My point is, why would you want to?  We have a printing machine which prints pretty pictures of presidents on paper (P^4).  They have value X.  We also grow corn on the side and accept back these P^4 in exchange for our corn.  Your neighbor who produces Cars is going around buying up every instance of these P^4 to make them rare and drive up their value to 10X so we can purchase his automobiles for 1/10th the price.  In the meantime, we can purchase anything we want from our other neighbors for 1/10th the price too.  Now sure it makes it difficult to sell corn in the meantime as few people have these pieces of paper to purchase our corn.

Two things can happen in the future.

1.  Our car building neighbor can continue to hoard these P^4 forever.  In this case he will support our standard of living forever.

2.  Our car building neighbor will begin to buy things with the P^4 in the future.  When he does so, he will find they purchase 1/10th of what he accepted them for and he has gone bankrupt because his wealth is based on worthless paper.  Our P^4 will return to their normal value and we will find ourselves back at work growing corn after having enjoyed a long hiatus.

Why fix this?  The free market works, why try anything else?  Let them suffer the consequences of attempting to circumvent the market to get a free lunch.

Understand deviating from free trade should be avoided at all costs.  To do otherwise, ALWAYS results in a broken window strategy.

When you engage in trade you ALWAYS benefit since what you get is worth more to you than what you give.  This applies to everything purchasable including your labor.  $ bills are nothing more than IOU's stating you will accept them back in exchange for something of yours (or someone else's) at a future date at an exchange rate (price) which will be negotiated at the time of the future purchase.

These IOU's serve two purposes.

1.  If the trader supplying the IOU (we'll call him the buyer though he is really just trading a different commodity) has nothing the trader of goods wants (we'll call him the seller) the seller knows he can return later and the IOU will be honored.  The value of the IOU will be negotiated when the future transaction is made.

So in one aspect these IOU's are merely a medium of exchange allowing you to buy and sell at different points in time.  There is some risk to the seller as anyone can attest who has accepted an IOU.  The seller accepts this risk on the basis the buyer will honor the debt and with the assumption the IOU will maintain it's value to a reasonable extent over time.  Time is money and money LITERALLY is time.

2.  If the buyer has nothing the seller wants the IOU allows the trade to proceed.  The seller accepts the IOU knowing the buyer has things a speculative third party wants.  So the seller knows he can purchase what he really wants from a third-party seller on another occasion who will use them to purchase what the current buyer has available.  So the original seller accepts the IOU's at higher value if the buyer has or produces "stuff" in great demand.

As more of these IOU's are printed their value decreases.  Therefore, a nation which engages in free trade and uses these IOU's freely (immediately purchasing goods from you and others with these IOU's) is assured their value will be maintained as little time has passed.

Chinese currency manipulation BENEFITS us because it allows us to engage in very favorable trades.  Sure it makes us temporarily sell fewer goods, but the favorable trade makes up for it.  When those IOU's are finally used the work will all come back to us only we will get the $ back at fair value.

You should be wary of hair-brained schemes which profess a means of circumventing free trade for WHATEVER reason --- real or imagined.  In every case you will find the scheme is nothing more than a "broken window" philosophy.

A "broken window" philosophy was made famous by Henry Hazlitt in his book "Economics in One Lesson".  He put forth an analogy where a young street urchin eyeing the pies and pastries in a baker's window decides to throw a brick through the bakery window and steal all the tasty goods on display.  As the young street urchin runs off down the street gobbling up what pastries he doesn't drop the baker rushes to the street.  The baker asks the passers-by (liberals) if they saw what transpired.  They reply, "Yes we did".  The baker asks if they will assist him in identifying the culprit.  They reply, "We most certainly will not!!!".

Perplexed the baker asks, "Why?"  They respond...

"Well you are going to have to pay the glass-maker to repair your window.  And you are also going to have to buy more flower from the miller.  The miller will have to buy more wheat from the farmer.  You will also need to buy more sugar from the merchant and he in turn will buy more sugar from the caner.  You will also need more coal for your ovens.  You may even have to hire a young apprentice to assist you in replenishing your pies.  You will have to employ 3000$ worth of labor.  Think of all the employment this young man has just created!!!!  We are going to give him a public service award."

Hazlitt then poses the question, "Has the urchin really created $3000 worth of employment?  Why or why not?"

In my next post I will provide the answer so don't read on until you figure it out for yourself.

The answer is quite subtle and may allude you.  Yet in your heart you know something isn't right with the analogy put forth by the passers-by.  The fallacy lies in the fact the passers-by are only identifying the positive and more apparent aspects of the urchin's conduct.

Realize the baker had been saving up the $3000 to buy his son books for school, a dress for his daughter, and dinner at a nice restaurant for his anniversary with his wife.  He now must spend this money to restore the situation back to what it was before the theft.  So for every $ in employment the urchin supposedly created an equal amount of employment was lost as the printer, seamstress, and waitress will be without work.

It is easy to see the employment which resulted from the urchin's actions.  Much more difficult to imagine the employment lost precisely because it was never allowed to exist.  The fact is, the world is poorer by a window, pies and pastries now, and poorer by books, dresses, and food after the situation is remedied.

Hazlitt later goes on to completely dismantle every aspect of liberal\progressive economics for the fallacies they are by clearly identifying them as examples of the "broken window" philosophy.  "Economics in One Lesson" is available online in pdf format for free.  It is a great read, very short with little to no mathematics.  Just clear undeniable logical arguments which teach everything you need to know about the fallacies of liberal economic philosophy attempting to circumvent the free market.

He even takes apart the more popular forms of liberanomics such as spending money on infrastructure.  For instance the government takes money from one group of citizens and uses the money to build roads and bridges.  They then attempt to obfuscate the public to attain votes saying, "Look at all the jobs we created as they point to the construction workers".  But they ignore the fact the money used to hire those workers came from the people who EARNED it --- not them.  And now that they have had their money confiscated they can't buy what they otherwise could have so autoworkers and others lose their jobs.  Now if we truly need the road or bridge rather than cars that's one thing.  But to argue the politician created jobs is ludicrous.  This is just one of many liberal strategies Hazlitt debunks.  He does all of them.

My ears always go up when I hear a politician propose some hair-brained scheme to create jobs rather than increase production.  Joseph Biden has made two such statements in particular which made me laugh until my stomach hurt.

Looking over Obama's shoulders as the POTUS signed the stimulus package into law he stated, "Congratulations Mr. President, you just created a million jobs.  3 million more to go".  LMFAO.

Later it was discovered the stimulus had created only a small fraction of that number.  Private sector jobs being shed as a result of the stimulus were 4X the rate created in the public sector.  He visited one of the stimulus job sites employing less than 1000 workers at a cost of $1.25 Billion (> $1.125 Million per job!!!) stating, "Is there any way you could hire 3000 workers to build that same bridge?"  LMFAO.

What an idiot.  I've never heard a CEO tell his stockholders his plan for the future is to hire more people to create the same amount of stuff.

Another popular program even among many Conservatives misled by their broken window twisted logic is the Student Aid programs.  The student aid programs do not benefit students AT ALL.  They are a subsidy for the higher education industry.  Every year the universities get together and decide how much to raise tuition.  Every year since the programs inception the result has been directly related to the increase in funding for the Student Aid program.  Universities know prospective students bring with them these subsidies from the government.  The result is an artificial increase in the demand for higher education.  If it weren't for the Student Aid program you wouldn't NEED a grant or a student loan to go to college.

So much so the benefit of a college education is no longer commensurate with the value of that education once you graduate.  Even worse, there is incentive for colleges to offer curriculum which lacks demand.  Students of little prospect can take courses in basket weaving all paid for with grants.  The students don't care as the money is granted and the government doesn't care because it isn't their money and it gets votes.  Some of the more naïve students will actually get loans for these virtually worthless degrees, causing them untold hardships and often default after graduation.

I have an acquaintance of mine who is receiving $15,000 in grants and $7,000 in loans every year for a degree offered online.  The curriculum?  The History of Ancient Greek Gods.  Now I'm not one to poo-poo the value of an education, but I don't hesitate to guess he and the 268 other students enrolled in the program at just this one "university" far exceed the demand for such drivel.

Other funny examples:  As part of the stimulus package the government spent $25 million refurbishing the trails in the Grand Canyon National Park.  Having been to the Grand Canyon on several occasions and noted the trails were merely dirt paths a reporter decided to investigate.  The money was spent hiring young 16-20 year olds at 15$/hour after having purchased dozens of 4-wheeled off-road vehicles (made by Kawasaki lol).  They were employed to drive up and down the trails dragging chain-linked fences in a manner similar to how you smooth out the infield on a baseball diamond.  35 such free wheeling teenagers were employed.  Watching the video of them driving around playing 4-wheeler tag with the fences would have been hilarious if not for the tragedy in the repercussions due to lost jobs.

In 1982 POTUS Reagan questioned an item in the budget giving the railroad industry $5 Billion a year in reimbursement costs for diesel locomotives.  No one could explain why it was in the budget.  Upon further investigation it was learned it had been included in the budget since 1933.  Reagan demanded a further investigation.  Some time later the reason for the original expenditure was determined.

In the early 1930's a new diesel-electric locomotive was invented which was rightly seen as a tremendous boon for the railroad industry.  It was much more efficient, produced less pollutants, was cheaper to maintain, more easily refueled, had a longer life span and provided more power on demand.  It had the additional "benefit" that it didn't require as many railroad workers to support.  There was no need for a fireman to shovel coal into a furnace and the locomotive maintenance mechanics needed were a small fraction.

FDR decided it would be of great benefit to get these locomotives into service and replace the outdated steam locomotives as soon as possible.  A government subsidy reimbursing the railroad industry for the cost of the locomotives seemed just the thing.

Of course the liberals didn't see the reduction in labor needs as a benefit nor did the railroad workers union.  They lobbied for relief and got amendments to the bill included.  These amendments stipulated the railroads not be allowed to reduce the number of workers required to operate or maintain the new locomotives.  Regulations were put in place requiring the railroads to employ the same ratio of maintenance workers to support the new locomotives and even required the railroads to employ a fireman to sit in the locomotive alongside the engineer at any time the engine was operated.

It didn't stop there.  Other companies who supplied the shovels and asbestos suits for the firemen received relief due to the loss of business.  Railroad regulations were put in place requiring the railroad to purchase shovels and uniforms for these phantom fireman to hold while they sat pretending to shovel coal into a diesel engine.  The coal industry also received relief requiring the railroads purchase the equivalent BTU's of coal to that purchased in kerosene (diesel).  This coal was to be given to 3rd world countries (continued until WWII).

So for 50 years we spent $5 Billion per year to pay people to pretend to work or otherwise supply that which was no longer needed.  The liberals succeeded only in ensuring no benefit was ever obtained from such a marvelous invention.  The cost was experienced through the loss of untold production of goods which would have otherwise come to fruition and benefited many.

Other make work project of the era abound.  TVA was tasked with digging away an entire mountain as one of FDR's make work programs.  Six years later (and many billions of dollars in today's money) when the work was complete it was seen as a tragedy as so many would no longer be employed.  The solution the liberals came up with was to pay them to fill it all back in.  The Big Dig became the Big Hill.

All the while many times that number lost their jobs due to continued and accelerated loss of work as taxpayers had to endure 90% effective tax rates.  No one had any money left to buy what was really needed and not produced due to labor shortages digging holes in the ground.

Sound familiar?

Quote from: LibDave on October 18, 2013, 03:05:11 PM
... If you take it to extremes and let's say all of Mexico came here and performed the jobs and production of every single American for 1$ in total we would be crazy not to hire them and sit home for the total cost of the change in my couch.  Our production and standard of living would be virtually unchanged though we would have one hell of a time sitting home and partying.

Lib Dave, your extreme example would not bring us to the "point of upset".
The "point of upset" due to cheaper imported goods occurs when the aggregate displacement of labor due to our trade deficit do not in aggregate compensate for USA's wage and salary earning families for trade deficit's detrimental effect upon our net numbers of jobs and our median wage's purchasing power.
USA's trade deficit of goods has brought us beyond that point of upset.

Nations' imported production supporting products can mitigate their trade deficit's immediate detrimental effects upon their GDPs.
It is also conceivable for a nation's laborers' aggregate technical, craftsmanship and production superior accomplishments to similarly mitigate their trade deficit's detriment to their GDP.  Conceivably such mitigation could immediately or eventually match or overtake detriments due to trade deficits.

Unfortunately the USA's trade deficit is not due to imported production support products and we have not demonstrated knowledge, craftsmanship and management skills to the extent of eliminating our trade deficit of goods' net detrimental effects occurring each year in excess of the past half century.

Respectfully, Supposn

Quote from: Supposn on October 20, 2013, 08:45:20 AM
USA's trade deficit of goods has brought us beyond that point of upset.

Evidently it hasn't as US consumers continue to buy more from them.

Quote from: Supposn on October 20, 2013, 08:45:20 AM
Nations' imported production supporting products can mitigate their trade deficit's immediate detrimental effects upon their GDPs.
It is also conceivable for a nation's laborers' aggregate technical, craftsmanship and production superior accomplishments to similarly mitigate their trade deficit's detriment to their GDP.  Conceivably such mitigation could immediately or eventually match or overtake detriments due to trade deficits.

Unfortunately the USA's trade deficit is not due to imported production support products and we have not demonstrated knowledge, craftsmanship and management skills to the extent of eliminating our trade deficit of goods' net detrimental effects occurring each year in excess of the past half century.

That would be wonderful, I hope it happens.  Somehow I doubt it considering the abysmal failure of the nations liberally controlled education system.  Regardless, precluding some miracle of magical enlightenment among our labor force, I am still content with reaping the benefits of Chinese attempts to circumvent the free market.  Our buying power has not been diminished in the slightest as the continued trade deficit indicates.  This sustained buying power hasn't come as the result of increased production, it has come as a result of favorable trade of equal or greater value.  I think this a favorable situation without need of remedy.  To assert otherwise is ludicrous.

Suppose you are working to produce $10,000 in goods.  Then I come to you and state next year you only need work to produce $1,000 in goods but I will multiply the real purchasing value of every dollar you earn by 20.  According to your logic I should be demonized for my offer as it will reduce your workload.  You go further and state since you are now purchasing $20,000 in goods and only selling $1000 you are "approaching a point of upset".  What are you upset about?  With enemies like this who needs friends.  If we do reach a "point of upset" whereby our purchasing power is diminished I suggest we continue to print more money to send to the fools until they choke on them and wise up.  Only then should we stop and get back to work in return for those dollars at whatever fair value they have finally adjusted.  When we do they will collapse and stagnate just as Japan has done after realizing they gave us the fruits of 20 years labor for the paper sufficient to create a decent bonfire.

Lib Dave, exporters of USA good are entitled to request, (i.e. not required) their goods be assessed and to pay the federal fees to acquire transferable Import Certificates.  Those fees expected to be the minor portion of ICs' global market values.

Federal customs inspectors' assessments of goods approximate market values at USA's ports in U.S. dollars are technical rather than policy determinations.  Government is granted no policy discretion within this proposal.

This proposal provides no net federal revenue or expenditures.  The entire global open market prices of ICs are passed onto USA purchasers and users of imported goods. They pay for all federal assessing, IC issuing and administrative expenditures due to this policy.  The remainders of ICs' prices are an indirect but effective subsidy of USA's exported goods.  It is a market rather than government driven policy.

Your contentions opposing government spending to build and retain our infrastructures, the FDR administration, stimulus spending, the WPA, the CCC, our methods of supporting education or your broken window story, are not germane to this trade policy proposal.

I agree with those contending the IC policy would increase our numbers of jobs and our median wage more than otherwise.

Respectfully, Supposn

Gee, if it's such a great idea, lets apply it to interstate trade, where one state is suffering because another state is out producing them.
Like sat Texas, because they have a source of cheap labor and Idaho has no access to this labor mkt, so Texas would have to pay an IC tax.
But wait, that means Idaho will as well, but wait, that means the employer will have to pay more per employee, oh but wait, they can pass it along to the end consumer.

WOW What a great idea, the consumer winds up paying another tax with absolutely ZERO benefit.

No matter how you spin it, you are attempting to circumvent the free market.  It will harm not help.  Subsidies don't work.  Trade restrictions don't work.  You are proposing heavy-handed bureaucratic intervention into the market which is GARAUNTEED to make matters worse.

You are also attempting to implement this abortion into every market imaginable based on your fallacious analysis there is a problem to be solved where none exists.  What is your problem with capitalism?  Why do you not appreciate free markets.  SOCIALISM doesn't work.  Give it up and find a viable economic model.

Quote from: LibDave on October 21, 2013, 04:55:20 AM
No matter how you spin it, you are attempting to circumvent the free market.  It will harm not help.  Subsidies don't work.  Trade restrictions don't work.  You are proposing heavy-handed bureaucratic intervention into the market which is GARAUNTEED to make matters worse.

You are also attempting to implement this abortion into every market imaginable based on your fallacious analysis there is a problem to be solved where none exists.  What is your problem with capitalism?  Why do you not appreciate free markets.  SOCIALISM doesn't work.  Give it up and find a viable economic model.

I have said those exact words nearly ten times throughout this thread, and his response is always the same, a convoluted mix of gibberish and obfuscation, never once addressing what I posted.