I know right now the rules talk about taxing your economy and higher taxes means smaller growth of your economy. My question is: what if you have reached the limit for taxing your country and are in the middle of a war that is costing too much money. It doesn't have to be a large to-the-death war, but it could very easily be several smaller wars. Do the numbers in the rules for taxation include borrowing done by the government? I ask because in theory the British government towards the end of the Napoleonic Wars tried to pay for its military through taxation (for normal upkeep) but half of the extra cost of the war would be covered by new taxes and the other half would be covered through borrowing. I was wondering if there might be any vehicle allowed through the rules that would allow a government to borrow money, either from its people or (in my opinion the better idea) from other nations? I appreciate that this may have been discussed and discarded however it had just hit me today that if the maximum you can increase your taxes by is to double them during wartime, the government might still be incurring costs above and beyond its tax revenue. If you're government has a policy of keeping taxes in the 3-5% range this might not be a problem but for governments more interested in economic development who find themselves the victims of overly aggressive nations trying to double a 1% tax is not going to do all that much for you.
KISS mate, we are not likley to see that as an option.
I like the idea of being able to borrow from somewhere or alternative being able to store sulprus. That said I don't think a 1% tax rate will be doable for anyone, you just can't maintain a suitable defensive force with that money, much less build stuff. 2% is probably the minimum one can go.
Quote from: Tanthalas on August 12, 2011, 10:42:22 AM
KISS mate, we are not likley to see that as an option.
I agree keeping it simple is the goal, and I don't view borrowing/lending as being all that complicated. Maybe it is, I'm definitely not an economist or a banker. But from my perspective country A says to country B, "yo, lend me $10" and country B says "sure, pay me $15 in 3 years". Or something like that.
Quote from: Darman on August 12, 2011, 10:50:29 AM
Quote from: Tanthalas on August 12, 2011, 10:42:22 AM
KISS mate, we are not likley to see that as an option.
I agree keeping it simple is the goal, and I don't view borrowing/lending as being all that complicated. Maybe it is, I'm definitely not an economist or a banker. But from my perspective country A says to country B, "yo, lend me $10" and country B says "sure, pay me $15 in 3 years". Or something like that.
Well... if Country A borrows $X from Country B, then we need to treat that as a simple private business deal.
1.) NO RULES NEEDED- Country A borrows the money as a 'handshake' kind of deal, and the two nations treat it as a simple transaction.
2.) LOAN WHAT YOU HAVE- As long as Country B has sufficient money to loan Country A, it's all good... loan as much as you can afford.
3.) CAVEAT EMPTOR- If the debt is not repayed on time, then it's your own fault for either engaging in a risky practice or not working out proper terms.
There should be no expectation of international committees, no demands of coalition wars, and no 'but he owes me money' whining.
The Mods had talked about allowing banking of funds and to allow borrowing but no firm agreement or approved mechanism.
Michael
Quote from: Carthaginian on August 12, 2011, 11:01:23 AM
There should be no expectation of international committees, no demands of coalition wars, and no 'but he owes me money' whining.
I had never even thought of any sort of international agreement on financing. Coalition wars may end up occurring, or at least the bankrolling of one nation's armies by another nation (England did that fairly often). And whenever you loan someone money you are taking a risk. And I for one wouldn't rule out the possibility of the losing side in a war defaulting on any loans made to them, either through a pure default or a revolution or coup. However if a certain nation routinely defaults on their loans then I think most other nations would be a little more hesitant to lend them money.
Quote from: miketr on August 12, 2011, 11:13:40 AM
The Mods had talked about allowing banking of funds and to allow borrowing but no firm agreement or approved mechanism.
Michael
Banking of funds might make sense, however that would probably involve rules and the way I view it borrowing/lending requires few, if any, rules. Other than the guidelines Carthaginian already posted, I think borrowing and lending would be a fairly self-regulatory business, if you have a tendency to default then nobody will lend you money.
Quote from: Darman on August 12, 2011, 11:31:11 AM
Banking of funds might make sense, however that would probably involve rules and the way I view it borrowing/lending requires few, if any, rules. Other than the guidelines Carthaginian already posted, I think borrowing and lending would be a fairly self-regulatory business, if you have a tendency to default then nobody will lend you money.
I'm really with you, Darman... that's why I like the 'handshake' model. Players who present a poor probability of returns will not be loaned money, simply because they aren't good investments. Beyond that, anything else is just more endless rules-lawyering, that will stretching the development time on the rules and push the start of the game farther and farther from the beginning of September.
I also basically expect that any loosing nation would default on loans... this is simply a result on gambling on a bad hand, you loose your stake. And while I don't particularly like the idea that a dozen nations might finance a single proxy to go to war for them, it is an inevitable fact of war that things work like that.
We were talking about borrowing from national banks, etc IE players would be borrowing from their economy in effect. Again we didn't have any firm agreement.
Michael
Quote from: miketr on August 12, 2011, 12:54:12 PM
We were talking about borrowing from national banks, etc IE players would be borrowing from their economy in effect. Again we didn't have any firm agreement.
Michael
Mike...
Why?
What is the point in allowing deficit spending?
Do we really want the N-verse to get into the kind of idiocy that the current economic situation reflects? I look at the stupidity going on around us in the world and wonder why the heck we'd want to invite that into our sim.
Is this VITAL to the sim's function?
Or can we just stay within a budget and forget about extraneous rules?
Its easy to keep it simple, you just borrow from yourself, if you don't pay it off in a set amount of time, mods cause your population to revolt or the economy collapses.
And just because its a stupid idea to do so doesn't mean it should be allowed. OTL is what it is because of said stupid decisions, so I say allow them. If someone wants to spend more than he makes let him, its his problem...
Quote from: Desertfox on August 12, 2011, 01:08:09 PM
Its easy to keep it simple, you just borrow from yourself, if you don't pay it off in a set amount of time, mods cause your population to revolt or the economy collapses.
And just because its a stupid idea to do so doesn't mean it should be allowed. OTL is what it is because of said stupid decisions, so I say allow them. If someone wants to spend more than he makes let him, its his problem...
Really... what does this rule add?
Well, aside from the fact that some small population of players will abuse this, constantly allowing their nation to revolt, change regimes, etc- simply as an excuse to abuse the fact that they can squeeze a few more dollars?
Desertfox, if someone makes a rule that invites jackassery, it is inevitable that jackassery shall ensue. I point out Real Life as my example. Prior to National Banks and the rise of deficit spending a nation's entire economy collapsing was unheard of... but today, we are looking at a
world collapse as a possibility.
ADDENDUM:
Perhaps I might be able to face this as a rule if the Mods place an appropriate penalty:
When your nation revolts because you are spending like drunken sailors on leave- or worse, like the U.S. Government- YOU LOOSE YOUR NATION FOREVER. The 'regime change' kicks out the leader responsible for destroying the nation's economy (the player) and becomes an open nation for a new player. The original player may play as any other nation available, but may not have his old nation back.
It gives you the ability to gain emergency cash for short periods of time in case no outside lenders can be found.
Your penalty is a little extreme, I would say a say 30% permanent drop in that country's economy would be more appropriate.
Quote from: Desertfox on August 12, 2011, 01:22:06 PM
It gives you the ability to gain emergency cash for short periods of time in case no outside lenders can be found.
OR, if abused, it allows you to do what the idiots in charge of a large chunk of the free world have done over the last 100 years or so.
Quote from: Desertfox on August 12, 2011, 01:22:06 PM
Your penalty is a little extreme, I would say a say 30% permanent drop in that country's economy would be more appropriate.
Looking at the world at large, I'd say that it is actually rather lenient... very few egomaniac dictators with poor accounting skills get a second chance to run a nation into the ground- most of them die horribly.
I counter that your penalty is too lenient, as it allows a player to keep playing, even though he has been kicked out during a revolution. ;)
We are not trying to make a perfect world here, and if the OTL world is doing it so much better reason to introduce it.
After the 4th or 5th penalty the player will move on by himself seeing as his economy will be completely shot and he won't be able to do anything. Think of it as a 3 strikes system, abuse it once 70%, twice 50%, three times 35%. Its not lenient at all, but allows one time offenders to get a second chance. Just look at the US, how many chance have we got...
My whole issue is the more shit we add the more complicated the bookeaping gets. im in favor of anything that reduces the ammount of numbers I have to crunch.
This would be optional, use it if you want to, if not don't even worry about it.
Yo.
Carth, if you want to talk about politics, please do it in private, k?
Quote from: TexanCowboy on August 12, 2011, 03:18:08 PM
Yo.
Carth, if you want to talk about politics, please do it in private, k?
Not talking about politics- I'm just pointing out real world examples, Tex. Every major nation that follows the practice of deficit spending has either a rapidly growing debt... and many are
right now experiencing political upheaval on a scale only seen before in tiny nations with no real economy and run by tin-plated dictators with delusions of godhood.
Even 'stable' and 'powerful' economies like the US, Japan, Great Britain, the EU and Canada are experiencing these kinds of troubles now- all as a result of something that is now being debated about being allowed in our game.
Deficit spending breeds more deficit spending as you borrow money to pay off the deficit.
It's just a fact of economics- and human nature- that once you break your budget, it is extremely difficult to come back within it..
No DF if the other nations that are hostile to yours are doing it,it isnt optional they defacto force you into doing it to remain viable. Thus forcing Aditional paperwork on other people. I will flatly say I am against this proposal, I will be against this proposal in any shape or form that dosnt have drastic repercutions for any nation taking it. Just as I havnt even broached several things that I know are OTL Mormon Standard for Deseret because im sure that the mods would say no.
*sighs*.....
This is getting a we bit frustrating..... I could have sworn one of the major problems in the last game was not being able to save up unspent money from your economy. Without the ability to build a slush fund or do what most nations did which was to bank surplus money well we dont really have any realistic way to simulate an economy.
I think if you look at the US Government Prior to World War I and World War II the US used to run at a profit. The profits were banked.
So before any MORE players blow a gasket..
The Proposal was to allow players to build up a percentage of their GDP in their own banks. Loaning that money to other Players or NPC well I dont think we as Moderators had gotten further then well its logical but do we want to allow it. Let alone what percentage of the GDP do we want to allow.
So please everyone take a chill pill discuss things like rational people.
Quote from: Carthaginian on August 12, 2011, 03:40:24 PM-snip-
The problem with deficit spending, that can be solidly proven, is not so much that it is a guaranteed fail, but the fact that the money is drawn out for a temporary fix and then never goes away. For example, social security was originally conceived in the US as a temporary means of helping people who did not know how to save, save for retirement. There was an opt-out option (no tax from SS if so). Eventually it became mandatory and expanded. Usually the deficit spending came from welfare programs that never went away.
Of course, in hindsight it seems insane, but it is quite logical. Even in today's problem, most people still do not want their over-bloated welfare programs taken away. Therefore it was simply bad politics to make such unpopular decisions (no one would support your position).
The problems of the US are no quite as severe as everyone makes it out to be. The debt-to-GDP is actually relatively small and with 2 trillion in tax revenue, we could easily pay it off. Problem is no one wants to make the sacrifices necessary to. Now the "stable" economies of Japan and the EU are another matter. Japan has long had a stagnate economy with over 200% debt-to-GDP ratio, it's rating should really be lower than B IMO. EU was just a fundamentally flawed concept, the consumer nature and government positions are too varied for such a weak Union to hold them together for a "strong" economy.
--
It's quite logical to borrow from other nations (or the national bank itself) during times of distress, so I do support both loaning between players and withdrawing savings in banks. My line of reasoning is that, that extra bit of money may make the different between victory or defeat in a war. In total war, it is the different between having a nation to pay back loans and not having a nation at all. It is reasonable, provided that the player returns the money.
Of course, we could "rate" players on their ability to return money (something like an N-verse S&P) or an inflationary drop in economy productiveness (ie: the currency is devalued and thus so is all products etc.). I think the former seems like a decent idea and the latter might be too much bookkeeping.
Logi,
THANK YOU.
You have just made the most excellent case for why this is a BAD IDEA. :) Nothing ever works like it is intended- and borrowing money is exactly one of those things. If we allow deficit spending, it will happen just like you detail- things that we never intend shall come about from the innocent notion of allowing a nation to borrow from itself or others.
Just like with Social Security, a very benign thing at its inception, allowing deficit spending in N-verse is likely to develop into the nightmare which you suggest- developing bond rating, a credit index... bogging down a nice, relaxing sim in the idiocy of international banking.
You are very convincing with your description of this nightmare...
I like the idea of having such things allowed even less than before you you typed that.
All I'm talking about is pretty simple. This is not a full scale economics sim...
Say Nation A is at war and is unable to secure a loan from any other nation. The nation pulls out a $20 loan from itself, terms are it has to be re-payed at $25 in three years. If said nation is unable to repay in said time it suffers a punishment in line with its loan, if a small loan then say a 5% permanent loss of GDP.
As an example of why this would be useful: In WW I had Mexico sells certain stuff to another country. I then went ahead and made my budget with the new income which was significant. However, said country canceled its purchase very very late. At that point I had made several other deals with other countries that I could not cancel. I was going to have the money later on but I did not have it at that specific point in time. I had to resort to getting a loan from another country using a couple of my ships as collateral. This almost led to war when the other country came close to not returning said ships after I repayed the loan. At that time such a system like this would have been very helpful.
I am simply against anyone being able to loan money to themselves... to much potential for Abuse.
1880 Nation A is $20.00 short so the borrow it from themselves
1881 Nation A Borrows $8.33 from itself and banks it
1882 Nation A Borrows $8.33 from itself and banks it
1883 Nation A Borrows $8.34 From itself and pays off the original loan ammount
1884 Nation A pays off loan 1881 $10.00
1885 Nation A pays off loan 1882 $10.00
1886 Nation A pays off loan 1883 $10.00
1887 start the Cycle over again
Atmitedly it would be a pain in the ass, but you never get hit with the big balloon payment doing it like this. You could even make it more complex by borowing the money to pay off the smaller loan ammounts. Now in and of itself there isnt realy a problem with this, im just concernd with what happens when a player gets ate by IRL and someone else who dosnt have all the financial data takes up the nation.
None of which takes into account some of the realy freaky things players can do. Take for Example Deseret, Heavily Mormon each member of the church is expected to pay 10% of their income to the church in tithing. However in this case the church just happens to be the Goverment. so Hypotheticly I could set my tax rate at 0% and still have more income than any other player, note I dont intend to even ask about actualy doing this its just an example (well unless the mods tell me I can do it without trashing my economic growth ;) but im realy not asking)
Tanthalas, I don't see were you see a problem.
When I asked (quite worried) if we (again) would have to perfectly balance our income and expenditure (coupled with only rough tax steps) I was told that this will not be a problem. In favor of KISS we would be allowed to carry over a couple percent of our GNP from one year/report to the next. I think it would be only consequent if that could be both a positive or negative value. If it's positive nothing happens, if it's negative you might have to pay a few percent interest.
Very simple, easily automated. Were is you problem?
The Only people mentioning borrowing from themselves is the PLAYERS....
That being said internatl loan where ones Governement borrows from its own private sector would be common historicaly. However they may be very promlematical from the SIM point of view. Nothing is decided on the Issue feel free to continue to discuss.
Quote from: Nobody on August 14, 2011, 02:22:37 AM
Tanthalas, I don't see were you see a problem.
When I asked (quite worried) if we (again) would have to perfectly balance our income and expenditure (coupled with only rough tax steps) I was told that this will not be a problem. In favor of KISS we would be allowed to carry over a couple percent of our GNP from one year/report to the next. I think it would be only consequent if that could be both a positive or negative value. If it's positive nothing happens, if it's negative you might have to pay a few percent interest.
Very simple, easily automated. Were is you problem?
I never saw what was so hard about balancing my expences in N3... I realise there was a great deal of complaining about it, but I just never found it to be hard. I actualy rather like the being able to bank some cash part, and as I have said before I dont have a problem with people loaning their extra cash to NPCs and other PCs who might need it. My only issue is im sure some clever Rules Lawyer will find a way to abuse being able to loan themselves money, my example was admitedly pathetic im just not Devious enough to come up with a truely blatent example.
Quote from: ctwaterman on August 14, 2011, 02:37:31 AM
The Only people mentioning borrowing from themselves is the PLAYERS....
That being said internatl loan where ones Governement borrows from its own private sector would be common historicaly. However they may be very promlematical from the SIM point of view. Nothing is decided on the Issue feel free to continue to discuss.
made that point once already LOL, and if it is decided its ok to do oh well im just trying to get my logic acrossed
Okay in this case, let me collect my ideas:
1) Loans between countries
No need for rules, just like other trades it's whatever they can agree to.
However, in this case Tanthalas, you would be correct. It might be very difficult to keep track of things in case the players change. Even more so, should these transfers have been made in secret.
2) Banking ones own money
Simple and very useful in many ways. Also simplifies writing reports for non "powerplayers". Should appear in the report.
3) Loans from oneself
Similarly simple as (2), but we should have rules/limits for this.
Why ctwaterman should this be a problem from the sim pov, if there are limits(up to x% GNP max) and penalties(paying interest or reduced growth for example)?
In the late 19th century the general school of thought is the following for economics.
1) In general terms balanced budgets, keep in mind that the USA has only not had a public debt like one time its history. Again general terms I am talking about.
2) Some form of metallic standards (Silver, Gold or hybrid between the two)
For American members of the sim I suggest you read this to get some of the flavor of the debate in our own historic terms.
http://en.wikipedia.org/wiki/Cross_of_Gold
3) Protectionism on internal front and mercantilism towards unprotected markets. The USA during this tariff period had a fairly impressive tariff wall for example. While everyone tried to export finished products to S America and China. Despite US tariff wall lots of stuff was still imported because of productive advantages other countries had and or monopoly of a product.
3a) UK was making something in fits and starts to what was later called the Sterling Zone, as all the British colonies / commonwealths either used the British pound or pegged their currencies to it. It created a de facto single currency zone over 2/5 of the worlds surface and a huge market.
That is the world the game lives in, the right or wrong of it doesn't mater from OUR point of view its the world view of the time period.
Michael
Quote from: Nobody on August 14, 2011, 02:22:37 AM
Tanthalas, I don't see were you see a problem.
When I asked (quite worried) if we (again) would have to perfectly balance our income and expenditure (coupled with only rough tax steps) I was told that this will not be a problem. In favor of KISS we would be allowed to carry over a couple percent of our GNP from one year/report to the next. I think it would be only consequent if that could be both a positive or negative value. If it's positive nothing happens, if it's negative you might have to pay a few percent interest.
Very simple, easily automated. Were is you problem?
I was able to balance my reports in N3- generally I had a surplus of something: money or BP.
I am able to not only run my household budget within my means, but I am generally running at $800 a month surplus; I use no credit cards and do not really bring home all that much money compared to most folks.
Thus I cannot see all the whining, moaning and complaining about wanting to be able to use money that they do not have. Even in real life, I can manage to live within my means, so my opinion is that governments- both real and fictional- should damn well do so.
If negative carry overs will not be allowed, then I won't complain. But I think that would be wrong.
Balancing N3 reports was easy: make sure you spent less than half on the military and spent the rest in the economy. But there appears to be no civil economy in N4 so that is not an option. In case of war all you can do is doubling your tax, but the cost of the military (which is your entire budget) rises by a factor of over 2.25 to 9. There is no way to pay that without debts.
And it appears to me that no real world government was ever able to have more money than debts for an extended period of time.
Sounds to me like the system is 1.) broken, as we will not be able to go to war and pay for it OR 2.) people will just have to be very careful during wartime, so as not to overstress their economies... like in RL.
I am leaning strongly toward the latter. In spite of any problems I might have with the system, I dom't think the mods made one so bad that you simply can't afford a war.
Carth, face it; many people in this world aren't smart. Governments will incure debts. It's the natural course of events, it's caused the collapse of many governments since ancient days. Not allowing some system of borrowing from the private economy will mean governments won't be able to function as they normally should. Heck, the nation of Texas had $10 million of debts when annexed; I expect many, many smaller nations to be like that, and some other large nations.
Even in N2 it was very, very difficult to do anything during a war. Rohan had to scrap ships and hold off maintainance of some older vessels just to keep the army and navy fighting...and it took several years to repair not only the fleet, but also the economy...which was helped by actually winning the war and gaining some spoils from it.
It was helped even more by the change to N3...while the economy and navy had been repaired by then, the change in systems allowed Rohan to actually build at a more normal pace, as for all of N2 naval construction was severly retarded by the lack of resources avalible for projects. Construction of a cruiser could take two to three times longer than it should. Though in N3 the same problem came up, but it was more due to the number of projects on the table that the limited amount of resources (Rohan was building multiple capital ships, cruisers, and smaller ships at the same time as expanding shipyards and building a canal....so there were delays in naval construction....in N2 there was barely enough to build one ship at a time at full capacity when you needed to be building three to keep up with the rate of ship decay)
I'm of the opinion that borrowing between players should be allowed.
I'm also of the opinion that either banking your surplus should be allowed, or borrowing from your economy (with interest rates defined by credit rating with a theoretical system below):
Debt as % GDP/GNP
0.0-0.9% = AAA = 3%
1.0-1.9% = AA = 5%
2.0-2.9% = A = 7%
3.0-3.9% = B = 10%
4.0-5.4% = C = 14%
5.5-6.9% = D = 19%
7.0-8.9% = E = 25%
9.0+ % = F = 40%
And a default results in the amount you owed being deducted from your economy.
This may be too complicated but it just came to me and appears to make some kind of sense.
Quote from: Nobody on August 14, 2011, 12:13:14 PM
In case of war all you can do is doubling your tax, but the cost of the military (which is your entire budget) rises by a factor of over 2.25 to 9.
Part of the reason why I favored with the first draft a max tax rate of 25% in war time.
In N4 one of the things is we don't want long drawn out multi year wars.
Michael
IF some kind of deficit spending is instituted, it will kill the sim. It WILL be abused, just as it is in real life.
Ask yourself just how much realism you want in your game... and imagine your nation 100% of its GDP in debt while you do it.
Give those with insufficient experience or insufficient responsibility enough rope, and they hang themselves- and quite often, so do those who should know better.
Carth, we have mods... My idea for borrowing from yourself would be you make out the loan and then turn it in to the mods for approval. They can reject the idea if they feel it is abusing the system or bad for the player, and punish abusers.
Tan, I know about the tithe, but 5% of the GDP is not the same as 10% income taxes. And besides that applies only to actual church members... ;-) Well you could apply it to everyone, in which case I would distribute "No taxes in Mexico" posters around... :-D
ROFL DF, have you read my population numbers from the Religion thread... I think I ended up at somthing like 75% of my population being LDS. Besides as I said I have no intention of implementing it, it would give me a higher tax rate than is felt to be acceptable and cause even more book work for me to keep track of it.
DF... Mike said exactly what I insinuated- that the mods intentionally made it too expensive to fight long, drawn-out wars without mod approval. I support that myself, actually... the best war is one with a limited, easily-achievable goal.
A flat 10% tax rate on your church goers does not equal 10% of the GDP, and an LDS Church without tithes? That's heresy! Remember, not all of that money would be used for military purposes, which is the only thing we are tracking. All of our governments probably have around a 15% taxation rate, however the rest is used for other stuff like running the government and in your case for church stuff. ;-)
This new rule doesn't exactly mean long-drawn out wars, heck most scenarios I envision it being used wouldn't even be at wars. See my example, sh*t happens and sometimes you just need that extra little bit of cash.
I'm starting to be drawn more over into the idea that borrowing from other nations and being able to store away money from year to year are the best ways to go about government finances, be they budget surpluses or deficits.
Quote from: Desertfox on August 14, 2011, 08:52:11 PM
A flat 10% tax rate on your church goers does not equal 10% of the GDP, and an LDS Church without tithes? That's heresy! Remember, not all of that money would be used for military purposes, which is the only thing we are tracking. All of our governments probably have around a 15% taxation rate, however the rest is used for other stuff like running the government and in your case for church stuff. ;-)
oh I still plan to have Tithing, im just not planing to include it in any sim budget, I may with moderator aproval have a seperate budget that pays for things like Temples, Churches, Missionary funds, Hospitals stuff like that.
Remember.... People Your GDP is going to start at I think the final figure will be something like $3333 the 2.5% or what ever you pick for you tax rate is what you get to run you military spending, maintain ship building infrastructure, and build and maintain your Navy.
The Tax rate is the % of the GDP spent on military stuff in effect. Wars are supposed to be small and with limited objectives.
Say I want that Sliver of West Virgina Back that NER is illegally Occupying... :o Or Tejas is being unreasonable about access to the Mississippi river.... I dont want to Occupy PA or all of Tejas I simply want to force them to see it my way. The Goal of the War is small, the Scope narrow and NER would realize the worst thing likely to happen if they loose was well I get that sliver of West Virginia Back.... ;) They are not facing national suicide. And given that my Costal and Internal trade with NER makes up 5% or more of my GDP well this is going to be an Expensive war even before I fire one Bullet. Perhaps maybe the first Bullet should be a parcel of Diplomats backed by Lawyers.... 8)
I believe we are trying to get a slightly more Vibrant Economy in the game. And I think the easiest way to punish those who want to borrow from their economy is simply to compare how much extra they are borrowing [Yes selling Bonds is borrowing] to the Tax rate and reduce their GDP Growth accordingly. Those who borrow will simply grow slower then those who dont and they would still have to pay back the borrowed money and the Interest rate :-[ This would be something to be avoided if possible.
Honestly I have to sit down think it over run some numbers and then make up my mind. I am in favor of allowing banking the storing of Gold and Silver from surplus in a national bank for use on a rainy day. Or when the NER decides to reverse that legal decision and take that Sliver of West Virginia back... :'(
Well, the good thing about specie backed currency is that it makes things quite easy to determine economically, if not to simulate. I do have a bit of an intrest in economics and specie backed currency so I can go through it a bit. With specie backed currency you can make the economics system as simple or as complex as you want, but even with a goos level of complexity it is no where near as hard to understand as today's economics. If you just want a simple overview of what can be done you can skip to the bottom.
There is supply and demand of money to take into account, and with specie backed currency you don't really have the option of inflating the money supply by printing more money, since money is a silver or gold note. It is all tied to how much specie you have, and how much specie each one of your notes or coins are worth. If you increase content exports suffer but imports rise, and you may have some deflation, but the wealthy will love it since investments are worth more money. Debtors won't be too happy since they owe more. If you decrease content you will probably cause a currency scare. Borrowing costs will rise, inflation will set in, and investments will become worth less. Debtors will love it since they will owe less specie (each unit of money being worth less specie).
If you run a large surplus and don't spend it, you will choke the economy by drawing specie out of circulation and will cause deflation, harming domestic economic growth by driving up prices (the currency also gets stronger, so imports get more attractive). If the money isn't from high taxes but from foreign flows in, it makes your currency strong but since it hasn't affected the money supply it doesn't have the deflationary effect (unless you choose to spend it internally, then you will have inflation until the money supply adjusts).
If you end up taking out loans it depends on who you borrow from. If it is domestically held it will slow growth by drawing specie away from more productive pursuits like investments and spending. By contracting the money supply borrowing costs go up because there is less to go around. If a foreign country has excess specie, it can loan it to a nation that has a deficit and lower the money supply of its own nation, weakening its currency and reducing deflationary tendencies. If you don't pay off the debt in cash, or if the country you borrowed from wants to do some economic warfare if strengthen its own currency, repayment can be in the form of your own specie, weakening your money. The French did this to the United States in the 1970s, causing us to withdraw from the gold standard to save our supplies.
The trade of specie between countries and the rise and fall of currencies is called the specie flow mechanism. Essentially on a global scale, since there is only so much specie, all national deficits (the combination of public and private) have to balance out or have a small surplus. You can't finance a deficit with specie that doesn't exist, and you can't run too large of a surplus without harming your economy by inflation (see Spanish Empire) or deflation (see Panic of 1873). The price flow mechanism pretty much automatically kicks in by economic forces to prevent currency extremes.
So, as a short answer, every domestic loan will slow growth and raise your borrowing costs at the same time. If your surplus is too high, your currency will either go into inflation or deflation, but either way it is best to take abroad to nations with a negative accounts balance to invest in their economy or debt or buy goods.
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Simulation wise, you could have money and specie be two seperate units. You could have Goldland start with say 1000 units of money and 1000 units of specie, and then the currency would go from there. If Goldland were to find 200 units of specie, it would have the choice of spending that abroad, strengthening the currency, or printing more money. If Goldland just adds it to its vaults, each Goldland unit of currency becomes worth 1.2 specie (and people are a lot more apt to desire it as payment or an investment). If more money is printing matching the percent increase, Goldland has a larger money supply and some inflation. If the specie is taken abroad, Goldland can get some more money or goods. If Goldland borrows too much and its loans are to repay in money, it can print its way out of it at severe cost to the economy and at the cost of making crediters quite angry, but it is always a fallback option. In a way, you can have a currency (and loan) market develop if desired, with the specie price flow mechanism.
Alternatively, all the behind the scenes involvement with specie and such can be avoided and we can simply simulate the effects of things like a surplus, deficit, overactive printing press, etc. directly to the economy.
Quote from: ctwaterman on August 14, 2011, 11:21:12 PM
I believe we are trying to get a slightly more Vibrant Economy in the game. And I think the easiest way to punish those who want to borrow from their economy is simply to compare how much extra they are borrowing [Yes selling Bonds is borrowing] to the Tax rate and reduce their GDP Growth accordingly. Those who borrow will simply grow slower then those who dont and they would still have to pay back the borrowed money and the Interest rate :-[ This would be something to be avoided if possible.
I agree with this, my question is who sets the interest rate? That is why I am beginning to prefer having the ability to save up money for wars. Build up a campaign/war chest. The Germans did it before WW1, decent chunk of the money the French payed went into the Prussian war fund. However it wasn't anywhere near what they needed for an all out war like WW1 ended up being.
QuoteHonestly I have to sit down think it over run some numbers and then make up my mind. I am in favor of allowing banking the storing of Gold and Silver from surplus in a national bank for use on a rainy day. Or when the NER decides to reverse that legal decision and take that Sliver of West Virginia back... :'(
I view quick infusions of cash being absolutely necessary to fight a short war. You wont have TIME to effectively mobilize your economy for war, your armies and navies yes, but not your economy. So the ability to either borrow or spend your savings is vital (in my humble opinion).
Quote from: Logi on August 13, 2011, 07:17:43 PM
EU was just a fundamentally flawed concept, the consumer nature and government positions are too varied for such a weak Union to hold them together for a "strong" economy.
It got flaws, but it should be noted that quite allot of the EU countries are doing very well indeed (hint:look around the Baltic sea).
QuoteOf course, in hindsight it seems insane, but it is quite logical. Even in today's problem, most people still do not want their over-bloated welfare programs taken away. Therefore it was simply bad politics to make such unpopular decisions (no one would support your position).
I would say that the problem is when politicians tell the electorate that they can both lower taxes and raise spending and the electorate rewards them for it (by voting for them).
It also makes it hard for pragmatic politicians who tells the truth about economy when all other promise that there either would be no decrees in service or no new taxes (in effect telling their voters that THEY will not be affected, only some other people).
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On the main issue:
Government borrow for the same reason corporations and private persons borrow: It allows you to make the investment _now_, rather then wait for years to build up the money to pay up front.
It should be noted that during the middle of the 19th century about 70% of Government expenditure in Sweden was on railroad construction for several years, and all the money for that was borrowed (mainly from Germany, were the ww1 inflation wiped out the last of those debts). So going into debt was pretty much the normal way to pay for any national project, and it seems like government bonds were the preferred form of investment in this period, so there were rarely a shortage of credit.
However I got the impression that the tax rate we set only is the strictly military budget? If so I see less need for a very intricate finance system as it would mainly be relatively small sums needed for the military. One use could also be to "round out" the military budget; say that my spending comes out at 47 million Kr, but my budget only allows for 45million Kr, then it will be cheaper to take a loan then raise taxes a level. I can also see it being used for larger on off-payments, such as starting construction of a major new base or buying a ship or two were the sum up front is larger then the ,5% max tax increase can allow for.
So my suggestion would be something simple, a 10% interest rate on loans, increasing by say 1% for every percent of debt-GPD (which is excessive, but we are only talking about military spending so should work well enough in that context).
I see little reason for any arbitrary punishment for borrowing (like some seems to prefer), it is just like other government policies, some do it well, and some do it badly.
Quote from: Korpen on August 16, 2011, 02:41:35 PM
It got flaws, but it should be noted that quite allot of the EU countries are doing very well indeed (hint:look around the Baltic sea).
Of course, they do well just as in any nation. Certain regions do well, certain regions do bad. However, the weakness, the sort I am talking about, stems from the different spending habits of the governments involved and the collective burden of supporting the Euro. Ie: When one of the nations in the Union (such as Greece) fails, so does it drag down the rest of the Union. The problems though - of Greece - stems mostly from it's reckless spending and entitlement culture, and would not occur if the government was as tight-pursed as some nations in the Union.
In a sense, it's the burden of working as a team and one member keeps losing or deleting everything. You can change your working habits, but not those of your teammate.
Quote from: Korpen on August 16, 2011, 02:41:35 PM
I would say that the problem is when politicians tell the electorate that they can both lower taxes and raise spending and the electorate rewards them for it (by voting for them).
It also makes it hard for pragmatic politicians who tells the truth about economy when all other promise that there either would be no decrees in service or no new taxes (in effect telling their voters that THEY will not be affected, only some other people).
That is what I meant. Politicians do the popular thing (no matter how illogical) to get elected and continue doing illogical things to get re-elected. They appeal to the selfish desire and as a result, spend more than they earn. As I said, everyone clamors for something like the US debt to disappear but no one wants to make the sacrifice. Everybody only wants more benefits and fewer taxes.
Quote from: Logi on August 16, 2011, 04:20:12 PM
That is what I meant. Politicians do the popular thing (no matter how illogical) to get elected and continue doing illogical things to get re-elected. They appeal to the selfish desire and as a result, spend more than they earn. As I said, everyone clamors for something like the US debt to disappear but no one wants to make the sacrifice. Everybody only wants more benefits and fewer taxes.
I applauded David Cameron and Nicholas Clegg when they unveiled their austerity measures. They seemed to be cutting almost everywhere (including the military). Of course now people are blaming the recent riots on the cuts to the police budgets.
Anyways, I don't see why the US military budget couldn't be trimmed back a bit. even 5% or so
from the previous year's budget not from this year's "estimated" budget would save money. But a corresponding cut in benefits for Congress and other elected officials might be a good idea too, as a sign of solidarity.
True, but 5% of the military budget in 2010 is just ~35 billion, that's 35 out of a ~1.3 tril budget deficit. That would be roughly a 2.7% decrease in the annual debt increase. In other words, it just isn't enough, in fact, not even close to the budget cuts we need (if we don't raise taxes).
The cost of the Iraq/Afghan war was ~130 bil in 2010. Even the wars is only ~10% of the deficit. We could cut the defense budget even more, but this is as good a time as any to cut the welfare brothers. Considering that the only difference between SS and a ponzi scheme is that SS is mandatory, I would cut SS first.
Then cut 8% of the military budget, the Brits did it, so can't we. Then cut welfare by 8% as well. Maybe the army can do without a couple ultra high-tech gadgets and hire a couple more soldiers instead so that some of those people on welfare can enlist.
The US govt ought to have implemented some sort of new tax to pay for at least half of the expenses of the Iraq/Afghanistan wars, then keep the tax in place until the money we borrowed is paid off.
and I think that this thread has gone way to far into IRL politics...
Quote from: Darman on August 16, 2011, 05:31:28 PM
Then cut 8% of the military budget, the Brits did it, so can't we. Then cut welfare by 8% as well. Maybe the army can do without a couple ultra high-tech gadgets and hire a couple more soldiers instead so that some of those people on welfare can enlist.
Anyone over the age of 18 (17 with parental aproval) and a High School Diploma can join a branch of the US Military. However it is a Choice to join, we dont just take anyone (atleast the Corps dosn't I cant comment on Squids, Dogs, and Zoomies), and we don't force anyone to join. Honestly most people I have served with came from fly over country (call it red states) and had a family history of serving. As to the high tech gadgets, the Corps had the Osprey forced on them literaly by Congress (anyone that has ever ridden in one knows why we didnt want it to).
Quote from: Tanthalas on August 16, 2011, 06:02:49 PMAs to the high tech gadgets, the Corps had the Osprey forced on them literaly by Congress (anyone that has ever ridden in one knows why we didnt want it to).
I always wondered about them... they're really that bad? I figured they were good in theory... get you where you're headed faster and all that.
Quote from: snip on August 16, 2011, 05:34:56 PM
and I think that this thread has gone way to far into IRL politics...
Sorry
Quote from: Logi on August 16, 2011, 04:20:12 PM
That is what I meant. Politicians do the popular thing (no matter how illogical) to get elected and continue doing illogical things to get re-elected. They appeal to the selfish desire and as a result, spend more than they earn.
This is two separate issues, not one single issue.
Politicians want to be re-elected, that is part of the game.
But the "spend more then the state got" is not a necessary effect of the first one.
In plenty of countries (such as Sweden, debt 39% of GDP) the vote-winner is fiscal caution and responsibility for the state finances and promises of lower taxes or better services are only possible if it can be show that the state can afford them. So it is all about what the voters expect and reward, so over time a country gets the politicians it deserves.
Quote from: Korpen on August 16, 2011, 09:57:52 PM
So it is all about what the voters expect and reward, so over time a country gets the politicians it deserves.
A more logical statement is that politicians- caring only about getting reelected and not about the mechanism which generates the votes- eventually get the country they deserve.
Wasn't this supposed to be about whether it should be allowed to loan from oneself or not?
I found data for the total US debt from 1792 to 2011, and the GDP from 1929 to 2011 (can anyone point me to earlier GNP/GDP data?) and compiled some of it in nice little graphs. Note that from the 1950s till the 1980s the debt relative to the GDP decreased although the total debt kept increasing.
Not to mention the slight increase during and after WW2.
Since government spending is included in GDP, I don't like using it as a measure. So I compiled data of US tax revenue to US deficit/surplus from 1992-2010. I could go earlier than 1992, but since each is a year, it's troublesome.
(https://docs.google.com/spreadsheet/oimg?key=0Atnkfly3ir_JdF9GWU1YSGQzQmR3WUQ5b0xuenF1VkE&oid=1&zx=mddrsj8g3ad9)
The chart info is here (https://docs.google.com/spreadsheet/ccc?key=0Atnkfly3ir_JdF9GWU1YSGQzQmR3WUQ5b0xuenF1VkE&hl=en_US#gid=0)
Measuring Worth (http://www.measuringworth.com/usgdp/) seems to have earlier GNP/GDP data, but I'm not sure how accurate they are.
Thanks for the source Logi. The numbers do match nicely, as the original source is the same (BEA).
I think this graph shows clearly that wars were not fought without deficit spending although the effect of WW1 is surprisingly little. And at no point in time the US were without debts.
From the data I have to wonder, were the US at war around 1862-1865?
Quote from: Nobody on August 19, 2011, 04:30:08 PM
From the data I have to wonder, were the US at war around 1862-1865?
Really? You're being sarcastic, right?
Quote from: Nobody on August 19, 2011, 04:30:08 PM
I think this graph shows clearly that wars were not fought without deficit spending although the effect of WW1 is surprisingly little. And at no point in time the US were without debts.
The US really barely participated in the First World War... very little reason to have a debt.
I'll do a more detailed graph for taxation vs deficit tomorrow. It should be even more apparent that countries did heavy deficit spending through history whenever they went to war.
Quote from: Sachmle on August 19, 2011, 05:12:30 PM
Quote from: Nobody on August 19, 2011, 04:30:08 PM
From the data I have to wonder, were the US at war around 1862-1865?
Really? You're being sarcastic, right?
No I was not. It was however half past midnight. Now I have to admit that this date does remind me of the us civil war...
(https://docs.google.com/spreadsheet/oimg?key=0Atnkfly3ir_JdF9GWU1YSGQzQmR3WUQ5b0xuenF1VkE&oid=3&zx=6sqircox6nor)
I had to cut out from 1994-on because the deficit just gets ridiculous (to the point where the rest of the lines appear almost to always be zero, excluding WW2).
You can see that minor wars, like Vietnam / Korea, don't appear to deviate from the line very much (it does cost a few billion in data though) whilst large wars like WW2 are very obvious deviations. However, you can also note that tax revenue doesn't change alot and therefore, the money must come out of deficit spending.