I hate to be a purveyor of doom (page 2)

Terry

Here in the United States the Government lives off tax dollars and spends like a drunken sailor. The interest rates are artificially manipulated by the Federal Reserve (i.e. Greenspan) and the theory that "we only owe it to ourselves" masks the danger of deficit spending.

Consequently, those not in the Billionaire bracket, (sadly most all of us!) live off of credit. Which means we are doing for ourselves what the government does using tax dollars.

So, we have a government spending money not yet made by people who are spending money not yet earned. It is all an artificial fantasyland.

Into this lovely dreamworld intrudes the reality of the REST OF THE PLANET. And, oh, how it hurts.

What was once a domestic problem is now a world problem due to the fact that our largest industries and corporations are world-invested and not merely parochial. We have no choice but to respond to what ____others___are doing. Americans are a binary lot. We see things black and white and respond with polices of the same hue (i.e. no grey areas allowed.)

The U.S. and the U.K. are locked in a death struggle with their economic wishful-thinking as the rest of the world sneers and sharpens carving knives. They dream of our collapse so they can feast on our (reasonably-priced-at-last) carcasses.

There is no DOOM in all this, however. Never is. Only shifts. Yes, shifts of tectonic strata that will send tidal waves and produces temblors in certain markets. Guess what? It will be the investors who take the bath when the waves hit; not the owners/operators.

I'll give one small example. Pension Funds. These will vanish. Older folk who depend on surviving off pension funds will discover the money "isn't there". Shareholders in mutual funds and stockholders alike will see $00.00 in the column marked "dividends/earnings".

Socialist countries who allow the producers to support the non-producers will drive out the industrious and the innovative from their midst as the burden of taxation chokes the life out of any semblance of profit. Where will they go? Where there is opportunity to escape governmental control.

The real meance in all of this is wage and price controls, tariffs, embargos, anti-trust laws, federal regulations and bureaucratic foot-shuffling.

All of this purported DOOM has happened a thousand times in the past and will again in the future. Only the person who refuses to operate on credit; the person who uses O.P.M. (other people's money) will survive the latest tidal wave of woe. All the rest are in for a drenching when the chits are called in for accounting.

T.

Crumpet

Mary I love the House Doctor! And yes it never ceases to amaze me what a pokey little flat in a nasty area will go for - but some people just want that london postcode so bad!

Terry I did read/hear about the whole recession thing, but how does it compare to the same period last year? Do people really start changing their spending habits because they hear their might be a recession - I'm not so sure. My surmise was that everyone is saving for their summer holidays and hence a drop in spending in the last month or two - least thats my excuse!

Terry

Terry I did read/hear about the whole recession thing, but how does it compare to the same period last year? Do people really start changing their spending habits because they hear their might be a recession - I'm not so sure. My surmise was that everyone is saving for their summer holidays and hence a drop in spending in the last month or two - least thats my excuse!

Without being black and white about it (ignore my photo) I'd point out that people born into a household that understands money are vastly different from the other sort of household that merely thinks money is something to spend and owe.

If you spend and owe you are witless about how money works and will continue to ignore trends in inflation or recession.

If you come from money you work the system by how you move money around to accrue benefit.

This polarized world in the U.S. is clearly defined by household debt. Few debtors avoid debt because they don't understand it. After all, a credit card allows you to spend money you haven't even earned yet based on risk assessment and offering tangible assets as security. Bankruptcy is a kind of GET-OUT-OF-JAIL-FREE card they play trump with when push comes to shove. In other words: cause and effect don't seem to work! This is unreal.

But, our economy is unreal by definition since it has controls on it. A "free" market is actually free.

A fellow named Keynes created this EVIL. If you don't know about him you might want to read this:

Keynesian Economics

Keynesian Economics is an economic theory proposed by British economist John Maynard Keynes. His major work came in 1936 in "The General Theory of Employment and Economics." His ideas created a revolution in the world of economics called the Keynesian Revolution. He proposed the idea that governments use deficit spending in order to bring about economic recovery.
His theory of deficit spending was used for economic recovery of the United States during the Depression. Keynes said that the depression was more that but one phase in the business cycle that would improve with time. He claimed that the depression was an equilibrium at a very low level and would persist unless enough spending occurred to get the system going. His solution was to have funds come from either the private sector through traditional forms of investment or from the public sector in the form of aggressive government spending programs and sizable tax cuts(Winkler20).
Franklin Roosevelt used Keynes's theory in order to help the country recover from the Depression in some of his New Deal program. Roosevelt's "emergency expenditures" was a humanitarian spending for relief and public works made up the bulk of government expenditure's and deficit until was preparations began in 1940(Collin4).
Keynesian theory continued on to influence the government. It came into play in solving post-war employment, which resulted in the Employment Act of 1946. It institutionalized Keynesianism into the government bureaucracy(Collin13). Keynes's theory provided a solution for the depression that helped in the recovery of the United States(Collins2). Through his idea of deficit spending, enough money would be put into the economy that spending would occur and the recovery process would begin................................................
This nonsense is at the root of our financial problems since it redefines cause and effect for ancillary purposes and defies reality.
T.

ballistic

Terry, I found that very interesting. I wonder if it is possible for the housing market to drop considerably without a recession. It seems recession is almost an inevitable result of the bull market.

Also, I wonder what is actually gpoing on behind a bull market, is the money migrating from poorer to richer people, until it (and credit) start to run out.

Terry

Terry, I found that very interesting. I wonder if it is possible for the housing market to drop considerably without a recession. It seems recession is almost an inevitable result of the bull market.
Also, I wonder what is actually gpoing on behind a bull market, is the money migrating from poorer to richer people, until it (and credit) start to run out.

Economics is the weather.

The weather is so many things happening simultaneously that it is a mere convenience (i.e. shorthand for "lie".) to think of it as a "this" or "that". It may appear to be; but, it isn't.

Meteorologists consider trends and histories and try to correlate the two. Sometimes this is illusory. If you've ever been surprised by forecasts that turn out wrong you'll understand this.

Economics is not one thing and to treat it as one thing is part of the problem.

There is no recession or inflation per se. There are effects on certain parts of the economy which have those indicators. Just as it can rain on my side of the street and not the neighbor's. Did it rain from my neighbor's standpoint, or not?

The most reasonable thing for an individual to do is understand how money works and treat all transactions from a personal point of view. The experts are just lucky until they are wrong and then new "experts" take the stage.

T.

Carmel

Geeeze Terry! For a minute I thought You Know was back! Whether you are right or wrong, I'm glad I don't owe anyone anything and have income from rental properties.....

carmel

ballistic

Geeeze Terry! For a minute I thought You Know was back! Whether you are right or wrong, I'm glad I don't owe anyone anything and have income from rental properties.....

Thought you was going to say "Glad I don't owe Terry money"! LOL

avishai

Only the person who refuses to operate on credit; the person who uses O.P.M. (other people's money) will survive the latest tidal wave of woe. All the rest are in for a drenching when the chits are called in for accounting.

As I am not as articulate, could you please explain the difference between O.P.M and credit for us, Terry?

Pleasuredome

if its true, then its great news.

Terry

As I am not as articulate, could you please explain the difference between O.P.M and credit for us, Terry?

Essentially the answer is: risk.

Credit is a loan made to you. The result of which you have to pay pay the lender plus interest and penalty and you risk your assets if you default.

O.P.M. (Other People's Money) is investment on the part of persons seeking a profitable venture. They risk loss and you don't.'

When I worked in Los Angeles I met a lot of movie industry people who were on the fringe. They would approach doctors, lawyers, (people with lotsa money) and get them to invest in movies straight to video. The movies were never intended to succeed at the box office. They were expected to fail. Pretty much the same plot as THE PRODUCERS. With a failure, the producer kept the money. A success would mean they had to pay people back. The investors claimed a tax benefit and business loss.

It is possible, of course, to have legitimate business funded by OPM. It beats credit for darned sure.

T.

I hate to be a purveyor of doom

Keynesian Economics

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