This gives an opening for small scale producers and entrepreneurs to get the market functioning again. And small business employs more people than big business, so it starts to build momentum.
When people don’t have jobs, and their savings have been removed, and the market has lost 80% of its value, then what do entrepreneurs use as capital to start that business. The Great Depression proved you can’t make anything out of dust, or the air.
Small businesses cannot borrow money to stay in business and keep their employees. The numbers are growing fast in unemployment....unless Obama stops being stubborn and recalls this unrealistic stimulus, budget and makes the right decisions this economy will not wait.
The government can’t exist without taxes, and if people don’t make paychecks they can’t pay anyone. It’s a codependent economy. Wall Street is Main street, and the two cannot be seperated...you hit one hard, and the other is hit hard. We are just beginning to see this downward spiral because the free market system cannot work in this socialist environment, where it is handcuffed by government.
Pumping money into this might give a bump, but the crash later would be even harder than now...but any bump up will be temporary unless handled correctly.
This is post-WWII economy thinking. “Easy credit” was an experimental concept, and it has failed. Small business used savings to get started, and used income to grow, not credit, since Biblical times.
So we have to get back to business concepts that work. Credit is not for those who need credit. It should only be offered to those who can back it with 100% collateral, and that collateral should always be appraised ahead of time.
Even credit cards should be more like debit cards. They offer convenience and more security than cash, but not “really” credit. Most people should never have credit. Getting a mortgage should be very hard, as it used to be.
At the end of each month, people get a paycheck. At the start of the new month, they use that paycheck to pay their *next* month’s rent. Everything else they put into savings, to pay expenses as they come. And if they run out of money, they do without until they get more. Except for the last 50 years, this is how things worked.
Investment is only for the wealthy. The only investment most people had was the interest they earned from bank savings. The big money was in bank Certificates of Deposit.
It’s not impossible to live this way.