Skip to comments.$2 Trillion Underground Economy May Be Recovery's Savior
Posted on 04/26/2013 5:32:59 PM PDT by 2ndDivisionVet
The growing underground economy may be helping to prevent the real economy from sinking further, according to analysts.
The shadow economy is a system composed of those who can't find a full-time or regular job. Workers turn to anything that pays them under the table, with no income reported and no taxes paid especially with an uneven job picture.
"I think the underground economy is quite big in the U.S.," said Alexandre Padilla, associate professor of economics at Metropolitan State University of Denver. "Whether it's using undocumented workers or those here legally, it's pretty large."
"You normally see underground economies in places like Brazil or in southern Europe," said Laura Gonzalez, professor of personal finance at Fordham University. "But with the job situation and the uncertainty in the economy, it's not all that surprising to have it growing here in the United States."
Estimates are that underground activity last year totaled as much as $2 trillion, according to a study by Edgar Feige, an economist at the University of Wisconsin-Madison.
That's double the amount in 2009, according to a study by Friedrich Schneider, a professor at Johannes Kepler University in Linz, Austria. The study said the shadow economy amounts to nearly 8 percent of U.S. gross domestic product.
Much of that money goes into cash registers, said Gonzalez, as personal consumption has risen since the recession.
"There is consumer spending in the short term, with people having money even if it's not reported, and that's boosting the economy," she said. "But in the long run, an underground economy is telling us that things have to change."(continued)
(Excerpt) Read more at cnbc.com ...
The ‘Rats will try to find a way to tax it to death.
This is one of the reason they hate bitcoin. Every cent in and out of a bank is tracked. They can’t track bitcoin.
I am sure that is much practiced here, such as with scrape metal scavengers.
Black markets thrive under communism.
Sounds a lot like Mexico.
Bitcoin is a sort of rebellious currency however its really just a pyramid scheme and really not a good example IMHO. Its just going to crash like all the other fiat currencies and a few early adopters will make out like bandits.
Anybody else notice that it seems more and more that the Obama regimes playbook was written by Ayn Rand, but the regime seems to believe that Eubanks, Scudder, Boyle, Mouch, and James Taggart are the “good guys?”
It’s almost as if they didn’t read the book all the way to the end...
Food is the ultimate currency.
WASHINGTON | Mon Apr 23, 2007 2:54pm EDT
(Reuters) - U.S. spending may have been lifted by close to 3 percent a year in recent years as owners tapped the enhanced values of their homes for cash, according to a paper coauthored by former Federal Reserve Chairman Alan Greenspan.
When the hell are we going to get back to a real economy?
Time for those aged 1960s Marxist-Alinsky campus radical, spoiled brats and their ideological issue to be kicked out of Washington!
Void the bowels of Washington, D.C.
I've not met a contractor in over two years who isn't willing to barter or work for cash. Barbers, hairdressers, dog groomers, landscapers, movers and handymen almost all put plenty of cash straight into their pockets with no paper work involved. I've even met a couple of dealership mechanics who make auto repair hose calls on the weekend.
The guy who cleans my pool offered me two years cleaning plus part of the new pool cover in barter for a Harley Sportster.
Was kewel with me. Only so many sports at one time and nothing to the governator.
I visit two different medical specialists who are giving significant discounts for cash. Not sure how it is booked, but it makes us both happy and I don’t ask questions.
Bitcoin is a vaporware ponzi scheme. I would prefer being paid in American Gold Eagles.
We need something that governments are prohibited from touching under penalty of death.”
My new handgun.
Over 30 years ago, as a young, naïve, wet-behind-the-ears congressional staffer, I worked a set of oversight hearings on the underground economy. The learned estimate at that time was that 10% of the U.S. economy was off the books. And the U.S. was in the lower tier internationally; I recall that the estimate for Italy was 40%.
It is important to note that these estimates did NOT include criminal activities, which of course involve huge amounts of money. The estimates were for activities that were otherwise legal except for cheating the taxman. I presume that these current estimates are also for non-criminal, off the books work.
High marginal tax rates will produce evasion. This is an iron law of life. This is reason #684 for keeping rates low enough that it's not worth the trouble of cheating.
You can’t buy a loaf of bread with a double eagle. Or a gallon of milk.
Making a buck is now a crime, before the income tax law it wasn’t illegal.
Growing underground economy = Going Galt.