• This is a political forum that is non-biased/non-partisan and treats every person's position on topics equally. This debate forum is not aligned to any political party. In today's politics, many ideas are split between and even within all the political parties. Often we find ourselves agreeing on one platform but some topics break our mold. We are here to discuss them in a civil political debate. If this is your first visit to our political forums, be sure to check out the RULES. Registering for debate politics is necessary before posting. Register today to participate - it's free!

Do you agree with this image?

phattonez

Catholic
DP Veteran
Joined
Jun 3, 2009
Messages
30,870
Reaction score
4,246
Gender
Male
Political Leaning
Very Conservative
 
phattonez said:
Click to expand...

Depends on what you mean agree

Does the economy function in a manner similar to it?

It most certainly does for periods of time.

Of course when people take on too much debt the cycle breaks down
 
Lord Tammerlain said:
Depends on what you mean agree

Does the economy function in a manner similar to it?

It most certainly does for periods of time.

Of course when people take on too much debt the cycle breaks down
Click to expand...

When Banks decide not to lend despite low interest rates, and a big need for loans...
 
Lord Tammerlain said:
Depends on what you mean agree

Does the economy function in a manner similar to it?

It most certainly does for periods of time.

Of course when people take on too much debt the cycle breaks down
Click to expand...

So then it is always unsustainable?
 
repeter said:
Not if the government controls the interest rates, right?
Click to expand...

Well, government has to set interest rates low in order to start this cycle. If interest rates rose, I guess you might be able to avoid the crash, but how do you know where to set it?

With free banking, you would never see interest rates low enough to start this cycle, but if it did interest rates would quickly jump back up due to depleted savings.
 
phattonez said:
So then it is always unsustainable?
Click to expand...

In the way the image is presented yes in my opinion

It seems to be indicating the stimulative effects of low interest rates on the economy. Low interest rates do tend to cause people to increase the amount of debt they carry.

At some point they will no longer increase debt, causing a break at the "more borrowing" part of the image
 
cpwill said:
no. you must save to invest, don't use the printing press, or a bust will surely follow, an economy depressed.
Click to expand...

:lol: Too bad not enough people commented when you posted that video here.
 
True saving is a function of income growth, not a byproduct of business cycles.

Savings increase when: Income increases (increased desposible income). Higher incomes lead to a higher (long term) interest rate.

Savings decrease when: asset values increase relative to the real interest rate.

Increased savings in a low interest rate environment signals a troubled economy.
 



 
You must log in or register to reply here.
Menu
Log in
Register
Cookies are required to use this site. You must accept them to continue using the site. Learn more…