Josh Dowlut

Josh Dowlut
Contributor since: 2009
Company: Federal Fidelity Mortgage
A response to multiple criticisms I've received to the effect of, "but they weren't talking about income taxes."
That is true, but the method of tax (income, property, or consumption) is a completely separate issue from the structure of a tax (flat, progressive, regressive), and it is clear that classical liberals such as Adam Smith and Thomas Jefferson supported a progressive structure, regardless of the method.
Thomas Jefferson would side with the 47%, and likely say their burden was too high given the payroll tax:
"The rich alone use imported articles, and on these alone the whole taxes of the General Government are levied. ... Our revenues liberated by the discharge of the public debt, and its surplus applied to canals, roads, schools, etc., the farmer will see his government supported, his children educated, and the face of his country made a paradise by the contributions of the rich alone, without his being called on to spend a cent from his earnings." --Thomas Jefferson to Thaddeus Kosciusko, 1811. ME 13:41
A great, detailed contemporary piece from 1988 that reveals Reagan to be more of a tax shifter than a tax cutter, the shift of course being downwards. In other words: cut taxes on the rich, increase them on everyone else.
"According to the Treasury Department, the 1981 tax cut will have reduced revenues by $1.48 trillion by the end of fiscal 1989. But tax increases since 1982 will equal $1.5 trillion by 1989."
And on the spending front:
"In 1980, Jimmy Caner's last year as president, the federal government spent a whopping 27.9% of "national income"...At the end of the first quarter of 1988, federal spending accounted for 28.7%"
Regarding the oft cited, "but it was all Congress' fault":
" in nominal terms, there has been a 60% increase in government spending, thanks mainly to Reagan's requested budgets, which were only marginally smaller than the spending Congress voted."
Thanks for the link. It's possibly the best I've seen on describing the incentive structure of fractional reserve. "The endogenous theory of central bank creation." Essentially, central banks are created by banks and bankers, not governments. It reminds me of Nozick's "Anarchy State and Utopia" that argues anarchy will evolve into minarchy even without violating the zero aggression principle.
Thanks for the dialogue. The exchange has helped me hash out ideas on this far better than a monologue. With a little bit of revision, elaboration, and citation, I have all I need for what I wanted to write.
Full reserve offends some libertarians because it is only possible through government prohibiting private businesses from doing certain activity. However, if you believe the purpose of government is to prevent fraud and force, then prohibitions against fractional reserve banking make sense because fractional reserve banking is itself a fraud.
Rothbard (and anyone who understand the mechanics of fractional reserve) consider it a fraud because it essentially requires money to be in two places at the same time, or more accurately, to have two exclusive owners simultaneously. A contract that says the person who started a checking account has immediate access upon demand to the money, but then loans most of that money out to someone else, is a fraudulent contract.
The entire real economic argument behind the fractional reserve system is premised on the false idea that money is a real resource that must be put to use in order to avoid a real output gap (like fallow land, unemployed labor, or idle factories). But the truth is due to the quantity theory of money, idle money lowers prices, raises real wages, and accelerates real growth. Money is not even a factor of production. Land, labor, capital, and technology are factors of production. Thinking money is a real factor of production is engaging in the thinking of students who do poorly in introductory econ courses.
Regarding the notion of competing currencies, review the history of wildcat banking from roughly 1833-1913. Without laws prohibiting it, banks will fractional reserve lend. I could probably draw up a fairly sound game theory based explanation as to why, but 500 years of history is perhaps a stronger argument for why to expect it as long as it's legal. The problem is that even someone who is highly sophisticated is incapable of knowing which banks are about to implode and which banks are not, because the information needed to determine that is a detailed analysis of the bank's loan portfolio quality. I'm sure an anarcho-capitalist who enjoys heterodox thought experiment could envision some sort of private auditing firms to rate portfolio quality (essentially ratings agencies), but literally centuries of history demonstrate that fractional reserve is inherently unstable, prone to collapse, and the fraud alone is sufficient reason to prohibit it.
On the off chance you haven't seen this, I highly recommend watching about the first 30 minutes of "Money as Debt." It covers the exact same material as a college level money and banking course, it just points it out for what it is.
Very familiar with Mises and Rothbard. I find that like so many others, their understanding of the mechanics of inflation is somewhat incomplete. It's true that when money is created, the order in which you get the money matters (a thought experiment of a counterfeiter demonstrates this), but there's much more to it than that. I'll frame out my basic argument for the overall mechanics.
First, it must be recognized that deflation is natural, or more precisely, it would be the natural result of an economy with a non-interventionist money system where money only served as a medium of exchange, unit of account, and store of value (textbook macro/monetary theory/money and banking definition of money). Real economic progress is the ability to get more output with the same or less input. It is increasing real per capita wealth by an increase in supply exceeding an increase in population. Absent intervention, such progress is reflected by lower prices.
Second background premise, markets depend on price signalling for everything. The most basic trade-offs between consumption vs. savings, and work vs. leisure depend on price signalling. Interfere with the price level, and you interfere with the entire function of the market.
Fractional reserve causes inflation, as well as depends on it to keep from imploding. In addition to the market behavior deviations due to price signalling interference, fractional reserve also makes virtually everyone dependent on the financial services sector, and in doing so transfers vast amounts of power to the financial services sector. Fractional reserve's money creation also creates a negative externality from every loan transaction. In a full reserve, deflationary economy, one could literally keep money under his mattress and get a positive real rate of return. Contrary to the traditional notion that mattress money is wasted money, the truth is that due to the quantity theory of money, mattress money lowers the price level, thereby raising real wages, and contributing to real growth per the Ramsey growth model (growth=production-con... For savers with a risk and liquidity tolerance, equity investment would be the way to get a higher return than the deflation rate.
How deflation raises real wages:
Factor mobility: Out of land, labor, and capital, labor is by far the most mobile factor of production. A worker can change jobs easier than land can be moved somewhere else, or specialized machinery can be re-purposed to produce something else. Entrepreneurs must consider deflation when purchasing inputs, and discount accordingly. Iron ore that will take 6 months to come out the assembly line as a finished car must be discounted to account for the lower price level that the entrepreneur will be selling into 6 months in the future. The longer the time between purchase as an input and sale as a finished good, the bigger the discount. Factors of production at the beginning of the process need to be discounted more than factors of production at the end of the process. Raw materials and commodities must go at the start of the process. They are immobile. However, iron ore miners can become retail car salesmen. Via the substitution effect, and the contestable market theory prospect of miners becoming salesmen, even the miners' wages will be discounted less. The raw materials, the basic commodities will be discounted the most.
An empirical review of data supports that during times of deflation, raw commodities/wholesale prices fall fastest, followed by retail prices, followed by wages. Workers win in real terms. Guys like the Koch brothers lose. During inflation, it works in reverse order: wholesale prices outrun retail prices which outrun wages. Workers lose, Koch brothers win.
Market power also plays a role. Inflation creates urgency to buy, shifting market power to producers and away from consumers. Deflation creates urgency to sell, thereby shifting market power to consumers and away from producers. Capitalism (defined as the intellectual work of Adam Smith) is concerned primarily with consumers, and cares for producers "only so far as it may be necessary for promoting that of the consumer" (Wealth of Nations, Book IV, Ch VIII). Mercantilism (modern version is called corporatism) is concerned primarily with the producer, often at the zero sum loss of the consumer.
Price elasticity and endogenous demand of basic necessities play a role as well.
Full reserve would also be able to exist free from subsidy (FDIC/Fed) with minimal regulation, little more than basic fraud prohibitions. Fractional reserve on the other hand needs a significant amount of regulation and subsidy. I differ from most in the Ron Paul camp by recognizing that ending the Fed without also ending fractional reserve, would make things much worse off.
How to transition from fractional reserve to full reserve and what a full reserve system would look like:
A transition would need to be very slow, and very gradual, possibly in the neighborhood of 30 years. The concern would be that many contracts were entered into under the assumptions of the perpetuity of fractional reserve and inflation, and to so dramatically alter the lay of the land would border on an ex post facto law, or violation of the Contract Clause, as well as the universal applicability rule that underpins most ethical systems. It would also likely induce chaos and loss of confidence, neither of which are good for markets. The idea would be to gradually raise the reserve requirement and increase the M1 money supply at the same rate as which outstanding loans were paid off and retired, thus bringing M1 and M2 inline with each other. Over the course of many years, the reserve requirement would be brought from 10%, to 100%.
With a 100% reserve requirement, commercial banking as we know it would cease to exist. Commercial banks could make loans, but only with time deposits. Time deposits could still maintain liquidity via selling the note at a discount. Demand deposits would have a warehousing/intermediary function only. Most businesses would be formed through equity rather than debt, and the sellers of big ticket items (cars/houses) could seller finance the sales. This could be a liquid market as well via selling the note at a discount. The difference is that such activity couldn't "create money."
I'm with you on the full reserve and actually in the midst of writing what I call "The Critique of Perfect Fractional Reserve." So much of the criticism of our banking system is based on what could go wrong, essentially runaway inflation, or implosion through widespread defaults, but what if it were to work perfectly? What if the Fed were able to perfectly hit its inflation target, would there be any real distributive effects?
I contend that yes there would be, through factor mobility and market power, both theory and empirical history show that inflation reduces real wages, while deflation actually raises them. Therefore, fractional reserve banking, even in its perfect execution, redistributes income and wealth from those who work for their money to those whose money works for them.
The bailouts were more about bailing out creditors (banks) than they were about bailing out debtors (households and non-bank businesses).
I'll repeat the part where I say everything resembling a bailout, namely loose monetary policy, externalizes costs (such as your example of who it impacts), thus creating market failure, and it would be far better for creditors to negotiate write-downs and modifications, even if it resulted in the insolvency of the creditor.
Blaine Young of Frederick County MD, a Republican who has recently formed an exploratory committee to run for governor, is all about big government when it creates protective barriers his incumbent business can hide behind so he can rent seek off his drivers and the public at large.
The list of comments from this local Frederick story on "illicit gypsy cabs" says at least most of the public gets it.
Frederick News-Post
'Gypsy cabs'
Originally published June 29, 2011
"June 29, 2011 @ 09:21 AM: inspectoroncall
Blaine loves gubment as long as it lines his pocket and there's still room for his little black book in their. Tight fit for sure. "
"June 29, 2011 @ 10:34 AM: Traderarb99
The problem here is not the rogue companies but the limited number of taxi licenses that are issued, which creates the oligopoly of cab companies. Everyone should be allowed to open a cab company and be issued a licensed provided they meet the necessary requirements. Let’s let the free market decide who runs the best cab company at the lowest price, not an arbitrary panel who decides the number of licenses that are granted and who receives them. Nature abhors a vacuum and if there is a market need, someone will fill it whether it is legal or not. "
"June 29, 2011 @ 01:03 PM: winstonsmithy
I don't know how anyone can argue without a smirk on their face that taxicab regulation benefits consumers of taxi service. All drivers must be licensed and insured, all vehicles must meet safety criteria set by the State, and it doesn't require years of schooling and internship to ensure competency to drive a passenger from Point A to Point B. All that Frederick City's taxicab regulation scheme achieves is to restrict competition, artificially raise the cost of taxi service, and provide politicians a "constituency" that must buy their favor to preserve their business. "
"June 29, 2011 @ 08:50 PM: j_kai
Taxi cab commission???!!! what a joke..... thats why this country is in a MESS.....regulations so certian people can keep thier monopoly on a enterprise. these cab company is just afraid of competition..... I say.....get a business license, insurance and let the better business bureau be the informative arm for the public. thats real capitalism and democracy. '
and more at the link...
Matt Bruenig cites even more commie talk from Locke's First Treatise of Government. The poor have a RIGHT to the surplus of the rich:
"God, the lord and father of all has given no one of his children such a property in his peculiar portion of the things of this world, but that he has given his needy brother a right to the surplusage of his goods, so that it cannot justly be denied him when his pressing wants call for it, and therefore, no man could ever have a just power over the life of another by right of property in land or possessions, since it would always be a sin in any man of estate to let his brother perish for want of affording him relief out of his plenty." can't use his market power to grind down other men to subsistence wages:
"And a man can no more justly make use of another’s necessity to force him to become his vassal by withholding that relief God required him to afford to the wants of his brother, than he that has more strength can seize upon a weaker, master him to his obedience, and, with a dagger at his throat, offer him death or slavery."
1973 SEC rule change source, among others:
"More precisely, the regulatory dependence on credit ratings began in 1973, when the SEC proposed amending broker-dealer “haircut” requirements, which set forth the percentage of a financial asset's market value a broker-dealer was required to deduct for the purpose of calculating its net capital requirement. Rule 15c3-1, promulgated two years later, required a different "haircut" based on the credit ratings assigned by NRSROs. See 17 C.F.R. 240.15c3-1. Since the mid-1970s, statutes and regulations increasingly have come to depend explicitly on NRSRO ratings."
Rethinking Regulation of Credit Rating Agencies:
An Institutional Investor Perspective
Prepared by
Frank Partnoy
George E. Barrett Professor of Law and Finance
Director of the Center on Corporate and Securities Law
University of San Diego School of Law
for the Council of Institutional Investors*
April 2009
Another 10th Amendment versus 2nd and 14th Amendment: Should a gun owner be allowed to transport an unloaded, locked in case firearm from legal point A to legal point C through illegal point B, or should illegal point B have the state power to deny him of his individual right?
Many of the companies Bain purchased received state and local government grants, tax credits, and tax abatements, well over $100M from 1994-2005.
Thanks for sharing. I did not know that about Ron Paul, but it is consistent with that entire brand of libertarianism, which is not really pro-liberty, but merely anti-government. If the size of government and the level of liberty were a constant inverse function, anarchy would equal perfect liberty. Many Ron Paul supporters, and Paul himself, at least at the federal level, subscribe to this.
For me, Ron Paul's clearest example of favoring state powers over individual rights is his We the People Act of 2009 ( It would have unincorporated the 1st and 4th Amendments, while effectively repealing the 14th. But he is also on record several times as saying the 1st doesn't apply to state or local governments, and there is no right to privacy:
"there clearly is no right to privacy nor sodomy found anywhere in the Constitution. There are, however, states' rights"
"The First amendment says “Congress shall make no law” — a phrase that cannot possibly be interpreted to apply to the city of San Diego."
I would challenge Paul to find the phrase "states' right" anywhere in the Constitution. The 10th Amendment, unlike the 1st, 2nd, 4th, 6th, 7th, and 9th Amendments which use the word "right," instead uses the word "power."
Yes, operation flat-line would be a more accurate name.
Standard yield curve theory attempts to explain the shape of the yield curve through investor preferences and expectations. For the quick benefit of anyone reading this who may not know (because I'm sure you do), a positive slope indicates positive expectations, a negative slope indicates negative expectations, and a flat slope indicates uncertainty.
The question is what would reshaping the slope by decree do to investor's behavior, all else equal? Given that the positive slope represents time preference for liquidity, if yields are equalized, investors will gravitate towards the shorter-term securities and away from the longer-term securities. Given that that fits with the Fed's plans of selling off the short end and buying up the long end, one can see how such a plan could be easily possible. The next question becomes what would the effect be on the overall economy, and that's where the malinvestment from discouraging long-term investing and savings comes into play.
What I'm failing to see is any benefit other than to hedge the government's own borrowing costs against rising inflation and interest rate risk.
Our world awards PhD's and Nobel Prizes not on a broad, interconnected understanding of how the clock works, or for universally applying sound logic. It awards these credentials for novel contributions to the broader field by studying one narrow sliver of it to microscopic detail. Krugman offered a novel, modern econometric based explanation on the network effect, and economies of scale of big cities. He was able to mathematically quantify an answer to the question of why cities like NYC hold a comparative,and absolute advantage in certain areas over all other cities. He never had to demonstrate sound logic, or a broad understanding of the way the world really works.
The latest update to this ruse
"each of the above exits makes reference either to Footnote 49 or Footnote 50. Footnote 49 reads: "Repayment pursuant to Title VII, Section 7001(g) of the American Recovery and Reinvestment Act of 2009 using proceeds received in connection with the institution's participation in the Small Business Lending Fund." Footnote 50 reads: "Repayment pursuant to Title VII, Section 7001(g) of the American Recovery and Reinvestment Act of 2009 — part of the repayment amount obtained from proceeds received in connection with the institution's participation in the Small Business Lending Fund."
Responding to arguments I've received against this,
The Maryland Legislative Services report that estimates it would hurt MD's budget is highly flawed on multiple fronts.
1. The Cade formula uses average cost, not marginal cost.
2. The 732 Cade exemptions at Montgomery College can be exempted for any number of reasons, such as " for dually enrolled high school
students. "
Many smart high school kids take courses at Montgomery College. Most of the adult elective classes they teach are exempt. There isn't nearly enough information to determine the # of illegals enrolled at MC based only on their Cade exemptions.
3. They literally quadruple these errors by applying a completely arbitrary doubling rate to these figures in 2013 and 2014.
This study analyzed the results of 10 states that have already tried in-state tuition for illegals (Texas was one of them) and they observed that it incentivized a 31-54% increase in enrollment for non-citizens. But that was a 30-50% increase of a very small number to begin with, 50 out of 19,000, that's 0.2%, the increase itself was 0.05%. Applied to UMD College Park you're talking about 19 new students.
The only way it would hurt the state budget would be if illegals were willing and able to pay the out-of-state rate, an argument and assumption that some have made. Given that they don't qualify for any student aid or loans, and come from much lower average income backgrounds, this isn't the case. These kids do not come from the same families as the New York and New Jersey kids driving late model BMW's and living on fraternity row at College Park.
There is also an originalist, Jeffersonian argument to make that this law is on the right side of a states' rights issue. Immigration was originally a state right. As Jefferson put it,
"Alien friends are under the jurisdiction and protection of the laws of the state wherein they are; that no power over them has been delegated to the United States, nor prohibited to the individual states, distinct from their power over citizens; and it being true, as a general principle, and one of the amendments to the Constitution having also declared, that “the powers not delegated to the United States by the Constitution, nor prohibited to the states, are reserved, to the states, respectively, or to the people,” the act of the Congress of the United States, passed the 22d day of June, 1798, entitled “An Act concerning Aliens,” which assumes power over alien friends not delegated by the Constitution, is not law, but is altogether void and of no force."
I'm really not sure. You can certainly argue the point that the law should never set in motion a chain of events that connects a civil offense with a prison cell, but it is admittedly a bit of a connect the dots type of argument.
In MD, the best chance we probably have is the fact that the MD law prohibits the operator of one of these devices from earning a commission. A case in Montgomery County got thrown out over the summer because the judge ruled that they were actually being operated by county police, not the contractor. It really keys on the definition of the word operate.
Purely speaking in theory, I think some version of a progressive consumption tax would be the most efficient and fair form of taxation. Practical administration of such a program would prove to be a nightmare, with many unintended consequences, the foremost being artificially altering relative prices without precision with regard to consumer tastes, likely leading to a broad loss of utility beyond the tax revenue raised, as well as tax rates approaching levels where tax avoidance becomes a real problem.
Progressive taxation was also favored by Jefferson, and the reason was fairness and equality: "Another means of silently lessening the inequality of property is to exempt all from taxation below a certain point, and to tax the higher portions of property in geometrical progression as they rise." --Thomas Jefferson to James Madison, 1785. Jefferson was a huge fan of Smith
"That liberty [is pure] which is to go to all, and not to the few or the rich alone." --Thomas Jefferson to Horatio Gates, 1798.
What has been lost by modern Republicans is that their traditional heroes, Adam Smith and Thomas Jefferson, absolutely REVILED aristocracy and sought public policies to limit it.
Within certain income bands yes. Above certain bands, when you start considering Warren Buffet income, no.
It would be a progressive, graduated consumption tax. For example, homes with a value over the median area's value could be taxed at a higher rate than homes under it. Cars with a sales price of more than 50k could be taxed at a higher rate than cars under it.
Because gas is almost as much a necessity as food (the Urban study indicates 67% of those at poverty level drive to work), basic shelter, or utilities, and it has a very low price elasticity of demand, it is much more regressive than simply a general sales tax that taxes everything including luxury items.
I read your take on this as well, regarding paying for use. To that I caution against the general soundness of "labeling" taxes. It's how the highly regressive payroll tax has come to be, with a label, and a "lock box" for it. Government should only provide public goods, not private goods. Public goods by their very nature make it difficult to completely and accurately charge all the beneficiaries of their positive externalities. The worker who uses the road is benefiting from their existence, but so is his employer, as well as his employer's customers. Public policy should first decide what are sound public goods and services to provide, and then separately consider what is the most efficient and fair method to pay for them.
The benefits the poor receive from public goods will always be a higher percentage of their income than that of the rich. To try to fee-for-service everything would result in their taxation being a higher percentage of their income as well.
And to that Adam Smith would say: "It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion."
There's a supply-side specific argument I'm making against the gas tax later tonight....
Book 1, Chapter 11, in talking about the 3 basic divisions of economic resources (rent, wages, and profit): "But the rate of profit does not, like rent and wages, rise with the prosperity and fall with the declension of the society. On the contrary, it is naturally low in rich, and high in poor countries, and it is always highest in the countries which are going fastest to ruin."
Translation: Profit is not indicative of the Wealth of a Nation, and can actually be indicative of a lack of competition.
MBA econ courses spend a lot of time going over strategies of how to increase profits by limiting competition. They really drive into the student's head the harsh truth that long-run profit cannot exist under perfect competition. Smith was a huge fan of competition, and the power of the free market to harness competition, but he absolutely hated businesses who sought to use collusion, and exclusion to limit competition in order to increase profits.
The granddaddy of taxicab regulation studies. 176 pages of the federal government's inquiry into determining of regulation is beneficial to society. The answer: NO.
The FTC studied taxi regulation in depth 26 years ago and concluded: "The principal conclusion of this report is that no persuasive economic rationale is available for some of the most important regulations."
Federal Trade Commission
An Economic Analysis
of Taxicab Regulation
Mark W. Frankena
Paul A. Pautler
Bureau of Economics Staff Report
May 1984, fundamental economic theory is timeless.
Agreed that we are not going to turn into Zimbabwe or Wiemar. I crunched numbers back in Nov indicating the absolute worst case total crisis of confidence possible scenario was an initial price shock of about 50% followed by 13-15% inflation:
Not agreed that the dollar devaluation is not without cost. The productivity gains you reference mitigate and mask the cost. Research indicates that inflation lowers real wages, and deflation raises them, essentially prices are more volatile than wages in both directions (see The Relationship Between Wage Rates and Unemployment by Emmett Welch, 1933). And contrary to the deflation=depression mantra of mainstream economists, evidence shows that deflation and strong growth have coexisted in our nation's past with 5 fold real GDP per capita growth (web.econ.ohio-state.ed...) at the exact same time we had a 50% decline in the price level (Deflation Determinants, Risks and Policy Options published by the IMF in 2003, pg 9).
Examining history from 1820-1913 reveals US real per capita income increased by nearly a factor of 5 and when ranked against other developed nations went from middle of the pack to #1 (see here -web.econ.ohio-state.ed...) during the exact same time the general price level fell almost 50% (Deflation Determinants, Risks and Policy Options published by the IMF in 2003, pg 9).
Strong growth and deflation, have and can coexist. The Welch piece cited within the article here shows that inflation decreases real wages, and deflation increases real wages.
In summary, inflation/deflation has little effect on total wealth and total output, but it does have a significant effect on the distribution of that wealth and output.
Pro-inflation policy, especially negative real interest rate policy such as we have, creates distortion and malinvestment by prodding people into higher relative risk. It enables governments to run bigger deficits, and along with bankers, control more of the economy.
How would a full reserve system look? Much less commercial banking, much less bonds, and much more investment banking. Your average worker would have a greater ownership stake in the world around him. Want to build a factory? You don't need a loan if you can raise stock from your community. More stock ownership, especially for small business, less bank loans. The average worker would now be in a position that more productivity gains were passed through to him, if not in wages, then in dividends or stock appreciation.
Your arguments contradict the first 2 of the 10 principles of economics I wrote back on Sept 14: Falling prices are the natural result of innovation, and your contribution to society is what you produce, not what you consume. The 3 functions of money is 2nd week intro level econ material that is beyond any serious debate.
I just reposted to my Seeking Alpha blog, my homage to Mankiw's 10 principles:
You can only sell for what someone else can buy for. Expensive housing may create a positive wealth effect, but it creates an even greater negative income effect due to the fact that a higher portion of wages is required to pay for housing, therefore a smaller portion of wages is left over for anything else.
EPI's Bivens cited the positive income effect of refinancing to the lower QE rates, but the other, more natural way to achieve a positive income effect through lower housing payments is through principal write-downs through default or restructure.
No one profits in the long run from expensive housing but the banks. Expensive housing creates the same real wealth that expensive tulip bulbs created 400 years ago, or that expensive profitless tech stocks created 10 years ago.
Correct, the 4 trailing items are not principle causes of today's problems, but comprehensive economic policy whose aim is to lessen resource underutilization should address them.
Regulation is a contributing factor to monopoly or market power. A firm with monopoly power (used interchangeably with market power) will charge a higher price and produce less output and therefore employ fewer workers than a perfectly competitive firm that has no market power.
See: the perfect competition model, behavior of the monopolistically competitive firm, and behavior of the perfectly competitive firm.
RE: health insurance. It is a fixed monthly cost that the employer incurs regardless of the # of hours an employee works. A profit maximizing firm will squeeze as many hours as possible out of such a worker in order to lower the average total cost as much as possible.
If the borrower has no equity, as is the case in most foreclosures, there is nothing to lose. If there is equity, the law requires it be paid to the homeowner after deducting for allowable expenses.
But regardless, it is only worth what someone is willing and able to pay, which brings us back to the central problem of incomes being insufficient for prices.
All the gold horded by kings and carried in bullion coins throughout human history has been "investment demand." Investment demand for gold is nothing new, its waning 10 years ago was an aberration from long-run history, not the norm.
How exactly do you see QE being scaled back? They are monetizing the deficit. The annual rate of QE is almost exactly equal to the annual deficit that exceeds the long-run average.
Cash 4 gold signs are not a sign of a bubble. The sign of a bubble is when your grocery store cashier starts telling you about the gold ETF they are making a killing on. As of now, the sophisticated money is still buying, and it is the unsophisticated rubes who are being conned into selling. When masses of unsophisticated rubes start buying, that's the bubble sign as it was in tech stocks and RE. Still a long way off from that point.
Plus, follow the nominal chart from 1971-1980:
When the US functionally defaults, there is precedent for increasing by a factor of almost 30 and drawing that increase out over an entire decade. Our "default" incident even by the longest possible measure is only 2-3 years old and gold hasn't even increased by a factor of 2.
CITATION NEEDED regarding your $400/oz physical supply/demand equilibrium price.