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Subject:  Re: Here's your chance: Balance the Fed budget Date:  1/2/2007  2:32 PM
Author:  capitanfracassa Number:  200163 of 603176

In reality, every government managed dollar is TAKEN from a pocket (that generally manages it better than the government would,) and then a mere PORTION of it is spent to then be re-delivered to another pocket.

The slippage the government siphons in between adds zero value, but merely drains frm the economy.

"In relaity"? In what reality? Can you give an example?

In the reality I'm aware of, the U.S. suffered an almost constant crisis of liquidity, overcapacity, and periodic depressions until the govenrment began soaking up the excess through transfers and wars. The government indeed inefficiently spends capital, because this is what kept the U.S. from a communist revolution. The problem is not how to produce efficiently but how to destroy excess capacity in a way that preserves the social order.

Returning the management of the funds to the earners of the funds would have a NET POSITIVE effect on the economy, if nothing else than be the elimination of the "mordida" (slippage) that the government ineptitude siphons off at each touch.

You can capitlize NET POSITIVE, but you can't prove it. In the real world, government contraction almost always leads to economic disaster. Take your pick of all the countries who were forced by creditors to cut spending. In which one would you want to live? Brazil? Argentina? Mali? Mexico? The only reason the U.S. has avoided this fate is that it doesn't depend on foreign creditors. But that will change and we will get to test your theory.

GOVERNMENT spending cuts do not result in aggregate lost profits AT ALL.

If you can convince a Boeing shareholders meeting with your theories, I'll eat my hat and yours. Did you buy a fighter jet with your recent tax break?

They merely relinquish the dispersion and discretionary management of the spending to the common man, who then far more effectively spends his own money as he desires.

The common man never had a penny to manage, discretionarily or otherwise, before WW-II. Even today, most of the money is in the hand of enterprises such as citibank and GE, that have about the some number of command levels as the federal government. These enterprises all practice "central planning." They all allocate resources as their top guys see it and then issue marching orders to their large and slow bureaucracies. Everyone who ever worked in one of these organizations knows that the dominant motivation of all players is to cover their behinds and please their bosses, which is exactly the same as in any government. In fact it is worse, because a fededal agent is slightly more likely to refuse a stupid order and escalate a dispute with her immediate boss than a citibank midddle manager. Another difference is that the CEO of citibank thinks one to four quarters into the future whereas politicians think two to six years into the future. Why that makes Citibank a more efficient allocator of resources than Congress is beyond me.

Of course, this discussion hinges on the notion that markets allocate resources better than bureacracies. Corporations may suck because they behave too much like mini-states. Hedge funds then should be much better, since they are pure market players with little bureacracy, always taking their orders from the market directly. Could you please give me a list of the five most important technologies that were created thanks to the foresight and profit seeking of hedge funds?

If he spends less, he will increase the savings rate and decrease the need for wasteful welfare.

Waste is necessary or the survival of the system. We have too much stuff. We have too much agricultural product, too many car factories, too many gadget makers, too much retail space, too many houses. Without waste, the profit rate will be 0 (Zero). Which means either communism or depression (and most likely first depression and then communism)

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