What is Tea Party movement?

[moda0306]

Bearbones,

That's hilarious.  I'm only 28 and it pisses me off a bit, too.

melveyr,

Is that story about the British Pounds true?  That is such a good anecdote for that point.  I always wondered if the value of the dollar could ever just go "poof" due to some mass realization that it was just paper, but when I heard the MMT idea that it was heavily driven by taxes (and, obviously, the quality of the government institutions and ability for the economy to produce what both the public and government demands both now and into the future) it finally made sense.

It's great to see a real experiment where all I ever had was thought experiments to prove this point.

[melveyr]

Bearbones,

That's hilarious.  I'm only 28 and it pisses me off a bit, too.

melveyr,

Is that story about the British Pounds true?  That is such a good anecdote for that point.  I always wondered if the value of the dollar could ever just go "poof" due to some mass realization that it was just paper, but when I heard the MMT idea that it was heavily driven by taxes (and, obviously, the quality of the government institutions and ability for the economy to produce what both the public and government demands both now and into the future) it finally made sense.

It's great to see a real experiment where all I ever had was thought experiments to prove this point.

I read it in Understanding Modern Money by Randall Wray. I have heard him talk about it in interviews too.

He has a new book that just came out called Modern Money Theory. It should arrive at my doorstep on Monday. I will let everyone know what I think of it. I am excited to read it 

[BearBones]

...Monetarily, the deficit doesn't matter right now because there are still substantial deflationary forces at work, roughly counterbalancing the inflation caused by the extra money. So yes, we should indeed raise spending on things that matter and cut taxes.

All very helpful. The only thing that I don't get is the part about deflationary forces vs deflation. First of all, it would seem to me that if there were such exaggerated deflationary forces at work currently there would be more deflation. In fact, the GDP and CPI are rising (albeit at very low rates). Second, the prices of many non-debt based goods such as food and energy seem to be rising, sometimes quite alarmingly. My world is inflationary since I do not carry debt. The world of the poor is inflationary. The world in such places as Egypt is inflationary.

So, it seems that we have a problem. For houses and auto loans, perhaps it is good for the government to boost spending. But for the rest of the world that does not need a mortgage, lease, or loan, (particularly those who are barely able to feed their families) the extra money being dumped into the economy may be having an untoward effect. What am I missing?

[Pointedstick]

All very helpful. The only thing that I don't get is the part about deflationary forces vs deflation.

I would say the difference is that inflationary and deflationary forces work to try to cancel each other out, and whichever one wins, that's the monetary condition we're left with. Others are more knowledgeable on this subject than I, but among the deflationary forces right now are housing prices still falling in many places and people paying down debt. As we know, one person's debt is another person's asset, so paying down that debt reduces the other person's assets, and therefore the size of the money supply. On the inflationary side, we have massive congressional spending and higher commodity prices, especially for food and petroleum.

The inflationary forces appear to be slightly more powerful right now, which is why we have light to moderate inflation at the moment. But of course you're absolutely right that this masks the fact that some sectors are inflating much more than others. If your budget primarily consists of food and gasoline, you may be hurting very badly. And once housing prices start to rise again and people become more comfortable taking on debt, those deflationary forces will become inflationary and then all the deficit spending become a much stronger driver of inflation. Will congress tamp it down at that point? Of course not. So at some point I think we're in for a big wave of inflation.

So, it seems that we have a problem. For houses and auto loans, perhaps it is good for the government to boost spending. But for the rest of the world that does not need a mortgage, lease, or loan, (particularly those who are barely able to feed their families) the extra money being dumped into the economy may be having an untoward effect. What am I missing?

I don't think you're actually missing anything! Financially, it's great to be a recipient of federal deficit spending, since you get the money first before it's had a chance to cause much inflation. So you get a double-whammy of more money with less of an inflationary effect. But it sucks to be a victim of that inflation and not receive even a trickle of the federal cash firehose. So yeah, if you're responsible, have no debt, and don't suckle at the teat of big government , it's easy to feel like you're being punished.

[MachineGhost]

I would say the difference is that inflationary and deflationary forces work to try to cancel each other out, and whichever one wins, that's the monetary condition we're left with. Others are more knowledgeable on this subject than I, but among the deflationary forces right now are housing prices still falling in many places and people paying down debt. As we know, one person't debt is another person's asset, so paying down debt reduces the other person's assets, and therefore the size of the money supply. On the inflationary side, we have massive congressional spending and higher commodity prices, especially for food and petroleum.

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[Storm]

You can't trust the NAR's numbers... why even post them?  I am more inclined to believe that deflationary forces are stronger currently.  Look at the fiscal cliff...  that's a 5% hit to GDP approaching fast.

[notsheigetz]

Basically, the original Tea Party in Boston was about the British government exempting the British East India Tea Company from import taxes, affording them favorable tax treatment to the detriment of others.

If you just liked to drink tea you probably didn't care about this very much but some tea merchants in Boston known in history books as "Colonists" (as opposed to terrorists in modern vernacular) didn't like it all.

So the Americans, led by the colonists, rebelled against the British and gave us a government whereby lobbyists get to court favor with so-called elected representatives who get go decide who gets favorable tax treatment and who doesn't instead of the British government.

Hi guys. I have a vague idea that the U.S. Tea Party movement is about anti-government spending. Can someone enlighten me why this group of people is called 'Tea Party' (sounds like a cute name), and what is the purpose of their movement? Just curious  :P

Coearth, in 1773, Boston (Massachusetts), the American colonists protested against the Tea Act, where the British (British East India Tea Company) imposed taxes on tea shipped to the colonies. The issue was that the colonists were being taxed by Britain, and they believed that if they were going to be taxed at all it should be by their fellow colonists with the tax revenues remaining in the colonies. They protested by boarding a ship that held taxed tea and dumped crates of it into Boston Harbor.  That act came to be know as the Boston Tea Party, and it was one of the defining moments in American colonial history leading to the American Revolution of 1776.

The connection between the Boston Tea Party of 1773 and  the current-day Tea Party is the protests over government use of tax revenues--in the current case, the use of tax money to bail out banks, overly indebted homeowners, automobile manufacturers, etc.  It started out as a nonpartisan, somewhat libertarian populist protest movement with a diverse membership drawn from the left, the right, and the middle, but it quickly became part of the Republican Party. When that happened, the membership changed rapidly, to the point where it is now primarily made up of conservative white male Republicans.