. Look at the prices of say, refrigerators, ovens, cars, toilets, etc. before 1971.) Few people would argue that cheaper computers is a bad thing. However, the government uses "hedonic adjustments", and lumps the effects of price drops on electronics in with the effects of inflationary monetary policies. We're patting ourselves on the back because the price of say, a hot water heater has only gone up 30% in 20 years, when in fact it should have gone down.

 

[B94]

We're patting ourselves on the back because the price of say, a hot water heater has only gone up 30% in 20 years, when in fact it should have gone down.

If it only went up 30% in 20 years - it did go down.

 

[garyd]

You Iriemon need to pull your head out. It was Bush's insane amounts of socila spending that caused the problem not the yearly pittance spent in Iraq and Afghanistan which together were less than 1% of the federal budget year in and year out. I would take what we spent on Average in Iraq and Afghanistan 50 years to get us to 5 trillion dollars. One years spending on the medicare medicaid prescrition plan cost more than all the money we will spend in Iraq for the next 10 years.

Why is it those left of center always seem to want to blame military expenditures that have average less than 21% of the federal budget since Reagan was president for all the indebtedness and leave the other 80% of the budget blameless.

 

[DiamondDave]

Nah... someone is not overtaxed when over 50% of their income is spend on 1 form of taxation or another

Here's a novel ideal.. EQUAL taxation rates on every last person on every last dollar with elimination of loopholes... then you'll see how fast the people voting DEM now will go screaming that they pay too much in taxes

 

[garyd]

What a shame. Spo baically then your argument would be that because there are people in the world more over taxed than americans Americans can't be overtaxed? Nonsense. If you sppend more than 25% of GDP on Government in any given year in which you are not at war for your very survival you are almost certainly overtaxed.

 

[Dr Grump]

These protests were about EVERYTHING that is wrong.

Where were these protesters six months ago...

 

[RetiredGySgt]

Of COURSE it is a POLITICAL PROTEST, DUH..... Would you prefer it to be a SHOOTING protest?

And it is a pretty tame protest to boot, I mean all they did is all mill around for a few hours one day, no one is going to refuse to pay taxes, no one is going to disrupt the collection of taxes. The Government was not and will not be inconvenienced by this "protest" at all.

But check out carefully the Response from the FAR left.... Demonize the protesters, belittle them and LIE about what they are saying. Anger at a peaceful LEGAL gathering across the Country. Personal insults and attacks on the Protesters. People that did nothing at all, except stand around for a few hours ONE DAY. They had the GALL to actually VOICE their opinion, can't allow that in Obama Nation, unless the opinion is in support of the "ONE".