I think he overloaded them with common sense. At least one of them seemed to "get it" though. Good work Peter!
I think he overloaded them with common sense. At least one of them seemed to "get it" though. Good work Peter!
1. I agree there needs to be less spending (like that war that was started a while back).
2. Mr. Schiff states he hires overseas in order to AVOID government regulations. Well, I'm sorry, but that's a huge problem. That basically means he doesn't want to pay more in taxes and that is BS. He could afford to do so, but it would mean less money in his pocket. Corporations avoiding taxation is one of the biggest reasons the budget is such a mess (as is ridiculous overspending). That tax money could be used to fund programs that benefit the country, but instead, the wealthiest try their hardest to avoid paying because they can just keep it. That is just plain immoral and unethical.
3. Capital doesn't just come from saving your own personal wealth or borrowing it in the long-run. Yes, in the beginning of a business, you do need those things, but the only reason a business grows is because demand for that business dictates it and there is capital flowing into that business. Once a business is self-sustaining, acquiring capital isn't an issue at all.
4. I agree with the need for higher interest rates, but for different reasons (I feel that controlling the interest rate and allowing the value of our currency to float is an insane idea. Stabilize the dollar and let interest rates float.)
5. He talks about how regulation is hurting the economy. That is another ridiculous statement. The banking industry was deregulated by Reagan in the 80's. Because of this, the banks were doing all kinds of unethical practices (like ARM's). The lack of regulation was like giving a toddler the keys to your car. Sooner or later, there will be an accident.
6. "Demand comes from supply." This is another insane statement. I can demand a ton of things, but if they aren't supplied, I can't buy it. Just because someone invents a machine that gives you AIDS, doesn't mean anybody will demand that machine (maybe some messed up people would, but the business idea would completely fail).
7. Honestly, I've only made it 6 minutes into this thing and have already listed a fairly large amount of nonsense this guy has spewed out of his mouth. I'll add more to this list, but felt the Badger and Blade community would benefit from what I have so far...
8. "How do we increase the demand of labor? Simple, you bring down the cost of labor." This isn't wrong, but there are other ways of doing it. If people demand a product, they will buy it. If the price of that good or service is decreased, demand rises for that good or service. Since most products are already marked up well beyond the cost to the business, it stands to reason that a decrease in price will increase demand. With the cost of labor being the same (because it doesn't change), increased demand for the product will result in NEW JOBS. How about that?
9. He advocates getting rid of the minimum wage and says those jobs prepare people for higher paying jobs. That is a load of horse feces if I've ever heard it. Being the fry cook at Corporate Fast Food Joint does not lead to a better job. As it is, the manager at that place is probably working two jobs just to make a decent living.
10. Why are there lawsuits against employers? Usually it's because the employer has done something wrong and doesn't want to make things right with the employee. If businesses acted fairly and ethically, there wouldn't need to be lawsuits or regulations. He speaks about how giving a worker an incentive isn't a right, but businesses always try to make a worker do more than what they agreed to do in their interview. What about the employees right for a fair wage in regards to their job? There better be incentives added if work is being added to the workload.
11. Infrastructure spending isn't necessarily intended to maintain or increase the productivity of the country. Often times, they do, but it isn't the main purpose. A road gets repaved because it needs to be repaved, not because it will help the economy. It has zero net impact. The smooth road means less damage is done to your car over its life. Less repair bills means you have more money in your pocket to spend. The money isn't going to the mechanic, but it is being spread out to the grocery store, Apple, Best Buy, etc. It might even bring the cost of shipping down, too.
12. I have a real problem with what this guy did at the 10-minute mark. He has been blabbing away for eternity and when the opposition has a chance to talk, he writes a snide little note on a piece of paper and gives it to her. Real classy.
13. I understand where he's coming from with regards to sales tax being the better taxing option, but the problem with that is that when demand is down, sales are down, the less sales made, the less taxes are collected. You cannot create a budget when you don't know how much money you will receive. Having modest wage taxes makes it far easier to create a budget.
14. "The money they (the rich) don't spend is what grows the economy." This is completely backwards. The higher the velocity of money in the marketplace, the better the economy does. When the rich (and corporations) hoard cash, it brings a hault to the economy. This is one of the primary reasons we are in this mess and for him to say that by keeping money out of the economy helps it is just plain wrong.
(now 14 minute through...)
15. Interest rates being artificially low now were being kept artificially high in the 80's. The government moved to a fiat currency in 1973. There wasn't any inflation or deflation prior to moving off a gold standard. One dollar held the same buying power for 50 years, if not longer. The reason there is inflation and deflation is because the Federal Reserve controls the interest rates (they have 3 ways of changing the money supply... buying and selling bonds, raising or lowering the reserve requirement of banks, and by increasing or decreasing interest rates) and not the value of the dollar. This ties into why I think interest rates should be higher (because the market dictates it...see #4). The reality is that interest rates aren't the problem of this economy, the velocity of money is.
Last edited by Mr_Amazing; 09-16-2011 at 01:41 AM. Reason: adding more...
Amen to everything Schiff said..
2-I don't understand the tax the rich when, as admitted, they will find ways to send it overseas. I am cool with taxing all monies leaving the US, but that includes small remittances too.. But yet we always here how people won't leave the US just because we raise taxes, Catch-22, IMO.
5-I don't agree. If it wasn't for fractional lending this wouldn't have happened, IMO. If you hadn't had Fannie &Freddie holding those loans and banks had to take the lose then they wouldn't have taken the risk. They did so because the Govt wanted it and the Govt agreed to back the loans.
6- I personally think you are wrong and right there. Demand comes from supply is true, ie Utilities, Groceries, etc. Somethings do work on Demand from supply. Businesses that work from Supply equals demand are generally wants and not needs.
Just my opinion and I admit I am not some financial guru, so maybe I have it all wrong.
5 - Fannie and Freddie were legally obligated to take those loans. The banks shouldn't have been giving them out to most of those people, but because regulation was gutted, the banks didn't legally need to refrain from giving out the loans.
6 - As far as demand being caused by supply, you have it wrong. Just because the electric company can supply you with more electricity than you need doesn't mean you demand that amount. The whole reason prices go up is because consumers demand a certain amount and the company cannot supply that much. Raising prices keeps people from using more than the company has. Groceries can be looked at similarly. Just look at the cereal isle. You don't pick which one you want based on who supplies the most, you pick the one you because you demand it. Cereal was made because people were sick of eating oatmeal for breakfast. Consumers demanded something different and suppliers offered it in the form of cereals. Same thing goes for chips, soda, and most other goods.
Wants versus needs is irrelevant in terms of a product. Needed goods simply have more demand than wanted goods (usually). Again, if society demands a product, someone will start to produce it, assuming there is profit to be made. You don't supply something unless it is demanded by consumers.
edit: as for #1, how about all the troops? I think the reason bases are kept is merely to keep an ability to interject in circumstances quickly, so I don't really have much of a problem with them, but the actual fighting troops should all come home.
Last edited by Mr_Amazing; 09-16-2011 at 02:09 AM.
Schiff is my homeboy! Been into his work for years.
"I don't know karate, but I know KA-RAZor!" -James Brown
His case only works if you overlook him constantly switching his definitions of “spending” and “saving” to whatever best suits him at the time. He uses “spending” to refer to standard spending (basically the lifeblood of the economy), and then he uses it to refer to government deficit spending, and talks about them like they’re the same thing. He also uses “saving” to refer to actual saving, which on a large scale causes the economy to stagnate and deflate, and he also uses it to mean holding onto money so he can spend even more a little later on – i.e. when he says “saving”, he means “spending” (or, more accurately, “large-scale spending”).
He says “99% of my income is taxed at the marginal rate”, which means that unless his bills are about $30 million a year, he’s probably got some serious personal savings. That means that for every extra dollar in his pocket, a fraction of it isn’t going to get spent. On the other hand, for every dollar in the pocket of one of his employees, who probably have mortgages to pay for, almost all of it is going to be spent, which means it’s going to do more for the economy. Even if he decides to create a job, apparently it’s going to be in Singapore, not the United States.
I like how he opposes the tax cuts for small businesses proposed in the Jobs Act because of the deficit it would create (by sheer coincidence, his business is ten times too big to be classified as a small business), but wants to eliminate corporate taxes, which are larger percentages of a bigger pool of money, and isn't concerned that doing that would cause deficit problems.
Then he says there should be less spending on education, and more on-the-job training. Fine, but considering he’s making tens of millions a year and still outsourcing jobs so he doesn’t have to pay American workers, I doubt he’s going to want to foot the bill for that. He might as well have said “if you’re willing to put up with the rich dodging tax at every opportunity, we’d be more inclined to invest some spare cash in a few American jobs”. He could afford to create jobs in America - but he's actively funnelling money outside of it, so I don't see why anybody would trust him.
So his plan comes down to this: scrap minimum wage law, scrap liability of employers to their employees, and scrap regulations that make it harder for him to conduct his business. It could work. It has worked for China. But do you want to be like China? I think he brought up some important points – huge deficit spending, mountains of unnecessary regulations, incentives to outsource jobs, artificially low interest rates – but he has some bad solutions, which only serve his own interests.
+1000 to everything Mr. Amazing said.
On #5-If Fannie and Freddie hadn't existed(Govt Assurance) then those loans would have had to have been held by the individual banks. If the individual banks knew that they had to hold those risky loans then they would not have been made. As well if the amount they could lend had been restricted to the amount of cash holdings they had then they would have been even more restrictive in their lending.
On #6- Your right. Sorry, it was late and the brain wasn't working. That said I personally am not even sure if Supply & Demand is even true anymore. We see so many forced decisions in the markets that many things are no longer fitting classic molds. Just look at our razors, Gillette likes to force us into the products they want thereby ensuring that we have to buy their products. You can also look at Walmart, CVS,etc that still carry DE blades and mug soaps and observe that there must be a demand. But those same companies have the ability to force demand for new products just by dropping those items.
As to #1, that was kind of my point. What war is just? We have fought many wars and still often have troops in those places many years later. I personally want all of them home even though at some level I see the need for rapid deployment bases. But seriously do we need to involve ourselves in every crisis around the world? I don't know, but I think often our presence overseas tends to inflame as much as it calms.
Sounds like we aren't to far apart in the end. As is almost always the case.
Last edited by Mako72; 09-16-2011 at 06:31 AM.
Gents, this is a fascinating subject. Nonetheless, I will say it early, keep this thread topical and gentlemanly. Thank you.
Thank you, Mr. Amazing, for your thoughtful and insightful post.
Schiff is somewhat wrong on regulation hurting the economy, as an issue it does not seem to even be on the radar of most corporations (when you look at polls, anyway).
Let's look at history for a better perspective of what Schiff is trying to advocate and defend:
Capitalism (what Schiff is advocating) - created the greatest civilization and standard of living ever known to man and improved the lives of billions of people.
The Isms (Socialism, Communism, Maoism, Nazism etc etc, every form of collective living arrangement and de facto Ism through government regulation and control) - Brought nearly every civilization and nation that has tried it to their utter destruction, deliberately murdered millions of people in it's path and destroyed the lives of countless individuals.
Take your pick.
Maxine Waters: Through nearly a dozen hearings, we were frankly trying to fix something that wasn’t broke.
Barney Frank: I don’t see anything in this report that raises safety and soundness problems.
Demand and supply is certainly true as it is the basis for darn near every transaction. The non-sustaining government programs are created because there is a demand for the program, but no supplier would be able to make money from it and it would be a failed business. With regards to the razor, I think we need to look at all of the variables at play. Obviously, those of us here are in it for the older appeal, the cost of blades, the sturdiness of the materials, etc. Most consumers just want something fast that gives them a decent shave. Also, because Gilette and Schick hold a vast majority of the market share, they become somewhat immune to demand because the average consumer is too lazy to find an alternative and these companies are so large that they can suffocate competition. Gilette has 72% market share, Schick has 15% and Bic has 6% as of 2010. When 3 companies have 93% of the market in an industry, the game is over.
As far as #2 is concerned, I disagree. Yes, the purpose of business is to make money, but money isn't everything. Don't get me wrong, I'm all for a self-made man growing his business. I just think they should do it through law-abiding ways, not using avoidance tactics to earn an absurd amount of cash. It's stuff like that which ends up hurting the economy. I would go more into detail (like why I think the stock market is a huge part of the problem with the economy), but I'll save that for another day.
We aren't far apart. When it comes down to it, we just want our representatives to make the best decision for us. For me, a guy that spouts out like this is dangerous to the entire country. Absolutely, pure capitalism works great. The problem is that that is what created slavery and unsafe working conditions. It puts all of the power into the corporations that don't care about the people. Most regulations exist because companies have completely abused moral and ethical standards. It is sad that regulation is needed, but it is needed. It might not be needed to the scope that it is at right now, but there is a definite need for regulation. Frankly, I think there needs to be a complete overhaul of this stuff. It needs to be written in plain English and businesses need to be kept separate from influencing the government (talk about a huge problem).
I love the smell of Proraso in the morning!
Unfettered capitalism does produce bad results, but unnecessary and prohibitive regulation produces bad results, too. Right now it appears that the pendulum has swung to the side of too much regulation. Every day we are seeing more and more evidence of the government cracking down on certain companies while letting others slide if they pay up during campaign season. Government like this cannot be trusted to fairly and wisely regulate. A government that also goes on and on about raising taxes on corporations should be looked at closely, as well. All these companies will do is carry the price of their products on to the consumer, after which we will hear more rhetoric from the same government claiming these companies are price gouging. Smoke and mirrors, gentlemen.
Sure, McDonalds uses Happy Meals as a marketing tool, just like other companies. Green energy companies seem to have had a good reputation among many in the population, but it's beginning to look like quite a few of them are in it for the money, too.
Last edited by bamafan64; 09-17-2011 at 10:04 AM.