Economics 101

Listening to the port deal on WDEL’s Ms “Alberta” Mascitti’s show and upon reading Cassandra’s piece in Delaware Liberal, and having arguments on conservative blogs over the problems of our economy, it has become apparent that not too many people who throw out their opinions, know what the economy is…

If we all knew what made up the economy, perhaps our arguments would be on the same topic.

Here is how we comprise and determine what our economy is. We use the GDP.

Once one understands what is a GDP, then one can more readily understand what is needed to do, or what we should definitely, not do….

GDP = C + I + G + (X – I)

GDP = CONSUMPTION + INVESTMENT + GOVERNMENT + (SUM OF EXPORTS MINUS IMPORTS)

CONSUMPTION: Examples include food, rent, jewelry, gasoline, and medical expenses but does not include the purchase of new housing. Consumption consists of private (household final consumption expenditure) in the economy. These personal expenditures fall under one of the following categories: durable goods, non-durable goods, and services.

INVESTMENT: Examples include business construction of a new mine, purchase of software, or purchase of machinery and equipment for a factory. Spending by households (not government) on new houses is also included in Investment. Contrary to popular use of the word, as when one speaks of his investments, investments here do not include financial purchases like buying stock or bond in a company. Those are counted as savings and are completely out of the GDP calculation.

GOVERNMENT: . It includes salaries of public servants, purchase of weapons for the military, and any investment expenditure by a government. IT is the sum of government expenditures on final goods and services. It does not include any transfer payments, such as social security or unemployment benefits.

EXPORTS MINUS IMPORTS: It includes our balance of trade. It takes what you export or send out of the country and compares that to what gets imported and brought into the country. If you export more than you import, then you spending less then you are making and getting richer. This becomes a contribution to your GDP. But, once you import more than you export, you are spending more than you are making, and it becomes a negative drag upon your GDP.

There you have it.

Here are the myths that facts dispel. Personal savings have not effect upon the GDP. If you spend all you make and save nothing, you are better for the economy than those putting your money into CD’s or stocks.

The fluctuations of the stock market have no effect upon the economy, unless it is because of a psychological secondary influence causing more or less confidence and more or less spending in the categories listed above which do matter.

“Cutting wasteful Governmental spending” takes out a big chunk out of the economy. One should argue that instead we need more “wasteful governmental spending” to get us out of our recessional slump. Obviously we should remove the adjective “wasteful” from that equation,

It is possible a country can import its entire wealth away. If all ones income is spent, one has a zero balance.

Higher Taxes are good. They take money out of savings and put it into Government which benefits the economy. They spur the transfer of assets out of savings where they are taxed, into Investment, where they are not.

Cutting back on Government without replacing those cuts with either more investment, more consumption, or a positive trade imbalance is very, very negative.

Cutting back on government, creates less consumption. Less consumption lowers demand, and less demand creates less investment.

You cannot grow investment by cutting back on government. But you can grow investment, by growing government…. This idea of making government smaller is very bad for the economy and is exactly why since 2010 and the Tea Party, we haven’t had rapid growth…

The best way to jump start the economy is to move money in savings over to investment. Investment causes consumption to increase, investment to increase, and if government stays the same, it’s percentage of the GDP shrinks….

Moving money from savings to investment in no way deletes a person’s wealth.That person’s wealth the same; it is just counted in a different form.

Higher taxes achieve that quickly.

Ummmm, About This Wide…..

Right Click for Full Image.

2000

This is post number 2000.

The only real significance is it is 150 posts more than where Tommywonk stopped exactly one year and fifteen days ago…

If some future historian looks back, I can only guess they may kindly make some note of the quality of thought that underlies these efforts, but my guess, is no one will ever notice…

Irregardless, as long as the urge to put thoughts down for others continues, we will go on. As usual, with no goal, no direction, and no ulterior motive. Probably upon reflection, my biggest surprise, right here, right now … is that I still enjoy it so much, and can’t wait to jot my thoughts down, click the button, and send them off to where ever cyberspace and the vast internet ocean, lets them drift….

For each of you who have become regular over the years, … thank you friend…

At What Price, Loyality?

This is going to my hard core Republican friends. Why are you still supporting Romney?

1) You know he is not going to win.
2) You know as the election heats up, his Bain Capital experience will make Republicans untouchable for decades.
3) You can’t pin down where Romney stands on anything.
4) He tied his dog to a car.
5) He stands with black people and says “Who let the dogs out, woof, woof.”

Most of you are telling me, “I certainly can’t vote for Obama. I guess I’m not voting for President this time.”

Let’s say, just for argument sakes there was a presidential candidate out there who says to have good government you need: …………………

1. Become reality driven. Don’t kid yourself or others.
Find out what’s what and base your decisions and actions
on that.

2. Always be honest and tell the truth. It’s extremely
difficult to do any damage to anybody when you are
willing to tell the truth–regardless of the
consequences.

3. Always do what’s right and fair. Remember, the more
you actually accomplish, the louder your critics become.
You’ve got to learn to ignore your critics. You’ve got to
continue to do what you think is right. You’ve got to
maintain your integrity.

4. Determine your goal, develop a plan to reach that
goal, and then act. Don’t procrastinate.

5. Make sure everybody who ought to know what you’re
doing knows what you’re doing. Communicate.

6. Don’t hesitate to deliver bad news. There is always
time to salvage things. There is always time to fix
things. Henry Kissinger said that anything that can be
revealed eventually should be revealed immediately.

7. Last, be willing to do whatever it takes to get your
job done. If you’ve got a job that you don’t love enough
to do what it takes to get your job done, then quit and
get one that you do love, and then make a difference.

Honesty. Integrity. Principal.

Sounds good so far. Let us say just for argument, he had chief executive experience. Let us say just or argument that he once ran a state, one of the fifty in this union. Let us say while governor, this is what he did…..

During his tenure, New Mexico experienced the longest period without a tax-increase in the state’s entire history.

1) He cut the rate of government growth in half,

2) Left the New Mexico state government with a budget surplus and 1000 fewer employees (without firing anyone),

3) Privatized half of the prisons in the state,

4) Brought a state-wide school voucher system to New Mexico.

5) Vetoed 750 bills (more than all the vetoes of the other 49 Governors in the country at that time, combined) with only 2 overrides, earning him the nickname Gary “Veto” Johnson.

6) In 1999, Johnson became the highest-ranking elected official in the United States to advocate the legalization of drugs.

7) Shifted Medicaid to managed care.

ISN’T THAT WHAT YOU WANT? ISN’T THAT WHAT WE NEED?

Can you not think of a better way to show your lack of enthusiasm over a wealthy capitalist buying his way to the top of your ticket, by voting for someone who has character, who does what you’ve always wanted, a doer, not a talker?

And to think…. you were simply just going to throw your vote away.

His name is Gary Johnson. He is the new party’s candidate for President.

Remember Republicans. It is your values that are important. If your party has given up and moved on from your values, don’t think you have to be loyal to the word…. “Republican”… What you have to be loyal too, is yourself. Always. Never lie to yourself.

You don’t need to waste your vote on Romney. You probably need to find more about this guy, Gary Johnson, and then throw your support behind him.

Don’t worry it is not one of the two parties on whose ticket he is running. Remember, at one point in time, the Republican Party was a once a third party too. One that went mainstream because of its core values, its principles resonated with everyday American People.

Roemer Owns The Room

C-Span carried the coverage here…. Go to 18:30 for the best part.