Boom & bust cycles,never no end.Private and State capitalists cannot control cycles.Can "the people" control the economy? Time to find out,the people are the economy,who would know better? We need a economic constitution base on real science to be a foundation for a economic democratic system.Workers-own & public banks should be basic parts of system. Wall St need to go back to basics,for new system.We need a new name,"Democratism".Lets hope this 'ism' do better than the others.
America's #1 Progressive Host & NY Times Bestselling Author
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Wall Street investment is gambling. Trying to alleviate the risk of making investments will only encourage more people to invest money they cannot afford to lose (and therefore increase the chance of a "bubble" or further malinvestment), and if the stocks they've "bet" on don't work out in their favor, it may put them in a financially compromising situation.
That is nobody's fault but that of the one who places his funds in such a volitile enviroment. If people want to take chances - let them. Just as much so, we should let them deal with the consequences of their actions, good or bad.
At least when the tech bubble popped, a large majority of the money that was lost in the stocks was money that people actually had in the first place. The bust occured, and they should have been forced to deal with their poor choices and foresight. Of course we all know that a true correction was never realized, another bubble was inflated, and the dominoes fell over again and led us to where we are today, where ANOTHER bubble is currently being inflated. This one won't be so easy to get bailed out of however.
Only about 5% of Wall Street functions actutally are utilized by the real economy....financing of start-up ventures, etc. The necessary functions could be handled by government banking operated in the manner of a public utility...like the state-owned Bank of N. Dakota.
Wall St. is really pretty irrelevant....functioning like a Casino. Unfortunately, when the Casino goes bust, it brings everything else down with it
DAVID KORTEN: Well, because Wall Street is totally in the business of creating phantom wealth. You know, it goes back to one of the fundamentals that I realized when I was working in international development and I began to wonder, “Why is it that the more developed the country gets, there’s more and more people living in poverty?” And it comes down to a very simple recognition. All the decisions that we make and official aid agencies are based on, what will maximize the returns to money, which means to people who already have money. And people who don’t have any money basically don’t fit into the equation. And that’s the way our whole economy, the whole Wall Street picture, is defined.
Full interview here: http://www.democracynow.org/2009/1/26/david_korten_agenda_for_a_newRetired
Retired Monk - "Ideology is a disease"
Part of that highest return sentiment actually discourages investment in productive job crating ventures. Newspapers had at one time a 38% +/- return, so a mere 15% return was considered losing money.
The old company towns averaged only about 5%, or a few percent above inflation, but everyone in town worked.
Lol yeah, it is very much like a casino. The difference is that now our government is bailing out all the people who threw too much money at the roulette wheel and lost. At least casinos force people to live with their risky choices.
The "phantom wealth" quote is absolutely spot-on though. The tech bubble was an absolutely beautiful example of that. People got under the impression that starting a dot-com company was the ticket to riches simply because they were going to go public. And the public bought into it because they saw what they thought was a potential to make money! It wasn't until someone realized that even if "shoelaces.com" (just making this up, now) sold every shoelace in the country, that it still wouldn't equal what they were trading at, that the bubble finally started to burst and all that phantom wealth that people though they had, was exposed.
But like I said before, at least with that disaster, most of the money that was lost was money that wasn't borrowed by the investors.
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I agree with Thom that we need to start making things again in the U.S. He also says we should go back to having tariffs on our goods so we don’t have to import cheap goods to compete against our own (not that we have any goods to compete with.) I am completely ignorant on this subject so I would like someone to explain to me, what happens if, say we start manufacturing again… clothing, dishes, steel, what have you, and we are paying our manufacturing workers decent union wages, which I completely support. How do we find a market, when goods are being manufactured so cheaply everywhere else? Who will buy a $50 pair of levis when they can buy one for $20? And if we institute a tariff, so that the $20 pair of levis made in China or India can’t be imported without the tariff, aren’t we putting millions out of work in other countries, (millions who are already dirt poor) and won’t that somehow have a ripple effect on other economies, perhaps China’s and then they’ll stop being our banker? I just would like a big picture explanation of this from someone who has thought the whole thing through. Perhaps Thom has and perhaps he explained it on his show and I missed it. Please help.
Jackie,very good question.The future of the planet depends on the answer. My answer would be,have a UN meeting with the heads of governments,new trade agreements and currency would be main topics.All trade agreements should base on basic needs of countries,a country will produce its needs and export it excess.Currency should be rated to the livelihood of each country and to each other.Climate change can help in making these new changes.Hopefully economic democracy can replace capitalism & communism,it will make things a lot easier.The "answer",is we better start working together! We don`t,we will go to Hell together.(Big Picture)
Probably imposing a tarrif on products made from teak wood wouldn't be a good idea. The tree doesn't grow in the U.S.. Trade is about that sort of thing.
The U.S. is in a unique position. Of all the nations in the world, it's the only one that cay "pay" with its currency rather than with an exchange of goods. When that ceases, the whole house of cards comes tumbling down....and the printing presses will become silent. Waklmart shelves empty.
Shifting of U.S. jobs to China didn't increase global emploment or production...it merely shifted where the production and employment takes place.
The "dollars" did give China a quick boost in capital...so they could expand production on their own.. It could have just as well been expanded with low interest loans if that was the desireable outcome. We didn't have to destroy our economic infrastructure to do it....and the Chinese would have developed industry to serve the Chinese...just as we once did.
We developed industry that for the most part served Americans. Trade was a pretty small per centage of our GDP...yet we prospsered and created the largest middle class the world had ever seen..with unsurpassed living standards...
If we went back to say,..... garment making..., we'd have to rebuild the industires that feed into it. Defunct textile firms, sewing maching makers, equipment, makers, makers of zippers/buttons, an increase in local transport and warehousing, etc....even an increase in janitorial supplies to mop the factory floors and clean the restrooms!.
Displacing an industry shuts down all of the feeder industries as well. Ship a million jobs to Chjina, and all of the domestic employment that fed those jobs disappears as well. That effect is totally ignored
Retired Monk - "Ideology is a disease"
Exactly, exactly, exactly. The dollar is in trouble and, just like poly said, when the rest of the world decides that they are going to stop letting us pay them in dollars, as they realize that the dollar is becoming far less valuable than what it's being exchanged for, that's when things will get *really* interesting for the US.
And the opposite will likely occur abroad, where other currencies and countries start to flourish because most of the goods the US used to consume have now been freed up for the rest of the planet to take advantage of. Our demand will diminish severely, and the excess supply will be made available elsewhere, and prices will reflect that. Dollar prices of goods will skyrocket while other currencies GAIN value VS their goods.
Jackie, the idea that the US is "employing" all of these other producers, and that without us, they'd be jobless, is simply incorrect. The fact of the matter is that, if we started producing things on our own, the countries who currently produce goods for us will then start consuming the goods they make, themselves. It will actually benefit them far more than if they produced the goods for us at low wages and then shipped them out.
Their currency will show it's true purchasing power once they realize that they've been working hard to feed an unproductive country and that they should instead be working hard to feed themselves. Their export profits will be reduced but as a result of this, but it's a very beneficial trade off in that they can now keep their goods AND their jobs, because the products they make are still going to be in demand elsewhere, either by other countries, but most likely by themselves.
Tariffs have a tendency to do more damage than good, I feel. They absolutely do work exceptionally well at protecting a nations industry, but it does so at the cost of inefficiency and higher prices for it's consumers. Truely free trade would result in productive nations providing goods to other nations that they cannot efficiently produce themselves. Look at the USA, and sugar for example. The USA enforced a high tariff on sugar, to encourage our consumers to buy sugar from US producers. But the US doesn't have great natural ability to produce sugar, ti is very bad for the environment where we DO make it and we can't produce it efficiently. So instead of importing it from other countries, US consumers were forced to pay roughly 3 times as much for sugar as they should have. The government, in response, began subsidizing US corn farmers to produce more and more corn, as a low-cost alternative to sugar was found in high fructose corn syrup. And I'm sure we all know just how healthy this garbage is for you, lol. So by enforcing a sugar tariff, it drove consumer prices in the country up, to prop up an industry that couldn't produce efficiently, which led to subsidization of corn, to produce a product that is far more damaging to humans than what it was replacing.
Our mind-set have a lot of deprograming to do.If we don`t change from "dog eat dog" mind-set to cooporation mind-set,we could all look forward to "Judgeman Day".The world is getting to "small" for tariffs!
Cooperation & equality only works if everyone involved shares a similar work ethic. And, unfortunately, people don't. There will always be overachievers and underachievers, those who continually raise the bar for themselves and those who are happy doing as little as possible to get by.
It would be a grand idea if we could all recieve equal wages and equal benefits and equality all around. But the fact is that some people will work harder than others and they *will* feel disincentivised to work at that rate if others are reaping the same benefits as them for less effort. Either the hard workers will start "slacking" or the more lazy people will have to take a benefit cut.
Cheesbone wrote Truely free trade would result in productive nations providing goods to other nations that they cannot efficiently produce themselves. Look at the USA, and sugar for example. The USA enforced a high tariff on sugar, to encourage our consumers to buy sugar from US producers. But the US doesn't have great natural ability to produce sugar,
poly replies: True. And that's what "free trade" is all about. A free trade on products we can't produce efficiently ourselves. Like teak wood products. Teak trees don't grow here. Ditto sugar. We can't produce enough for our own needs. There shouldn't be a tarrif on it.
However, we can produce clothing, furniture and electronics goods efficiently...the only difference being wage costs. Transfering wage costs isn't free trade...it's simply transfering wage costs and production facilities and ultimately inpoverishes the nation that does it. That's been known for over a century. Advanced countries heeded it...even keeping tight reigns on the export of capital to encourage development of their own country.
Then along came the Corporate State and its constituency. Corporations make a bundle impoverishing the nation and the people that gave them birth..People accepted the proposed future benefits right along with their layoff papers..
A nation's currency ultimately rests upon what it produces. If Saudi Arabia didn't produce oil...it would have a currency based on sand. There isn't much demand for sand...and wouldn't be any demand for it's currency either. when in the end, a nation's currency has to be spent on what the nation issuing it produces. In Arabia's case....sand if it didn't produce oil..
When the U.S. loses its international currency status...a unique position...its currency like every other nation will be based on what it produces....will have to be spent on what it produces. which is not much.. No one will want it Probably at some point the Chinese Yuan will take the dollar's place as the international currency and the shelves at Walmart will be empty....
Retired Monk - "Ideology is a disease"..
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Yep, I think the Yuan is going to go stratospheric within the next few years. They can't supress that currency much longer, regardless of how hard they try.
I guess I just have a problem with the idea of a reserve "currency" in the first place. I'm still pretty young, there are a lot of facets of economics (and especially politics) that I am not familiar with, and so I try to not comment on things I don't know much about, but I think a basic knowledge of why an economy actually functions is all that's needed to see the huge problems with the dollar and the global economy as a whole (because it uses the dollar as a foundation).
Things are already changing. Brazil is becoming a major economic player. Brazil and China don't use the U.S. dollar in their exchanges. The new China/S.E. Trade Agreement doesn't use it either. It's locked out.
Trades between Russia and China no longer use the dollar.
All that bolsters the dollar is oil. It's the medium of exchange accepted by oil producing contries. That has an "effect" of Saudi oil backing the U.S. dollar. As China develops its own sources in Iraq, the Sudan and other parts of Africa....that will change.
Brazil already sells its newly found oil to China...and accepts Yuan.Russia sells oil to China...and accepts Yuan. That puts a demand for Yuan on world markets.
Retired Monk - "Ideology is a disease"
Cheesebone,all people are different,what we don`t need, is systems/rulers exploiting their differences.Our understanding of cooporation & equality has come a long,like our belief in God.Like they say"Their is alway room for improvement".Poly,America is passing the capitalist ball to China. Communism might give some life,but it won`t last.A safety-net might give it some more time,but until the system stop exploiting people,it will not last. Money won`t buy their way out of "Hell".
You're right, we don't need systems & rulers exploiting people's differences. But when rulers enforce regulations that punish businesses who have done NOTHING WRONG because of poor choices that businesses before them have made, this drives up the cost of doing business in general. And as more regulations are created, again, business becomes more expensive to maintain. These costs eventually lead to a decline in the amount of employees that smaller businesses hire, or ultimately, a complete collapse of that business as a whole. And in some cases this applies to HUGE companies as well.
These outsourcing corporations are outsourcing because our economic policies have chased them OUT of the US for doing business. We have made it cheaper for them to hire people 12,000 miles away to produce goods and then ship them back to us another 12,000 miles, and add an import tax as well.
Your idea of exploitation may be different from someone elses idea of exploitation as well. Look at American Samoa and their resulting economic destruction thanks to the enforcement of US minimum wage laws. We view the $3.55/hr they earned there before the minimum wage law as very little to survive on. But the Samoans didn't think so, in fact, they pushed very hard to exempt themselves from these wage increases, because they understood the problems associated with it. But, wages were forced up to over $5.00/hr, Chicken Of The Sea shortly after closed down their tuna cannery (and tuna canning could be traced back to/related to almost **80%** of their economy), Starkist laid off a large portion of their workers, and now the economy is in shambles. To make things worse, the tuna ships that used to leave full of tuna, used to bring back goods that the Samoans could purchase. Now, with such a small amount of tuna leaving the shore, they have to pay for ships to make special trips to deliver goods to them instead, which in turn has driven the prices up dramatically in Samoa. So now they have huge unemployment AND rising prices thanks to the liberal outlook that "higher wages are necessary". If the wage had stayed at or near it's original level, this entire problem could have been avoided.
Cheesebone wrote: These outsourcing corporations are outsourcing because our economic policies have chased them OUT of the US for doing business. We have made it cheaper for them to hire people 12,000 miles away to produce goods and then ship them back to us another 12,000 miles, and add an import tax as well.
poly relpies: Actually, they left because we encouraged it with our trade policy. In eliminating tarrifs, we made it very profitable for them to do that.
It solved a problem of Economic Royalists...how to reduce wages, pollution control costs, worker safety costs, etc., . and increase profits. Huge CEO bonuses and incomes are a reflection of that.
As Ricardo warned over a century ago,... a nation that ships its labor costs abroad will impoverish itself. A nation that ships its capital abroad will impoverish itself. A few will profit handsomely from it. The U.S. used to heed that warning.
Outsourcing is merely the solution to problems of the new Economic Royalists...how to lower wages, etc. and increase profit extractions. The ultimate impoverishing of the nation is irrelevant to that. A lot of B.S. is made up to justify it.
Retired Monk - "Ideology is a disease"
I think we both agree then that the reason outsourcing is rampant is because our policies have made it more profitable to outsource. I think where we differ is on WHICH particular policies are to blame, hehe.
I also think that we agree that this process is totally unsustainable for the dollar though, which in the end, is the big problem for everyone here in the US.
I read an interesting article in one of the computer rags about it being cheaper to move some operations back to the US. Sorry, I don't recall which magazine it was at the moment. So... I looked into it, did some math, and have initiated the move of a call center back to the US. It turns out that the offshore firms have grown to a point where they are more expensive than Smalltown, USA.
Technology played an important roll. It doesn't really matter where the person on the other end of the phone is sitting anymore. I can pay the people in the small town selected a lot less than what I would have to pay in a bigger city. I see a win-win situation, I hope; I'll find out. The small town came with less taxes and less regulations. The headhunter I hired has flown a trial ballon and got a lot of bites (yes, that is a mixed metaphor). There may be plenty of people, with the required skillset, who will be willing to take the pay cut and move away from the big city. Residents of Smalltown, USA don't need a lot of money to live well. That is the theory anyway...
It seems to me though that the jobs you are bring back to the US aren't really the jobs that we NEED back in the US, as these are service sector jobs answering phones and they aren't really doing anything for our productive capacity as a whole.
Although it is absolutely beneficial that the jobs are coming back this way anyhow, at least the money they are earning is money that came from the private sector and that is certainly something I can't complain about.
The only solution to all of capitalism problems,is to "Kill" it.Before it kills us!
Tayl, let me ask you a few questions. Qhat kind of car do you drive? What kind of phone do you own? Do you have any TV's? What kind? How about your computer, what kind are you using?
I feel this same sentiment toward elites in this country, as opposed to perceiving the "lazy people" as those who would be less successful than me in a just economic system. A partner and I worked our butts off building a tree service. As we grew and had the need to hire people, I realized how deep insurance companies had their hands in our and our workers' pockets. For every dollar a worker earned, a comp. company charged eighty cents. This was required by law for our workers. My partner and I couldn't afford the coverage for ourselves--priced outrageously. The fact that it was charged as a percentage led me to see it for what it was: a tax. The insurance company also took the liberty of telling us who we could or could not hire, enforced with higher rates (fines). I feel very disincentivized by this system. I don't want to work to make someone else rich. Elites in this country do very little work in proportion to their incomes. Insurance companies, in particular, have been imposed on us as our social safety net. They are not accountable for the money they charge--more profit is considered more successful (profit is "earned" from customers), also, their regulatory process is not a democratic one. I don't want to be subjected to their rule. Democratic, non-profit government has to take their place.
Wall Street is not about investment, it's about speculation. Essentially, it's dependent on the expectations of participants with no link to the underlying businesses, exactly like collecting baseball cards or beany babies. It seems what is necessary is to eliminate margins and tax trading heavily to make quick turn overs excessively expensive. Perhaps a Tobin tax would be a good start.
Wall Street should be tightly controlled as it offers little benefit to society. Wall Street is simply an example of what happens when the wealthy game an economy for their benefit, as production provides too low a return on their "investments". Reward work, not speculation.
It seems to me though that the jobs you are bring back to the US aren't really the jobs that we NEED back in the US, as these are service sector jobs answering phones and they aren't really doing anything for our productive capacity as a whole.
Okay, I'll bite. What does "productive" mean?
What does productive mean to me? - Someone earns their keep. They bring in more than it cost me to hire them. Do they produce something the customers want; yes. My assumption is that you are suggesting that if someone does not make a physical widget that can be touched, they are not being productive.
Cheesbone wrote: "What does productive mean to me? - Someone earns their keep".
poly replies: Probably if an economy functioned on people earning their keep exchanging paper... people would starve to death. It isn't productive. All it does ins increase claims on what is actually produced. without producing anything in return.
Just one of many reasons why the U.S. is imploding....collapsing upon itself..... It' has come to think of money as wealth...rather than as merely representing wealth...real stuff.
That may work on a personal level .....merely increasing claims on what already exists or is produced...on a national level it's catastrophic.
Probably if an economy functioned on people earning their keep exchanging paper... people would starve to death. We ought to stop doing that..
Retired Monk - "Ideology is a disease"
Cheesebone,is the point of your question,where i(world) would be without capitalism? I answer this way,this country got started by people thinking "why pay England for something they can do themselfs". Mr.Cheesebone,with capitalism and globalization,America has become a "COLONY AGAIN"! Do you support that?
Poly, just want to mention that you got me mixed up with "Paleo-con", I'm not the one who asked what "productive" meant, I think me and you see eye-to-eye on that.
You're absolutely spot-on about the "paper exchange" and how people can be tricked into thinking they are wealthy when in all reality the "wealth" may be just as real as the Tooth Fairy.
Paleo-con - "earning your keep" doesn't necessarily mean that you are being productive. You may be generating revenue, but that is not the same as productivity. Farmers are productive. Factories are productive. People that produce consumable goods (in demand) are productive. Retailers are generally just revenue generators, they take goods produced by one person and sell them to another for more than what they purchased them from the producer for. This is not productivity.
Production is where REAL money, real wealth comes from. Before "Money" there was just the exchange of goods and services from one person to another, the barter system... The butcher would trade some meats for some candles made by the candlestick maker. Now the butcher can light his home and business and the candlestick maker can eat. Money was created as a way to place a value on these goods and services and simplify the "exchange" of goods and services.
Tayl44 - the point of my question was that, without capitalism, there is very little incentive to build a better product. With better products comes higher efficiency. With higher efficiency comes the ability to do more with less energy invested. This translates economically into lower prices and higher quality. The problem is that we don't live in a real capitalistic society. We have these limitations and regulations that have chased the productive businesses out of this country and helped create the problem we see now. We have bankrupted millions of people because of government manipulation of "natural" market forces, creating distortions that encouraged massive amounts of malinvestment and resulted in outrageous levels of debt, because people thought they were more wealthy than they actually were. When the cover is blown, the phantom wealth vanishes, and all that's left is the debt we've accumulated. The decisions (from borrowers AND lenders) that were made that led to this crisis would NEVER have been made if the government had not gotten involved in the first place and the market had been allowed to function properly.
The old saying that someone "builds a better mousetrap" is around for a reason. creating a protectionist environment for businesses really discourages the incentive to improve on the "mousetrap" they already make because competition is inhibited from making an impact.
Cheesbone wrote: "The decisions (from borrowers AND lenders) that were made that led to this crisis would NEVER have been made if the government had not gotten involved in the first place and the market had been allowed to function properly"
poly replies: What Greenspan said was, de-regulating financial markets was an "error in his thinking"....and led to the near-total financial collapse. All the players were operating in their "own best intersts".
The rest of your post explains early capitalism pretty well. A hundred years ago, it functioned in that manner...just as it did in the prior 400 years. Like all social/economic systems, our application of capitalism. has it's reached the end of its rope and has become destructive.
Capitalism will remain...it's an economic fundamental.....and the way its implimented will go the way of feudalism. if we survive it. The race for change or. environmental collapse is neck and neck....with collapse ahead by a nose. and gaining ground,.
You're right about any service sectors...they are ultimately supported by the productive ones. A retailer. doesn't spend his time growing his own beef or building his own house..The productive sector does that for him in exchange for his services....importing goods from the productive sectors of the society for local distribution..
Retired Monk - "Ideology is a disease"
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poly replies: Probably if an economy functioned on people earning their keep exchanging paper... people would starve to death. It isn't productive. All it does ins increase claims on what is actually produced. without producing anything in return.
Paleo-con - "earning your keep" doesn't necessarily mean that you are being productive. You may be generating revenue, but that is not the same as productivity. Farmers are productive. Factories are productive. People that produce consumable goods (in demand) are productive. Retailers are generally just revenue generators, they take goods produced by one person and sell them to another for more than what they purchased them from the producer for. This is not productivity.
So my assumption was correct. You actually think only the creation of something physical is productive. I disagree. Let me examine the farmer example. The farmer who produces crops is productive, but the bank that provided the credit allowing the farmer to farm is not productive. Does that sound about right? If we take away the banks credit and the farmer cannot raise crops, do we still have productivity?
There is a huge difference between banking, lending money, and Wall Street. Wall Street is entirely speculation as it has nothing to do with the underlying business but with the expectations of share price within the market and with products that are gambling, such as credit default swaps. It produces nothing but speculative wealth whereas properly regulated banks fund production. In fact, the very reason that Wall Street exists, at least as we know it, is because it brings the wealthy far greater return on their "investments" than normal banking that invests in business. So, you are correct that the bank produces but through the borrower. Wall Street doesn't produce anything useful or good for society.
Very true, Jeff. Only about 5% of Wall St. functoins actually have a productive use...such as providing capital for a new business venture.. The regular banking sector can do that. The state-owned Bank of N. Dakota does it all the time.
Banks are a part of the service sector. The service sectors are supported by the productive sectors. Bankers rely on the productive sector for their food, shelter, clothing, etc.
Probably the productive sector providing Wall Street banksters with a billion bucks worth of goods as a "bonus" for a questionable service is a bit overboard. Those sort sof extractions are predatory on the productive economy..They make Huge claims on the productive sector without producing anything in return that is socially beneficial....unless periodic collapses are seen as a benefit..
If our banking system was based on the model of the State Bank of N. Dakota, financiers and Wall Street would be redundant and worthy of extinction, or as Korten says., "Let Wall Street fail".. Tax it to death. rather than bailing it..
Retired Monk - "Iceology is a diseae"
Paleo, where do you think credit comes from in the first place?
It comes from other people's savings.
On a smaller scale, an economy produces what it needs to survive. When the production of that product (fish, corn, whatever) exceeds the amount that they consume, they have an excess. This excess becomes savings. They can either choose to keep producing and creating further savings, or they can take a vacation, stop producing, and consume their savings.
Or, they can consume their savings while spending the time that would have been used to produce food, to produce a different good, for entertainment or possibly to increase the efficiency of their food production in the first place. Maybe they can become so efficient at production of food that only a small portion of the population needs to be in the food production sector, and now there are other areas free'd up for investment and production. Now, the people that create these OTHER widgets (which are either fun, or helpful, time-saving, whatever they find a demand for), trade them for the food created within their own economy.
Either way, the economies that produce "widgets" and ONLY widgets, are capable of trading these widgets for food produced by other countries. If there are no countries that want their widgets, then they simply have to stop making them and concentrate their production on food and shelter. Some countries are naturally more capable of producing a specific (if any) resource whatsoever. Iraq for example, would be a desolate, virtually uninhabited country right now if it wasn't for their potential to produce oil, which is in high demand almost everywhere on the planet. The revenues they earn from oil production are traded for food, manufacturing materials, etc...
The problem we have in the US is that we don't currently produce many widgets to offer other countries. Our main widget is the dollar. (Yes, we produce cars, and airplanes, lagre-scale huge-dollar items, but how often does the average consumer go down to the store to buy a passenger jet)
Other countries trade their goods for our dollars. But the dollar by itself is NOT a valuable item, it merely represents value. I feel that within the next few years, we *will* see a dramatic loss in the paper value of the dollar (and a resulting surge in the pricing of goods in USDollars, while prices decline in terms of other currencies), simply because the countries that supply us with goods, are also lending us the money to pay for them. When it becomes apparent that we simply cannot pay back the debt, the worldwide "habit" of propping up the dollars value (which lowers the value of their own currency) will start to go away. The US will either have to default on the loans, or pay them back with inflated currency by printing up what they owe and making "good" on the loans. Of course, this amount of inflation will completely destroy the value of the dollar and NO country will have any reason to support it. And when other countries don't want our "main export" (the dollar) anymore, we'll be forced to restructure everything within our economy to survive again.
Our eceonomy is a "service economy". We don't do many things that are productive. At one point, we had the money to pay others to do the productive things for us. Now, in the USA, we're broke. But our government doesn't want to admit it.
And Poly, Greenspan is correct when he said that "de-regulating helped lead us to where we are" - but I feel that it's because we didn't DEREGULATE enough, lol. The removal of Glass-Steagall was a bad decision, simply because we didn't eliminate the real root reasons WHY the removal or Glass-Steagall was a problem. The Federal Reserve's drop of interest rates and government backing of mortgages is the REAL reason why we had a housing bubble in the first place, it was the elimination of "risk" for the lenders that encouraged them to loan money to lenders who under normal circumstances would have never qualified for these loans in the first place. Without these distortions, the loans would have never been made in the first place. Removing Glass-Steagall only made things worse. But again, if they'd pulled the FED out of it, the loans wouldn't have existed, and therefore Glass-Steagall's repeal wouldn't have had a negative impact to begin with. There wouldn't have been anything to gamble with.
I agree let Wall St. fail, but it will do that on its own if it isn't productive, so there is no need to tax it to death. Merely remove the safety net that we have provided and let nature take its course. The firms/institutions that actually provide value will survive and those that don't will die off....its survival of the fittest....economic evolution. Taxation is not necessary and will only allow for some otherwise productive firms to be killed unecesarily. Taxation is the antithesis of natural grow and evolution.
Cheesebone, you pretty much right on from my point of view. One of the main problems that we have is that we have too much intervention, and your analysis of the tech bubble, followed by housing bubble, to the current treasury bond bubble, to the collapse of the dollar is on the "money" from where I am sitting. What we need is free market interest rates and sound money. What is a dollar worth? If you went to the Fed to redeem your pledges for goods (dollars) what would they give you in return? When money, which is supposed to represent goods, can be made by the Fed typing a number of zeros into an account why would we expect anything but bubbles to occur? Unfortunately we won't leave our current system until there is literally blood in the streets. We weren't even able to get an audit of the Fed because Bernie "Benedict Arnold" Sanders sold his soul for a few bits of silver at the last minute. If our elected officials can't even audit the people that "make" our money what hope is there for real reform? As much as the progressives want to beat the taxation drum, it is inflation that robs at rate that is far superior to taxation. Since the creation of the Fed the dollar is now worth less than 10% of what it was prior to the Fed. Like I have said in other posts you aren't going to care what the tax rate is when you have to wheelbarrow your money to the store to get a loaf a bread.
Cheesebone: But the dollar by itself is NOT a valuable item, it merely represents value.
Choco: This is so true, so simple, so fundemental to understanding our economic problems. Why can't people get it? Something must be clouding their preception, hmm, Greed maybe?
There's far too little intervention. Had it been illegal to use more margin on certain transactions than others, then those speculators would have had more of their own money at risk and thus may have had less incentive to engage in those transactions. If credit default swaps were legally considered what they are, insurance, and thus had the same requirements as insurance, then they wouldn't have ballooned into the catastrophe that they posed due to the mortgage problems. In fact, had mortgage brokers been regulated as banks, then the bad mortgages wouldn't have been granted. We need proper regulation, more intervention, not less as the market is wholly incapable of regulating itself.
Regulation merely entrenches the status quo, you end up with bail-outs hand outs, cozy relationships etc. It is vitally important that companies that are unproductive die off and are replaced by companies that are productive. Bad ideas should be allowed to go the way of the dodo. You are really missing the mark however, in that, it doesn't matter how much you regulate a bank if the the bank's bank produces money out of thin air. How can you determine value by using a non-absolute method of measurement? Can you determine length by using a measuring stick that is constantly varying? Anytime the Fed issue Reserve Notes, it is an invisible form of wealth transfer from those who have current Reserve Notes to those who receive the new Reserve Notes. This invisible wealth transfer, hurts the poorest amongst us disproportionately as wages always lag behind inflation, and those who save and have fixed incomes see there wealth inflated away.
Jeffbiss, your statement holds plenty of water, I don't disagree with a lot of what you said. My take on the whole situation is that, the interventions and regulations you want, wouldn't even be necessary if the distortions that LED to the needs for these regulations didn't exist. And these distortions come from the government and the Fed! They create one problem, so they make regulations to prevent the problem from getting bigger. But the new regulations create new problems, so more regulations are created to fix those problems. And it just pyramids down. The top of the pyramid is government intervention, and NOT capitalism.
The bigger problem is that the more we regulate, the harder it becomes for small businesses to succeed because it costs so much more for them to stay afloat - we ebb away at the foundation of our economy by regulating and taxing the small guys off of the map, and at the same time chase the large companies overseas as we've made it cheaper for them to outsource than to keep their capital and laborers within our borders.
Paleo, where do you think credit comes from in the first place?
It comes from other people's savings.
......Our economy is a "service economy". We don't do many things that are productive. At one point, we had the money to pay others to do the productive things for us. Now, in the USA, we're broke. But our government doesn't want to admit it.
tmoney13 and Cheesebone,
AND
My take on the whole situation is that, the interventions and regulations you want, wouldn't even be necessary if the distortions that LED to the needs for these regulations didn't exist.
Not regulating created the conditions that created the recent recession. Had regulation embedded in the Glass-Steagal Act been in place, it wouldn't have happened. The fundamental problem that you are alluding to is due to business interests controlling the political process. Therefore, we need to get private money out of our politics and end business influence in politics. Then regulation will do what it's intention is, to protect the American people from bad behavior and greed.
jeffbiss: Then regulation will do what it's intention is, to protect the American people from bad behavior and greed. - so how come the SEC didn't protect people from the greed and bad behaviour of Bernie Madoff? They had info on him for over a decade. I would suggest reading the Creature from Jekyll Island, the bailout game has been going on for years, not inspite of regulation, but because of it!!! In 1970 the Penn railroad was about to go bankrupt, congress then gave away $125 million to the banks who had loans with Penn. The railroad went bankrupt anyway and is now the money pit known as Amtrak. These scenarios were played out again and again. Lockheed also in 1970, Chrysler in '78, Commonwealth Bank in '72, First Pennsylvania Bank of Philadelphia in '79 with the Fed and the FDIC being complicit, and in '82 with Continental Illinois which was the 7th largest bank at the time. All of these took place decades before Glass-Steagall was repealed. You can't get private money out of politics because the Federal Reserve is, guess what???.....a private money cartel!! The very funny money we use which is created out of thin air is done so by a private banking cartel. Until you recognize that all else is window dressing.
Like I said in post #30, business interests control our government for their benefit. Not regulating is not an answer, as that simply produces financial crises, it always has. The only answer to is three-fold: a) publically finance elections, (b) make it illegal for a pol or members of their staff to work for industries or companies that they affected, and (c) regulate in the public's interest.
The Fed is the root of all evil, and is modeled after the Bank of England, also a private entity.
Choco, I completely agree!! I would further add any regulation built on a platform where the Fed is still the foundation of our monetary and economic system will be utterly worthless as it does not address the root of the problem, do you agree? Regulation is merely window dressing, meant to look good for the masses and hide the ugly truth that lies beneath.
If God give mankind enough time,we`ll have a "economic-constitution" base on science facts.The facts will be the "regulations".Cheesebone,i disagree with your logic,capitalism cause to much incentive(greed/dog eat dog)) We can make progress without the rat-race for the money.Does man live by bread alone? Capitalism already have basic problems(the hand isn`t invisible) when government for the people is corrupted and manipuated by special interests,the case is close on using capitalism as a way of building a better "mousetrap". We can & need to do better.Economic Democracy is the way to go.Grassroots control businesses & money!We create it,we should control it.Together.a democracy without either capitalism or communism.
Ry144wrote: Together.a democracy without either capitalism or communism.
poly replies: Can't have any social system without capitalism. It's an economic fundamental... not a social system. What we can do is change caiptalism's applications.
Basic capitalism: Produce a surplus to maintain production. Like growing more wheat seed than you grind into flour so that another crop can be planted. Capitalism.
As long as the basics are maintained, any social system can be implimented. Even subsistence farmers get by admirably without Wall Street. So did the nation prior to Wall Street's existence.
When the Chief regulators say don't enforce regulation....it isn't regulated and non-regulators are appointed to fill regulatory postions. That was Greenspan's position and has pretty much been the position of the Fed for 30 years and the SEC for the past ten.
Repealing Glass-Steagall made the job of non-regulating much easier. The Financial Reform recently passed by Congress didn't re-instate it..The highway to another financial sector collapse remains open and the signal is green.
The function of Wall Street:The primary function of Wall Street is to make rising extractions from the productive economy by bidding up and inflating paper claims upon it. If your stock or financial paper iinflates in value...so does your claim on the real economy. It's that simple..
That's Wall Street's only relation to the Main Street economy that most people live in. It generates claims upon it...by producing nothing.
Chicago School theory is that the increased claims will be spent. (trickle down). . In actuality,they are so high, they can't be spent.... most are returned to Wall Street.further inflating and increasing the claims on Main Street. productivity..
Increasing financier/bankster wealth by producing higher super-rich claims on Main Street... by producing nothing... is called economic recovery..It's nuts.
Retired Monk - "Ideology is a disease".
Poly,we disagree,i wouldn`t call saving for a rainy day,capitalism.Saving for a rainy day is fundamental/natural,capitalism is unnatural.If you think you can make capitalism natural? The world would love to see it,before it destroy it!
Choco, I completely agree!! I would further add any regulation built on a platform where the Fed is still the foundation of our monetary and economic system will be utterly worthless as it does not address the root of the problem, do you agree? Regulation is merely window dressing, meant to look good for the masses and hide the ugly truth that lies beneath.
I agree because the Fed is the original ponzi scheme, fiat money, private bankers printing our money and "lending it to the Treasury" for the sake of appearance of legitimacy and that US Treasury Stamp that makes it look official, and then they charge us interest on the money. Biggest and boldest ponzi scheme ever. They have to print ever greater amounts of money so that we can pay back the principal and intersest. Funny how many people don't know this and that the IRS was founded in 1913 the same year as the FED.
IRS
16th Amendment
In 1913, Wyoming ratified the 16th Amendment, providing the three-quarter majority of states necessary to amend the Constitution. The 16th Amendment gave Congress the authority to enact an income tax. That same year, the first Form 1040 appeared after Congress levied a 1 percent tax on net personal incomes above $3,000 with a 6 percent surtax on incomes of more than $500,000.
Federal Reserve:
The Federal Reserve System (also known as the Federal Reserve, and informally as the Fed) is the central banking system of the United States. It was created in 1913 with the enactment of the Federal Reserve Act,
http://www.reformation.org/federal-reserve.html
To top it off, we constantly hear how this is a "Christian Nation" founded on "The Bible and Christian principals and morality, that's what makes us superior to other nations" But Jesus and the other parts of the Bible condemned Usury. Why are people so loath to read, or is it comprehension that is the problem?
Why people don`t condemned usury? Addiction!(like drugs & oil) Cold turkey(withdrawing) might kill the world,we have no choice,we`re killing the world anyway.