what are you? a fucking teacher?, telling everyone that they don't even have a basic understanding of economics plus: no banks -> no loans -> no businesses -> no hiring -> 1. no work done 2. no consumption now look at it this way: no work done -> no services or products created -> no consumption -> no businesses -. to lend to -> banks are fucked the relationship is more circular than linear, and don't forget work is a more important factor in this equation than banks lending, because if banks dont lend people can; by buying shares and crap, but if people don't work, let's see what we get for that?, oh yes the robots that were supposed to do all of our work in the year 2000, haha
This might come as news to you but the United States has one of the LOWEST savings rates in the world . . . In fact, in 2005 it actually dipped into negative territory which hasn't happened since the Great Depression. That's right. A negative savings rate for an ENTIRE year! As a result, there is not enough capital formation from people's savings rates to be able to spur economic growth for an economy that had a GDP of $13.8 TRILLION dollars last year. You need to check your premise and the facts that support your claim. In other words, your math doesn't add up.
I agree with plugger. No point in fighting over macro economic basics. For anybody who wants a recommendation on a good macro economics text book I'd go with either of these two. Best $100 you can spend on the topic IMO: http://www.amazon.com/Macroeconomics-N-Gregory-Mankiw/dp/0716752379 http://www.amazon.com/Macroeconomics-4th-Olivier-Blanchard/dp/0131860267
Exactly. No savings! Gee, wonder why. Could it be that the dollar lost more value today than a years worth of interest payments. Wags, you've unwittingly hit upon a chief problem of the Bernanke rate cuts. If you punish savers they will stop saving. Giving folks 2% a year on a dollar denominated investment that loses 2% in a day is NOT the way to induce storage of capital. Borrowing a dollar today that's worthless to-morrow is not going to help. Or maybe it will. I'm sure Bush/bernanke/Paulson hope that by 2013 a night of cab driving will bring middle class America $80,000 in tips. That's why you never heard of a mortgage crisis in 1970's Buenos Aires.
Some editing was done but if you REALLY want to send that letter. He goes the edit. I write to you today to discuss my concerns about the sad state of our country with respect to our economy. Under this current administration, we are changing from a great capitalist superpower to a third-world socialist state. Former Chairman Alan Greenspan spent many years toying with bubbles and balancing the economy. He was always attempting to manipulate and avoid the natural capitalist economic cycle. Prior to his departure from the Federal Reserve, he reduced rates and held them at ridiculously low levels for far too long, therefore creating a major liquidity bubble that we are currently battling in commodities. Today, Chairman Ben Bernanke has attempted to implement socialist policies by taking our hard earned money to bail out the very thieves on Wall Street that have put this country at risk to begin with. These continued rate cuts are clearly causing extreme harm to America in the form of run-away inflation, the effects of which we are all paying dearly. In fact, the pace of inflation is grossly outrunning income; this poses a much larger and looming threat towards a systemic meltdown of our economy. This threat is the effect of Chairman Bernake's policies--one he chose to implement rather than allow the market to cleanse itself in the way that capitalism is designed to do. I applaude Jean-Claude Trichet of the European Union for sticking with the mandate of price control and choosing to battle inflation. T he FED has clearly lost its way and is threatening our future and my children's future. I plead with you that you and your colleagues take action and demand that the FED return to its mandate of fighting inflation. There is a FOMC meeting next week where the rates will likely be cut further. This is not and has not helped comsumers in any way. My biggest fear, that I and many Americans share, is what will happen to the American dollar should Mr. Bernanke cuts rates again. As I write this letter, Oil is trading over $110 per barrel and wheat is trading over $13. The list goes on and on. Gasoline stockpiles in the US are currently at the highest levels in over 15 years; yet, we are paying over $3 at the pump. This has been accomplished on only an 85% utilization in refining. The bottom line: this is a problem related to the dollar of which the FED is destroying, not a true supply/demand imbalance. Please stop further rate cuts.
US banks and people are not the only ones lending to US corporations, many foreigners and foreign banks are lending and purchasing shares oh and who did you say is doing the work then, oh yes our tiny robots, you are right the ones in china and india, I almost forgot so you are saying if we add up all liquid assets of 300M people we won't get any where close to $13T, ok how is the gap filled, oh with dept, the money banks lend, ok so how do banks come up with that, using economic theories and mathematical equations they produce it from the ether, but I wonder if most any other country could pull that off, no they can't, if they could they would have by now, so what is behind these complicated economic equations, military might, I mean imagine japan trying to pull the same shit off, so they print all this yen, and who will take it in exchange for physical goods? and if they don't what can japan do about it? or imagine you designing 'Landis Dollars' in microsoft paint, printing it and taking it to your neighbour, so you tell him very nicely sir i have come to do business, take my money and give me some peanut butter, if he doesn't punch him in his fucking face and make him take it, or even shoot him, make sure all the other neighbours learn their lesson, as to how valuable your Landis money is. so is it not the work done for the military that supports the central bank, which in turn is able to create money from ether, and lend it to businesses and other banks, and keep the economy flowing
I hope your not a doctor landis, makloda either. economics 101 is not a boilerplate problem solver as each problem we get into is different. do you take antibiotics for the flu?? The last recession was more about an equity market bubble coupled with the black swan event of 9/11. This recession is a completely different animal. This problem was created from the fed cutting rates too low for too long, period. this is a bad case of the flu and needs a differnt treatment to alleviate the symptoms. cheap money will not reinflate the assetts as people are underwater on the current debt they hold, and guess what, consumer rates are not falling. What do you think would happen if the us consumer had a 10% rise in the tax rate? Everyone is so worried about tax increases under a democrat, yet are fucking blind to the fact that infaltion is has already taxed us at least this amount over the last year. Continuing to cut rates is going to lead to futher increses in inflation, and that IS economics 101. BTW, nowhere did I suggest we raise rates to 6 or 12%. I suggested we stop cutting rates further. What have extremely low rates done for japan?? watch out, that nikkei is on fire!!
Maybe it all comes down to bad business and poor American values. Okay, we see the problem...what are we going to do about it?
The whole system is so corrupt why even bother thinking about it. Only a domestic revolution will change it.