News What are the potential impacts of public confidence on the economy's recovery?

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The discussion centers on the precarious state of the U.S. economy, emphasizing that restoring public confidence is insufficient for recovery. Critics argue that reliance on cheap credit and government interventions has exacerbated the financial crisis, suggesting that a significant restructuring of the economy is necessary. The conversation highlights the ongoing challenges of rising unemployment, projected to exceed 10%, and the slow pace of economic recovery, with GDP still declining. Various recovery scenarios are debated, including V-shaped, W-shaped, and L-shaped recoveries, with pessimism about the immediate future.The dialogue also touches on the implications of national debt, which is growing rapidly and could lead to a future crisis if not addressed. Participants express skepticism about the effectiveness of government stimulus measures, pointing out that only a fraction of allocated funds have been spent, and stress the need for job creation and productive investments to drive genuine recovery. The discussion reflects a broader concern about the sustainability of economic policies and the potential for long-term consequences stemming from current fiscal practices.
  • #501
CRGreathouse said:
Yes, making other people pay for my retirement could stop SS from running out of money. But that's not the idea -- it's not supposed to be other people paying for my retirement but *me* paying for my retirement. The income cap exists because of the benefits cap.
This kind of logic makes me wonder if people have any sense that the economy changes despite money staying the same. Money is nothing more than the ability to acquire available goods and services. If the goods and services available don't add up to those produced for the money you got/saved, how can you redeem your SS for them? Money is ultimately just a medium for bartering.

Mathnomalous said:
Economic recovery? I doubt the economy will "recover" before 2020.
It depends on what you mean by "recover." Probably people will figure out how to live well with less personal spending before 2020, but will that be counted as recovery?
 
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  • #502
brainstorm said:
This kind of logic makes me wonder if people have any sense that the economy changes despite money staying the same. Money is nothing more than the ability to acquire available goods and services. If the goods and services available don't add up to those produced for the money you got/saved, how can you redeem your SS for them? Money is ultimately just a medium for bartering.

Wow, that had nothing to do with my post.
 
  • #503
CRGreathouse said:
Wow, that had nothing to do with my post.

Of course it does. If you worked on the railroad, how did you contribute to your own SS unless the railroad you worked on provides support for the economy that takes care of you in retirement? My point is that SS is a mechanism for trading present labor for future labor, but who is to say whether present labor will actually have any economic benefit to future labor? More likely the trade is "we built the mass-production economy, now you serve us in restaurants."
 
  • #504
brainstorm said:
Of course it does.

I notice that you still didn't tie any of that into my post. I'll respond anyway, though.

brainstorm said:
If you worked on the railroad, how did you contribute to your own SS unless the railroad you worked on provides support for the economy that takes care of you in retirement?

It doesn't have to. You could work for a railroad, contribute to SS, and have the railroad go bankrupt without the railroad ever supporting the economy, and yet still collect SS. Of course the economy still has to exist (supported by some companies) at the point that you want to collect, and the laws still have to allow you to collect. But this has nothing to do with the fate of your employer.

brainstorm said:
My point is that SS is a mechanism for trading present labor for future labor

I'm quite sure that every person who has posted on this thread is aware of that fact.

brainstorm said:
who is to say whether present labor will actually have any economic benefit to future labor?

Future voters and politicians, mostly.
 
  • #505
mheslep said:
Still no resolution to the pending tax increases for everyone. The Treasury will have to send out the new with-holding tables with increased rates in about a week. What a disaster given yesterday's http://www.suntimes.com/business/2943864,CST-NWS-Jobs04.article" and 15.1 million.
http://www.reuters.com/article/idUSTRE6B31NN20101205

Well, for once, I'm in agreement with the Republican leadership.

Chicken Crap!

:mad:
 
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  • #506
CRGreathouse said:
I notice that you still didn't tie any of that into my post. I'll respond anyway, though.
I was simply questioning your assumption that you contributing money toward your own retirement (SS) is equivalent to your economic contribution contributing to the economy that supports you in old age.

It doesn't have to. You could work for a railroad, contribute to SS, and have the railroad go bankrupt without the railroad ever supporting the economy, and yet still collect SS. Of course the economy still has to exist (supported by some companies) at the point that you want to collect, and the laws still have to allow you to collect. But this has nothing to do with the fate of your employer.
You're still not getting my point to differentiate monetary contribution from functional economic contribution. You might have made loads of money working for World Online or building houses prior to the mortgage meltdown, but that doesn't mean that what you produced actually contributes to your retirement. Building houses might in the sense that someone could live in a house you built in exchange for providing you with restaurant service. On the other hand, the same person could build their own house and dismiss having to serve food to retired people to make a mortgage payment. My point is that economics is ultimately the exchange of goods and services regardless of how they are represented in balance sheets and SS payments.

I'm quite sure that every person who has posted on this thread is aware of that fact.
The point is that if the economy collapses due to lack of connectivity between past and present/future economic exchanges, your entitlement due to previous contributions is meaningless. It all comes down to milking the goods and services you want out of the present economy. If social security allows you to do that, congrats. What you did to qualify for your SS is just legitimation. It's nice to think of the system as being valid, but does it really matter in terms of economic realities?
 
  • #507
brainstorm said:
I was simply questioning your assumption that you contributing money toward your own retirement (SS) is equivalent to your economic contribution contributing to the economy that supports you in old age.

That was never my assumption.

brainstorm said:
What you did to qualify for your SS is just legitimation. It's nice to think of the system as being valid, but does it really matter in terms of economic realities?

That's well and fine, but I'm talking about the legal tie between how much a person pays into SS and how much they can collect, not what philosophical claim they may and may not have to SS. I acknowledge that this could be an interesting topic, but it has nothing to do with my post.
 
  • #508
brainstorm said:
It depends on what you mean by "recover." Probably people will figure out how to live well with less personal spending before 2020, but will that be counted as recovery?

What I meant by "recovery" in a consumer-based monetary system is primarily the return of jobs that will provide people with money to cover their basic needs. If one has no job and no other means of income, one will likely starve.

So, unless those jobs return in the near future (highly unlikely) or a new industry or technology rises (uncertain), I expect unemployment and general discontent to remain high for the next decade.

Want to short circuit that? Start a war, preferably with China.
 
  • #509
OmCheeto said:
Well, for once, I'm in agreement with the Republican leadership.

Chicken Crap!

:mad:

Why were you angered? Is how the sick game of modern politics is played. The donkeys forced the elephants to take a position on tax cuts and now the donkeys will base their plays on the elephants' position. It only matters to those who still buy into the system.

In the end, it is all a farce.
 
  • #510
CRGreathouse said:
That's well and fine, but I'm talking about the legal tie between how much a person pays into SS and how much they can collect, not what philosophical claim they may and may not have to SS. I acknowledge that this could be an interesting topic, but it has nothing to do with my post.
What other basis is there for establishing that legal tie besides a value exchange between labor contributed and labor consumed in old age? Money is a measure of labor-value; at least it is when it is paid/collected for labor rendered. When you save it, either through SS or otherwise, you are investing it in other people's labor with the hope of getting a value return for it at a later moment. If the labor it gets invested in doesn't produce anything of value to you, how can you expect to enjoy the fruits of that value in retirement? What is it, exactly, that you want to consume with your SS income?

There's a good chance that there will be enough food and shelter for you not to have to be homeless and hungry. Anything else might become scarce considering the babyboomers are a large generation with high expectations for consumption. If so, consumption may become competitive driving the price up of many goods and services many people would expect to consume in retirement. As such, you might find yourself in the class of people excluded from those scarcified goods and services. You might also find you're one of the privileged but that you will have to spend a great deal of your retirement wealth on a limited number of privileges. It may only be very very rich people who get it all, i.e. retirement condo in a warm climate, extensive travel privileges, expensive life-prolonging proprietary pharmaceuticals, etc. It shouldn't be this way, probably, but that's capitalism for you.


Mathnomalous said:
What I meant by "recovery" in a consumer-based monetary system is primarily the return of jobs that will provide people with money to cover their basic needs. If one has no job and no other means of income, one will likely starve.
Starvation isn't the main problem with unemployment. It's homelessness. Usually, unemployed people are able to get food one way or another, I think. The question is whether people and/or government will figure out some way to give people access to the large surplus of inhabitable property even if job-creation doesn't grow. The ironic thing is that as long as the property surplus continues or grows, GDP will continue to shrink. However, you can't really create jobs that people don't want to pay for so the best option would be to split up existing jobs to create more part-time jobs, but what would stop people from taking multiple part-time jobs leaving others once again fully unemployed.

So, unless those jobs return in the near future (highly unlikely) or a new industry or technology rises (uncertain), I expect unemployment and general discontent to remain high for the next decade.
There's a third possibility, though it's somewhat like a new industry or technology. What happens is that people give up on paid employment and the people who do so most comfortably are those with other sources of income. These people then create cultural lifestyles that appeal to others, causing people to desire to work less. This is basically the culture of valuing life more than work and money. The more people choose this culture, the higher the demand will become for part-time work, which will open up more part-time jobs and remedy unemployment. I keep wondering when some kind of part-time labor lobby will develop to pursue laws and policies that would be beneficial to part-timers.
 
  • #511
Obama announced today that the Bush-Era tax cuts would be extended for 2 years, in exchange for an extension of unemployment benefits. It appears that Obama has conceded that raising taxes during such a recession will not help the economy.

http://www.boston.com/news/nation/w...s/?rss_id=Boston.com+--+Top+political+stories

They also mention that a "payroll tax" will be reduced from 6.2% to 4.2%. I think this refers to the Social Security contribution from workers, which will help give workers higher take-home pay but will definitely accelerate the bankruptcy of Social Security as well. I'm still waiting for the day (perhaps in vein) that I can opt-out of Social Security and instead put that money in a Roth IRA or 401k of my choosing.
 
  • #512
Mech_Engineer said:
...It appears that Obama has conceded that raising taxes during such a recession will not help the economy...
I look at it that he conceded he wouldn't get anything he wanted if he didn't give the rich what they wanted, so he gave in. Fixing the taxes for millionaires isn't going to affect the economy much, but it would help the deficit and fix some of the imbalances in the current tax system. Republicans, as usual, were douche bags, and didn't allow this to happen.
 
  • #513
dreiter said:
Fixing the taxes for millionaires isn't going to affect the economy much, but it would help the deficit and fix some of the imbalances in the current tax system.

You know what would fix the "imbalances in the current tax system"? A http://en.wikipedia.org/wiki/Flat_tax" model. Flat tax would certainly simplify the US tax code quite a bit...

dreiter said:
Republicans, as usual, were douche bags, and didn't allow this to happen.

Republicans are D-bags for defending citizen's right to keep money they earned?
 
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  • #514
mech_engineer said:
you know what would fix the "imbalances in the current tax system"? A http://en.wikipedia.org/wiki/flat_tax" model. Flat tax would certainly simplify the us tax code quite a bit...
+1

republicans are d-bags for defending citizen's right to keep money they earned?
+2
 
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  • #515
Mech_Engineer said:
Obama announced today that the Bush-Era tax cuts would be extended for 2 years, in exchange for an extension of unemployment benefits. It appears that Obama has conceded that raising taxes during such a recession will not help the economy.

http://www.boston.com/news/nation/w...s/?rss_id=Boston.com+--+Top+political+stories

They also mention that a "payroll tax" will be reduced from 6.2% to 4.2%. I think this refers to the Social Security contribution from workers, which will help give workers higher take-home pay but will definitely accelerate the bankruptcy of Social Security as well. I'm still waiting for the day (perhaps in vein) that I can opt-out of Social Security and instead put that money in a Roth IRA or 401k of my choosing.

I absolutely LOVE the idea of putting the Democrats tax increase plan on the ballot (more or less) for 2012.

As for the "payroll tax" reduction - why would anyone propose to cut funding for a (long term) under-funded program? The other aspect of such an idea (one of my personal pet peeves) will the Earned Income Tax Credit also be reduced (if not/why not)- it's designed to give back Social Security withholdings?
 
  • #516
dreiter said:
I look at it that he conceded he wouldn't get anything he wanted if he didn't give the rich what they wanted, so he gave in. Fixing the taxes for millionaires isn't going to affect the economy much, but it would help the deficit and fix some of the imbalances in the current tax system. Republicans, as usual, were douche bags, and didn't allow this to happen.
It's easy to shift the tax burden to the rich when you don't count yourself among them. It's like having a broken leg and saying that people with good legs should run more. This mentality of spend money and send the bill to someone with more money promotes an extremely irresponsible approach to economy. I would like to see people who advocate more spending do so from the perspective of how much labor they themselves are willing to contribute to the public good. If taxes would be taken in labor instead money, I wonder how many people would be voting to raise the amount of labor the government would demand from them.
 
  • #517
http://www.myfoxny.com/dpp/news/national/average-familys-wealth-soars-ncx-20101210"
What are Americans going to do with their $10,400 of added wealth? That's how much the average US family's wealth increased between July and September, according to the Federal Reserve -- cited by the New York Post -- which reported Thursday that the nation's 115 million households gained $1.2 trillion in worth.

A forward from one of my facebook financial buddies.

Don't really know what it means, but several of his buddies asked where their $10k was.

:cry::smile::cry:
 
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  • #518
brainstorm said:
What other basis is there for establishing that legal tie besides a value exchange between labor contributed and labor consumed in old age?

Fiat, of course.
 
  • #519
OmCheeto said:
A forward from one of my facebook financial buddies.

Don't really know what it means, but several of his buddies asked where their $10k was.

:cry::smile::cry:

I'd bet it's because the average savings rate in the US went up due to the crappy economy. If your "buddies" want to know where their $10k is, ask them why they didn't save it!
 
  • #520
OmCheeto said:
A forward from one of my facebook financial buddies.

Don't really know what it means, but several of his buddies asked where their $10k was.

:cry::smile::cry:

I'm guessing mine was re-distributed?
 
  • #521
Mech_Engineer said:
I'd bet it's because the average savings rate in the US went up due to the crappy economy. If your "buddies" want to know where their $10k is, ask them why they didn't save it!

I imagine it's paper wealth from real estate revaluation.
 
  • #522
Mech_Engineer said:
I'd bet it's because the average savings rate in the US went up due to the crappy economy. If your "buddies" want to know where their $10k is, ask them why they didn't save it!

Actually, my financial buddy said he saw his. I think the others were just joking.

The article also said:

Since the depths of recession in December 2008, the average household net worth has climbed by $51,309 to a current level of $477,315

That's about 12% in two years. Not too shabby.

The DJIA is up 62% from it's low.

My top 6 stocks are up 45%
My bottom 4 stocks pull that down to only 12.5%.

BTW, does anyone know if it helps the economy when I invest in growing companies?
 
  • #523
OmCheeto said:
BTW, does anyone know if it helps the economy when I invest in growing companies?

Yes, typically. Of course the effect is small unless you're particularly wealthy.
 
  • #524
OmCheeto said:
That's about 12% in two years. Not too shabby.

The DJIA is up 62% from it's low.

My top 6 stocks are up 45%
My bottom 4 stocks pull that down to only 12.5%.

I was happy to see my 401K is up 12% for the year, a lot better than a few years ago!

Seriously though, times of economic turmoil tend to trigger higher savings rates, but it's hard to know if the full $10k was due to savings alone, and not reevaluation of monetary factors...
 
  • #525
generally a high level discussion here..bravo...

The original NY Times article has some good ideas...but also panders to NY Times liberals so they'd print it...cigarette (boat) gas guzzlers? give me a break...OBAMA a popular President? at 39% approval?...his PERSONAL approval is higher but the authors appropriately discount such things in discussing economic activity.

If you want to understand why the economy is doing so poorly, why so few jobs are being created, why 2011 will be no better than 2009 and 2010, why this is weakest economic "recovery" since the great depression...try reading about Bill Ayers (Obama's buddy and inspiration), Cloward and Piven...and see why Obama and Company are picking winners (supporters like Goldman Sachs, Bank of America, unions, GE, now 522 union and company exemptions granted from OBAMACARE, etc) and losers ( Merrill Lynch, Lehman Brothers, the wealthy). US Business, properly, does not TRUST Obama and fears he will collapse the US financial system as planned by his extreme left wing supporters. When the government gives $600M to BOA can buy out Merrill Lynch, nobody knows who Obama will try to crush next.

The solution is obvious: eliminate most federal taxes (to strip the federal government of its power) so they can't distribute (earmarks,etc) it via politics and darkroom deals, let States do the work and exercise their legitimate powers,
and constrain the federal government via enumerated powers specified in the Consiitution of the United Sates.

http://en.wikipedia.org/wiki/Cloward–Piven_strategy



Post #522:
Since the depths of recession in December 2008, the average household net worth has climbed by $51,309 to a current level of $477,315

Household net work HAS never been anywhere near that high...I don't thion it has EVER exceed even $100K...Could not find a current figure but the government tracks that...here is one chart that seems in the ballpark:

http://en.wikipedia.org/wiki/File:Graphic.png
\Note the peak at about $65K.

Check this on CURRENT Dem and Rep nonsense:

http://www.politico.com/news/stories/1210/46383.html
 
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  • #526
Post #522:
Since the depths of recession in December 2008, the average household net worth has climbed by $51,309 to a current level of $477,315
Does household net worth include human capital? If you would take age of retirement and subtract age of employability (e.g. 67 - 17 = 50), you could multiply that number by minimum wage or higher and come up with a lifetime earnings-projection. Using this number, you could extend credit lines to people and allow them to stimulate the economy by buying real-estate, cars, and other expensive items on credit. Sure, some would never make enough to pay off all their debt and would spend their lives indentured, but wouldn't the economic growth be worth a little enslavement? I mean, at least they would be able to feel like their "net worth" was higher than if they were free.
 
  • #527
brainstorm said:
Does household net worth include human capital? If you would take age of retirement and subtract age of employability (e.g. 67 - 17 = 50), you could multiply that number by minimum wage or higher and come up with a lifetime earnings-projection. Using this number, you could extend credit lines to people and allow them to stimulate the economy by buying real-estate, cars, and other expensive items on credit. Sure, some would never make enough to pay off all their debt and would spend their lives indentured, but wouldn't the economic growth be worth a little enslavement? I mean, at least they would be able to feel like their "net worth" was higher than if they were free.

Re: bolded: In fact that's some of what you'd calculate on an actuarial table for a number of purposes. Although it isn't usually advertised that way, what do you think drives insurance profits, credit cards, loans and especially mortgages? You're not describing an Orwellian nightmare, you're describing accounting.
 
  • #528
brainstorm said:
Does household net worth include human capital? If you would take age of retirement and subtract age of employability (e.g. 67 - 17 = 50), you could multiply that number by minimum wage or higher and come up with a lifetime earnings-projection. Using this number, you could extend credit lines to people and allow them to stimulate the economy by buying real-estate, cars, and other expensive items on credit. Sure, some would never make enough to pay off all their debt and would spend their lives indentured, but wouldn't the economic growth be worth a little enslavement? I mean, at least they would be able to feel like their "net worth" was higher than if they were free.

Please help me to understand.

If someone never works a day in their life and lives on Government benefits from cradle to grave - they have a negative net worth under your calculation?

I guess it could also be said they're indentured to the Government system - in this example?
 
  • #529
Naty1 said:
[...]
The solution is obvious: eliminate most federal taxes (to strip the federal government of its power) so they can't distribute (earmarks,etc) it via politics and darkroom deals, let States do the work and exercise their legitimate powers,
and constrain the federal government via enumerated powers specified in the Consiitution of the United Sates.
Clearly the lack of revenue ($1.6 trillion short) has not stopped the Congress from issuing earmarks, nor stopped it from doing much of anything.
 
  • #530
mheslep said:
Clearly the lack of revenue ($1.6 trillion short) has not stopped the Congress from issuing earmarks, nor stopped it from doing much of anything.

I strongly believe we need term limits in the House - and without lifetime benefits for serving a single term (or a portion thereof) - the past election meant nothing to these people.

Anyone the voters want to re-elect when their term has expired - would be eligible to run for the Senate. This might help turn the Senate (occasionally) as well.
 
  • #531
WhoWee said:
I strongly believe we need term limits in the House - and without lifetime benefits for serving a single term (or a portion thereof) - the past election meant nothing to these people.

Anyone the voters want to re-elect when their term has expired - would be eligible to run for the Senate. This might help turn the Senate (occasionally) as well.
Get started on the Article 1 amendments then, as we've been there already through legislation: http://en.wikipedia.org/wiki/U.S._Term_Limits,_Inc._v._Thornton" .
 
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  • #532
mheslep said:
Get started on the Article 1 amendments then, as we've been there already through legislation: http://en.wikipedia.org/wiki/U.S._Term_Limits,_Inc._v._Thornton" .

:smile: I don't think limits in the Senate are realistic. However, a focus on the House only - might be possible?
 
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  • #533
WhoWee said:
:smile: I don't think limits in the Senate are realistic. However, a focus on the House only - might be possible?
Not without a constitutional amendment. See the link.
 
  • #534
mheslep said:
Not without a constitutional amendment. See the link.

Never said it was easy - I said possible.
 
  • #535
nismaratwork said:
Re: bolded: In fact that's some of what you'd calculate on an actuarial table for a number of purposes. Although it isn't usually advertised that way, what do you think drives insurance profits, credit cards, loans and especially mortgages? You're not describing an Orwellian nightmare, you're describing accounting.
That's what makes it a poignant social critique instead of dystopic scifi.
 
  • #536
brainstorm said:
That's what makes it a poignant social critique instead of dystopic scifi.

I find that the latter is often a preview of the former, beyond which I see little difference.
 
  • #537
nismaratwork said:
I find that the latter is often a preview of the former, beyond which I see little difference.
Excellent point. So why did you differentiate between accounting and an Orwellian dystopia?
 
  • #538
brainstorm said:
Excellent point. So why did you differentiate between accounting and an Orwellian dystopia?

I didn't, I simply pointed out that you weren't delivering news... I'd say that most here grasp the situation that the average wage-slave or indebted 1st worlder finds themselves in. That reality has led to global economic chaos, so it may not be Orwellian at the moment, but it's a dystopia.
 
  • #539
nismaratwork said:
I didn't, I simply pointed out that you weren't delivering news... I'd say that most here grasp the situation that the average wage-slave or indebted 1st worlder finds themselves in. That reality has led to global economic chaos, so it may not be Orwellian at the moment, but it's a dystopia.

I don't think people think of debt and wage-labor as modernized indenturement. I think people realize that when banks assess the ability of a borrower to pay, that they are calculating their prospective wages over the period of the loan but what I don't think they consider is that when you add up all the value of someone's labor for their entire life, it is basically the same thing as pricing a slave on an auction block. Obviously there are some significant differences with slavery, but it's kind of sad that people live for wage-labor to pay for acquisition and consumptions. Some things in life are priceless, but that seems to be a shrinking part of too many people's lives.
 
  • #540
brainstorm said:
I don't think people think of debt and wage-labor as modernized indenturement. I think people realize that when banks assess the ability of a borrower to pay, that they are calculating their prospective wages over the period of the loan but what I don't think they consider is that when you add up all the value of someone's labor for their entire life, it is basically the same thing as pricing a slave on an auction block. Obviously there are some significant differences with slavery, but it's kind of sad that people live for wage-labor to pay for acquisition and consumptions. Some things in life are priceless, but that seems to be a shrinking part of too many people's lives.

I'm not sure this comparison is valid. If you walk into a bank and ask for a loan, yes they will inquire about your ability to pay. However, they are more interested in the asset you are using to secure the loan - my bank likes CD's - they own enough real estate, cars, boats, commercial buildings, and restaurant packages.

In your example, the bank might have loaned money to someone to buy the slave being offered - based upon the slave (assets) ability to produce income?
 
  • #541
Naty1 said:
Post #522:
OmCheeto said:
blah blah blah
Since the depths of recession in December 2008, the average household net worth has climbed by $51,309 to a current level of $477,315
blah blah blah


Household net work HAS never been anywhere near that high...I don't thion it has EVER exceed even $100K...Could not find a current figure but the government tracks that...here is one chart that seems in the ballpark:

http://en.wikipedia.org/wiki/File:Graphic.png
\Note the peak at about $65K.

Um...

Naty. I don't mean to be rude, but you really need to pay closer attention to the scales on graphs:

[PLAIN]http://upload.wikimedia.org/wikipedia/en/a/a3/Graphic.png
Naty's wiki Graphic.png graph

$55,000 x a BILLION is 55 trillion dollars.

55 trillion dollars divided by 115 million households is around 400+ thousand dollars per household.

I actually did the math last week wondering how incredibly rich this nation was. I was like; "Where's my $477,315?!"


115000000 = households
477315 = wealth number from original article
$54,891,225,000,000.00 = wealth of a nation

But of course, wealth is all relative to what people will pay for something. I was arguing the other day with a fellow investor about the value of gold, as I find the value of gold to be quite humorous.

He said; "The value of gold is what people are willing to pay for it."

I didn't argue the point, because he was, as everyone knows, correct.
 
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  • #542
WhoWee said:
I'm not sure this comparison is valid. If you walk into a bank and ask for a loan, yes they will inquire about your ability to pay. However, they are more interested in the asset you are using to secure the loan - my bank likes CD's - they own enough real estate, cars, boats, commercial buildings, and restaurant packages.

In your example, the bank might have loaned money to someone to buy the slave being offered - based upon the slave (assets) ability to produce income?

LOL. I actually went into banks to talk to loan officers following the credit meltdown. I asked them how much I could borrow and they told me it was purely dependent on my income (i.e. my ability to repay the loan). I asked them if things had changed, because I thought that collateral-value was a standard basis for lending and they told me that this was never the case. Maybe they were lying because of the stigma associated with "hoodwinking" at that moment in time, but I took them at their word. The assurance was, however, that lending is based on ability to repay the loan. You can use your imagination for how to establish how much someone is capable of repaying to establish their credit-maximum.
 
  • #543
It has always been the case, in the modern US at least, that the first thing banks want to see on an individual loan deal is a demonstrated income stream sufficient to paying back the loan. Banks don't want your collateral so that they have to get into house selling business or the gold coin collection selling business or the yacht selling business, though they are often forced to do so. They just want a monthly payment. It's occasionally possible to use collateral in lieu of income, but considerably more difficult.
 
  • #544
I helped prepare 3 different loan packages in the past few months, for small business owners. In each case, the bank wanted the loan secured with the cash each of them had on deposit. In previous years, 2 of them had borrowed from the same banks to purchase their land and build their buildings - based on business income at that point.

In my lifetime, the banks have never had better rates to borrow at, nor has it been so difficult to borrow (as a business owner).
 
  • #545
mheslep said:
It has always been the case, in the modern US at least, that the first thing banks want to see on an individual loan deal is a demonstrated income stream sufficient to paying back the loan. Banks don't want your collateral so that they have to get into house selling business or the gold coin collection selling business or the yacht selling business, though they are often forced to do so. They just want a monthly payment. It's occasionally possible to use collateral in lieu of income, but considerably more difficult.

In other words, banks want you to sell houses, businesses, gold coins, and yachts so they don't have to. Is this a form of indenturement? Of course, there are banks that do sell things for you so that you don't have to but those are called pawn shops and they give you a worse deal. Although the lenders facilitate your indenturement, they are only brokers that help you trade future labor for immediate gratification. Your actual owner(s) is/are the people whose savings you borrowed and whose investments pay your income. These might include you if your net-worth is greater than your debts.

What is "economic recovery" in light of the fact that people become slaves to debt? Is the economy recovered when everyone has sufficient means of income to pay off their debts and be free? If everyone did this, how would anyone save money? Doesn't having savings require someone else to borrow and pay back their debt with interest? Considering that some people are always going to save money requiring others to be held in debt, will the economy ever really "recover" for debters or will they always be caught in a cycle of repayment and new credit lines?
 
  • #546
brainstorm said:
What is "economic recovery" in light of the fact that people become slaves to debt? Is the economy recovered when everyone has sufficient means of income to pay off their debts and be free? If everyone did this, how would anyone save money? Doesn't having savings require someone else to borrow and pay back their debt with interest? Considering that some people are always going to save money requiring others to be held in debt, will the economy ever really "recover" for debters or will they always be caught in a cycle of repayment and new credit lines?


Interesting comment (I bolded your words) what do you suppose happens when Government becomes a slave to debt - along with a majority of it's citizens dependent upon (Government) subsidy?
 
  • #547
WhoWee said:
Interesting comment (I bolded your words) what do you suppose happens when Government becomes a slave to debt - along with a majority of it's citizens dependent upon (Government) subsidy?

A slave broker? Well, technically it depends on HOW the government mitigates the debt and how citizens respond to the mitigation. If, for example, the government would continue its policy of exempting incomes from taxation below a certain threshold, then citizens are not responsible for paying off the debt as long as they limit their incomes to below that amount.

On the other hand, if government decides to repay the debt by taxing the "wealthiest individuals," i.e. corporations, then the corporations will become the slave brokers by extracting the taxes they owe from their clientele and employees.

The question is what a "recovered" economy means and whether it's possible to achieve economic well-being without anyone having to be in debt.
 
  • #548
brainstorm said:
A slave broker? Well, technically it depends on HOW the government mitigates the debt and how citizens respond to the mitigation. If, for example, the government would continue its policy of exempting incomes from taxation below a certain threshold, then citizens are not responsible for paying off the debt as long as they limit their incomes to below that amount.

On the other hand, if government decides to repay the debt by taxing the "wealthiest individuals," i.e. corporations, then the corporations will become the slave brokers by extracting the taxes they owe from their clientele and employees.

The question is what a "recovered" economy means and whether it's possible to achieve economic well-being without anyone having to be in debt.

It seems reasonable that recovery would be possible in your example if the full production output capabilities of the citizens and businesses could be realized - that is, if EVERYONE capable of being productive was productive?
 
  • #549
WhoWee said:
It seems reasonable that recovery would be possible in your example if the full production output capabilities of the citizens and businesses could be realized - that is, if EVERYONE capable of being productive was productive?

But doesn't this imply that everyone has to totally submit their labor-productivity to monetary exchange? If I make a sandwich for myself, do I have to charge myself a dollar to make the economy "recover?"

What if everyone cooked all their own meals for themselves and all restaurants closed? Would that inhibit 'economic recovery' even if everyone was sufficiently nourished?
 
  • #550
brainstorm said:
But doesn't this imply that everyone has to totally submit their labor-productivity to monetary exchange? If I make a sandwich for myself, do I have to charge myself a dollar to make the economy "recover?"

What if everyone cooked all their own meals for themselves and all restaurants closed? Would that inhibit 'economic recovery' even if everyone was sufficiently nourished?
Yes, assuming you are using meals as an example of the economy as a whole. Because in general, the things bought have more value to the buyer than the labor expended by the buyer to buy them. That's because of the efficiency gained by mass production, as well as the fact that different people are more productive at different things.

For example, if the time it took for someone to cook their own meal cost them more in lost time doing something else than the added cost of buying the meal from someone else instead, everybody loses.

Every voluntary transaction in a free market creates wealth, since the product sold both has more value to the buyer than the price paid and the price paid has more value to the seller than the product sold. Otherwise the transaction would never occur, unless it involves force, fraud, charity, mistake, etc.
 

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