So what of the recession of 82. Volker and Reagan are given a lot of credit for "Breaking the back of inflation" by throwing us into a recesssion ( some imply intentionally) Did not simply tight , resposible monetary policy(relatively), along with gov. deficit spending cause severe competion between gov and business for available money and drive rates sky high, tighten credit and cause that recession. Wasnt this 82 recession the catalyst to switch from managing the money supply to managimg rates and jamming liquidity into the system trashing rates and the dollar. Should a lot of credit be given to V and R for making these decisions and going down this road?
raising rates induced a flood of money into US bonds, a loan to the US, when they patched the econ and needed to pay that back they dumped the dollar so you were getting pennies to the dollar on your investment, i think the japanese were buying new york and hawaii and got hammered by the devaluing,going on memory and not an econ guy so this is just a gist
I bought my first PC in 1985, some Taiwanese brand, with a Seagate 20MB HDD and the whole rig set me back less than $1,000. IBM clones they were called. The deal breaker was software. Lotus 1-2-3 was available from discount warehouse stores in the States for $499, but out here in Asia it was selling for like $1,200. The killer was that government legislation banned parallel imports, so one could not mail order. Probably the relative of some minister had a stake in the local distributor. I can't remember what I paid for Office 2010, probably under $300 so if you factor in the value of money then vs today's money, prices have come down hugely. But yes, the PC was not really that commonplace, so perhaps I should have phrased it as 'the computer'. The company I was working for started computerising payrolls, Inventory Management and accounting in 1980. That was the beginning of real change in staffing level, availability of information and inventory/supply chain management. Once all this evolved into Management Information Systems, it transformed the whole way we managed things and made decisions.
www.dof.ca.gov/html/fs_data/LatestEconData/Chronology/chronology.htm There is nothing here to rate the importance of any of these events. For example the "Plaza Accord" , mentioned on the ACD thread, is treated similarly to a duck flying into a power line causing a CA. brownout. The power of organized labor does stand out pre Reagan as do interest rates. Not just CA., theres a lot of national and internatinal issues presented. Reading through this breif history it is clear that "shht happens". Thank God we now have a FED to prevent all that, sailing blissful seas of low volatility rising equities.
Universities abandoned Keynesian economics for dubious neo-Keynesian supply side stuff that created this mess.
As has already been said in the quote below, the long term changes in productivity as a result of putting computing power (hardware, software ... the whole package) on everyones desk were and are incredible. In addition, although he may not have come on until '81, Paul Volker changed an inflationary mindset from it being a one-way bet into a risky bet. Short term that changed the world and allowed decisions to be made on a much sounder basis. Regan using the air traffic controllers to remind one and all that actions have consequences also did not hurt.
Maybe the Luddites were right. Maybe the manufacturing revolution required excessive population growth. Maybe manufacturing revolution is unsustainable ( resources, power etc). Maybe some will always game the system for personal gain to the detriment of others. Maybe the agricultural revolution was the worse thing that ever happened to the planet. After all it did allow increasing population density to occur making it possible for the few to control increasingly larger populations. Another way of saying increasing central control. Maybe allowing increasing disregard for the environment that accelerated during the industrial revolution. Maybe once opened Pandoras box is irreversible. Maybe all we can do is to continue to just muddle through. Maybe not.
That is the second or third time on thread you have said it was crazy to think tax cuts would lead to an increase in revenue but then admitted that revenue increased after Reagan's tax cuts. You are completely aware of the lie/bullshit in your own spin/rhetoric but you keep you seem to keep on proposing that more taxes would improve things. a. You will note that after Bush tax cuts and Kennedy tax cuts and the Melon tax cuts revenues also went up. B. State, local and every other tax imaginable that has gone up since 1981. We have taxes and fees we could not even imagine back then. c. tax increases destroy GDP. From Obama's own advisor Romer... Raising taxes destroys GDP. http://www.nber.org/digest/mar08/w13264.html "Tax changes have very large effects: an exogenous tax increase of 1 percent of GDP lowers real GDP by roughly 2 to 3 percent." You want to raise GDP... lower taxes properly and strongly. I advise the end of personal income taxes. Our economy will boom and the middle class will rise again.
If you want to know what happened to america's middle class and our savings... you do not have to look any further than this. We have had 700 percent inflation since 1963. How could we have a devaluation of our dollar when our dollar was in needed by the eastern block the black market and many govts through out the world. Our dollar should have gone up in value not down? One of our dollars should be buying 10 dollars worth 1963 dollars instead of 10 cents worth of 1963 dollars. How did we have such a massive devaluation of our dollar? Was it govt spending... I would say no... we borrowed all our money until 2008... so that should not have been inflationary. So how could the money supply have increased so dramatically that even with incredible world wide demand for dollars our dollar decreased in value by 700 percent. How did the money supply increase what 7 fold plus all the dollars that are not in circulation but are being saved world wide? Who got the benefit of printing 10s of trillions of extra dollars? Could that be the source of our economic and social and political downfall. Additionally how much of our GDP has been spent supporting a dollar denominated world? Did tax payers really need that after 1987?
Update... I just spoke with a family member, I was reminded of that during WWII my grandfather owned a bar in New York called Club 190. He served nickel beers. 5 cents to 5 dollars in 70 years. how many thousands percent inflation is that? So... lets see how this system works. 1. You create notes and send out trillions of debt notes called dollars all over the world. Causing massive devaluation of the savings of hard working americans... and at the same time you have your govt friends create a taxing franchise you call the IRS. You then create a death tax and other taxes so that a persons business success and productivity is taken back within two generations. For your cronies you leave little loopholes in the code such as: the "accidental trust" http://www.bloomberg.com/news/2013-...k-saves-wealthiest-americans-100-billion.html In summary... What happened to the tax paying american was no accident. It was and is systematic.