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View Diary: Nobody could've predicted that slashing budgets crashes economies (151 comments)

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  •  delusion (0+ / 0-)

    Bad is never good until worse happens

    by dark daze on Fri Sep 30, 2011 at 08:51:08 PM PDT

    [ Parent ]

    •  printing comes with a price (0+ / 0-)

      it aint free.  With this type of printing you start to risk everything.

      http://www.youtube.com/...

      Bad is never good until worse happens

      by dark daze on Fri Sep 30, 2011 at 08:52:41 PM PDT

      [ Parent ]

      •  Only sometimes... (0+ / 0-)

        Right now, 'printing' money is pushing on a rope. If people were to willingly borrow -- and spend -- this money, then it could be different. Right now we're in a liquidity trap, and that changes many, many things.

        •  sometimes? (0+ / 0-)

          since wilson fucked up and let the Fed take over in the early 20th century.  The us dollar has lost 97% of its worth.

          Bad is never good until worse happens

          by dark daze on Sat Oct 01, 2011 at 09:01:43 AM PDT

          [ Parent ]

          •  And Yet Our Standard of Living (1+ / 0-)
            Recommended by:
            eyesoars

            Is 100 times higher.

            So what if the dollar is now worth a nickel relative to 1913?  WTF difference does that make ?

            You are drinking the Ron Paul koolaide and you are getting just as crazy as that lunatic.

          •  ... (0+ / 0-)
            The us dollar has lost 97% of its worth.

            And that's a good thing.

            A small inflation (and the U.S. has historically targeted a rate of 2%) gives economic actors incentive to invest extra moneys. If, instead, money goes into mattresses (often rational w/o inflation), an economy doesn't do well. In deflation (or w/o inflation), putting money into mattresses is rational, and the consequence is severe boom/bust cycles and generally depressed economies.

            (I'll also point out that the U.S. farm population has gone from > 1/3 to about 3%, yet we produce more food. Wage adjusted, consumers' buying power is substantially higher.)

            Gold/silver bugs obviously don't want inflation, but there's no known way to make economies work well without it.

        •  People would spend and allow the government (0+ / 0-)

          to spend too if they understood there was no cost down the line in higher taxes.

          But Kossacks have joined in the clamor with Obama and the Dems for higher taxes which scares everyone into saving money instead of spending.

          •  This doesn't make sense (0+ / 0-)

            We do need higher taxes. We have two growing categories of people right now who are causing troubles: (a) people who have money, but don't see any place to invest and don't want to spend, and (b) people who need to spend but have no money.

            Economies only work money moves. Whenever actors in the economy can trap/save money without bound, economies will fail.

            •  There is NO NEED for higher taxes (0+ / 0-)

              The federal government can borrow money for 10 years at less than 2% interest, which is less than the rate of inflation.  Therefore, it is FREE money.

              Yes, we need to get everyone spending money to create demand that will mean new jobs.  But raising taxes is not necessary at all.  

              In fact, we need to give people tax incentives to buy houses, cars, appliances, etc. to pump up consumer demand which is 70% of our GDP.

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