Economic Solution

[Chip]

... 80% of the wealth will be in the hands of 20% ...

In a bad recession, there's a lot less wealth ... and the basic ratio decays, perhaps to 90-10, whereafter follows additional loss of wealth, followed by additional ratio erosion ... until things are really bad.

Again, how do we stop the decline; what action needs to be taken to halt the bleeding and begin a return to happier 80-20 days where the 80% that owns 20% won't be on the brink of homelessness?

There are concrete steps that need to be taken to stop the free-fall and prevent a truly horrific disaster in America.

What are those concrete steps?

 

[Andy]

In a bad recession, there's a lot less wealth ... and the basic ratio decays, perhaps to 90-10, whereafter follows additional loss of wealth, followed by additional ratio erosion ... until things are really bad.

Again, how do we stop the decline; what action needs to be taken to halt the bleeding and begin a return to happier 80-20 days where the 80% that owns 20% won't be on the brink of homelessness?

There are concrete steps that need to be taken to stop the free-fall and prevent a truly horrific disaster in America.

What are those concrete steps?

Reduce all taxation. More many in the hands of consumers, results in more consuming. More money in the hands of business owners, results in more jobs.

 

[Pidgey]

If you don't have supporting documention to support an exponential distribution shift, then don't bother proposing it. It is, in any case, a non sequitur.

Your current problem is a confidence problem--consumers are only buying what they need and either saving the rest or paying off debt. They have far less faith in the future. More importantly, investors are exponentially losing faith that any actual investment will gain value in the long term. For that, you'd need an expanding energy distribution scenario, because it takes that to manufacture. Or exponentially increasing efficiency of said manufacture. Without some combination of the two, the economy is toast if it's growth-based. Growth-based economies must have an expansion tomorrow to pay off today's debt. Therefore, energy utilization is key. If you don't have a positive exponential there, then your only viable course is impoverishment and the war, famine and pestilence that that has historically brought.

Period. End of story.

 

[Pidgey]

By the way, doesn't anybody else see the logical flaw in the stimulus package: you tax people to give them "free" money to spend? Only... you're not giving it to them to spend, you're giving it to select parties...

Yeah, that'll boost confidence and get 'em spending again! That's all it takes! Yippee, we're saved!

Get outside the problem and then look at it, people.

 

[Chip]

Reduce all taxation. More many in the hands of consumers, results in more consuming. More money in the hands of business owners, results in more jobs.

Reducing taxation reduces a little bit of burden on the consumer ... assuming the consumer has a job.

Again, the problem with a rapidly descending economic spiral is that waves of unemployment occur.

Once people are unemployed, they don't have money to spend even at lower prices ("lower prices" in effect resulting from reduced tax rate), and so coorporations lose more sales resulting in more lay-off waves ... ... .

As beneficial as tax reductions are ... they are, arguably, too slow and too weak to stop this kind of monster before the monster consumes too many.

We need something more super heroic, something stronger and faster.

What is that something?

I truly don't know what it is.

But we have to find it.

 

[Andy]

Reducing taxation reduces a little bit of burden on the consumer ... assuming the consumer has a job.

Again, the problem with a rapidly descending economic spiral is that waves of unemployment occur.

Once people are unemployed, they don't have money to spend even at lower prices ("lower prices" in effect resulting from reduced tax rate), and so coorporations lose more sales resulting in more lay-off waves ... ... .

As beneficial as tax reductions are ... they are, arguably, too slow and too weak to stop this kind of monster before the monster consumes too many.

We need something more super heroic, something stronger and faster.

What is that something?

I truly don't know what it is.

But we have to find it.

The other thing that needs to be done, is remove the "Mark-to-Market" general accounting practice, that's led this whole thing.

Beyond that, the economy will correct itself. There is no need to enact any policy on this, it simply has to iron itself out. Without any help, people will eventually pay off their debts, and as they do, start buying things they want. You don't have to push for it. It happens automagically.

One thing we should do is push for government to stop printing money. (stop overspending). At some point, and likely soon, that will start pushing inflation up massively, which will cause even more economic havoc.

 

[Pidgey]

I seriously doubt that most of these folks understand or are aware of "Mark-to-Market" and its significance, Andy.

 

[Chip]

By the way, doesn't anybody else see the logical flaw in the stimulus package: you tax people to give them "free" money to spend? Only... you're not giving it to them to spend, you're giving it to select parties...

Yeah, that'll boost confidence and get 'em spending again! That's all it takes! Yippee, we're saved!

Get outside the problem and then look at it, people.

Yes, that aspect of stimulus pacakges bothers me too.

And public works packages mean government-run communal jobs like FDR's CCC.

I don't like bailouts to bankers, especially considering they just use the money to buy other banks, still keeping their purse strings tight.

I don't like bailouts for the big three auto-makers, as when the money runs out, what guarantee is there people will be buying their cars when they weren't previously. It's just stalling.

Better would be to give money back to the public in, perhaps, lotteried vouchers to be used to open an account at a failing thrift or buy a big-three car. Instead of giving bailouts directly too businesses that aren't working, we give the money to the people who can then buy those struggling American business products and those companies can make money the usual way and not lay their workers off, and by giving vouchers to individuals, maybe individuals down on their lay-off luck, we might prevent additional drain on emergency coffers, and we can all weather the storm a bit better.

Whatever, it just seems there must be a better use of the money than to simply bailout coporations directly ... a mere temporary and arguably inadequate patch.

But what?

I know there's got to be something better ...

... But what is it?

 

[Chip]

Beyond that, the economy will correct itself.

Yes, the economy does always correct itself ... eventually.

But the economy isn't a living being.

If we wait for the "eventually" on this one there will be a lot of people dying from the economic plague.

Sometimes, we have to make peoples lives more important than a more nebulous "economy".

Really, any "economy" must exist to serve living beings, not so exclusively the other way around.

The economy, by its very nature, perhaps, has once again behaved badly.

I don't believe we have the time to wait for its usual slow corrections.

We need to take swift action to stop horrific human suffering.

We need to put our heads together, eschewing business as usual, and come up with something ... something a whole lot better than what appears Washington is settling for ... but something significant and unusual, nonetheless.

What is that something?

 

[Pidgey]

I don't like bailouts to bankers, especially considering they just use the money to buy other banks, still keeping their purse strings tight.

I don't like bailouts for the big three auto-makers, as when the money runs out, what guarantee is there people will be buying their cars when they weren't previously. It's just stalling.

Better would be to give money back to the public in, perhaps, lotteried vouchers to be used to open an account at a failing thrift or buy a big-three car. Instead of giving bailouts directly too businesses that aren't working, we give the money to the people who can then buy those struggling American business products and those companies can make money the usual way and not lay their workers off, and by giving vouchers to individuals, maybe individuals down on their lay-off luck, we might prevent additional drain on emergency coffers, and we can all weather the storm a bit better.

Listen, fella', you'd do just as well to tell everyone with a savings account to go spend a certain percentage of it that would cascade exponentially right back up that curve for all the good it would do.

Try looking at it from a different angle: an awful lot of debt is owed, too much. If too many default on their debt, then the people holding said debt get burned and don't have a reason to lend anymore. Therefore, the proposal is essentially taking FROM the holders of the debt to GIVE TO the debtors so that they can PAY BACK the holders of the debt.

What the investor sees is: there ain't no point in loaning anymore--close up shop, stand back and let the herd thin.

 

[Pidgey]

Graphically:



Click on the thumbnail, and then click on the image again when it comes up in a new browser window--choose Full Screen.

 

[Chip]

... stand back and let the herd thin.

The thinning of the laid-off herd via death is what we are trying to prevent.

And we are trying to prevent additional waves of layoffs with no available jobs.

It is not good to let people suffer in the name of "the economy".

The purpose of this thread is to come up with ideas to prevent that from happening.

Do you have any ideas on the topical matter?

 

[Pidgey]

I'm only pointing out the governing dynamic. I don't like herd-thinning any more than you do. I've known this was coming for almost 40 years and didn't have children because of its absolute inevitability.

If you want to save the world, then develop cheap energy and deploy it very rapidly. But consider: the population has had exponential growth to the tune of about 1.02. That gives you a doubling time of approximately 35 years. So, in 35 years, you're going to have twice the people as now, and in 70 years, four times as many. Just how far do you think it can go? Energy isn't the only problem, you know... what about phosphorus?

http://www.energybulletin.net/node/33164

If you want to save that which probably cannot ultimately be saved, then be prepared to spread everybody back out to small farm holdings and away from urbanization & industrialization.

 

[Andy]

I seriously doubt that most of these folks understand or are aware of "Mark-to-Market" and its significance, Andy.

Ok... I made a thread on Understanding 'Mark-to-Market' and it's roll in the economic crash.

That should help for anyone who doesn't understand Mark-To-Market, and how it works.

 

[Andy]

Yes, the economy does always correct itself ... eventually.

But the economy isn't a living being.

If we wait for the "eventually" on this one there will be a lot of people dying from the economic plague.

Sometimes, we have to make peoples lives more important than a more nebulous "economy".

Really, any "economy" must exist to serve living beings, not so exclusively the other way around.

The economy, by its very nature, perhaps, has once again behaved badly.

I don't believe we have the time to wait for its usual slow corrections.

We need to take swift action to stop horrific human suffering.

We need to put our heads together, eschewing business as usual, and come up with something ... something a whole lot better than what appears Washington is settling for ... but something significant and unusual, nonetheless.

What is that something?

You and I have completely different views on "human suffering". I think the worst human suffering in the world has been caused by attempting to stamp out all human suffering.

The economy is not something that can be "fix" or prevented from causing problems.

What say we promise everyone a job, and promise everyone food, and promise everyone a home, and everyone health care even. Will that prevent all suffering? Perhaps in one sense, but then China had that and what was the result? 66% of the population lived under the poverty line, and the poverty line in China is 25 cents a day. But they all had food, shelter, health care, and a job. Is that how you wish to prevent human suffering?

Now, China no longer promises food to all citizens. No longer promises a home to all citizens. No longer promises a job to all citizens. Now only 3% of the population is under the poverty line.

So which way it better?

Even in this case, the changes in the Community Reinvestment Act, that drastically pushed for sub-prime loans, was for the purpose of easing "human suffering". What was the result? More human suffering than there was before, in the form of bankruptcy, foreclosure, screwed up credit reports for 7 years, not including debts they'll have to pay for years to come.

Not to mention Mark-to-Market which was to prevent Human suffering from companies like Enron. Instead they caused massive losses on the stock market the effect everyone's 401K, not to mention lost jobs from bankrupt companies.

In the end, the more we try to prevent all human suffering, the more human suffering we're going to cause.