[mike777]

I thought the one thing Economists knew how to do is fix a liquidity crisis.

I am surprised we don't simple use Open Market Operations and flood the economy with money. Buy Treasury securites(pieces of IOU electronic paper) with cash (another piece of electronic paper).

Add in slower acting but an effective Flooding of Fiscal spending for infrastructure I would think this would create plenty of liquidity.

How to deal with the resulting inflation and debasing of various assets is another issue.

If falling housing prices is the problem you can inflate these assets.

Open Market Operations do not require a new act of Congress.

http://en.wikipedia....rket_operations

[luke warm]

why not just do away with the capital gains tax?

[PassedOut]

The Fed has already been increasing the supply of money: Treasury and the Fed Looking at Options

Quote

Even before the House stunned the world on Monday by rejecting the Bush administration’s bailout bill, the Fed was already resorting to the oldest action in its book: printing money.

With money markets around the world seizing in fear, the Fed on Monday announced that it would provide an extra $150 billion through an emergency lending program for banks, and an additional $330 billion through so-called swap lines with foreign central banks to help money markets from Europe to Asia.

And I don't think many people will be paying heavy capital gains taxes this year.

[Al_U_Card]

But will they be applying capital losses against future capital gains? (There is more than one way to skin a cat...)

[hrothgar]

luke warm, on Sep 30 2008, 01:09 PM, said:

why not just do away with the capital gains tax?

Ever heard the expression "A solution in search of a problem" ?

It almost feels like Conservatives has an ingrained bias in favor of taxes cuts. They seem to trot taxes cuts out regardless of what issue is at hand.

The Federal government is running a surplus - Better issue a tax cut
The Federal deficit is running a deficit - Better issue a tax cut
The US is dependant on foreign oil - More tax cuts are needed
Wall Street is melting down: You guessed it - Tax cuts

I don't find it at all surprising that the religious zelots on bulletin board also seem to be the ones who buy into this same type of mindless mantra regarding tax cuts

[barmar]

I guess I don't have to ask Richard how he plans to vote next month on Massachusetts Question 1.

[helene_t]

mike777, on Sep 30 2008, 08:36 AM, said:

Buy Treasury securites(pieces of IOU electronic paper) with cash (another piece of electronic paper).

Maybe better buy junk mortgages, after all it will help the banks to get rid of those more than it will help them to get rid of treasury certificates.

[cherdano]

luke warm, on Sep 30 2008, 04:09 AM, said:

why not just do away with the capital gains tax?

Jimmy, no serious economist from which I read comments in the last few days took this idea seriously. There is just no reason why this should work. Eliminating capital gains tax doesn't mean that suddenly everybody invests into the mortgage marked or starts buying investment banks, and the liquidity problem gets solved. (And I read about this in a lot of different places.)

I would suggest that you subtract some economic credibility from whatever source you got that idea from, seriously.

[Lobowolf]

hrothgar, on Sep 30 2008, 09:25 AM, said:

luke warm, on Sep 30 2008, 01:09 PM, said:

why not just do away with the capital gains tax?

Ever heard the expression "A solution in search of a problem" ?

It almost feels like Conservatives has an ingrained bias in favor of taxes cuts. They seem to trot taxes cuts out regardless of what issue is at hand.

The Federal government is running a surplus - Better issue a tax cut
The Federal deficit is running a deficit - Better issue a tax cut
The US is dependant on foreign oil - More tax cuts are needed
Wall Street is melting down: You guessed it - Tax cuts

I don't find it at all surprising that the religious zelots on bulletin board also seem to be the ones who buy into this same type of mindless mantra regarding tax cuts

And of course the flip side from the other side of the aisle...the "solution in search of a problem." As long as "problem X" can conceivably be remediated by money, we've got a solution! -- Take more money from "rich" people and pay for whatever you don't have. Oh, and remember me at election time.

[cherdano]

Yeah, those leftist bastards who came out with the bailout plan should be fired from ever getting close to running this country again...

[mike777]

helene_t, on Sep 30 2008, 11:13 AM, said:

mike777, on Sep 30 2008, 08:36 AM, said:

Buy Treasury securites(pieces of IOU electronic paper) with cash (another piece of electronic paper).

Maybe better buy junk mortgages, after all it will help the banks to get rid of those more than it will help them to get rid of treasury certificates.

Helene, Open market operations can only buy treasuries.

The theory being you flood the economy with trillions of bucks. Those bucks need to go somewhere which creates liquidity.


It would also inflate assets such as homes that have been falling in valuation.

Of course inflation and debasing assets creates problems of its own. See Germany in the 1920's as an extreme case or parts of Africa today.

The only reason I bring this up is I keep hearing we are in a liquidity crises and something needs to be done today, now!

[Lobowolf]

cherdano, on Sep 30 2008, 12:50 PM, said:

Yeah, those leftist bastards who came out with the bailout plan should be fired from ever getting close to running this country again...

You mean the ones who all compare themselves to Kennedy, who cut taxes to stimulate a sluggish economy? If you want a bailout to PASS, then Pelosi should probably be barred from ever getting close to giving a pre-vote speech.


I think that there'd be strong Congressional support for the proposition that "Significant government intervention (i.e. "bailout") is required."

The question of any particular plan is a much harder sell.

[jdonn]

Lobowolf, on Sep 30 2008, 01:31 PM, said:

If you want a bailout to PASS, then Pelosi should probably be barred from ever getting close to giving a pre-vote speech.

Pelosi is dispicible and so was her partisan speech. That being said, anyone from either party who changes their vote in either direction over something like that is an even-more-partisan whiny baby who deserves nothing but insults, mockery, and bad fortune for the rest of his or her life. So she gave a speech, big freaking deal, ignore her and move on. The vote impacts the entire economy!

[Lobowolf]

jdonn, on Sep 30 2008, 01:36 PM, said:

Lobowolf, on Sep 30 2008, 01:31 PM, said:

If you want a bailout to PASS, then Pelosi should probably be barred from ever getting close to giving a pre-vote speech.

Pelosi is dispicible and so was her partisan speech. That being said, anyone from either party who changes their vote in either direction over something like that is an even-more-partisan whiny baby who deserves nothing but insults, mockery, and bad fortune for the rest of his or her life. So she gave a speech, big freaking deal, ignore her and move on. The vote impacts the entire economy!

Agree.

I strongly expect a bailout to pass Thursday. The question isn't "Bailout?" It's "Which bailout?" While there is a time-critical element to the discussion, I don't think that a general need for a bailout should necessarily stampede people into a vote for any particular bailout.

With respect to delaying the bailout and the hoped-for stability it will bring, I'm more P.O.'d that they're taking days off than I am that Bailout 1.0 didn't fly. Maybe there are procedural requirements that don't make it possible to work through? I suspect that if this were a private sector crisis, the key people in its resolution wouldn't have holidays off.

[jdonn]

Lobowolf, on Sep 30 2008, 01:54 PM, said:

jdonn, on Sep 30 2008, 01:36 PM, said:

Lobowolf, on Sep 30 2008, 01:31 PM, said:

If you want a bailout to PASS, then Pelosi should probably be barred from ever getting close to giving a pre-vote speech.

Pelosi is dispicible and so was her partisan speech. That being said, anyone from either party who changes their vote in either direction over something like that is an even-more-partisan whiny baby who deserves nothing but insults, mockery, and bad fortune for the rest of his or her life. So she gave a speech, big freaking deal, ignore her and move on. The vote impacts the entire economy!

Agree.

Then I'm confused, could you further explain your first comment? Are you saying that some House Republicans ARE the type of people I describe, given that the House Republican leadership blames (at least largely) Pelosi's speech for the bill not passing?

[Lobowolf]

jdonn, on Sep 30 2008, 02:07 PM, said:

Lobowolf, on Sep 30 2008, 01:54 PM, said:

jdonn, on Sep 30 2008, 01:36 PM, said:

Lobowolf, on Sep 30 2008, 01:31 PM, said:

If you want a bailout to PASS, then Pelosi should probably be barred from ever getting close to giving a pre-vote speech.

Pelosi is dispicible and so was her partisan speech. That being said, anyone from either party who changes their vote in either direction over something like that is an even-more-partisan whiny baby who deserves nothing but insults, mockery, and bad fortune for the rest of his or her life. So she gave a speech, big freaking deal, ignore her and move on. The vote impacts the entire economy!

Agree.

Then I'm confused, could you further explain your first comment? Are you saying that some House Republicans ARE the type of people I describe, given that the House Republican leadership blames (at least largely) Pelosi's speech for the bill not passing?

I only know one House Republican well enough to answer, and for him I'd say no. But I think that given a possibly close and certainly important vote, why take chances? Lots of people are, or at least can be, quite petty. Yes, that's a particularly horrible quality (sic) in a Congress member; however, to the extent that we recognize and praise Obama's and/or McCain's ability to bring bilateral support to measures, and to the extent that it's an important quality in a leader, then I think the flip side is that divisiveness, particularly at a time like this, is rightly criticized.

[jdonn]

I'm fine with criticizing her. But you were implying that she was the reason it didn't pass...

[Lobowolf]

I wouldn't go that far on the first vote...the margin was big enough that I don't think there were that many boneheads (if any). But if the vote's going to be close on Bailout 2.0, I'd rather she kept her mouth shut.

[jdonn]

Ok, I doubt I'll drag this on much farther since I feel like what you post keeps shifting just enough to keep the last thing consistent. It simply seems to me that you can find distaste in what she said, but that if it had any impact at all on the vote, the blame goes to only those (Republican[s]) who were impacted, not her. And since they are the ones saying she "poisoned" the vote...

[luke warm]

cherdano, on Sep 30 2008, 12:17 PM, said:

luke warm, on Sep 30 2008, 04:09 AM, said:

why not just do away with the capital gains tax?

Jimmy, no serious economist from which I read comments in the last few days took this idea seriously. There is just no reason why this should work. Eliminating capital gains tax doesn't mean that suddenly everybody invests into the mortgage marked or starts buying investment banks, and the liquidity problem gets solved. (And I read about this in a lot of different places.)

I would suggest that you subtract some economic credibility from whatever source you got that idea from, seriously.

arend, there are economists who do say that eliminating the cgt would result in much more money in the markets... nobody posting here has the expertise to say it would do no good, imo

hrothgar, on Sep 30 2008, 09:25 AM, said:

luke warm, on Sep 30 2008, 01:09 PM, said:

why not just do away with the capital gains tax?

Ever heard the expression "A solution in search of a problem" ?

It almost feels like Conservatives has an ingrained bias in favor of taxes cuts. They seem to trot taxes cuts out regardless of what issue is at hand.

The Federal government is running a surplus - Better issue a tax cut
The Federal deficit is running a deficit - Better issue a tax cut
The US is dependant on foreign oil - More tax cuts are needed
Wall Street is melting down: You guessed it - Tax cuts

I don't find it at all surprising that the religious zelots on bulletin board also seem to be the ones who buy into this same type of mindless mantra regarding tax cuts

i don't know what it has to do with religious zealotry... i could with equal illogic say that atheists buy into socialism... what would happen if there was no capital gains tax, richard?