Bitcoin Forum

Well, the difficulty in keeping the U.S. debt from increasing exponentially, that is -- which then necessitates a vote to raise the debt ceiling (in red).

http://www.washingtonpost.com/rw/2010-2019/WashingtonPost/2011/05/15/Health-Environment-Science/Graphics/w-debt-graphicstory.jpg (http://www.washingtonpost.com/national/bumping-the-ceiling/2011/05/15/AFKT7Q4G_graphic.html)
 - http://www.washingtonpost.com/national/bumping-the-ceiling/2011/05/15/AFKT7Q4G_graphic.html

Doesn't look too terribly much different than Bitcoin's difficulty adjustments (red):
http://bitcoin.sipa.be/speed-lin.png (http://bitcoin.sipa.be/)

profitability will keep difficulty in check.

Oh my god, how stupid is that!??

What's the point of having a debt ceiling if congress keeps increasing it each time it is reached?

It's a joke, right?

No, unfortunately this is true.  They will raise the ceiling again soon. 

I guess it's brilliant if you are the one spending the money and have no morals?

It's still silly. If you set your own credit card limit you don't really have a limit do you?

NPR just ran a story on All Things Considered today with a little history about the US debt ceiling and what they used to do before Congress implemented this policy: http://www.npr.org/blogs/money/2011/05/16/136363196/the-history-of-the-debt-ceiling

Congress has been asked many dozens of times to raise the debt ceiling. It has never refused - not once.

The idea that there is a ceiling at all is a greater fantasy than the fiat currency they're using to breach it.

i think we will see a diff close to 300k on the next update.

So let me guess.  The politicians and media people are going to yabber about the ceiling and blame the other party for the debt.  Then they will procrastinate in actually raising the debt ceiling until the very last minute.  Then they will threaten a government shutdown and try to frame the other party as being responsible for why any of your friends who work for the US are stuck without a job.  Then they will miraculously stitch together a hideous bill that no one actually likes, but they manage to pass it by strategically adding pork, strangely-worded clauses, and appending entirely unrelated bills to it.  They they will tell us that they didn't want to do it, but that they were forced to and had no choice.

Limit? What limit? They raised it every fking time they were close to or at limit? What good is a limit of which it's purpose get's completely ignored by an increase every single time you reach it. It's no limit at all. Printing away, stealing our wealth with an invisible hand while trying to maintain an illusion of fiscal responsibility. That's what it really is.

The saddest part is it looked like it could turn around until 2011 came around and the US went to war with an emotion.  And we funded nearly all of the war on "fear and the people who make us feel that way" with debt.  The people who wanted to see the US fall could not have hoped for a better reaction.  We sacrificed out liberties, our economy, and our dignity in an effort to regain the illusion that we are safe.  As long as there is envy, a single man with a few materials from Walmart can disprove that illusion.  And the best way to combat envy is to help your neighbor when you can.  America's national unity has been fractured in a very severe way as the gap between debt holders and debtors grows.  Hopefully, bitcoin will help balance things out as debt holders will be slower to adopt a deflationary currency.  If not, anyone who doesn't have an escape plan is in for a world of hurt.

You make it sound so simple! Why is it that so few people understand that that is exactly what's going on? Oh right, because they were educated in a school system run by the same people.

It's "your" fault.


If they cut spending on the military, the right whines America is now defenseless.

Kill medicare and you kill real people.

Raise taxes and the economy might stutter. Get out of foreign countries and maybe regret it later.

Etc.

My point being: for every cent spent, there's a huge lobby or audience that is going to cry "We will vote for whoever continues spending this!". Nobody accepts cuts. That doesn't change, debt doesn't change.

Simple. But want your cake and eat it, too? Does not work.


Here, you guys try making the decisions:

http://www.nytimes.com/interactive/2010/11/13/weekinreview/deficits-graphic.html

I'm happy to accept all cuts of all US Federal Government "services" in return for my taxes back.  I don't want their cake.

The cake is a lie.
The cake is a lie.
The cake is a lie.
The cake is a lie.

lol wut?

Anyways, it took about five minutes to get a $65 billion surplus by 2015 and a $450 billion surplus by 2030.  And I could've done a much better job with a bit more granularity.

http://www.nytimes.com/interactive/2010/11/13/weekinreview/deficits-graphic.html?choices=3xp7800c

Terrible side effect of democracy: legislators.

I agree. Anyone who continues to pay taxes while complaining about how their tax money is spent is a hypocrite.

Required disclaimer: I'm not suggesting you don't pay taxes. I'm suggesting you learn to live your life legally while paying as few taxes as possible. Yeah, it's not easy, but shit, do you have a spine or not?

good point. 

Some moderate reductions in military spending, social security only for old people, actually tax the rich:

http://www.nytimes.com/interactive/2010/11/13/weekinreview/deficits-graphic.html?choices=03p8j0mh

EZ game.

If only DATA COMMANDER controlled the budget...

wish that website was an actual a ballot and we were voting on it. 

Better yet, I will pretend that I am somehow participating in the Democratic process and am somehow making a meaningful difference when I vote for politicians.

You want to "actually tax the rich" when the top 5% of income earners currently pays about 60% of Federal income taxes?  Exactly what percentage of other peoples' earnings do you think you're entitled to?

All of it.

As much as they want the government to spend... they're the ones who benefit the most.  Those top 5% of tax returns are all corporations.

Um no, sorry. We're talking about personal income taxes here, not corporations. The top 5% of individual earners in the US pay for 60% of personal income tax revenue.  This means, if there are 20 people, the richest one pays for the government "services" used by 11 of the other people. It's absurdly immoral for one person to be forced to subsidize the lifestyle of someone else... much less 11 others. 

Damnit, I hate when sites rearrange everything and leave 404s around.

Oops! Your page could not be found then redirected to index.cfm

Nevermind that, I found the original numbers at the IRS web site (http://www.irs.gov/taxstats/indtaxstats/article/0,,id=129270,00.html).

For the last year available, 2008 (http://www.irs.gov/pub/irs-soi/11intr08winbul.pdf):


In other words, the 5%/60% statistic is exactly what the IRS is claiming.

*Please excuse the use of the "US" perspective (we = "US Citizens", etc.)  It's just easier to write how I'm used to discussing things in person*

I did find some data from 2000: http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?DocID=221&Topic2id=20&Topic3id=22

If I'm reading it right, at that point the top 5% of individuals paid 49.1% of income taxes.  I suppose it could have gone up 10% in the past 11 years, but I don't know.  It probably has considering the widening gap between the wealthy and the poor [http://www.slate.com/id/2267157].  The wealthy have enough capital and credit to take advantage of the inflationary nature of the dollar (pay for it next month for no interest and you're paying it off with dollars that are worth less).  And the credit card companies are able to offer the such fantastic credit because they fuck you in the ass if you the shit hits the fan one month and you can't pay your bill until it's 5 days late.  When you're poor, it doesn't take much to screw up your finances.  I live below the poverty line, but that's my choice.  I have a degree, and I could get a much higher paying job.  I have very few needs, and I prefer to work less and spend more time in low cost leisure activities.  Thankfully, I barely use my credit and have never gotten myself into too much trouble, but I've seen it happen many times.  Those at the top trade less value for the goods they buy while those at the bottom get chewed up.  The wealthy get all kinds of perks that companies are only able to offer them by squeezing more out of the little guy.  I don't think we should pull the poor out of their pit, but I do think we should at lease have a ladder in place they can climb if they choose.  One that doesn't constantly move downwards.  Medical expenses happen, car accidents happen, lots of things can happen.  Even if you work hard 40 hours a week, an accident of illness can be devastating.  For many, there is not much to go around after gas and groceries.  It's easy to forget these people when you insulate yourself from them.  But it's impossible when you witness it every day.  The only workable remedy I can imagine is more demand for labor.  Many are not cut out for an information economy, and if we move away from the jobs they can do, they will end up being supported by the welfare system until their blood lines die out.  Most people on welfare reproduce more quickly because they get paid more per child, so don't count on that happening any time soon.

Thanks, I concede that point.

Sorry for not stating the source initially. My number came from here, and I suspect their numbers come from the IRS as shown in a preceding comment.

http://ntu.org/tax-basics/who-pays-income-taxes.html

Contrary to popular opinion, "the evil rich" carry this country, not only in productive output but also in providing the plurality of warm blood from which Washington feeds.

In a more fair world, perhaps the poor should pay all the taxes, for they haven't contributed to society as much as the rich (indeed the wealth of the rich is [usually] a direct indication of the value provided to society in the marketplace).

The poor absolutely have not contributed as much to society as the wealthy.  But the also reap far less benefit from it.  Your opinion assumes I'm interested in the productive output of the wealthy.  I have different valuations of things then "society in the marketplace".  Do I really deserve to be punished (as you suggest) for preferring spending my time with friends and family over optimizing my "market value"?  When you get to the end, which would you rather look back and remember: your loved ones, or your bank balance?  You're welcome to sacrifice your life pursuing riches, but don't force your valuations on me.  By legal standards, I am "poor".  But when I'm surrounded by people I care for and who care about me, I feel pretty rich.

Don't feel sorry for me, I'm smart, capable, and I live below the poverty line by choice.  However, you should feel bad for the thousands of laborers that are put out of jobs based on the decisions of those who blindly seek to optimize profit.  All they see are the numbers, while here in reality, people lose their livelihoods and become chronic welfare cases.  If they really want to keep taxes down, they would be a little more sympathetic to how their decisions effect real people.  The majority of people are not cut out for the ventures that give the highest rate of return.  They could provide labor for a profitable business, but investors want more profit than they can offer.  You can't leave over half the country behind.  Besides, when those profit seekers create bubbles, they have the information available to get out before they pop.  Who's left holding the overvalued assets?  Retirement accounts that had little to no control over how the money was invested.  Your suggestion that it would be more fair to tax the poor offends me deeply.  Fuck you.

I'm sorry wha, they carry the country in productive output? As in the 5% of people you claim are paying all the taxes are also producing everything? As in they themselves are producing it? Or they are the ones with the capital to finance paying other people to produce the machinery and create the infrastructure that will then be used by the rest of the country to produce things? Pretty fine distinction between the two.

Can you define contribution? If a poor person works 8 hours a day producing X numbers of widget A for a rich person, he is inherently profitable or he would be fired. He has thus generated both a useful good for society and a profit for a rich person. So far he sounds pretty productive and contributing.
Now the poor person goes home after buying some gas from Corporation W, eats the food his wife shopped for at Store Y, and watches the TV he bought at Store Z.
At the end of the year after he has paid all his taxes, rent, insurance, bought all his clothes and food and cars, electronics, gas, etc. he finds he has 0 physical dollars (though he owns some property).
Thus 100% of his "pay" has returned to the system through both taxes and purchases, as well as creating goods for society and generating profit for a rich person. That sounds like he has contributed a lot to me, although the tax portion itself might not be that large, he has literally given more than everything back.

Meanwhile the rich person has used their capital to create more wealth for themselves, paid 15% (oh right, capital gains taxes, not income taxes!) on it, merely transferred the poor person(s) production to society and likely not bought much more than the poor person (excepting perhaps a few luxuries which slush money around a much smaller more monied pool).

That is a very specific and non-extensible example obviously, but it makes clear how ridiculous it is to tout numbers like income taxes, but if you insist:

2009 US Federal Budget -- $1.21 trillion - Individual income tax
                                    $949.4 billion - Social Security and other payroll taxes
                                    $339.2 billion - Corporate income tax
                                    $172.2 billion -- Misc lumped taxes

Even if we ignore the fact that rich people do not make most of their money from income, but rather from capital gains...

Income taxes make up less than half the budget yet it is 100% of the focus of people crying foul for poor rich people paying out. Hey look payroll taxes make up almost as much as individual income taxes, obviously the rich must pay most of that too right? Except that the payroll tax is capped on the first $100,000 of your income. So if you made 50,000,000 dollars last year, you paid taxes on $100,000 for social security. Suddenly rich people don't seem like they're paying as much tax when half of what goes to the govt is mostly subsidized by the middle class.

Blah blah blah. Anyway, I don't really want to get too into this (I'm not going to bring up state and local/sales taxes), but these juvenile statesments about how we should all be on our knees sucking off the rich because they're our saviors are really ridiculous, and it needs some saying so.

Are you saying that we would be better off without that accumulated capital?  Or just that we should take it away from those that produced and saved it?

Hmmm your point here is perfectly valid. My suggestion that the poor be taxed instead of the rich was somewhat sarcastic of course - neither rich nor poor should be taxed. But, please refrain from swearing at me.

@bcpokey

Your post was full of some important economic fallacies, but I want to focus on one of them in particular. "Spending money" does not equal "contributing to the economy" as you so state. While spending money may increase GDP (as GDP measures... spending), doing so for the purpose of consumption is a net drain on economic health, not a benefit. A poor person buying a burrito is not helping the economy - rather, he has consumed resources by so doing. When he is at work, producing, then he is benefiting the economy. Knowing whether a given expense is "productive" or "consumptive" is very important. But don't worry, most politicians don't know the difference either.

And I never said we should "be on our knees sucking off the rich," did I? I said merely that they ought not be taxed. And you must see the irony in calling my statements "juvenile" when, in the very same sentence, you equate reduction in taxation with oral love-making.  ::)

This is basically nonsense.  When someone buys a burrito it means someone else is producing a burrito.  It's the combination of both that is useful economic activity.  If you produce burritos and no one eats them, it doesn't contribute to the economy in a meaningful way.  If you were going to account for it at the time of production, then when it goes bad and throw it away, you would have to account for that destruction by subtracting, so you get the exact same overall result as you do when measuring at the time of purchase.

You are so close, but...

Buying a burrito in no way means someone else producing a burrito in the present or the future.  It means someone produced one in the past.

The burrito made in the past is an investment of capital, a risk.  Whether that risk pays off (will be useful) or not is not known at the time of production, but only after the risk has been taken and the cost sunk.

Economically speaking, eating it is indeed a drain.  Medically speaking, the drain is necessary.  Production has the potential to create wealth, but consumption always destroys it.

thats WHY 3x-5x(!!!!) tax exemption for corporation is ruined commerce in US.
before tax changed such  [silly]way, majority was self-employed.
now - corporation dominate market and established world-wide trust finally ruined basic principles of market/capitalism, let alone social impact.

Now you are moving the goalposts.  You said "economic health" before, now you are saying "wealth."  Sure, eating a burrito consumes wealth, in a sense (though it depends how you value a nourished person relative to a hungry one), but that's different from "economic health."  Producing and consuming burritos are certainly useful economic activities and if they are occurring with any regularity that is a sign of a healthy economy (in fact more healthy than producing burritos when no one is consuming them), even though taken together they have no net effect on wealth as you define it.

Mr. Smooth - if that IS your real name - I must respectfully disagree with you. When you eat a burrito, it does not mean someone else is producing a burrito. That is the fallacy for which so many people fall. Conversely, if you produce a burrito, there is typically a market price at which a buyer can be found. Maybe that price is only one penny... but if the market price is above the cost of production, then the production of the burrito was a net creation of wealth. When you say that valuable production requires a buyer, you are correct, but you are ignoring the crucial element of the pricing mechanism.

Consumption is the result and reward for production. Production is not the result nor the reward for consumption. The distinction is very important. And, when the government tells society to "go out and shop" in order to "grow the economy," it is merely telling people to consume resources because it's operating under the fallacy that consumption = production. Rather, a wise government would say, "go out and profitably produce things."  But of course, profits are evil, so the government refrains from such advocacy.

If not, where does it come from?


This argument fails to make a distinction between production and consumption because the same argument can be used in the other direction.  If you want to consume a burrito there is typically a market price at which you can get someone to produce one.  Any argument you can make like that in favor of production being "useful" economic activity can be rearranged to apply to consumption.

The reality is that you can't separate the two in that way; you can't have sellers without buyers (nor vice versa).

I will agree with you though, that the government going and telling people to do this or do that almost never contributes to useful economic activity (and when it does it's by accident).

Chipotle (http://www.chipotle.com/) just opened a new store in my town today, and I went there to have a burrito tonight. There was a line out the door and I had to wait almost 30 minutes to get one. But oh, was it good!

Clearly there are two sides to this equation. I couldn't consume that Chipotle burrito unless the company had saved a LOT of money and invested it into opening that store, so that the burrito could be produced on-site right in front of me.

Point being, before there can even be production of those things consumers consume, there must be investment in the means by which that product will be produced. Whether it be storefronts, factories, UPS trucks, whatever. And whoever puts up that money is taking a huge risk. What if nobody wanted burritos and the "grande opening" had been a complete flop? They would be out all that money.

Someone has to take those risks, and they should be appropriately rewarded. Taxing the living daylights out of them is hardly a suitable reward.

Not me, someone else.

I consider the phrase "economic health" to be hopelessly vague.  If you ask 10 economists what it means, you'll get a dozen answers.

Quote: "Economically speaking, eating it is indeed a drain.  Medically speaking, the drain is necessary.  Production has the potential to create wealth, but consumption always destroys it."

Feeding it to a living being is a capital investment, investing in living-being capital.

Quote: "Point being, before there can even be production of those things consumers consume, there must be investment in the means by which that product will be produced. Whether it be storefronts, factories, UPS trucks, whatever. And whoever puts up that money is taking a huge risk. What if nobody wanted burritos and the "grande opening" had been a complete flop? They would be out all that money."

Someone had to feed people *something*, even if not yet those specific burritos, in order for someone to live long enough to even try to organise such a complex organisation as that shop.

How many dollars worth of meat are you? How much resources and effort are expended "merely" on efforts to prevent others from using you as meat instead of going to all the trouble of participating in some vast burritos-made-from-nonhuman-beings enterprise?

At some point I have found it useful to seriously consider something along Buckminster Fuller's forward person-days of life-support for inhabitants of this planet measure of wealth instead of counting how many pieces of paper Scrooge McDuck and his ilk get to swim in without even taking seriously the idea that using that stuff for swimpools for his ilk might well be depriving someone else somewhere else of life or limb or liberty...

-MarkM- (If they have no paper, let them eat [scrooge mc] duck?)

EDIT: s/hotdog/burrito/ ...  I don't know where the hotdog came from.

First off, sorry for the swearing.  Secondly, consumption is not a drain on the economy.  Consumption provides crucial encouragement for the capital owner to continue to invest in production.  If enough people decide to start growing their own hogs (as about half the families I know do) instead of paying your ridiculous hotdog prices, the hotdog market will dry up.  The capital owner will reinvest in a different type of venture and the hotdog maker will be out of a job.  If he is older than 30, he is unlikely to find work much above minimum wage, and his only hope for economic security is his children, if he managed to get them through school before he was laid off, or maybe his wife.

Not all investments are productive.  Also, we've now stepped up a meta level.

We're chasing the wrong thing. Everyone wants the economy to do well, as if it has interests different from those of the people. Thousands of people making huge fortunes selling each other lead paint and asbestos underwear is not a healthy economy.

It is a healthy economy if someone wants to buy lead paint and asbestos underwear, with the obvious caveat that the health costs of those products are not being transferred to other people (ie- pollution). If I want asbestos underwear, and I don't throw it in the river when I'm done with it, then there's nothing wrong with a producer of such underwear making profit by trading it to me (and hopefully he'll accept bitcoins for the purchase).

While it's true you can't have sellers without buyers, you CAN have producers without consumers. You CANNOT have consumers without producers. That's the difference. Those producers who figure out what is most in demand will reap profitable returns, but their production itself doesn't rely on the availability of consumers. One can produce more than one consumes, but one cannot consume more than one produces  (unless others donate their own excess production which they then had to refrain from consuming).

At any given time there is only so much wealth/goods in a usable form that can be consumed by us humans. If society consumes such wealth faster than it produces it, society will find itself increasingly impoverished. However, if society produces wealth faster than it consumes, it will be increasingly wealthier. The corollary is that by refraining from consumption, we enable a surplus of wealth (ie - savings) which can be used and risked in investment toward even greater production.

An easy way to demonstrate this: if everyone was given $1,000 tomorrow, spending in the economy would increase over the following days and weeks and months. IF such spending improved the economy's health, however defined, then all the government needs to do to end recessions is print money and give it to us. Such a theory is absurd. Upon receiving the $1,000, no new wealth was created, but the new money enables excess consumption and after the dust settles, the world will be no better off at best and likely poorer, as they spent some portion of that new money on consuming resources that were limited, and such resources now require human work to replenish.

Here's the thing.  The (US) government defines "economic health" solely in terms of efficiency of production.  Efficiency of production tends towards centralization of production.  Centralization of production gives government useful tools that it can use to control vast areas and populations.  A "healthy" economy is therefore a centrally-managed economy, ipso facto.

But centralization of production also tends towards risk.  Centralization, and the risk inherent, periodically creates phenomena like entire generations of people who can't find jobs and can't survive independently and who are forced to become dependent upon more government, more efficiency and more centralized production.  Government drives this process through Keynesian economic spending.  Giving everyone $1,000 encourages consumption, which incentivizes efficiency, which leads to centralization, which creates risk, which leads to future failure and more spending, etc.  This process is exactly what the US government wants to encourage, because it has defined this as a "healthy" economy.

That's the first time I've heard that before. Seems to me the government defines economic health quite purely in terms of GDP figures, which are a measure of spending, not efficiency. The Gov. doesn't declare us in recession when efficiency declines. It declares recession when GDP shrinks. It measures growth according to GDP, never efficiency.

Take "Cash for Clunkers" in which we were all supposed to destroy working automobiles in order to spend money on newer ones... that increases the GDP of the country drastically, because massive spending occurred. There is, however, no efficiency gain from such behavior - efficiency has in fact been decreased, because now more money has been spent to transport humans in their daily routines.

Well, sometimes.  The US government is big, with many divergent interests.  Sometimes economic health is measured by GDP growth.  Sometimes by stock market growth.  Sometimes by wage growth.  Sometimes by foreign trade.  Overall, if wasteful spending were the only priority, they could probably do an even better job of it.

Regardless, spending forces efficiency.  It's not "efficiency for the sake of higher consumption".  It's "higher consumption for the sake of efficiency".  But efficiency is not the end goal.  It's just the next step.  So it doesn't matter where on the circle you start.  What's important is the process:

spending -> consumption -> efficiency -> centralization -> risk -> failure -> dependence -> more spending

Cash for Clunkers artificially increased the efficiency of big corporate auto manufacturers.  For a time, there was pressure for centralization through mergers.  At the least, it has prevented smaller competitors from arising.  It has created the risk that subsidized, centralized auto companies will again fail to bring efficient cars to market.  And when that happens, Americans will again be dependent upon foreign energy supplies secured by big government and made affordable by government spending.

So, no, it's not really efficiency.  But it's the definition of vicious cycle.

Everything that we produce is intended for (eventual) consumption. It's just that some things are meant to be consumed immediately, while others are intended to be consumed over very long periods of time. When you realize this, the production/consumption dichotomy breaks down, and it becomes more sensible to analyze things in terms of sustainability.

Indeed.