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Lilfe long Democrat can't believe how inept Democrats are in Economics

Do you believe that Bernanke/Obama's policies are destroying the American household?

  • Yes

    Votes: 9 42.9%
  • No

    Votes: 12 57.1%

  • Total voters
    21
imagep said:
I agree entirely and none of that changes the accuracy of my observations.

Not disagreeing with your observations, just trying to add a little bit on why money is being hoarded just now...though you do sound just little bit accusatory! :)

Hoarding cash is a symptom, not the cause. Lack of incentives, confused outlook for gov't policy (regulatory and tax), perceptions of still-high counter-party risk (would you enter into a contract with someone whose risk of default is currently perceived as being unusually high?) - all these are causes. Address these and cash gets spent.
 
What if savings remained high with all of those measures. Would you still want it to be lowered?
 
Not disagreeing with your observations, just trying to add a little bit on why money is being hoarded just now...though you do sound just little bit accusatory! :)

Hoarding cash is a symptom, not the cause. Lack of incentives, confused outlook for gov't policy (regulatory and tax), perceptions of still-high counter-party risk (would you enter into a contract with someone whose risk of default is currently perceived as being unusually high?) - all these are causes. Address these and cash gets spent.

Sure, I agree.
 
What if savings remained high with all of those measures. Would you still want it to be lowered?

Only if excessive stores of inactive money was contributing to a bad economy. Of course at that point the gov could just print up more money to replace what has been removed from circulation, but a lot of people would suggest that would be diluting the value of all the other US dollars in existance.
 
Only if excessive stores of inactive money was contributing to a bad economy. Of course at that point the gov could just print up more money to replace what has been removed from circulation, but a lot of people would suggest that would be diluting the value of all the other US dollars in existance.

But it's not inactive if it's being saved.
 
But it's not inactive if it's being saved.

Maybe.

If it's buried in the back yard it's not in circulation or available for circulation. If it's in the bank it may be available for circulation, but if the bank doesn't have demand for loans from qualified borrowers (as in our current situation), then it's not in circulation either.

Anyhow, what I am saying is that the velocity of money has slowed and that has contributed to harming our economy. I am sure that no one will disagree with that. When the velocity of money slows, that money is being stored somewhere that it is not being circulated. Maybe I should just quit using the word "horded" as apparently y'all apply a negative meaning to that.
 
imagep said:
Maybe I should just quit using the word "horded" as apparently y'all apply a negative meaning to that.

If I was a member of the spelling police, I would say something snarky, like, "Hey, if you spelled it correctly -hoarded - maybe we would be so negative!

But I'm not so I won't. Besides, I got no roum to talk. Every time I thmk I've got something rit, sombody shuuts me dwn.

:)
 
If I was a member of the spelling police, I would say something snarky, like, "Hey, if you spelled it correctly -hoarded - maybe we would be so negative!

But I'm not so I won't. Besides, I got no roum to talk. Every time I thmk I've got something rit, sombody shuuts me dwn.

:)

If there was a spelling police, I would have been executed years ago.
 
Maybe.

If it's buried in the back yard it's not in circulation or available for circulation. If it's in the bank it may be available for circulation, but if the bank doesn't have demand for loans from qualified borrowers (as in our current situation), then it's not in circulation either.

Anyhow, what I am saying is that the velocity of money has slowed and that has contributed to harming our economy. I am sure that no one will disagree with that. When the velocity of money slows, that money is being stored somewhere that it is not being circulated. Maybe I should just quit using the word "horded" as apparently y'all apply a negative meaning to that.

Say I do bury money in the backyard. I'm still producing, right? Where exactly is the harm that is caused by my burying money in the backyard? People can still buy the things that I produced, it's just that the money isn't in circulation. Granted, it's not the smartest investment I can make, but it's not as if I sucked wealth out of the economy.
 
Say I do bury money in the backyard. I'm still producing, right? Where exactly is the harm that is caused by my burying money in the backyard? People can still buy the things that I produced, it's just that the money isn't in circulation. Granted, it's not the smartest investment I can make, but it's not as if I sucked wealth out of the economy.

On a moral level, there is certainly nothing wrong with you doing whatever you choose to do with your money. It may not directly be harmful to our economy, but on a relative bases it may be more harmful than if you had expanded a business or used the money to purchase goods that would potentially allow someone else to keep their job. Also, generally making the best investments for your particular situation is the best use of money for the country - if you buried it in the backyard and that was not as wise a decision as investing it in the stock market or depositing it in a bank account, then you may have done a disservice not only to yourself, but also to our economy.

No, you didn't suck wealth from our economy, I don't believe that wealth and money are the same thing, but you may have hoarded a resource that could have been put to use better or which may have otherwise contributed to the creation of wealth.

Of course the government may find it necessary to print some more money to replace what you have removed from circulation. There may be an advantage to the taxpayer, we get to pay less in taxes because the gov got to print some more money which they may then distribute in the form of hiring another government worker (not that we really need more government workers but at least the taxpayer ain't having to pay for him). Due to you removing money from circulation, their may be no inflationary effect caused by the gov printing and distributing that money. If you die and that money rots in the ground, well I guess you just made a donation to the taxpayer. If you dig up that money and spend it a year later, then you and the government may have unintentionally partnered in devaluing the dollar.
 
richrf asked This is a different way to frame the debate. If you were a waiter would you rather pool your tips, and at the end of the shift everyone gets an equal share of the tip jar? Or would you rather go home with the tips that were given directly to you?
I'd rather they compete to see who could make the most tips. Losers buy the drinks for the winner on Friday night.
Customers would get great service, all waiters would end up with more in their pockets than if they just split tips. ( depending on how many waiters and how much of a drinker the winner was):cheers:

It seems that liberals are adrift. Thirty years after LBJ's great society, Clinton put in a new type democrat. Who knows if he had not had the personal issues they may have led to a more pragmatic democratic party. One that tries to balance helping the less fortunate while allowing the economy to prosper.

If democrats wake up to why they lost in 2010, they have a chance to be less the party of rich versus poor and more the party of equal opportunity for everyone capable to do well.

Through things like the voting rights act, the expansion of our social safety net etc, liberals put into place a lot of their agenda in the 60's and 70's. Sure there can be improvements including a debate of how to best pay for health care. Whether through an employee based system or a government program. But the liberal side has not properly evolved so we are stuck in the same old B.S. of class warfare.

I just read Tony Blair's new book. He described moving the Labor party into a more pragmatic, but more electable party which still moved the liberal agenda forward. Obama would do well to read Blair's book.
 
...monopoly... They just happen to be out of the game because they lacked either the skill or luck to remain in. In a board game that's not a bad thing. It's the goal of the game to have just one winner who ultimately owns everything. Thats why there is no automatic redistributation mechanism (other than passing "Go"). The game could go on forever if there was a more substantial mechanism for redistributation. I would hope that in the came of real life, that it is not our goal to end our economy. I kind of like having enough money to eat.
We can debate Monopoly the game if you wish, how there is redistribution every time you land on someone else's square. THE ENTIRE GAME IS BASED ON REDISTRIBUTION AND MONEY VELOCITY! What does that say about your theory?

Further, if you expand faster than you can sustain it may ultimately lead to your downfall. Companies fail all the time in a capitalistic economy. That's how it works.

All economies have to have a mechanism to redistribute wealth or else ultimately one person ends up with all the wealth and that economy becomes very very poor. I am not suggesting that anyone be paid to stop working.
Then explain how redistribution works. How do you "redistribute" to the poor?

And yes, if people who have lots of money all started spending more, that would fix the situation that we are in now.
What dollar amount is "lots of money"?

I would seriously doubt that keeping some money stashed in a savings account paying one half of one percent interest is going to make anyone wealthy.
Lets flash back to the distant history of 2004... How does your debt compare? - MSN Money

You advocate more spending and less saving... About 43% of American families spend more than they earn each year.
You advocate more credit... Average households carry some $8,000 in credit card debt.
You criticize the banks for upping their loan standards... The aggressive extension of credit to consumers with weak credit scores.
You are an advocate for low interest rates to help encourage spending and not saving... (Cause of future problems) Unusually low interest rates.... Personal bankruptcies have doubled in the past decade.

Conclusion of the article: It's not clear exactly where the debt trend will take U.S. consumers or the U.S. economy. But it is clear that both are sailing in uncharted waters.

Lots of people had jobs that they and the bank both thought that were very stable. Obviously they were both wrong. You can be wrong without making a poor decision. **** happens.

Ignorance does not make it right. Making the same mistake twice doesn't offer any long term solutions to the problems either.

Capitalistic markets have ups and downs. That's how it works. You need the downturn to lead to an expansion. You need to rid the herd of the weak so the herd can remain strong.

You still didn't address the point that someone can sell their stuff if they were that hard for cash.

You also didn't discuss the point that you can give your money to someone poorer than yourself to spend your money as a way to stimulate the economy.
 
You can't tell me that if businesses all suddenly decided to use that money to expand and crank up production that jobs wouldn't be created.
When I hire someone, I expect to make more money than that employee costs me. Ramping up my labor costs benefits the economy in no way. Further producing more of something that is not selling only leads to lower final sale prices, higher overhead for storage, lower profits, and is a great way for an owner to join the ranks of the unemployed. So by over hiring 2 people, I run the risk of laying off 20. Does that seem logical?
 
Thank you for an honest assessment. This is precisely right I think. Liberals tend to think in terms of the community as a whole while Conservatives tend to think in terms of the individual. My personal view is that we need a balance of both as too much of either can cause harm and misery.

republican elite cater to the individuals who win and those who create wealth

dem elites cater to those who are losers to get votes and with those votes, the power to take others wealth
 
Have you ever played monopoly? At the end of the game, just one player has all the money and all the assets and the game ends because everyone else is broke. Is everyone else a lazy worthless piece of crap just because they didn't win? Of course not. They just happen to be out of the game because they lacked either the skill or luck to remain in. In a board game that's not a bad thing. It's the goal of the game to have just one winner who ultimately owns everything. Thats why there is no automatic redistributation mechanism (other than passing "Go"). The game could go on forever if there was a more substantial mechanism for redistributation. I would hope that in the came of real life, that it is not our goal to end our economy.
I have to admit, I have been thinking of your Monopoly parable (which means I have been thinking of you ;) ). I regret to say, I wish I had thought of it earlier in our discussions.

You are seeking higher money velocity, yes? Money velocity is at it's peak as the game of Monopoly ends. As players are eliminated their personal velocity increases to the point where they spend everything and save nothing. The economic money velocity also increases as a whole in the game when money is turned over quicker due to landing on developed properties. The End game result as you point out is that one person/company owns everything... and your neighbor is bankrupt and in debt. Correct me if I am wrong, but those are the policies you are advocating for, higher inflation and higher money velocity, and you chose Monopoly as your example, yes?

You suggest the game could go on much longer if there was a better system of redistribuing the money. There are a few ways to look at that statement. The first is a very socialistic view which takes away all of the "fun" from the game. Every square is free for the stay and no "rent" is due. You also can't buy the square since it is public property. But roll the dice and move the next government owned entity. Collect 200 dollars for passing go, pay then 199 in taxes to support all these "free" things...

Another option for a sustainable game, and a capitalistic approach would be to have lower levels of inflation, or even deflation coupled to a lower velocity of money. Maybe "rent" on Boardwalk should be 400 dollars with a hotel, not 2000. The problem as you bring up in the game is that the cost of living increases (inflation), while the salary (200/pass go) stays the same. It is clearly not a money supply issue requiring QE, the bank has never ran out of money in any game I played (maybe the game could use a few more 100's and a few less 500's). Also the bank will always lend to me against my assets no questions asked whenever I need money. However that probably means I am in financial trouble and will probably soon exit the game as bankrupt... leaving the bank holding my property.

Any thoughts? I wish I was able to take credit for this, but it was all you.
 
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Consider that we are not an industrial economy. We are a service economy. Most people do not produce anything at their jobs, nor do they directly sell products which they produced.

Doctors, lawyers, information tech, store clerks, waiters, bartenders, mechanics, landscapers, roofers, nurses, plumbers, teachers... What do you do for work? What did you produce and sell yesterday?

All of the professions you listed have a distinct product (a service is a product...) and will not be profitable if they fail to produce. The fact that most of us sell our time and knowledge rather than a particular quantity of produced goods is irrelevant.
 
Spending is what drives production. No one is going to produce unless they get paid for their products. If no one is buying products, people will stop producing products.

Over and over again I hear how we need to increase production to get out of this recession. Sure, that's true - on a macroeconomic level. But on a microeconomic level, businesses are not going to just magically increase production without having customers - and this is true regardless of the tax rate or any government policy.

I do agree that people who happen to be productive drive our economy, but the reason that they happen to be productive is profit and income. Without profit and income (derrived from sales) they will not likely be productive. And even if they are productive, without customers, have their efforts really benefited our economy? I own a business, given a large amount of cash in the bank my business could be very productive for a while, producing tons of work, but without people purchasing our products, then what would be the point of that?

Production will not happen without spending, thus spending drives our economy.

The only way to encourage businesses to increase production is for them to have an increase in sales.

Spending does not drive the economy. Without productive people, there's nothing of value to trade. It cannot be any simpler. This is not one of those "chicken or egg" scenarios.
 
As long as people continue to believe that our economy is driven by spending, you are pissing in the wind, my friend.

I think you mean "government spending" here, yes?

As long as our economy depends upon its citizens carrying a heavy debt load, continually spending more than they earn, that's how long we'll piss in the wind.

It is so frustrating and embarrassing for me to watch Democrats as they fumble around with the economy. I am not sure whether Obama is just wet behind the ears and has no business being President (I voted for Clinton in the primaries because to me Obama was as ill-equipped as Palin or Bush) or whether he is just being a shill for his backers on Wall Street - especially Goldman Sachs.

The Democrats - Frank, Schumer, Pelosi - have all betrayed their constituency as the middle class is being destroyed by King Bernanke's "Let Them Eat Cake" policies. It is a disgrace and I still have to hold my stomach whenever I hear Frank shilling for Wall Street and the fat cats that he financed via Freddie and Fannie.

I hope that there is a new breed of Democrats that come along that have good knowledge of economics and can serve their constituency. It would be a breath of fresh air.

Up until now, our Congress has only cared about perception. Just maybe the Republicans have learned it's about results.

The Dems have been so busy paying off their campaign contributors with pork spending....so busy growing government...so busy using this economic crisis to create a society ever more dependent on the largess of their programs, that they haven't even been thinking about solving our economic crisis.
 
I think it's important to understand what defines conserverative and liberal beliefs. It seems that too often it is boiled down to one's views on abortion or war or taxes.

community vs individual
equality vs freedom
positive law vs natural law
new institutions vs traditional institutions

These are a few of the left vs right arguments. Keep that in the context of this thread, you see why the right feels the way they do and the left feels the way they do.

I see it as

1) it is my job to take care of myself and that duty is primarly mine

2) its the government's duty to take care of me and they have the primary responsibility to do so
 
I think you mean "government spending" here, yes?

As long as our economy depends upon its citizens carrying a heavy debt load, continually spending more than they earn, that's how long we'll piss in the wind.

No. I don't mean government spending. That's a separate, but related, topic.
 
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