Initiate Change

[bpwallace49]

Here's a funny headline from today:

 

I don't know about you guys but the solution to over-spending is not to spend more. At least that's what logic would tell us. Not that there's anything logical remaining in the power structure of this country. There's silly me ranting about logic in an illogical economic system.

 

It's hard to blame the masses for not being angry when in every basic economics class you are taught that spending is what drives the economy. Unfortunately, this country is a BIG F'in JOKE.

 

If you're one of those huddlers who think I'm a quack - you will see soon enough.

 

Um Brent? Isnt increased BUSINESS spending a sign of a strenthening economy? Like more re-investment in the business, capital projects, re-hiring people, ETC.

 

Cause the article said business spending . . not personal spending, which I agree with you is way out of control.

[Ursa Majoris]

Here's a funny headline from today:

 

I don't know about you guys but the solution to over-spending is not to spend more. At least that's what logic would tell us. Not that there's anything logical remaining in the power structure of this country. There's silly me ranting about logic in an illogical economic system.

 

It's hard to blame the masses for not being angry when in every basic economics class you are taught that spending is what drives the economy. Unfortunately, this country is a BIG F'in JOKE.

 

If you're one of those huddlers who think I'm a quack - you will see soon enough.

Spending drives any economy unless it's a pure communist barter system. The most important spending referred to here is business spending because that probably leads to hiring, never mind the fact that suppliers having the money spent on them are likely to hire too, and so it goes on down the chain. One company / consumer's spend is another company's / consumer's income. This isn't government spending we're talking about here, this is good old capitalism getting it's wheels under it again.

[Duchess Jack]

Isnt increased BUSINESS spending a sign of a strenthening economy?

 

that's what the illuminati want you to think you blind, educated, heard creature

[Brentastic]

Um Brent? Isnt increased BUSINESS spending a sign of a strenthening economy? Like more re-investment in the business, capital projects, re-hiring people, ETC.

 

Cause the article said business spending . . not personal spending, which I agree with you is way out of control.

The article refers to consumer and business spending.

[Duchess Jack]

The article refers to consumer and business spending.

Good luck running a business if consumers aren't spending.

[Avernus]

this country needs to build up it's savings again, and then we can think about spending some...

 

at some point there will be encouraged spending when we are pretty much running on E with two flat tires....hopefully we decide to go through the "tough times" now so it won't be for so long with how we're dragging it out...

 

how many times will China have to buy US Treasuries to keep both economies going? This is why Chinese Government has encouraged their people to invest in silver (and gold), but mostly silver which is a complete 180 from what they were "allowed" to do for so many years. The speculation is that they want to build up growth in silver and then exchange it in to be melted and pressed for money which would at the very worst double their current money supply. Why does this matter? This would allow them to ditch us and start selling to their own country....

 

I expect this to happen at some point and that is where things could get scary...the only "likely" scenario I see anyways if anything catastrophic were to happen at all....it would be the aftermath of China not buying US Treasuries anymore...

[Brentastic]

Spending drives any economy unless it's a pure communist barter system. The most important spending referred to here is business spending because that probably leads to hiring, never mind the fact that suppliers having the money spent on them are likely to hire too, and so it goes on down the chain. One company / consumer's spend is another company's / consumer's income. This isn't government spending we're talking about here, this is good old capitalism getting it's wheels under it again.

This is the keynesian philosophy and, IMO, it's flawed. The reality is that consumer spending is the result of a healthy economy, not the driver. The way the economy flows naturally is that interest rates decrease as people save more (and vice versa). So without manipulation, the economy moves as it should because in a low interest rate environment, businesses are more attracted to long-term projects (i.e. the cost of borrowing is cheap).

 

On the flip side, when consumers are spending and not saving - and because the financial sector is collapsing, the Fed decreases interest rates - it causes false signals to businesses who use the low rates to fund long-term projects - at the same time, consumers are borrowing money cheaply and spending on short-term wants/needs. In the short-term the results may not be evident and in fact, the economy may seem to boom or grow as a result. But the longer-term imbalance could be catastrophic.

 

The biggest flaw in Keynesian philosophy is the idea that consumers need to keep spending to drive the economy. But if consumers comply with this flawed logic, nobody ever saves. AND savings increases future spending naturally.

[Avernus]

http://www.thezeitgeistmovement.com/

 

A resource base economy?...the website is definitely an interesting one..

[Brentastic]

This guy sums up things well and his method for achieving change is the same as mine, which is mass non-compliance. I think this video is well worth watching. It is divided into 4 parts, each lasting 15 minutes.

 

Part I -

Part II -

Part III -

Part IV -

 

E2A: I linked the wrong videos, still good but not what I intended. The correct ones are now linked.

Edited February 4, 2011 by Brentastic

[Brentastic]

Spending drives any economy unless it's a pure communist barter system. The most important spending referred to here is business spending because that probably leads to hiring, never mind the fact that suppliers having the money spent on them are likely to hire too, and so it goes on down the chain. One company / consumer's spend is another company's / consumer's income. This isn't government spending we're talking about here, this is good old capitalism getting it's wheels under it again.

 

This is the keynesian philosophy and, IMO, it's flawed. The reality is that consumer spending is the result of a healthy economy, not the driver. The way the economy flows naturally is that interest rates decrease as people save more (and vice versa). So without manipulation, the economy moves as it should because in a low interest rate environment, businesses are more attracted to long-term projects (i.e. the cost of borrowing is cheap).

 

On the flip side, when consumers are spending and not saving - and because the financial sector is collapsing, the Fed decreases interest rates - it causes false signals to businesses who use the low rates to fund long-term projects - at the same time, consumers are borrowing money cheaply and spending on short-term wants/needs. In the short-term the results may not be evident and in fact, the economy may seem to boom or grow as a result. But the longer-term imbalance could be catastrophic.

 

The biggest flaw in Keynesian philosophy is the idea that consumers need to keep spending to drive the economy. But if consumers comply with this flawed logic, nobody ever saves. AND savings increases future spending naturally.

Weigie, Ursa - no rebuttal here?

[Ursa Majoris]

Weigie, Ursa - no rebuttal here?

I thought Keynesian economics referred to government spending? I'm not advocating massive government spending but in capitalism, all dollars spent should generate more dollars spent. In this context, spending is good, since the spending is to generate income.

[Brentastic]

I thought Keynesian economics referred to government spending? I'm not advocating massive government spending but in capitalism, all dollars spent should generate more dollars spent. In this context, spending is good, since the spending is to generate income.

I'm not saying spending is always bad, but it's not always good either. It depends on if the spending is the 'right' spending. You can't automatically assume that all business spending is on new hires or profitable projects. For instance, during the housing bubble, there was a lot of spending on new houses/commercial buildings and those projects have now been abandoned. My point is that there is a time to spend and a time to save. Bernanke tooting his horn that consumers and businesses are now spending and implying that is a good thing - well, not really. IF the businesses are spending on new hires, then it probably is a good thing for the economy. However, consumer spending may not be a good thing (in the general sense). You gotta realize that Bernanke is the voice of the Fed - and to the Fed, consumer spending is a GREAT thing. For the consumer, however, spending is not always a good thing and in fact, is only good when they have adequate savings to do so. Now is not the time for mass consumer spending but unfortunately, most consumers still don't get it. They will soon enough, unfortunately.

[Avernus]

I thought Keynesian economics referred to government spending? I'm not advocating massive government spending but in capitalism, all dollars spent should generate more dollars spent. In this context, spending is good, since the spending is to generate income.

 

the only problem is that instead of saving, a lot of people are buying flat screens and splurge on home entertainment - which is usually the option most look to in a depression/recession....

 

instead of saving their money, they feel the need to live a little because they want to take their mind off how bad things are....where-as I see people saving when there is more money circulating in an upbeat economy because they want to invest or put something away because they have such a large amount of money to make moves with......it's tougher to save when your income is on a slow burn..

[Ursa Majoris]

the only problem is that instead of saving, a lot of people are buying flat screens and splurge on home entertainment - which is usually the option most look to in a depression/recession....

 

instead of saving their money, they feel the need to live a little because they want to take their mind off how bad things are....where-as I see people saving when there is more money circulating in an upbeat economy because they want to invest or put something away because they have such a large amount of money to make moves with......it's tougher to save when your income is on a slow burn..

You are wrong about that. The saving rate is up to over 5%

[Avernus]

You are wrong about that. The saving rate is up to over 5%

 

 

up from what low point?....isn't it still well below standards? We need the saving rate to pick up by more than 5% to even show a glimmer of hope (seriously)

[bushwacked]

In general, businesses have been raking in profits for awhile now, and now they are spending, because they have gotten to a point where there are comfortable with their savings. I fail to see how this is a bad thing.

 

It is what it is.

 

While there are many hurdles to be met, some of you opinionated chicken little guys fail to grasp the basics while predicting the end game. Some of you guys can't even fact check yerselves while committed to preaching something more cataclysmic.

 

Like a cult.

Edited February 5, 2011 by bushwacked

[Brentastic]

In general, businesses have been raking in profits for awhile now, and now they are spending, because they have gotten to a point where there are comfortable with their savings. I fail to see how this is a bad thing.

 

It is what it is.

 

While there are many hurdles to be met, some of you opinionated chicken little guys fail to grasp the basics while predicting the end game. Some of you guys can't even fact check yerselves while committed to preaching something more cataclysmic.

 

Like a cult.

Not only do you NOT know what you're talking about but for being a self-proclaimed 'scientist', you base your argument on zero facts.

 

For instance, I'd like to know what 'basics' I'm failing to grasp. I'm certain that I know a hell of a lot more about economics than you do and in fact I've proven it in several threads. So please enlighten me on the 'basics'.

 

Just because you've been spoon fed information on how the economy works based on one flawed (keynesian) model doesn't mean you know what you're talking about. In fact, you only keep proving that you have limited knowledge on the subject and you are the staple for herd mentality. Your inability to think critically and ask questions that challenge the current system is annoying and I would presume a good scientist would exhibit those traits. It's not surprising though because those that lack creativity are robots to thoughts and ideas that are already mainstream and can't fathom thoughts and ideas that challenge conventional thinking.

 

If nothing else, government has proven more often than not that they manipulate information and hide truths but yet you buy into our economic model which yields constant inflation, hence making your dollar worth less with each passing day. If you took anything from history and cared about America, you would challenge the current system not accept it for what it is. I'm not your enemy man, I'm on your side and I'm just trying to get you to look at things from a different perspective but you're too eager to argue. Yet you argue about a topic you know little about. Have you read any of the articles I posted on the previous page?

[Ursa Majoris]

up from what low point?....isn't it still well below standards? We need the saving rate to pick up by more than 5% to even show a glimmer of hope (seriously)

That depends on what a "standard" is. Looking at the graph, it is very clear that savings are higher now (and since the crash) than in the previous five years. Certainly savings rates were much too low as people believed their houses were in effect giant piggy banks but what I see here is an increase of nearly 200% over the lowest years. That has surely got to be a good thing.

 

Off on a slight tangent, it should be remembered that pay has been flat or lower for several years too, so it's not like these higher savings are coming from increased wages. Taken overall, it would seem that people are doing exactly what you recommend.

[Avernus]

That depends on what a "standard" is. Looking at the graph, it is very clear that savings are higher now (and since the crash) than in the previous five years. Certainly savings rates were much too low as people believed their houses were in effect giant piggy banks but what I see here is an increase of nearly 200% over the lowest years. That has surely got to be a good thing.

 

Off on a slight tangent, it should be remembered that pay has been flat or lower for several years too, so it's not like these higher savings are coming from increased wages. Taken overall, it would seem that people are doing exactly what you recommend.

 

you are right, but up 5% savings in contrast the the last 5 years isn't enough to slow down the recession imo.....I wish it were, but even at 5% savings, we're still in some bad shape...

 

one of the problems is though that unemployment is not looking good and as you say, the savings are not coming from increased wages which is a good thing with so many people out of work, but it really feels like a small hiccup compared to the kind of strides we need to make...

 

hopefully the 5% uptick is a sign of things to come and we can build on that....we really need it.

[Brentastic]

Really? How can anyone with a brain believe this crock of diaper dirt? Sure, this was written a few months ago but it just shows how dummied down Americans are. The fact that they can justify QE2 by the same methods that caused the financial crisis. Every person should be pissed off that they are getting away with this. Consumer borrowing is only good for the Fed - bottom line.

 

http://www.federalreserve.gov/newsevents/o...ke20101105a.htm

 

Chairman Ben S. Bernanke

Op-ed column for The Washington Post

November 5, 2010

Aiding the Economy: What the Fed Did and Why

 

Two years have passed since the worst financial crisis since the 1930s dealt a body blow to the world economy. Working with policymakers at home and abroad, the Federal Reserve responded with strong and creative measures to help stabilize the financial system and the economy. Among the Fed's responses was a dramatic easing of monetary policy--reducing short-term interest rates nearly to zero. The Fed also purchased more than a trillion dollars' worth of Treasury securities and U.S.-backed mortgage-related securities, which helped reduce longer-term interest rates, such as those for mortgages and corporate bonds. These steps helped end the economic free fall and set the stage for a resumption of economic growth in mid-2009.

 

Notwithstanding the progress that has been made, when the Fed's monetary policymaking committee--the Federal Open Market Committee (FOMC)--met this week to review the economic situation, we could hardly be satisfied. The Federal Reserve's objectives--its dual mandate, set by Congress--are to promote a high level of employment and low, stable inflation. Unfortunately, the job market remains quite weak; the national unemployment rate is nearly 10 percent, a large number of people can find only part-time work, and a substantial fraction of the unemployed have been out of work six months or longer. The heavy costs of unemployment include intense strains on family finances, more foreclosures and the loss of job skills.

 

Today, most measures of underlying inflation are running somewhat below 2 percent, or a bit lower than the rate most Fed policymakers see as being most consistent with healthy economic growth in the long run. Although low inflation is generally good, inflation that is too low can pose risks to the economy--especially when the economy is struggling. In the most extreme case, very low inflation can morph into deflation (falling prices and wages), which can contribute to long periods of economic stagnation.

 

Even absent such risks, low and falling inflation indicate that the economy has considerable spare capacity, implying that there is scope for monetary policy to support further gains in employment without risking economic overheating. The FOMC decided this week that, with unemployment high and inflation very low, further support to the economy is needed. With short-term interest rates already about as low as they can go, the FOMC agreed to deliver that support by purchasing additional longer-term securities, as it did in 2008 and 2009. The FOMC intends to buy an additional $600 billion of longer-term Treasury securities by mid-2011 and will continue to reinvest repayments of principal on its holdings of securities, as it has been doing since August.

 

This approach eased financial conditions in the past and, so far, looks to be effective again. Stock prices rose and long-term interest rates fell when investors began to anticipate this additional action. Easier financial conditions will promote economic growth. For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance. Lower corporate bond rates will encourage investment. And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.

 

While they have been used successfully in the United States and elsewhere, purchases of longer-term securities are a less familiar monetary policy tool than cutting short-term interest rates. That is one reason the FOMC has been cautious, balancing the costs and benefits before acting. We will review the purchase program regularly to ensure it is working as intended and to assess whether adjustments are needed as economic conditions change.

 

Although asset purchases are relatively unfamiliar as a tool of monetary policy, some concerns about this approach are overstated. Critics have, for example, worried that it will lead to excessive increases in the money supply and ultimately to significant increases in inflation.

 

Our earlier use of this policy approach had little effect on the amount of currency in circulation or on other broad measures of the money supply, such as bank deposits. Nor did it result in higher inflation. We have made all necessary preparations, and we are confident that we have the tools to unwind these policies at the appropriate time. The Fed is committed to both parts of its dual mandate and will take all measures necessary to keep inflation low and stable.

 

The Federal Reserve cannot solve all the economy's problems on its own. That will take time and the combined efforts of many parties, including the central bank, Congress, the administration, regulators and the private sector. But the Federal Reserve has a particular obligation to help promote increased employment and sustain price stability. Steps taken this week should help us fulfill that obligation.

[Avernus]

silver in complete backwardation.

 

http://harveyorgan.blogspot.com/2011/02/si...kwardation.html

 

yeah, it's a blog but what he is talking about with gold and silver (mostly silver) is extremely compelling considering the 2015 silver futures contract is set at .05 less than what it's at today....

 

I'm not even sure if the price of silver will be tied to inflation as much as it has been (aside from other factors as well)...it seems to be doing it's own thing and has even detached itself from the growth of gold which hasn't happened.

For seven years, gold and silver have traded in perfect uniformity. If gold goes up by 1% then silver will rise somewhere around 1%. Douglas has now concluded that the shackles have been removed and silver is now on its own. Douglas also noted that silver is basically in complete backwardation or no contango.

[Brentastic]

Spending drives any economy unless it's a pure communist barter system. The most important spending referred to here is business spending because that probably leads to hiring, never mind the fact that suppliers having the money spent on them are likely to hire too, and so it goes on down the chain. One company / consumer's spend is another company's / consumer's income. This isn't government spending we're talking about here, this is good old capitalism getting it's wheels under it again.

 

This is the keynesian philosophy and, IMO, it's flawed. The reality is that consumer spending is the result of a healthy economy, not the driver. The way the economy flows naturally is that interest rates decrease as people save more (and vice versa). So without manipulation, the economy moves as it should because in a low interest rate environment, businesses are more attracted to long-term projects (i.e. the cost of borrowing is cheap).

 

On the flip side, when consumers are spending and not saving - and because the financial sector is collapsing, the Fed decreases interest rates - it causes false signals to businesses who use the low rates to fund long-term projects - at the same time, consumers are borrowing money cheaply and spending on short-term wants/needs. In the short-term the results may not be evident and in fact, the economy may seem to boom or grow as a result. But the longer-term imbalance could be catastrophic.

 

The biggest flaw in Keynesian philosophy is the idea that consumers need to keep spending to drive the economy. But if consumers comply with this flawed logic, nobody ever saves. AND savings increases future spending naturally.

Weigie, Ursa - no rebuttal here?

With still no response from our resident economic 'expert', I'll call this a minor victory.

[Brentastic]

You are wrong about that. The saving rate is up to over 5%

Here's an interesting stat regarding savings:

The US savings rate (as a percent of disposable income) is actually up from the lows of less than 1% in 2001 and 2005. It's no wonder, as cash has easily outperformed stocks in the last decade. At 5.3%, the current savings rate is still a long way from the high of nearly 15% in 1974. This bear market is two degrees bigger, so it will push the savings rate even higher than that before it's over.

 

That will be a clue on when to buy stocks again (after the upcoming crash) - when the savings rate starts approaching 20%. Just like if you would have started buying stocks in the early 70s when the savings rate was at it's highs.

[MikesVikes]

All laws are crappy. We should all have hand guns. No laws, just guns. The guy with the fastest draw makes his own rules. Until another dude comes along and shoots him in the back.

 

Whatever happened to those good old days anyway?

Edited February 8, 2011 by MikesVikes

[wiegie]

With still no response from our resident economic 'expert', I'll call this a minor victory.

If you will notice, I haven't posted in this thread at all yet. Nor will I do so. Call it a victory if you want, I will call it not wasting my time raining on your parade.