u.s. economy crisis?

[arora]

Did not see a thread on this topic although I'd think there was one..... anywho this is a funny email I got but it made me think. What is really going on?



Dear Mr. President:

Please find below my suggestion for fixing America's economy.
Instead of giving billions of dollars to companies that will squander
the money on lavish parties and unearned bonuses, use the following
plan.You can call it the Patriotic Retirement Plan:

There are about 40 million people over 50 in the work force.
Pay them $1 million apiece severance for early retirement with the
following stipulations:

1) They MUST retire. Forty million job openings -
Unemployment fixed.

2) They MUST buy a new American CAR. Forty million cars
ordered-
Auto Industry fixed.

3) They MUST either buy a house or pay off their mortgage
Housing Crisis fixed

It can't get any easier than that!

If more money is needed, have all members of Congress pay
all their taxes...

If you think this would work, please forward to everyone
you know.

If not, please disregard.



Thoughts?

 

[mindwise]

40 million million, that's 40trillion right?

Or 40Bn of these:

Funny story, i guess the gas prices will go up though

 

[Mark T]

Two problems

Case A
Man A is over 50 and earns $500,000 a year. He has a $1,000,000 mortgage. $1,000,000 isn't going to be enough and forcing me to retire would harm my financial status.

Case B
Man B is over 50 and earns $12,000 a year. He has a $20,000 mortgage. He becomes very wealthy for no reason.

 

[Sniffs]

Add Case C: man over fifty is the most experienced man in the building...

I think the writer of the e-mail didn't think about THAT little tidbit, did they? 50's are the guys with the most experience that are still young enough to do it, and old enough to remember grunt labor from when that's all we had.

 

[Joey D]

Many American cars aren't even built in America, they are built elsewhere, mainly Canada and Mexico. On the flip side many Japanese cars are built here in America. So how would you even decide what an American car is?

 

[arora]

I don't know who wrote the email, it was a forward to me. I would say(hopefully) that it is a poke at how silly redistribution of weath is and/or how silly the stimulious deal was.

 

[Joey D]

I would agree that it is probably a jab at all the ridiculousness going on in the world today, but it still doesn't make a whole lot of sense when you start to think through it. Maybe we are just over-analytical.

 

[Omnis]

Did not see a thread on this topic although I'd think there was one..... anywho this is a funny email I got but it made me think. What is really going on?



Dear Mr. President:

Please find below my suggestion for fixing America's economy.
Instead of giving billions of dollars to companies that will squander
the money on lavish parties and unearned bonuses, use the following
plan.You can call it the Patriotic Retirement Plan:

There are about 40 million people over 50 in the work force.
Pay them $1 million apiece severance for early retirement with the
following stipulations:

1) They MUST retire. Forty million job openings -
Unemployment fixed.

2) They MUST buy a new American CAR. Forty million cars
ordered-
Auto Industry fixed.

3) They MUST either buy a house or pay off their mortgage
Housing Crisis fixed

It can't get any easier than that!

If more money is needed, have all members of Congress pay
all their taxes...

If you think this would work, please forward to everyone
you know.

If not, please disregard.



Thoughts?

Read the link in my signature.

Governments do not produce anything. What they give must be taken from someone, somewhere else. Therefore, wealth can only be redistributed at best, while, in reality, the "redistributor" consumes some of that wealth in the process. It is a net loss.

The solution to America's problems are savings and production... the last thing it needs is government intervention-- even a tongue-in-cheek chain letter entertaining it.

 

[Northstar]

I agree, now all hail King Obama!!!!!

That would basically be a dictatorship.

 

[Solid Fro]

40 million million, that's 40trillion right?

Or 40Bn of these:

Funny story, i guess the gas prices will go up though

I thought The Messiah didn't look like those dudes on the dollar bills?

I agree, now all hail King Obama!!!!!

That would basically be a dictatorship.

The Messiah is the chosen one! Bow before his greatness.

 

[Pupik]

There are about 40 million people over 50 in the work force. Pay them $1 million apiece severance for early retirement with the
following stipulations...

There's a slight problem with that: We don't have 40 trillion dollars...Nobody does:

40,000,000 x 1,000,000 = 40,000,000,000,000

Your Plan = Massive, meaningless inflation. Everyone will be a millionaire, but that doesn't matter if it costs $10,000 to go grocery shopping every week, or $5,000 for a tank of gasoline, et cetera. I could see the signmakers, printers, and engravers ultimately profiting, though.

And if members of Congress pay their taxes (for which we pay their salary [minus kickbacks]), aren't we just robbing, gagging, and raping Peter to pay Paul?

 

[arora]

Your Plan = Massive, meaningless inflation. Everyone will be a millionaire, but that doesn't matter if it costs $10,000 to go grocery shopping every week, or $5,000 for a tank of gasoline, et cetera. I could see the signmakers, printers, and engravers ultimately profiting, though.

Well it's not my plan And of course you ae right, that was my point weither it be redistribution of wealth or all out socialism or communism. I'm with omnis........ less government interference would help the economy a great deal.

 

[mindwise]

Read the link in my signature.

Governments do not produce anything. What they give must be taken from someone, somewhere else. Therefore, wealth can only be redistributed at best, while, in reality, the "redistributor" consumes some of that wealth in the process. It is a net loss.

The solution to America's problems are savings and production... the last thing it needs is government intervention-- even a tongue-in-cheek chain letter entertaining it.

that's a great point, and i fully agree, it contains some irrefutable truth.
Ironically, i think goverment should have stepped in harder years ago to 'promote' more saving, less consuming and more production. But THAT is an 'unpopular' measure

But i am not convinced it's a given that less government influence automatically results in economic benefit, and certainly not in this case.
I think something like a 'sweet spot' and obviously things depend on the nature of the involvement.

Not sure if you would count the following as 'government intervention'..
Bothwell said the previous Liberal government refused to let the five banks merge. The banks wanted to get bigger so they could expand into the U.S. but former Liberal Prime Minister Jean Chretien said it wasn't in the national interest.
Canadians pay much higher fees than Americans because of the concentrated banking system.

You may be speaking about what the best remedy is now, or was the comment indeed also a general guideline?

distribution comes at a cost, but i doubt people making many millions of dollars a year really help anything either, certainly not 'distribution. (the word 'trickles down' comes to mind )


Somewhere between no government and a totalitarian state lies a sweet spot i think.
Economy is so complex, everyone can say something and give reasons for it, One can also claim that there was/is not enough government intervention

==

That said, on to the article, i agree with most of itAmerica (i'm sorry guys, not you obviously) has been living on growing credit too long, and at some point it will bite.
A scenario as what there is now (and much worse) was long philosophized to happen. just to make that point: (posted to youtube sept 2007, but the (dutch) documentary originally aired in 2005.)


The guy (George Reisman of the article) is right economically, and probably the government plans are not ideal.
But a total collapse of the economic system is not unthinkable if you don't do anything.

What can you save if you have no money, what can you produce if there are no buyers, how can companies invest without money that can be lent to them (savings).
Of course, as the author points out, inflation does not help anything either.
And, lets face it, printing money may very well be part of the financing of the stimulus, i don't know.

I'm probably talking economic nonsense , that said, the "experts" don't all agree it seems so i'm in "good company" (for lack of a better term)

Economics is not an exact science.

 

[TofuStoreDrift]

The thing that concerns me with spending all this money is China. Look at Germany, post WWI, they owed quite a debt to the US. When the US became broke we decided to collect. This then screwed the Germans, making them one of the hardest hit countries during the Great Depression. Ofcourse this, with the help of communism growing strength, put German leaders in a bind, so they elected Hitler as their Chancellor, to keep Germany safe from the communists. They figure they could control Hitler better than the communists, but we know how that went.

So what happens to the US if China decide to collect? Will history repeat itself?

 

[Omnis]

that's a great point, and i fully agree, it contains some irrefutable truth.
Ironically, i think goverment should have stepped in harder years ago to 'promote' more saving, less consuming and more production. But THAT is an 'unpopular' measure

But i am not convinced it's a given that less government influence automatically results in economic benefit, and certainly not in this case.
I think something like a 'sweet spot' and obviously things depend on the nature of the involvement.

Not sure if you would count the following as 'government intervention'..
Bothwell said the previous Liberal government refused to let the five banks merge. The banks wanted to get bigger so they could expand into the U.S. but former Liberal Prime Minister Jean Chretien said it wasn't in the national interest.
Canadians pay much higher fees than Americans because of the concentrated banking system.

You may be speaking about what the best remedy is now, or was the comment indeed also a general guideline?

distribution comes at a cost, but i doubt people making many millions of dollars a year really help anything either, certainly not 'distribution. (the word 'trickles down' comes to mind )


Somewhere between no government and a totalitarian state lies a sweet spot i think.
Economy is so complex, everyone can say something and give reasons for it, One can also claim that there was/is not enough government intervention

==

That said, on to the article, i agree with most of itAmerica (i'm sorry guys, not you obviously) has been living on growing credit too long, and at some point it will bite.
A scenario as what there is now (and much worse) was long philosophized to happen. just to make that point: (posted to youtube sept 2007, but the (dutch) documentary originally aired in 2005.)


The guy (George Reisman of the article) is right economically, and probably the government plans are not ideal.
But a total collapse of the economic system is not unthinkable if you don't do anything.

What can you save if you have no money, what can you produce if there are no buyers, how can companies invest without money that can be lent to them (savings).
Of course, as the author points out, inflation does not help anything either.
And, lets face it, printing money may very well be part of the financing of the stimulus, i don't know.

I'm probably talking economic nonsense , that said, the "experts" don't all agree it seems so i'm in "good company" (for lack of a better term)

Economics is not an exact science.

Yeah, Peter Schiff and other Austrian economists have been warning about this for years.

The sweet spot you describe is actually what the market provides. The government stepping in hard to promote savings would just be like a redundancy. If we already have a system that regulates itself if not tampered with, then do we really need some outside authority arbitrarily setting these artificial rates and messing with the market? I don't think we do.

On the contrary, I think a total collapse is more probable if the government keeps doing what it's doing. Of course, the government could help by resetting rates to encourage savings, but, like I said, it doesn't have to if the true market rate is already ready to reset in its absence. The only thing left to do is to cut spending to lessen its burden on the private economy.

Savings counts for more than just money. We're talking about productive capital and labor too. To that end, we might need competing, real (hard-asset backed) currencies in lieu of a hyperinflated dollar. Who knows. People will adopt what's best as long as legal tender laws are abolished. And there will always be buyers for what you produce. (as long as you're not GM, oh! ) Markets clear (Say's law). Economics is not an exact science because there is a human element involved. Those schools of thought that neglect this (coughKeynescough) will always be incorrect.

 

[arora]

One way to look at inflation; Back in the day a 20 dollar gold piece was an once of gold, today an ounce of gold is worth probably 800 paper dollers or so

 

[Joey D]

One way to look at inflation; Back in the day a 20 dollar gold piece was an once of gold, today an ounce of gold is worth probably 800 paper dollers or so

Gold's at $979, I'm guessing it'll crest $1,000 next week.

 

[Omnis]

I'm seriously hoping it drops down to the 800s before then. Gotta get on board before the plane takes off.

 

[mindwise]

If we already have a system that regulates itself if not tampered with

To me it seems we don't have a system that regulates itself, otherwise we would not be in the mess that we are. Unless one would accept significant collapse and slow recovery as a system.

I'm not sure if you are suggesting this would not have happened in a completely unregulated market, if so, what figures are there to support this, which market is the example of that 'system'?

It appears that countries with more government involvement are actually hit less severe.

Sure, one could point out that i.e. China is seeing problems too, but that's arguably mainly due to big problems in "a certain" export market for them.

There may be less regulated markets then the US, but someone needs to point them out to me as i cannot think of any.

What would happen if governments did not step in to keep major banks in the US and here in Europe alive and functioning?
Anyone guess is valid of course, but i doubt there are any realistic "happy" scenario's.

I don't know all the details of the rescue plan, so like i said before i'm sure there is valid criticism, but i am not convinced doing nothing would be a good idea either. Self regulation would mean many major banks collapsing and that, i don't think, would be something the economy would recover from anytime soon, that could very be really disastrous, with a near total collapse/halt of the economy, perhaps even going back to a market with a trade system?

I fully concede that the problem has to do with (massive) consumption on credit (mainly in the US), i just don't quite follow how that is caused by regulation if that is what you are suggesting. It seems rather like too little regulation.

The banks in trouble here are, so it seems at least, mainly in problems because of investments in popped bubbles in the US.

As i mentioned before, of western banks the Canadian banks are currently rated the healthiest of all..

On FOX news of all sources..(feb '09)

Prime Minister Stephen Harper said Canada has strong regulation that encourages a cautious culture in the banks.

Canada has avoided government bailouts and has not experienced the failure of any major financial institution. There has been no crippling mortgage meltdown or banking crisis north of the border.

I know the recovery is going to be painful, but i am far from convinced self regulation is the best way out from where we are now.
And neither that it is by default the best way to prevent such things from happening.

Of course, i could very well be wrong, i cannot claim it's much more then a hunch
So you may very well be correct

 

[Joey D]

I'm seriously hoping it drops down to the 800s before then. Gotta get on board before the plane takes off.

It won't, it's been going crazy lately. And a bit of advice, if you are going to buy or sell gold do not do it at a jewellery store, they pay you virtually nothing and charge you an arm and a leg. Where I work we pay something like 40% of the actual value of the gold.

 

[FoolKiller]

I fully concede that the problem has to do with (massive) consumption on credit (mainly in the US), i just don't quite follow how that is caused by regulation if that is what you are suggesting. It seems rather like too little regulation.

Look at why the massive consumption of credit started. What allowed people who should never have credit to suddenly get it? The Federal Reserve began playing with interest rates to allow more people, aka those who shouldn't have it, to be able to get credit. That also made housing prices go up, so more interest rate fiddling allowed more bad credit on even more expensive himes to happen. Eventually, those getting loans due to government interference started defaulting, and created a chain reaction.

It is something that people calling for less government intervention had been predicting for years. Of course, the only presidential candidate to bring it up was laughed at.

The banks in trouble here are, so it seems at least, mainly in problems because of investments in popped bubbles in the US.

If people have been talking about a housing bubble for ten years now, who is at fault in this case? If someone made an investment despite that it is their own fault. I played with my 401k (retirement fund) to make sure it was not in danger of that, and it has still grown, albeit slowly, through all of this. A guy in nowhere Kentucky should not be able to make smarter investments than professional bankers all over the world, but I did. I understand the difference between rapid growth and smart long-term investing. I also listened to those saying that the government was mucking up the market.

I know the recovery is going to be painful, but i am far from convinced self regulation is the best way out from where we are now.
And neither that it is by default the best way to prevent such things from happening.

Bubbles happen as frequently as they do now because of government intervention. Bubbles and market corrections are naturally occurring, and overall healthy for the market, but when interference causes them to happen once a decade it is harmful.



The best thing to do is to look at the economists who have been predicting this for years now. You will see they were all pointing fingers at the government then. The truth is that for decades now the "free market" has not been all that free.

Watch quotes from 2007 and 2008 predicting this because of too much intervention.

 

[Omnis]

Actually, the bubbles are symptomatic of a fractional reserve banking system. It is the central bank (Federal Reserve), however, that compounds the business cycle and intensifies the periods of boom and bust with interest rates and other manipulations that are not in line with the correct market levels-- the sweet spot that mindwise describes.

The definitive book by which to learn all you need to know about it is a tome called Money, Bank Credit, and Economic Cycles by Jesús Huerta de Soto. Mises.org has the complete text on its website for free (4.0MB .pdf) My sentiments regarding the topic of this thread are found in the most complete and best expressed form in this article by Sr. Huerta de Soto as well.

 

[arora]

Right or wrong, I really like ron Paul, he's my kind of guy

 

[Dotini]

Judging by the small size of this thread, is it to be taken that many members of this forum do not accept that there actually is some kind of financial or economic crisis in the U.S.?

If it is accepted that crisis exists, is it rational or prudent to assign cause or blame?

Which among the following would be the suspects to round up for questioning:

- Government, whether executive, legislative, judicial, unelected bureaucrats or the Fed.

- Business leaders or unions.

- Ordinary consumers who simply made poor decisions.

- Academics who provided the imprimatur of legitimacy for excessive risk taking.

- Impersonal or historical phenomena such as globalization, population growth, capitalism, etc.

- General cultural decay.

 

[Touring Mars]

I think the reason this thread is not so big is because the main issues have been/are still being discussed in other threads, specifically this one and also in the Obama thread...