The money sitting in insurance funds gets invested in funds that enable production. Unless it is invested in Treasury products, in which case it is being invested in Obamacare. Either way it is doing something. Money never does nothing. It just moves faster slower or leaves the country or comes in from abroad.
ok Morgan. I know most of the crap companies I am invested in can't think of anything better to do with their money other than give it back to me in dividends so I can pay taxes on it. And most of these insurance companies I am talking about do nothing with their money other than loan it to the government. And who the hell knows what the government does with it? Now the markers get called, and everybody has to pay up. Bonds get sold, stocks get sold, bonds get re buyed, homeowners get paid, on property that was just sitting there, Unemployed get hired to clean up and re build, they pay off bills, their loan sharks reinvest. And it's all paid for, not by taxes, but by premiums that were sitting there all the time. So yes, it's not anything new, but it's just a lot of money moving around, and everybody gets a small cut each time it changes hands. It's wealth redistribution in the truest sense. And it doesn't really cost anybody anything except the insurance company, who could have made more if the peace has lasted longer. But they were already hedged and will make it back up with new higher premiums now that people know how risky life is. So there is no such thing as a perpetual motion machine, but selling risk is about as close as you will come. All you need is some food, a decent animal, and a fan (once the power supply for the fan goes out, you are in business.)
There will be some benefit to this. The money will be directed to construction firms and create employment it will also bring in money that the insurance firms invested abroad that would not benefit the US before. That is the main benefit. So I guess you're right.
well it's about damn time I was finally right about something. I'll enjoy it until Ed comes along and tells me how much I am wrong about everything. They tried to teach me this when I was in first grade, "If Johnny has three apples and he gives two to Sally, how many will Johnny have?" And they have been arguing about it ever since. My favorite was, "Depends on how many seeds were in the apples." I always figured he gave Sally the two bad apples and kept the good one for himself. at anyrate, Johnny now owns an orchard, and nobody knows what happened to Sally, so you just never know how these economics are going to turn out.
Sorry, old time, "It is an ill wind that blows nobody good;" it is well established that there is no societal benefit. You should read Bastiat; "Ce qu'on voit et ce qu'on ne voit pas." The condition of a shortage of investment making return on investment by insurance companies low is not changed by a Hurricane. The condition of the excess labor of construction workers that exists before the hurricane is not long changed by the hurricane...and there are costs in the sector shift of resources used to rebuild. One of the main Keynesian confusions is to assume that all spending is the same, that all transactions are the same, that the health, the wealth, of an economy is measured by the nominal cost of transactions, as if they are all the same value with regard to creating wealth. In the disaster of a destroyed above ground wire electric grid and the distruciton of primary and secondary homes, the fact that the damage is substantially, but in truth only partially, insured, does not mean that the work created to rebuild will create any wealth. It should be pointed out that much wealth invested in these homes had been lost before the hurricane. There should be some thought about whether, where and how to rebuild these homes. The electric grid is simply being put back up as vulnerable wires among the trees again; the same way it was put back up last year. The IBEW is very busy again but are they creating wealth? To create real wealth you might rebuild the grid in a way that the next storm (perhaps coming next week) is not so likely to knock out the grid asset again...but I suppose this not the concern of the IBEW; I suppose they favor working on projects whose destruction again is forseeable; the broken window fallaciy is really not that different from 'planned obscellesence. Wealth creation is not make work. Giving up your liesure to stand in line to fill gas cans to power your generator; taking time off from your productive job to cut trees and putt them off your roof is not creating wealth for you or for society in general. Employment is only sustainable if it is used to create and maintain assets on a continuing basis. Simply repairing the damage of a disaster does not create any wealth; it simply restores the status quo, and it is never fully insured. It shifts resources between sectors for a time and creates other sector market distortions and other unseen effects. The society is poorer in that resources have been directed to replace rather than to produce something new; the aggegate asset base does not grow. In the end when the repair is done and the resources have been spent in the repair, there will have been less investment elsewhere in the economy and the repair will have been made to depreciating assets without changing the pre-existing context of why these assets were depreciating in the first place. Maybe the French will take up your reasoning and burn down Paris to save thier economy.
Wealth creation maybe not. But shifting money that was otherwise spent abroad and repatriating it yes. This is what happened in Japan after the Tsunami.
So you see that the process is converting a financial asset, investment abroad, into a tangible domestic 'repair.' You end up with less financial assets and the same tangible assets...so you are poorer.
No piezone unfortunately most of what I said was true. There were few instances of mild inflation however mild deflation spanned a nice 150.
Yes deflation is bad for the credit market. However the credit market has been screwing us over for years now. People need to quit falling into debt. It's a nation wide problem and people can't pay it back. Keynesians mainly revolve GDP on consumption. Fuck exports imports savings and investment. People need to be rewarded for investing in banks. Instead inflation is higher than my savings thus me having my college money in the bank hoping I don't lose as much... Its all rhetoric to them but to me it's shitty economics. Consumption is not the end all be all. Especially when we are all broke! Let the people become responsible savers and spenders again.
Actually, I realize now that I understated the absurdity of your post. http://www.rpmex.com/value-of-the-dollar.html Also, should you care to look at the data pre 1900 you will see that while the dollar was backed by a hard asset its purchasing power changed relatively little with alternating periods of mild inflation and mild deflation (as I stated earlier) except during war time when inflation predominated (Civil War for example.). Below are the absurd statements you posted that I am specifically referring to: "History supports deflation actually. For 150 years the United States was thriving off of deflation up until 1913." and, "Also for the last century Inflation is all our economy has seen since 1913 so economists fear it."