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Thread: Trillions of Dollars

  1. #1 Trillions of Dollars 
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    Nevermind the political reasons the Economic stimulus is going to fail.

    But doesnt going through with it contradict the way that all ecosystems have been working on this planet for millions of years.

    Bailing out bankrupt companies and handing out free money is exactly like the heard of wildibeasts stopping to carry their sick and weak.

    preventing the economic failure is just sweeping the problem under the rug

    Failure is just as natural as sucsess.

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    Republican ideas = the old, sick and weak and they have been culled from the American herd.


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    yeah but the problem of imposed equality in a system that is inherantly unequal...people are idiots.
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    This is the naturalistic fallacy - that because something happens in nature, that it SHOULD happen when it comes to human policy making. That is not true. Science should only inform, not justify human morals and/or policy. I'm moving this thread to the politics subforum.
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    Most of the issues at present are from a contracting money supply. In so far as the stimulus package is capable of injecting new money into the economy, it will work. The shovel ready projects, on the other hand, will have little effect on the economy as a whole; they can be thought of as a form of welfare to help unemployed people retain a sense of self worth.

    The best cure for what ails us is for the Fed to take the unprecedented step of setting the prime rate to negative numbers. Basically pay banks to take money from the Fed. But the Fed is also concerned about inflation, which can be a problem (lead us into stagflation basically).
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    Quote Originally Posted by Jon not Ron
    Nevermind the political reasons the Economic stimulus is going to fail.
    Aye, any economic stimulus will fail. We will only see some benefit in the short run, but at the pace we're going, that short run will run out pretty fast. We have no solution to the economic problems we have. I presume the leaders of countries and their advisors don't know the solutions too, so they do only what they know, that is to pump in more money. Governments are just feeding a blackhole.
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    My idea for restoring our economy is to raise the minimum wage to $10.50 an hour.
    So this great mass of people would be able to buy cars and pay their mortgages.

    At the same time, 'tap' those 'stagnant bloated bank accounts of the ultra rich by raising the income taxes to higher levels like 90% and graduated down to 5% for the minimum wage earners,
    This should be done after all living expenses are deducted. So this would not have any effect on their lifestyles.

    The current free market economy has the ultra rich saying 'the dollars stop here'.
    So these stuffed bank accounrs are not contributing to our economy because dollars have to be spent to keep the economny prosperous.

    The small business owners can be given some tax relief to meet the minimum wages of their employees.

    My solution for a thriving economy is SHARE THE WEALTH!

    I saw on yesterdays news of a CEO that had a bonus(?) or whatever of $60 million to give this entire bonus to his employees.

    Cosmo
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  9. #8  
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    Quote Originally Posted by Cosmo
    My idea for restoring our economy is to raise the minimum wage to $10.50 an hour.
    So this great mass of people would be able to buy cars and pay their mortgages.
    This would cause unemployment. The higher the minimum wage, the fewer employees employers are able to pay.

    At the same time, 'tap' those 'stagnant bloated bank accounts of the ultra rich by raising the income taxes to higher levels like 90% and graduated down to 5% for the minimum wage earners,
    This should be done after all living expenses are deducted. So this would not have any effect on their lifestyles.
    That money isn't stagnant. The banks use it to loan out to businesses and people. The ultra rich are rich because they're smart at investing. They use their money to invest some more. Essentially, the ultra rich decide what our economy produces, and how much of it. Which is a good thing. They're rich because they're very good at knowing what people want to consume.

    The problem right now is that lending has slowed because of fears of credit default. This has caused the money supply to contract (people can't get a loan), which means many businesses can't get the basic money supply they need to pay workers and equipment costs, and have to close down.
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    Numsgil

    If you read my article, you would have seen that I allowed for the loss of jobs by giving tax relief to the small businesses that would have difficulty to meet the MW laws.
    The large corporations could easily comply since those bloated CEO salaries and perks add up to hundreds of millios of dallars. They could easily sacrifice some of these dollars for the sake of the business.

    Where are they going to invest those stagnant dollars? Their investment market has crashed.

    Cosmo
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  11. #10  
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    At the same time, 'tap' those 'stagnant bloated bank accounts of the ultra rich
    That money isn't stagnant. The banks use it to loan out to businesses and people.
    I agree with the second quote. One is perfectly free to dislike the "ultra rich" and to believe they should be taxed at a higher rate, but that does not mean the money they hold in bank accounts, invest in stocks and shares or directly in industry is "stagnant". Surely this would only apply to money that, for a variety of reasons, might be kept (under the bed) at home!
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  12. #11  
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    Quote Originally Posted by Numsgil
    They're rich because they're very good at knowing what people want to consume.
    I would think they're rich because they're good at marketing goods and services that people don't 'need' and instead would 'want'. Brainwashing the common dude into buying something he don't need is what makes them rich. And in capitalism, the rich gets richer, the poor gets poorer.
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    Quote Originally Posted by Cosmo
    Numsgil

    If you read my article, you would have seen that I allowed for the loss of jobs by giving tax relief to the small businesses that would have difficulty to meet the MW laws.
    The large corporations could easily comply since those bloated CEO salaries and perks add up to hundreds of millios of dallars. They could easily sacrifice some of these dollars for the sake of the business.

    Where are they going to invest those stagnant dollars? Their investment market has crashed.

    Cosmo
    I read that part about subsidizing small businesses. The problem is that a small business has incentive to stay small. If they get too successful their tax break goes away. Which means you're screwing with the economies of scale, and your economy is less efficient than it should be.

    There's a reason people get paid a certain wage by an employer: that's what they're worth. You can invent all sorts of clever ways around this, but Adam Smith's invisible hand always means things won't turn out as rosy as you thought. It's like a water bed. You apply pressure in one area, and another just gets bigger.

    One idea you might consider instead of a minimum wage is a reverse income tax. Basically, no matter how much money someone makes, the government gives everyone 7500 dollars or something like that. Then based on their total income, taxes them progressively (rich get taxed more). Google the term. There are many proponents for such a method, since it allows poor people on welfare to pull themselves out of welfare (unlike the current system).
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    Quote Originally Posted by newnothing
    Quote Originally Posted by Numsgil
    They're rich because they're very good at knowing what people want to consume.
    I would think they're rich because they're good at marketing goods and services that people don't 'need' and instead would 'want'. Brainwashing the common dude into buying something he don't need is what makes them rich. And in capitalism, the rich gets richer, the poor gets poorer.
    No one's twisting their arm to buy. I'd say the rich are rich because they know what stupid people want to buy better than stupid people do
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  15. #14  
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    Quote Originally Posted by Numsgil
    I read that part about subsidizing small businesses. The problem is that a small business has incentive to stay small. If they get too successful their tax break goes away. Which means you're screwing with the economies of scale, and your economy is less efficient than it should be.

    There's a reason people get paid a certain wage by an employer: that's what they're worth. You can invent all sorts of clever ways around this, but Adam Smith's invisible hand always means things won't turn out as rosy as you thought. It's like a water bed. You apply pressure in one area, and another just gets bigger.

    One idea you might consider instead of a minimum wage is a reverse income tax. Basically, no matter how much money someone makes, the government gives everyone 7500 dollars or something like that. Then based on their total income, taxes them progressively (rich get taxed more). Google the term. There are many proponents for such a method, since it allows poor people on welfare to pull themselves out of welfare (unlike the current system).
    With your economy, why don't stagnsnt dollars invest in the current problem instead of getting the government to invest its public dollars .
    Its your system, rescue yourself.
    Why run to the government to provide you with welfare?

    What we need to do is let those that work, get more for their needs than what is currenrly available.
    The MW earners EARN their dollars .
    The CEO's IMO, do not.
    So let those deserving people earn more so they can buy the cars and pay for their mortgages to boost the economy.

    The current failure of the free enterprise system is the GREEDY CEO's that run it.

    Cosmo
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  16. #15  
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    Quote Originally Posted by mormoopid
    yeah but the problem of imposed equality in a system that is inherantly unequal...people are idiots.
    I agree that there has to be some incentive to use your brains if you've got them. Even republicans are guilty of wanting this, though ("No child left behind" in grade school == every child stop and wait for the dumb kid)

    This whole notion of equality got started as a great idea, when it was social equality, no serfs, no lords, no slaves.... etc. Somewhere along the way it became economic equality, maybe with the rise of communism.

    I think the original idea was to make the whole world a meritocracy. If you were fit to lead, the fact your father/mother were serfs wouldn't bar you from holding a government position. But... that was if you were fit.... Now it's converted into something where merit is completely ignored again. In a sense, we're back where we started.

    Quote Originally Posted by Numsgil
    Quote Originally Posted by newnothing
    Quote Originally Posted by Numsgil
    They're rich because they're very good at knowing what people want to consume.
    I would think they're rich because they're good at marketing goods and services that people don't 'need' and instead would 'want'. Brainwashing the common dude into buying something he don't need is what makes them rich. And in capitalism, the rich gets richer, the poor gets poorer.
    No one's twisting their arm to buy. I'd say the rich are rich because they know what stupid people want to buy better than stupid people do

    The most ideal case would be gambling. If a person's poor understanding of the laws of probability leads them to dump their life savings at a roulette wheel in Vegas, well, you can't really blame the casino owners for accepting their money.

    The trouble is that too often the sales schemes we see today are driven by misrepresentations so close to being outright lies that only a lawyer can tell the difference, and people often hire lawyers to do exactly that: tell them how close they get to the edge of false advertising laws without going over.

    There are a lot of ways of making money that work, and require intelligence to use, but where the people using them still really don't deserve to be making money. It's kind of a "perfect world" argument, though. The trick is to see the difference between a little bit of this happening, and a lot. Too much of it, and we're destined to bankrupt ourselves.
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  17. #16  
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    The ultra-rich are mostly speculators.

    They don't produce anything but a paper trail.
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  18. #17  
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    Quote Originally Posted by kojax
    The most ideal case would be gambling. If a person's poor understanding of the laws of probability leads them to dump their life savings at a roulette wheel in Vegas, well, you can't really blame the casino owners for accepting their money.

    The trouble is that too often the sales schemes we see today are driven by misrepresentations so close to being outright lies that only a lawyer can tell the difference, and people often hire lawyers to do exactly that: tell them how close they get to the edge of false advertising laws without going over.

    There are a lot of ways of making money that work, and require intelligence to use, but where the people using them still really don't deserve to be making money. It's kind of a "perfect world" argument, though. The trick is to see the difference between a little bit of this happening, and a lot. Too much of it, and we're destined to bankrupt ourselves.
    The stupid people will still be the majority of people in the world. The smart, the cunning, the intelligent, will get away with working less and earning more, usually from those stupid people in the street. These smart people have every right to work less since they work smarter, and have every right to earn more by virtue of their intellectual ability or resourcefulness. But the stupid guy on the street will work more and earn less. Majority of them will. So what are they going to do when they don't get enough food or a shelter over their heads? even if it serves them right? They force the rich to give to the poor. That is how this Global economic crisis happens. And it doesn't seem to end. Every country in trouble from the global recession is shouting stimulus package to help the economy. no matter how many trillions you pump into the black hole, the problems will still be there. Albeit a bigger one once it unfolds. Because the common people will still remain stupid, and the rich and smart ones remain smart!

    Now if the smart ones and stupid ones is to get what they desire, smart ones desire record profits and cash in their pockets, stupid ones desire less time from work, enough to buy food and comfortable place to stay, wouldn't the world be a happy and peaceful place to be in? That is if everybody receives what he desires. This reality isn't far fetch if the smart ones and the stupid ones all together are united as one. Meaning each and every one understands the needs of the other and fulfills them to the extent that he is capable of. Just a change of intention is all we need.
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    Struggling Americans call tent cities home

    Where did the trillion of dollars go?
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  20. #19  
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    The trillions are basically sitting in banks or in low risk yield accounts (money markets, etc.) as capital, because the banks feel it isn't worth it to loan it to each other, and they prefer to keep all that cash nice and liquid. Because they're scared. And they should be. Lots of banks are going belly up.

    Here's basically how the economy works, and why giving trillions to banks is a smart move even if it sounds like the money would be better given to real people:

    Bank 1 loans to Bank 2 1000 dollars. Bank 1 has 1000 dollars on its accounts receivable. So it has 1000 dollars in assets.

    Bank 2 loans 1500 dollars to bank 3, using the 1000 it borrowed from bank 1 as collateral. Bank 2 has 1500 in accounts receivable and 1000 in accounts payable. Bank 2 has 500 dollars in assets. On paper.

    Bank 3 loans to a family 2000 dollars to buy a house, using the money from bank 2 as collateral. Bank 3 has 2000 in accounts receivable and 1500 in accounts payable. For net assets of 500 dollars. On paper.

    The family owns their, let's say, 2000 dollar home, with a 2000 dollar mortgage. They have 0 net assets.

    So the total wealth of our imaginary economy is 2000 dollars, even though only 1000 of it is "real". Basically new money has been created from loaning. Now let's say the family defaults on their mortgage because bank 3 wasn't smart enough to figure out if they could reasonably be expected to pay their mortgage. Bank 3 seizes the home, and will attempt to sell it to recoup some of its loses.

    But wait, in the mean time the housing prices have fallen. The home is only worth $1000. Bank 3 is over extended, and has to default on its loan to bank 2. Bank 2 is able to pay back bank 1, but just barely, and it does so by cutting back on loaning to businesses for things like payroll. Suddenly businesses which relied on bank 2 to give out short term loans find themselves in trouble, and have to declare bankruptcy.

    Bank 1 is no fool, and is now going to hold on to its money instead of loaning it to that crazy bank 2 which clearly is now in trouble. It will probably invest it in sure fire things like government t bills. Which means our imaginary economy now only has $1000 dollars. And that money has basically been given to the government instead of real people.

    This is basically what's going on right now. The funny thing about banks is that they basically mint money when they loan to each other. When they stop loaning to each other, it's like suddenly trillions of dollars in the economy have disappeared.

    Now lets say that the government gives trillions of dollars to actual people instead of banks. How much richer is the economy? Not really very much, because those people will probably consume instead of invest their money. There's some multiplicative factor as the money changes hands between people to businesses to employees to businesses, etc. but it's not very high. Whereas if the money is given to banks and they start lending to each other, the multiplicative effect is quite high and it's like trillions more dollars suddenly appear.

    So if you give 1 trillion dollars to consumer, it's like, say, 2 trillion in new money has suddenly appeared. But if you give 1 trillion to banks, it might be more like 10 trillion in new money has suddenly appeared. So giving to banks is the right move here. The problem is that the banks still don't quite trust each other yet. Lots of banks are still folding all over the country. World probably. Fear is still high, which keeps banks from loaning out money. It's sort of a self fulfilling prophecy.

    But this obviously doesn't apply to businesses. Bailing out car companies does not create new money like this.

    ...

    Very little of it percentage wise is lining anyone's pockets, if that's your worry. Mostly it's just sitting in low return investments, when the economy needs it be in higher risk investments like loaning to Coke for 3 days so it can pay its employees on time.
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  21. #20  
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    Sounds like madness.
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  22. #21  
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    No one said the economy was sane
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  23. #22  
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    So the government is giving out a trillion dollars to banks to improve economic situation. The banks are not loaning out the money because they're afraid other banks may fold. That is not a solution isn't it.
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  24. #23  
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    Quote Originally Posted by newnothing
    Quote Originally Posted by kojax
    The most ideal case would be gambling. If a person's poor understanding of the laws of probability leads them to dump their life savings at a roulette wheel in Vegas, well, you can't really blame the casino owners for accepting their money.

    The trouble is that too often the sales schemes we see today are driven by misrepresentations so close to being outright lies that only a lawyer can tell the difference, and people often hire lawyers to do exactly that: tell them how close they get to the edge of false advertising laws without going over.

    There are a lot of ways of making money that work, and require intelligence to use, but where the people using them still really don't deserve to be making money. It's kind of a "perfect world" argument, though. The trick is to see the difference between a little bit of this happening, and a lot. Too much of it, and we're destined to bankrupt ourselves.
    The stupid people will still be the majority of people in the world. The smart, the cunning, the intelligent, will get away with working less and earning more, usually from those stupid people in the street. These smart people have every right to work less since they work smarter, and have every right to earn more by virtue of their intellectual ability or resourcefulness. But the stupid guy on the street will work more and earn less. Majority of them will. So what are they going to do when they don't get enough food or a shelter over their heads? even if it serves them right? They force the rich to give to the poor. That is how this Global economic crisis happens. And it doesn't seem to end. Every country in trouble from the global recession is shouting stimulus package to help the economy. no matter how many trillions you pump into the black hole, the problems will still be there. Albeit a bigger one once it unfolds. Because the common people will still remain stupid, and the rich and smart ones remain smart!

    Now if the smart ones and stupid ones is to get what they desire, smart ones desire record profits and cash in their pockets, stupid ones desire less time from work, enough to buy food and comfortable place to stay, wouldn't the world be a happy and peaceful place to be in? That is if everybody receives what he desires. This reality isn't far fetch if the smart ones and the stupid ones all together are united as one. Meaning each and every one understands the needs of the other and fulfills them to the extent that he is capable of. Just a change of intention is all we need.
    It depends on the way the smart person works smart. If his business is excavation, and he recognizes that, by investing 10 million dollars to provide his employees with modern machinery, he can excavate twice as much dirt in half the time, using half as many workers, and save 30 million dollars by the end then, he definitely deserves to be making some money for that.

    If all he did was figure out how to dupe some poor schmucks into working twice as long, for half the pay, then he's a real bastard, and I hope he doesn't make any money at all.
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  25. #24  
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    Quote Originally Posted by newnothing
    So the government is giving out a trillion dollars to banks to improve economic situation. The banks are not loaning out the money because they're afraid other banks may fold. That is not a solution isn't it.
    No, that solution sort of fell flat on its face It was a sound theory though.
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  26. #25  
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    Quote Originally Posted by newnothing
    Struggling Americans call tent cities home

    Where did the trillion of dollars go?
    Probably to those multi-million dollar bank accounts of the ultra rich.
    This is a free market dollar republic, you should know.

    Cosmo
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  27. #26  
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    Geez Cosmo, I just said that wasn't the case.
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    Quote Originally Posted by Numsgil
    Geez Cosmo, I just said that wasn't the case.
    Anyways, we won't see the money on the streets anytime soon. Better get my ol' camping equipment ready and stock food ration, just in case.
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  29. #28  
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    If it's any consolation it's unlikely that the economy will get much worse.
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