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Obama promises more than 600,000 stimulus jobs

Default sounds like a better option to me than inflation.

Default is a sign of desperation.


Inflation affects everyone, default affects those people who made bad loans and the people who took out the bad loans.

Inflation will increase the dollar denominated value of assets, deflation will do the opposite. Most big ticket items, or high end capital goods are financed, therefore carry a fixed cost. Deflation (ongoing default) will actually starve the buying power out of everyone who has contractually obligated debt.


You could argue that this would freeze up capital, but why shouldn't it be hard to get?

No, it would cause prices to fall, and then freeze up credit. And its all about credit.

This way only those most trustworthy would get the capital and we invest in those strongest areas of the economy.

No.... What you are describing will cause another liquidity trap. If people are afraid prices are going to continue to fall, purchases through capital or credit will diminish; even if consumers/investors have the ability to do so.
 
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^^You are not a libertarian. Seriously. You're advocating huge government interventionism. I'll answer your claims, but how do you reconcile what you just said and calling yoursle a libertarian?
 
^^You are not a libertarian. Seriously. You're advocating huge government interventionism. I'll answer your claims, but how do you reconcile what you just said and calling yoursle a libertarian?

I think your missing what we both are saying.

Under our current economic situation, state capitalism, the government must do these things otherwise it ends in a giant cluster ****.

That does not mean that we want it that way. I'm not sure of Goldenboys specific wants as far as the economy goes so I can't answer it for him.

Free market capitalism and state capitalism are two totally different animals.

We live in a state capitalist system.

[ame=http://en.wikipedia.org/wiki/State_capitalism]State capitalism - Wikipedia, the free encyclopedia[/ame]
 
^^That's nothing more than fascism, it's not capitalism.
 
^^You are not a libertarian. Seriously. You're advocating huge government interventionism. I'll answer your claims, but how do you reconcile what you just said and calling yoursle a libertarian?

Ideology and practicality do not always go hand in hand. I have witnessed in one year, several close friends and family members lose 50% plus in their investment/retirement accounts as well as steep declines in the values on their homes. Most forum vets will vouch that before Oct 2008, i was the most bull headed free markets guy there was. That period taught me something; the system is built to require government intervention. As HG and others stated, the majority of all entrepreneurship, commerce, and industry require state intervention to function on the long and short run.

Many free market pundits (including myself) were predicting hyper inflation back in late 2007, as a result of the sub prime mess. The exact opposite came true; asset values tumbled. And here you are prescribing policy that wreaks of a deflationary spiral.

If you are a contrarian investor, then free market ideology will most likely serve you well. If you are a college professor, market orientated economics/finance can help you provide some interesting course material. But if you are an average American, who has children and a long list of future liabilities; free markets equate to a vast array of uncertainty. Mass uncertainty will cause wide spread panic. Telling people to buy gold and stock pile food and ammunition has been a favorite for many so called libertarians.

I on the other hand do not desire panic, and do not want to stock pile for economic collapse. I want to make money, and live a happy life. That is the type of libertarian i am. The fear boat left port back in October....:2wave:

You said you would respond to my initial reply. I am waiting....
 
I don't think that word "fascism" means what you think it does.

It means exactly what I think it does when you are talking about the economic aspect of it.
 
Ideology and practicality do not always go hand in hand. I have witnessed in one year, several close friends and family members lose 50% plus in their investment/retirement accounts as well as steep declines in the values on their homes. Most forum vets will vouch that before Oct 2008, i was the most bull headed free markets guy there was. That period taught me something; the system is built to require government intervention. As HG and others stated, the majority of all entrepreneurship, commerce, and industry require state intervention to function on the long and short run.

But history does not show that.

Many free market pundits (including myself) were predicting hyper inflation back in late 2007, as a result of the sub prime mess. The exact opposite came true; asset values tumbled. And here you are prescribing policy that wreaks of a deflationary spiral.

No libertarian would fall for that deflationary spiral tripe. Inflation is still coming. It's an increase in the money supply, which we have, now we just need a fall in confidence. Deflation isn't all that bad anyway.

If deflationary spiral were true, then people would never buy computers. It's the same concept. Computers become obsolete in 2 years, and technology is always rapidly improving. Yet people bite the bullet and buy computers. Same with deflation.

If you are a contrarian investor, then free market ideology will most likely serve you well. If you are a college professor, market orientated economics/finance can help you provide some interesting course material. But if you are an average American, who has children and a long list of future liabilities; free markets equate to a vast array of uncertainty. Mass uncertainty will cause wide spread panic. Telling people to buy gold and stock pile food and ammunition has been a favorite for many so called libertarians.

And government intervention is unstable, a waste of resources, and decreases our productive capabilities. Increasing production helps the poor the most.

I on the other hand do not desire panic, and do not want to stock pile for economic collapse. I want to make money, and live a happy life. That is the type of libertarian i am. The fear boat left port back in October....:2wave:

You said you would respond to my initial reply. I am waiting....

I was just waiting for you to respond, but you still don't sound like any libertarian.
 
Default is a sign of desperation.

That doesn't mean that it shouldn't happen.

Inflation will increase the dollar denominated value of assets, deflation will do the opposite. Most big ticket items, or high end capital goods are financed, therefore carry a fixed cost. Deflation (ongoing default) will actually starve the buying power out of everyone who has contractually obligated debt.

So we will have increased savings and only the best companies will be able to produce. Sounds good to me.

No, it would cause prices to fall, and then freeze up credit. And its all about credit.

Maybe if you fall for a Keynesian fallacy. It's not all about credit. We've had too much credit and that is what has caused our problems.

No.... What you are describing will cause another liquidity trap. If people are afraid prices are going to continue to fall, purchases through capital or credit will diminish; even if consumers/investors have the ability to do so.

If everyone is buying and no one is saving then we will never invest in the factors of production. That's a terrible idea.
 
But history does not show that.

Care to provide a frame of reference?

No libertarian would fall for that deflationary spiral tripe. Inflation is still coming. It's an increase in the money supply, which we have, now we just need a fall in confidence. Deflation isn't all that bad anyway.

Inflation is, and always was, a monetary phenomenon. Until banks begin lending their excess reserves in hordes, inflation is not a short term worry. Falling stock prices, real estate prices, and wages is good:confused:

If deflationary spiral were true, then people would never buy computers. It's the same concept. Computers become obsolete in 2 years, and technology is always rapidly improving. Yet people bite the bullet and buy computers. Same with deflation.

The % of computer purchases that are obtained with credit versus the % of real estate purchases bought with credit are most likely inverses. You're talking peanuts, im talking elephants.

And government intervention is unstable, a waste of resources, and decreases our productive capabilities. Increasing production helps the poor the most.

When did i say it was stable (strawman)?

I was just waiting for you to respond, but you still don't sound like any libertarian.

And you sound like a new libertarian. :2wave:
 
That doesn't mean that it shouldn't happen.

Do you own real estate? If so, why do desire for the value of your property to go down? That is what massive defaults create.

So we will have increased savings and only the best companies will be able to produce. Sounds good to me.

Even Toyota is reporting record losses (for the first time in their history). It sounds nice in theory, but in practice mass liquidations will create utter chaos.

Maybe if you fall for a Keynesian fallacy. It's not all about credit. We've had too much credit and that is what has caused our problems.

Stable credit markets allow for production to continue. Believe it or not, there are people who are able to obtain credit and make their payments. Credit should not be offered to everyone, but this is another subject in itself.

If everyone is buying and no one is saving then we will never invest in the factors of production. That's a terrible idea.

When i buy a new 900 CFM air compressor, that is considered a business investment. When someone hires me to apply a protective coating on their cement plant, that is a business investment. The situation is far more complex than you are giving it credit (pun intended):rofl My revenue is down more than 1/2 since last July when i officially incorporated.

Remember, people cannot save if they do not have an income stream. People are not buying as much because their future income expectations are in jeopardy. Your solution is the exact opposite needed. Why punish everyone for the mistakes of a few?
 
Care to provide a frame of reference?

Reference the US before the Depression. Even better go back to before Roosevelt.

Inflation is, and always was, a monetary phenomenon. Until banks begin lending their excess reserves in hordes, inflation is not a short term worry. Falling stock prices, real estate prices, and wages is good:confused:

You think banks have an excess? I can assure you they don't. And we need falling prices because all prices will not fall at the same rate. We will get prices that are closer to market prices. A correction.

The % of computer purchases that are obtained with credit versus the % of real estate purchases bought with credit are most likely inverses. You're talking peanuts, im talking elephants.

It's the exact same mentality.

When did i say it was stable (strawman)?

Why would you advocate for something that isn't stable?

And you sound like a new libertarian. :2wave:

You sound a lot more like a Keynesian.
 
Do you own real estate? If so, why do desire for the value of your property to go down? That is what massive defaults create.

Everyone's property values will fall. What's the problem? Besides, you shouldn't have a risk that you take be guaranteed. You buy property knowing that the value may fall. If you don't want to take that risk, then don't buy the property.

Even Toyota is reporting record losses (for the first time in their history). It sounds nice in theory, but in practice mass liquidations will create utter chaos.

So if we didn't bail out auto companies we would have no new cars in the world? Because that's basically what you're going for.

Stable credit markets allow for production to continue. Believe it or not, there are people who are able to obtain credit and make their payments. Credit should not be offered to everyone, but this is another subject in itself.

You're not really answering my argument here.

When i buy a new 900 CFM air compressor, that is considered a business investment. When someone hires me to apply a protective coating on their cement plant, that is a business investment. The situation is far more complex than you are giving it credit (pun intended):rofl My revenue is down more than 1/2 since last July when i officially incorporated.

Remember, people cannot save if they do not have an income stream. People are not buying as much because their future income expectations are in jeopardy. Your solution is the exact opposite needed. Why punish everyone for the mistakes of a few?

People are saving more because they are afraid of losing their incomes. This would lower interest rates in a market. However, we're trying to inflate a popped bubble with these artificially low interest rates.

It's not as if the money does nothing when it is saved.
 
Goldenboy219 said:
Inflation is, and always was, a monetary phenomenon. Until banks begin lending their excess reserves in hordes, inflation is not a short term worry.

That depends on what you mean by "short term". I see no reason why this will not start circulating within a few months or a year as banks' assets start thawing.
 
Reference the US before the Depression. Even better go back to before Roosevelt.

So those were globally diverse economies? Very bad comparison....

You think banks have an excess? I can assure you they don't.

I know, fractional reserve banking. But really; the banks have unparalleled lending capacity.


And we need falling prices because all prices will not fall at the same rate. We will get prices that are closer to market prices. A correction.

A panic induced contraction of economic activity is not your standard "correction". Last fall was only a shadow of what fear can produce.

It's the exact same mentality.

No, it is a bad comparison.

Why would you advocate for something that isn't stable?

Listen... Mass liquidation is not an option. They will never let it get like that again, no matter how bad you want it. No government that is elected will allow it, period! Yeah, a complete system would be ideologically good, but in reality, that is how Hitlers rise to power.

You sound a lot more like a Keynesian.

You watch your parents lose half of their retirement, and reality sets in. Saying "i told you so" just isn't an option, especially when you see the changes in attitude, loss of sleep, and anxiety; while i have profited (i was buying puts on everything in early August) from their loss.
 
That depends on what you mean by "short term". I see no reason why this will not start circulating within a few months or a year as banks' assets start thawing.

And hopefully they can pull it out of the system without shocking the markets.
 
Everyone's property values will fall. What's the problem? Besides, you shouldn't have a risk that you take be guaranteed. You buy property knowing that the value may fall. If you don't want to take that risk, then don't buy the property.

Tell me, when have assets fallen so sharply before in history? Mass foreclosures are a bad thing. But if a guy/gal bought a $300k house under the premise that they were going to make $75k/year; then not only does their property value fall to $200k, but they have lost their job as well: it is a ****ed situation no matter how you stack it. This is the reality for many Americans.

So if we didn't bail out auto companies we would have no new cars in the world? Because that's basically what you're going for.

Dude, you have to chill out with the strawman business. The money given to GM and Chrysler could have gone to help build innovative new age automotive companies. Hybrid Vehicle Manufacturing and Services Company - Bright Automotive

You're not really answering my argument here.

You have none. You stated it is not about credit, when the markets have shown otherwise.

People are saving more because they are afraid of losing their incomes.This would lower interest rates in a market.

Your synthesizing two ideas without much reasoning behind it. People are afraid of losing their incomes because jobs are being lost. Jobs are being lost because demand for goods and services has dropped off considerably.

When money is either restricted (not available) or is being remove from transactional accounts, this lowers the banks ability to make loans. LIBOR went off the charts in October for this very reason, people were pulling their money from banks, causing a freeze in credit availability. Saving can be considered paying off debt, which has been the "in thing" as of late. The amount of money being deposited into savings accounts is nowhere near the amount being removed from transactional (checking) accounts. Without quantitative easing from the Fed, assets would have continued to spiral downward.

However, we're trying to inflate a popped bubble with these artificially low interest rates.

No, we are trying to revive a $3 trillion credit market, which the Fed is propping up with a little more than 1/3 the previous available liquidity. Credit is the life blood to all developed economies.

It's not as if the money does nothing when it is saved.

Saving is good, so is living within our means. But the system will not go into punish mode.
 
So those were globally diverse economies? Very bad comparison....

Just because you don't like it? It's more complex, but the same principles hold. In fact, increased complexities are an argument for less intervention because government will be less able to understand all of it.

I know, fractional reserve banking. But really; the banks have unparalleled lending capacity.

Sure, but fractional reserve is what got a lot of banks in trouble and that's why a lot are afraid to lower their reserve ratios (or is it raise, either way, you know what I mean). It's fraud and the free market would be clearing it up if not for government support of the corrupt system.

A panic induced contraction of economic activity is not your standard "correction". Last fall was only a shadow of what fear can produce.

People will still buy. You act as if we'll go back to the stone ages.

No, it is a bad comparison.

It's the same human mentality. It's the way that people think. You have no reason to say that it is a bad comparison other than it is not convenient for you.

Listen... Mass liquidation is not an option. They will never let it get like that again, no matter how bad you want it. No government that is elected will allow it, period! Yeah, a complete system would be ideologically good, but in reality, that is how Hitlers rise to power.

Just because governments won't let it happen doesn't mean it shouldn't. And besides, Hitler got to power from the collapse of the Weimar Republic. What doomed the Weimar Republic? Inflation from an interventionist government. Sound familiar?

You watch your parents lose half of their retirement, and reality sets in. Saying "i told you so" just isn't an option, especially when you see the changes in attitude, loss of sleep, and anxiety; while i have profited (i was buying puts on everything in early August) from their loss.

My parents have lost just about all of their retirement because it was all in BofA stock. So don't tell me that it hasn't hit home. However, there is a risk in stocks and if you fail you don't deserve to have someone back you up. If you don't want to fail then don't take the risk.
 
Tell me, when have assets fallen so sharply before in history? Mass foreclosures are a bad thing. But if a guy/gal bought a $300k house under the premise that they were going to make $75k/year; then not only does their property value fall to $200k, but they have lost their job as well: it is a ****ed situation no matter how you stack it. This is the reality for many Americans.

People need to learn that there are risks. It's about time that they learn that failure can happen to them.

Historical example: look at home values in the late 19th century. It's eerily similar to what we are going through now.

Dude, you have to chill out with the strawman business. The money given to GM and Chrysler could have gone to help build innovative new age automotive companies. Hybrid Vehicle Manufacturing and Services Company - Bright Automotive

You're the one talking about how all of these auto manufacturers are doing poorly so they need to be bailed out. Well why? We will get new auto manufacturers if these ones go out of business. More than likely they will be better run too. They would also be more sensitive to our demands unlike the current companies.

You have none. You stated it is not about credit, when the markets have shown otherwise.

Credit caused the problem. A lack of credit right now is a good thing. It will come back when people start saving more (it would in a free market).

Your synthesizing two ideas without much reasoning behind it. People are afraid of losing their incomes because jobs are being lost. Jobs are being lost because demand for goods and services has dropped off considerably.

When money is either restricted (not available) or is being remove from transactional accounts, this lowers the banks ability to make loans. LIBOR went off the charts in October for this very reason, people were pulling their money from banks, causing a freeze in credit availability. Saving can be considered paying off debt, which has been the "in thing" as of late. The amount of money being deposited into savings accounts is nowhere near the amount being removed from transactional (checking) accounts. Without quantitative easing from the Fed, assets would have continued to spiral downward.

Except that can't happen. The idea that all economic activity will just cease is insane. That has only happened with hyperinflation, and even then people will switch to barter. Economic activity continues.

No, we are trying to revive a $3 trillion credit market, which the Fed is propping up with a little more than 1/3 the previous available liquidity. Credit is the life blood to all developed economies.

But credit without the real backing is a bubble. It's not sustainable and it shoudln't be pursued because of the inevitable crash.

Saving is good, so is living within our means. But the system will not go into punish mode.

People are being punished for taking out bad loans. Banks don't want to lend as much. Only the most worthwhile will get money and others will save more. This correction will lead to actual production from our economy, steering us away from a phony finance economy.
 
Just because you don't like it? It's more complex, but the same principles hold. In fact, increased complexities are an argument for less intervention because government will be less able to understand all of it.

No, because China was not the largest foreign holder of US Treasuries. Or, there was not massive government obligations. Or, Oil wasn't primarily produced by sovereign middle eastern countries. The reasons why it is a bad comparison/apples to oranges/off base, whatever, are numerous. But... The main reason why markets were so turbulent prior to the 1950's is due to access to accurate information and reports.

If anything, the argument for free markets is technology orientated. I believe free(er) markets are imminent, but that is still years away.

Sure, but fractional reserve is what got a lot of banks in trouble and that's why a lot are afraid to lower their reserve ratios (or is it raise, either way, you know what I mean). It's fraud and the free market would be clearing it up if not for government support of the corrupt system.

No, everything would have crashed into oblivion.

People will still buy. You act as if we'll go back to the stone ages.

It was very close.

It's the same human mentality. It's the way that people think. You have no reason to say that it is a bad comparison other than it is not convenient for you.

Its not convenient for you to use faulty comparisons. Spending 30 years to purchase something is quite different than spending a grand on a new laptop. Come on....

Just because governments won't let it happen doesn't mean it shouldn't.

Here is why it shouldn't. Millions of people do not need to face unnecessary suffering.

And besides, Hitler got to power from the collapse of the Weimar Republic. What doomed the Weimar Republic? Inflation from an interventionist government. Sound familiar?

Wiemar inflation was primarily due to ungodly war reparations, and following 1929 it fell in line with most nations that were shaken by the depression.

My parents have lost just about all of their retirement because it was all in BofA stock. So don't tell me that it hasn't hit home. However, there is a risk in stocks and if you fail you don't deserve to have someone back you up. If you don't want to fail then don't take the risk.

All assets will go up in the long run, but the psychological toll it places on the populace not only non desirable, but unnecessary.
 
My parents have lost just about all of their retirement because it was all in BofA stock. So don't tell me that it hasn't hit home. However, there is a risk in stocks and if you fail you don't deserve to have someone back you up. If you don't want to fail then don't take the risk.

Man, you gotta tell your parents to diversify.

Thats some face palm stuff there. :doh
 
People need to learn that there are risks. It's about time that they learn that failure can happen to them.

Not everybody is a failure.

Historical example: look at home values in the late 19th century. It's eerily similar to what we are going through now.

:shock:

You're the one talking about how all of these auto manufacturers are doing poorly so they need to be bailed out.

Where have i said this? Link please:2wave:

Credit caused the problem. A lack of credit right now is a good thing. It will come back when people start saving more (it would in a free market).

The economy is run on credit, nearly all business operations are funded on short term credit. Your lack of knowledge of how the real economy works dilutes your arguments for free markets. Credit is everything.

Except that can't happen. The idea that all economic activity will just cease is insane. That has only happened with hyperinflation, and even then people will switch to barter. Economic activity continues.

During the great depression, the country faced a massive deflation. Because the Fed at the time pulled money out of the economy, real recovery took nearly two decades. Now there is a massive deflation of assets that use financing (credit) to purchase and produce. Tightening of credit will cause prices to fall even further (just like the GD). There is no reason for this to happen.

But credit without the real backing is a bubble. It's not sustainable and it shoudln't be pursued because of the inevitable crash.

And this leads to inflation right:roll: BTW, a bubble is extreme overvaluation in which the exit from the market is unattainable for the majority of investors.


People are being punished for taking out bad loans. Banks don't want to lend as much. Only the most worthwhile will get money and others will save more. This correction will lead to actual production from our economy, steering us away from a phony finance economy.

My parents did not make or take bad loans, and can pay their debts just fine. Why should they have to feel the brunt of this pain: because of the stupidity of a few, and the fraud of even fewer? Get your head out of the clouds and take a peek at reality.
 
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Man, you gotta tell your parents to diversify.

Thats some face palm stuff there. :doh

They're blue chips, they're supposed to be secure. At least, that's what they led everyone to believe.

At least this is teaching everyone that there are no sure things in life.
 
No, because China was not the largest foreign holder of US Treasuries. Or, there was not massive government obligations. Or, Oil wasn't primarily produced by sovereign middle eastern countries. The reasons why it is a bad comparison/apples to oranges/off base, whatever, are numerous. But... The main reason why markets were so turbulent prior to the 1950's is due to access to accurate information and reports.

If anything, the argument for free markets is technology orientated. I believe free(er) markets are imminent, but that is still years away.



No, everything would have crashed into oblivion.



It was very close.



Its not convenient for you to use faulty comparisons. Spending 30 years to purchase something is quite different than spending a grand on a new laptop. Come on....



Here is why it shouldn't. Millions of people do not need to face unnecessary suffering.



Wiemar inflation was primarily due to ungodly war reparations, and following 1929 it fell in line with most nations that were shaken by the depression.



All assets will go up in the long run, but the psychological toll it places on the populace not only non desirable, but unnecessary.

I'm not responding to any of this. These are all just claims without any theoretical or statistical reasoning.
 
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