oldreliable67
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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?
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.
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.
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.
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:
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?...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.
Then explain how redistribution works. How do you "redistribute" to the poor?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.
What dollar amount is "lots of money"?And yes, if people who have lots of money all started spending more, that would fix the situation that we are in now.
Lets flash back to the distant history of 2004... How does your debt compare? - MSN MoneyI 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.
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.
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?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.
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.
I have to admit, I have been thinking of your Monopoly parable (which means I have been thinking of youHave 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.
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?
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.
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.
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 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.
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