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Where is all the money coming from?

Was it wise of western governmetns to pump the economy with "money", consequences?

  • Yes it was wise

    Votes: 2 18.2%

  • I have no opinion on that

    Votes: 0 0.0%

  • I have no idea really

    Votes: 0 0.0%

  • No, it was not wise

    Votes: 6 54.5%

  • It was disasterous

    Votes: 1 9.1%

  • It will save the economy

    Votes: 1 9.1%

  • It will help the economy

    Votes: 2 18.2%

  • It will do nothing

    Votes: 0 0.0%

  • It will be bad for the economy

    Votes: 2 18.2%

  • The economy will collapse as a result

    Votes: 2 18.2%
  • Total voters
    11
Maximus Zeebra

Maximus Zeebra

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Both in Europe and the US and on a smaller scale around the world governments and central banks have bailed out banks and companies by guaranteeing them and paying them to stat afloat and avoid bankrupcy.. Western governments have put trillions into this purpose, already indebted governments are clearly coming up with money quickly, but where does it all comes from?

And is the bailout in dollars and euroes essentially only hurting the economies in the long term by fuelling the fire with high flamables that will only burn up the fundmamentals even quicker? Have we seen the true effect of the bailouts and the government actions? Which governments are in reality bankrupt by now(except Italy)?
We all have to remember that this situation in part stem from the global lack of trust for the US economy for years, because of massive debt in government, trade and the people, the same thing that has completely ruined the Italian economy.. What happens when a country which essentially have no money spends more than tax revenues to save the economy? Who bares the costs, the people? What will happen?


The question is this.. Was it wise of western governments to interfere with the fragile market? What wil the consequences be?
 
You know when you, say, your computer gets an error, and you try to fix it yourself, and the computer becomes erratic, crashes, etc. and it ends up even worse than before? Well, thats kind of like what happens when you have governments interfere with the market.
 
DarkWizard12 said:
You know when you, say, your computer gets an error, and you try to fix it yourself, and the computer becomes erratic, crashes, etc. and it ends up even worse than before? Well, thats kind of like what happens when you have governments interfere with the market.
Click to expand...

Yeah... But still.. Do anyone know where the money is coming from? Who is paying this? Is the money just printed? In that case the effects will definetely be very bad..
 
Maximus Zeebra said:
Yeah... But still.. Do anyone know where the money is coming from? Who is paying this? Is the money just printed? In that case the effects will definetely be very bad..
Click to expand...

well of course it is printed...but it is backed by the productivity of the USA's industries....which has been eroding for decades as jobs go overseas....
that is as far as I can go, the rest is doodoo economics.:shock:
 
DarkWizard12 said:
You know when you, say, your computer gets an error, and you try to fix it yourself, and the computer becomes erratic, crashes, etc. and it ends up even worse than before? Well, thats kind of like what happens when you have governments interfere with the market.
Click to expand...

To continue the analogy, on the other hand, if you don't fix your computer, you later find your hard drive has been irrevocably corrupted and your entire system is ****ed.

While I don't always get it right the first time, when my computer is broken I eventually fix it.
 
DarkWizard12 said:
You know when you, say, your computer gets an error, and you try to fix it yourself, and the computer becomes erratic, crashes, etc. and it ends up even worse than before? Well, thats kind of like what happens when you have governments interfere with the market.
Click to expand...

Some of the money comes from increased Govt debt. Finding funding hasn't been particularly difficult at the moment because everyone is pulling money out of investments and buying th safest things they can, ie Govt debt. That doesn't necessarily increase the total money supply.

Fed direct investment or lending is fiat money. That will have inflationary effects. However, with the economy in a deflationary mode at the moment, inflation is not the currect overriding concern.
 
Maximus Zeebra said:
Yeah... But still.. Do anyone know where the money is coming from? Who is paying this? Is the money just printed? In that case the effects will definetely be very bad..
Click to expand...
They will either Borrow money, or print.
 
Iriemon said:
To continue the analogy, on the other hand, if you don't fix your computer, you later find your hard drive has been irrevocably corrupted and your entire system is ****ed.

While I don't always get it right the first time, when my computer is broken I eventually fix it.
Click to expand...
You missed the point by a huge long shot. Either way, the computer is ****ed. So, the moral, if you can't fix it yourself, how do you get it fixed?
 
DarkWizard12 said:
You missed the point by a huge long shot. Either way, the computer is ****ed. So, the moral, if you can't fix it yourself, how do you get it fixed?
Click to expand...

Given the alternative, I'll at least try to fix it rather than watch it sit there broken. I'm usually successful. Would you agree that it at least makes sense to try to fix it?
 
Iriemon said:
Given the alternative, I'll at least try to fix it rather than watch it sit there broken. I'm usually successful. Would you agree that it at least makes sense to try to fix it?
Click to expand...
Ok, pretend your in the United States Senate. Your 72 and can't even write an e-mail. Are you telling me that you could fix it yourself? Even if it was a critical error?

Now replace computer with economy and you get the effect.
 
DarkWizard12 said:
Ok, pretend your in the United States Senate. Your 72 and can't even write an e-mail. Are you telling me that you could fix it yourself? Even if it was a critical error?

Now replace computer with economy and you get the effect.
Click to expand...

Fortunately we didn't hire the 72 year old who can't even write an email to fix the computer! Now that would have been a pretty stupid thing to do, eh?

;)
 
Iriemon said:
Fortunately we didn't hire the 72 year old who can't even write an email to fix the computer! Now that would have been a pretty stupid thing to do, eh?

;)
Click to expand...
Yea, unfortunately, the people who you would hire to fix the computer, are crooks themselves.
 
DarkWizard12 said:
Yea, unfortunately, the people who you would hire to fix the computer, are crooks themselves.
Click to expand...

Well I'd have to see proof of that accusation. But to be honest, if he overcharges me a couple bucks but makes the computer work, I'm really not that upset about it.
 
UtahBill said:
well of course it is printed...but it is backed by the productivity of the USA's industries....which has been eroding for decades as jobs go overseas....
that is as far as I can go, the rest is doodoo economics.:shock:
Click to expand...

No, printing of money is suppose to be backed up by solid finances, surpluses.. Italy tried to back their debt and printing backed by their production, and we all know how that went.. In the end, the people are the ones who have to pay for this all I suppose? Trillions tranfered from the people to the banks, how nice, eh, and convenient?
 
Iriemon said:
Some of the money comes from increased Govt debt. Finding funding hasn't been particularly difficult at the moment because everyone is pulling money out of investments and buying th safest things they can, ie Govt debt. That doesn't necessarily increase the total money supply.

Fed direct investment or lending is fiat money. That will have inflationary effects. However, with the economy in a deflationary mode at the moment, inflation is not the currect overriding concern.
Click to expand...

Yes, but this is a problem is it not? It will shrink the money supply in the end, and the people end up paying for it all, correct?
 
Where is it coming from?

Us, our children, our grandchildren, our great-grandchildren...
 
Iriemon said:
Well I'd have to see proof of that accusation. But to be honest, if he overcharges me a couple bucks but makes the computer work, I'm really not that upset about it.
Click to expand...

How can you know this? How can you know the computer will work, when the problems are beyond the experts to fix, and they just try their best?
 
Maximus Zeebra said:
How can you know this? How can you know the computer will work, when the problems are beyond the experts to fix, and they just try their best?
Click to expand...

How do you know this? How do you know the computer won't work?

We do know it is broken and if we don't fix it ain't going to work.
 
Maximus Zeebra said:
Yes, but this is a problem is it not? It will shrink the money supply in the end, and the people end up paying for it all, correct?
Click to expand...

You mean expand the money supply?

Yes, there may ultimately be an inflationary consequence, as well as the Govt being even deeper in debt.
 
Iriemon said:
Well I'd have to see proof of that accusation. But to be honest, if he overcharges me a couple bucks but makes the computer work, I'm really not that upset about it.
Click to expand...
Who are you talking about?
 
Iriemon said:
You mean expand the money supply?

Yes, there may ultimately be an inflationary consequence, as well as the Govt being even deeper in debt.
Click to expand...

Will it? Printing money and increasing the money supply when the fundamentals of the economy is shrinking, will that not in the end shrink the money supply? I dont know, I can only imagine it will.. Governments have to tighten their budgets, people have to pay more for their stuff etc etc etc.
 
Maximus Zeebra said:
Will it? Printing money and increasing the money supply when the fundamentals of the economy is shrinking, will that not in the end shrink the money supply? I dont know, I can only imagine it will.. Governments have to tighten their budgets, people have to pay more for their stuff etc etc etc.
Click to expand...

Printing money expands the money supply. More money with a shrinking pool of goods means each good equates to more dollars, ie inflationary.

The deflationary problem we have now is that banks and investors are sitting on their money and not lending it. When banks lends money, the effect on the money supply is multiplied by the multiplier effect. The opposite is true when they call loans and don't lend the money. The money isn't in currency. And with overbuilt inventories, merchants are under pressure to cut costs, contributing to it.
 
chart


This is the dollar index against other currencies. It shows there is quite a bit of room to work with for the Fed to increase the money supply without de-valuing the currency to below normal levels.
 
Maximus Zeebra said:
Yeah... But still.. Do anyone know where the money is coming from? Who is paying this? Is the money just printed? In that case the effects will definetely be very bad..
Click to expand...

That is the question the politicians won't answer.

There are two ways of doing it:

1. Just print more money. Of course the consequence of this is inflation. Considering the size of the debt, which is in the trillions, the inflation will be massive--like Germany in the 1920's, and Argentina in more recent years.

2. This one is perhaps even worse--massive tax increases--either direct or indirect. They will be so massive, it will take many future generations to pay it off.

It's just one more example of government bailing out the big banks, big business, and worst of all, big government, on the backs of the small businesses and lower to middle income working people.

Now you choose which catastrophe you prefer.
 
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