Taxes, the Deficit/Debt, and the Fiscal Cliff

[herkbier]

4 hours ago, Lord Ratner said:

However if you want to see it working on a smaller scale, just head to Texas. Tolls and property taxes may be annoying, but everyone participates, not just the wealthy.

That's kinda my point. Wealthy people still live in and buy stuff in Texas, so I don't think the decrease in spending every materialized.  Are the poor worse off in Texas than if they were in any other state? Don't know.  The big plus to me is that everyone participates.

[Lord Ratner]

That's kinda my point. Wealthy people still live in and buy stuff in Texas, so I don't think the decrease in spending every materialized.  Are the poor worse off in Texas than if they were in any other state? Don't know.  The big plus to me is that everyone participates.

Housing is cheaper, as are most goods. I think it would be hard to argue that the poorest in Texas are worse of than the poorest in California, but I'd love to see data that shows otherwise.

[nsplayr]

There is a minor candidate running for the 2020 Dem nomination named Andrew Yang proposing exactly what's being discussed, a 10% VAT paired with a UBI.

https://www.yang2020.com/what-is-ubi/

He discusses the idea at length on a podcast here:

 

Edited January 27, 2019 by nsplayr

[Guest]

That's kinda my point. Wealthy people still live in and buy stuff in Texas, so I don't think the decrease in spending every materialized.  Are the poor worse off in Texas than if they were in any other state? Don't know.  The big plus to me is that everyone participates.

Sales tax isn’t high in Texas. 6.25% IIRC.


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[matmacwc]

VAT is another one of those taxes that are ridiculous and we need to leave it to Europe, most things we take for granted are so overpriced over there, in part, due to this.  I’ll fight VAT tooth and nail.  How bout we spend less.

Gevernment oversight of every step of manufacturing, what could go wrong?

Edited January 27, 2019 by matmacwc

[pawnman]

23 hours ago, ihtfp06 said:

Sales tax isn’t high in Texas. 6.25% IIRC.


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8.25% here in Taylor county, near Dyess.

[Lord Ratner]

VAT is another one of those taxes that are ridiculous and we need to leave it to Europe, most things we take for granted are so overpriced over there, in part, due to this.  I’ll fight VAT tooth and nail.  How bout we spend less.
Gevernment oversight of every step of manufacturing, what could go wrong?

I'd much rather spend 20% on sales tax than 40%+ on income taxes. And I much prefer a system where everyone contributes. Hard to care about a tax that doesn't affect you, and nearly half of Americans (voters) aren't affected by income tax.

[matmacwc]

5 minutes ago, Lord Ratner said:

On 1/27/2019 at 9:57 AM, matmacwc said:

VAT is another one of those taxes that are ridiculous and we need to leave it to Europe, most things we take for granted are so overpriced over there, in part, due to this.  I’ll fight VAT tooth and nail.  How bout we spend less.
Gevernment oversight of every step of manufacturing, what could go wrong?

I'd much rather spend 20% on sales tax than 40%+ on income taxes. And I much prefer a system where everyone contributes. Hard to care about a tax that doesn't affect you, and nearly half of Americans (voters) aren't affected by income tax.

I get it, but if you think our government is going to get rid of regular taxes and replace it with VAT your are sorely mistaken, the libs don’t think it’s your money to start with, why do you think anyone would benefit?  The government surely will.

[Lord Ratner]

I get it, but if you think our government is going to get rid of regular taxes and replace it with VAT your are sorely mistaken, the libs don’t think it’s your money to start with, why do you think anyone would benefit?  The government surely will.

We agree there. I actually think the only way to fix it is the long game. Make things worse, compromise heavily to get what you want so it can take root and become "normal," then hope you can undo the bad during the next wave.

Oh, and you have to hope the conservatives don't completely waste two years of near-total control. Again.

I'm not optimistic.

[TreeA10]

Whatever tax structure is used such flat tax, progressive tax, or VAT combined with ever rate the idiots in Congress decide upon with up to and including a 70% rate recently mentioned,  that tax method and rate is completely irrelevant if the idiots in Congress keep spending more money that the country takes in.

[snoopyeast]

https://www.usdebtclock.org/

[magnetfreezer]

I'd much rather spend 20% on sales tax than 40%+ on income taxes. And I much prefer a system where everyone contributes. Hard to care about a tax that doesn't affect you, and nearly half of Americans (voters) aren't affected by income tax.

Many European countries have the 20%ish VAT, but on top of the 40%+ income tax - worst of both worlds.

[nunya]

Public Service Announcement:

If you use the militaryonesource HR Block software and want to pay taxes owed by credit card, don't pay at the link they give you.  Their link goes to Pay1040.com with a CC fee of 2.49%.  Instead go to Pay1040.com in a separate browser, enter the exact same information, and the fee is only 1.87%.  USAA Cash Back card pays 2.5%, so ya got that going for you, which is nice.  

[gearhog]

Help me out here. I've probably been listening to way too much Ray Dalio, Peter Schiff, George Gammon and others. The end is near! Tell me why I shouldn't pull out of the market tomorrow, build a gold vault under my house, and stock up on ammo based on the following ideas trapped in my head:

- $23 Trillion in debt and the Federal government under Trump continues to add $1Trillion per year when the Federal Government owns only about $4T in assets.

- Growth in Banking/Finance/Services industries accounts for the growth in GDP while manufacturing continues to decline. We're consuming way more than we're producing.

- Economy is 70% consumer spending and consumers are more in debt than ever. Home, Auto, Student, and Credit Cart Debt are all time highs during a time of record prosperity. 

- On top of that, the individual taxpayer share of government debt is approx $140,000.

- Quantitative Easing is flooding the system with dollar bills that will drive massive inflation. That inflation will force lenders to raise rates. A 1% raise in interest will cost the government an additional $200 Billion per year in debt maintenance. Artificially keeping rates low during inflation is effectively stealing the savings of you and I.

- The market is propped up by cheap money flooding into corporate buybacks and bad businesses whose shares are priced according to revenue, not profitability.

- We're going to see some social unrest before and after the election. Trump won't win. To mitigate the anti-capitalist social unrest (already occurring elsewhere), the next socialist-leaning democratic administration won't cut benefits, they'll raise taxes, print money, and fuck everything up.

Can anyone make the argument that everything is just fine?

 

 

Edited December 5, 2019 by torqued

[Clark Griswold]

24 minutes ago, torqued said:

Help me out here. I've probably been listening to way too much Ray Dalio, Peter Schiff, George Gammon and others. The end is near! Tell me why I shouldn't pull out of the market tomorrow, build a gold vault under my house, and stock up on ammo based on the following ideas trapped in my head:

- $23 Trillion in debt and the Federal government under Trump continues to add $1Trillion per year when the Federal Government owns only about $4T in assets.

- Growth in Banking/Finance/Services industries accounts for the growth in GDP while manufacturing continues to decline. We're consuming way more than we're producing.

- Economy is 70% consumer spending and consumers are more in debt than ever. Home, Auto, Student, and Credit Cart Debt are all time highs during a time of record prosperity. 

- On top of that, the individual taxpayer share of government debt is approx $140,000.

- Quantitative Easing is flooding the system with dollar bills that will drive massive inflation. That inflation will force lenders to raise rates. A 1% raise in interest will cost the government an additional $200 Billion per year in debt maintenance. Artificially keeping rates low during inflation is effectively stealing the savings of you and I.

- The market is propped up by cheap money flooding into corporate buybacks and bad businesses whose shares are priced according to revenue, not profitability.

- We're going to see some social unrest before and after the election. Trump won't win. To mitigate the anti-capitalist social unrest (already occurring elsewhere), the next socialist-leaning democratic administration won't cut benefits, they'll raise taxes, print money, and fuck everything up.

Can anyone make the argument that everything is just fine?

Can't tell you everything as fine but as long as the dollar is the reserve currency of the world the party goes on, right now as China is stumbling (Uighurs, Hong Kong, slowing growth) they can't take the title, if they fix those and other problems then we've got problems

[gearhog]

Hate to beat a dead horse if no one is interested, but just some friendly advice to do a little reading up on the repo market, interest rates, inflation and what this means for any savings/investments you have. 

FIVE HUNDRED BILLION DOLLARS.

Quote

Dec 12

 

The New York Federal Reserve Bank has announced that it will be dumping a previously unfathomable amount of money into the liquidity market beginning Friday. Fed’s statement reads:

 

“In accordance with the most recent [Federal Open Market Committee] directive, the Desk will conduct repo operations to ensure that the supply of reserves remains ample and to mitigate the risk of money market pressures around year end that could adversely affect policy implementation.

 

“The Desk will continue to offer two-week term repo operations twice per week, four of which span year end. In addition, the Desk will also offer another longer-maturity term repo operation that spans year end. The amount offered in this operation will be at least $50 billion.

 

“Overnight repo operations will continue to be held each day. On December 31, 2019 and January 2, 2020, the overnight repo offering will increase to at least $150 billion. In addition, on December 30, 2019, the Desk will offer a $75 billion repo that settles on December 31, 2019 and matures on January 2, 2020.

 

“The Desk intends to adjust the timing and amounts of repo operations as needed to mitigate the risk of money market pressures that could adversely affect policy implementation, consistent with the directive from the FOMC.”

 

Translation: The New York Fed will continue to offer two-week term repurchase operations twice per week. Four of those will span the end of the year. It will also offer one more longer-term “repo” operation that also spans the end of the year. That operation will be at least $50 billion.

 

Also, in order to prevent an avalanche of liquidity issues to end the year, the Fed will continue its daily repo operations through the end of the year. The amount that will be offered each night will be increased to $150 billion. Additionally, there will be a $50 billion term repo, followed by daily $35 billion repo offerings, which will total $365 billion.

 

Adding in $50 billion for the expanded overnight repo, and another $60 billion in T-bill purchases, the total injection in the next 30 days will be $500 billion. Added to the current Fed balance sheet, by mid-January, it will hold more than its all-time high of $4.5 trillion.

 

[uhhello]

3 hours ago, torqued said:

Hate to beat a dead horse if no one is interested, but just some friendly advice to do a little reading up on the repo market, interest rates, inflation and what this means for any savings/investments you have. 

FIVE HUNDRED BILLION DOLLARS.

 

Can I get a translation?

[pawnman]

Fed is dumping money into banks to keep them solvent.  Banks regularly borrow from each other overnight to reconcile accounts, but for some reason they are becoming more reluctant to do those loans, so the Fed had to.

[di1630]

Fed is dumping money into banks to keep them solvent.  Banks regularly borrow from each other overnight to reconcile accounts, but for some reason they are becoming more reluctant to do those loans, so the Fed had to.

Can you dumb it down further to what that means to the average middle class American? Ie why do I care?


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[pawnman]

10 minutes ago, di1630 said:

Can you dumb it down further to what that means to the average middle class American? Ie why do I care?


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Banks don't have liquidity.  You might go to get your money, and it isn't there.  Like in 1929.

Edited December 14, 2019 by pawnman

[gearhog]

2 hours ago, uhhello said:

Can I get a translation?

 

1 hour ago, di1630 said:

Can you dumb it down further to what that means to the average middle class American? Ie why do I care?


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Here's a couple good vids. Forgive the "Click-baity" thumbnails, the actual content is good.

This guy (George Gammon) just recently started explaining current macroeconomics via Youtube videos and I highly recommend his channel for anyone who is interested in the things that are currently happening. He's fantastic at explaining the issues to those of us who aren't expert economists. He has another vid on his channel explaining the Repo Market (above) and why this is a major event.

Here's another great explanation:

 

Edited December 14, 2019 by torqued

[waveshaper]

This Fed Repo and Reverse Repo stuff is way to complicated for my pay grade (old ass) but it seems that all the Fed Repo Operations crashed at the beginning of the 2008 financial crisis (Sept 2008).

- Some history (2001 until the crash in 2008); Fed Admits Failure of ‘Plan A’ to Control Money Market Rates, Shifts Back to Repos (which was ‘Plan A’ till 2008);

https://wolfstreet.com/2019/09/20/fed-admits-plan-a-of-controlling-money-market-rates-fails-shifts-to-plan-b-repos-which-was-plan-a-till-2008/  

- Repo and Reverse Repo Agreements;

https://www.newyorkfed.org/markets/domestic-market-operations/monetary-policy-implementation/repo-reverse-repo-agreements

 

 

Edited December 14, 2019 by waveshaper

[MilitaryToFinance]

For those who prefer a picture. We spent about a year and a half trying to normalize monetary policy in this country, the markets tanked and the Fed cowards reversed course and slashed interest rates. And when that wasn't enough to get the stock market back to all time highs they decided to blow out the balance sheet again. In 3 short months plowing in so much liquidity they undid what took over a year and a half to sell off. But Jerome Powell assures us this isn't quantitative easing, nope definitely not QE4 going on, nothing to see here the markets are fine.

[nsplayr]

 

Edited December 18, 2019 by nsplayr

[N730]

Yeah, lowering taxes and interest rates along with the current actions being taken by the fed should not happen during a period of economic growth. They should be saved to provide a boost to the economy when we go into a recession.

It has also made it difficult to judge the true health of the economy. Yes, it is growing. But we basically provided a small stimulus package to a healthy economy, so it has covered up any obvious warning signs or consequences that could have been created by the trade war/tariffs/anything else.

I worry that we are going to be in trouble when the next recession hits and those moves are off the table.

Edited December 18, 2019 by N730