Okay, this can't be as stupid as it seems

Tek7

Tek7

CGA President, Tribe of Judah Founder & President
Staff member
I'm not a math person. I'm certainly not an expert on the economy. My best work is with words, not numbers.

But I'm confused about this economic stimulus bill, so I'm calling on the math experts to help me out.

Point 1: America (and other countries) got ourselves into this problem by spending money we didn't have.

Point 2: The American government seems to think we can fix the problem by spending money we don't have.

Point 3: The American government is throwing huge sums of taxpayer dollars at the poorly managed businesses who were largely responsible for getting us into this mess.

Now either I have to be misunderstanding something here or our representatives in Congress are complete and utter morons.

Please, please tell me I'm misunderstanding something.
 
I hate to say it Tek, but I think you are just asking for a large argument over this one. Personally I don't think either this stimulus bill or the last one make any sense what so ever and I think they are retarded. I am a Republican, but the republicans spit out as much crap in the last year as the democrats.
 
I have a great site that cuts through the MSM baloney. I also called this mess(in terms of the housing issues) years ago(checkout hescominsoon.com). Back in 2k5 i did not know how quickly it would implode. I also did not invest the time to research wht was going on...once things blew up i got VERY interested in our economy and how things are run. The site i highly recommend to read about the REAL reason we have this issue is http://market-ticker.denninger.net

Also checkout his podcast which is done weekly. You can access the podcast on the right side down a bit from the top of any of his site's pages.

The real issue is partly the the market is flooded with fraud and bad debts right now which the gov't is not allowing it to get cleaned out. Our monetary system actually doesn't truly exist(read my blog about fiat money) and then listen to the most recent podcast on the market ticker. Once you do some digging you'll see this issue started back in the 20's and continues to this day. The federal gov't is the main CAUSE of our issues right now because they won't get out of the way..the great depression was caused by the FED.
 
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I have edited the post please refresh your page to see the latest links. I have categorized all of my financial posts going back to 2005..read that one first.
 
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Tek7 said:
Please, please tell me I'm misunderstanding something.
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you're misunderstanding something.

That last bit, where they throw large sums of taxpayer money at businesses that should have filed bankruptcy and been reorged, should also include the fact that they are throwing large sums of taxpayer money at various pork projects, and then attaching rules to those moneys to force the companies that take it to do inane things like give jobs to unqualified individuals who don't really want to work.


You caught everything else pretty well though...
 
The best solution to a recession is to spend your way out. Problem is, the people who need to do the spending have no means of doing so. That is, there is no available credit for them to access, banks are holding tight on loans and mortgages, companies that once did leasing no longer do so. All the "cash" they have from what ever employment they may have now is going into paying living expenses that take up a good chunk of their take home pay and what ever is left, people are leaving in the bank in case they loose their job. People are pulling investments out of equity markets to remain liquid which has an annoying side affect of hindering well run companies ability to access credit they need to operate.

It is a major cluster bomb going on in the entire world.

Now what?
 
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spending your way out works IF the money actually exists. Credit is not capital..it is debt and the world is so overleveraged right now there's little if any real cash to spend.
 
Tek don't worry you aren't misunderstanding anything just look at history and you will see that it all makes sense. One of the worst stock market drops was actually quickly recovered because the president didn't want to do anything to help the people and we recovered from it very quickly. Then another president gives money to people when stock market crashes and we get the great depression. That is why i am glad that alot of states are starting to refuse the money that Obama is trying to give them. It will in the end help the economy of that state.
 
I'm greatly bothered by this whole mess too. There is a good side to this whole thing though--more and more eyes are being drawn to Ron Paul!

RP FTW!
 
Yes the OP is missing something but it is long and complex. I suggest reading the following book which gives an excellent first exposure to basic economics and is a good launching pad for understanding stimulus packages:
http://books.google.com.au/books?id...&dq=basic+economics&ei=HBinSZWEPJ6mlQSG8K2KDg

P.S. the great depression was not caused by the government giving the people lots of money it was a combination of hopelessly misguided stockmarket investments and extremely tight US government monetary policy. I assume you are refering to govenment infustructure projects that aimed to reinvigorate the economy. In this case the money was not the problem but the fact it was targeted at long term projects that took to long to materialise.
 
that's not correct...it was the govt's meddling and the creation of hte federal reserve that causes what's known as the business cycle. http://www.hescominsoon.com/?p=1912

This causes the cycles of highs and lows we see due to not only our financial system but most of the world's as wlel being based on...nothing..it's all run on inflation. Inflation can only go on for so long before there has to be a correction. The gov't is not the one to regulate this..it should be the market. Paper money is nothing but debt..it doesn't stand for anything since it's backed by...nothing..it's relaly worth...nothing.
 
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Hescominsoon said:
that's not correct...it was the govt's meddling and the creation of hte federal reserve that causes what's known as the business cycle. http://www.hescominsoon.com/?p=1912

This causes the cycles of highs and lows we see due to not only our financial system but most of the world's as wlel being based on...nothing..it's all run on inflation. Inflation can only go on for so long before there has to be a correction. The gov't is not the one to regulate this..it should be the market. Paper money is nothing but debt..it doesn't stand for anything since it's backed by...nothing..it's relaly worth...nothing.
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Didn't say it wasn't the government (hence my statement that it was overly tight monetry policy - which at the time was governemnt policy), just not what he said it was and not for the reason he said it was (I think you will find that this supports your no regulation arguement better than the previous post which suggested stimuls packages were to blame). Again I refer to Sowell's book.

In essence the government does not really have a lot of power anyway. Monetry policy is not handled by the governement and fiscal policy is in essence relatively powerless and really can only be aimed indirectly at adjusting economic issues. The stimulus package sounds huge but with limited government power, and beyond excessive regulation, I can't see what else they could have done. The only real leaver the government has is fiscal policy, and history shows that policy must be short-term, targeted, and aim at boosting spending. Should it work, which may be doubtful, increased consumer and industry spending should encourage banks to once again lend to each other and hey presto recovery should result.

You can read the book about whether money really is a freud or not but to summarise:

Feit, which HCS refers means "let it be". Money used to be based on the Gold standard (i.e. countries used to have to have enough gold to cover the money in circulation) or where money used to be pinned to the US curreny (which was them covered by the gold standard). This was in essence untenable as their is simply not enough gold in the world (indeed if you gather together all the gold ever mined it would account for only two olympic sive swimming pools - see recent national geographic for details). Money systems then moved to Feit, that is the government said our dollar is worth X number of US dollars. NOw most currencies are regulated by market forces (i.e. investers, etc, buying government bonds betting on their increase or decrease in value). So where does fiet come in. Well the whole monetary system is based on the banking system. What happens is the bank lends $100 to person a, person a spends money which makes its way back to the bank which then relends the money to person B. The bank has now magiced the $100 and turned it into $200. In repeated this process the bank can turn $100 into much more out of thin air. This works excellently provided everybody does not come for there money at once. To cover this, every bank must put aside at the government reserve 10% of all incoming coin to cover this. Essentially, money used to bail out banks should come from the banks money that it has put aside in the federal reserve. Whether this is happening or not I am not sure as the finacial system in the US is under alot of pressure and is essentially maintained by China which maintains large stocks of US currency thus maintaining the system. If the government does not turn this crises around by all means possible China may pull out of US currency which will sink the US.

Thus I say pray that the stimulus package works or else much greater problems could occur.
 
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it is exactly the govt's unconstitutional use of fiscal powers it really doesn't have via the federal reserve that is the problem. it all boils down to getting hte gov't back into its constitutional box.
 
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Hescominsoon said:
it is exactly the govt's unconstitutional use of fiscal powers it really doesn't have via the federal reserve that is the problem. it all boils down to getting hte gov't back into its constitutional box.
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Ah but Keyens is our saviour is he not ;)

http://en.wikipedia.org/wiki/Keynesian_economics

I don't know I used to be a free market economist, but i still think it is worth considering whether slightly stronger and better regulation might be useful. Our banks have always being relatively strongly regulated and, while still exposed, it looks like we will be one of the few economies to miss the recession with continued growth (of course that may have more to do with the resources boom here than regulation but worth considering all the same).

On a side point this was always going to happen. For every dollar put in savings around the world, the US consumers borrows over 50% of it. This is simply unsustainable. Hence the Teks first post. The average US consumer can no longer rely on credit as you can not continue to spend more than you earn, yet the only leaver the government has to get the country out of recession is agressive fiscal policy which to work, must promote consumer spending. Just makes me glad i am not the one in power ;)
 
LOL wOOt! Fire up those printing machines because my soda used to cost me ten cents and a snickers ten cents and now its up ten fold so crank up them printing machines because I needs money and a snickers bar! hehehehe.
 
Oh i forgot to make a second point. States around the world have seniorage, that is that the face value of the printed money outweights the cost of making the money and thus states literally make a profit off printing money. All states that is except the US which makes a lose on the 1 cent peices. The US could regain substantial sums of money by simply pulling this coin out of circulation.
 
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I don't subscribe to keynes..most assuredly..i subscribe to the Constitution of the United States. Our current federal government and financial system is not inside that framework
 
Hescominsoon said:
I don't subscribe to keynes..most assuredly..i subscribe to the Constitution of the United States. Our current federal government and financial system is not inside that framework
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Yer I figured you might not like Keyne (I dont like some of his stuff either and was really only being facetious). In any case would you be able to direct me to the constitutional boundries of the government in relation to fiscal policy (out of interest only, and only if you have the time, I am not looking to pick holes). Just interested cause we have had debates over here and are in the middle of a government task-force on whether Australia should develop a consistution (we have, as i understood it, relyed on common law in the past but i could be wrong).
 
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