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$2 Trillion Underground Economy May Be Recovery's Savior
CNBC ^ | April 24, 2013 | Mark Koba, Senior editor

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 ...


TOPICS: Business/Economy; Crime/Corruption; Culture/Society
KEYWORDS: blackmarket; economy; immigration; recession; undergroundeconomy

1 posted on 04/26/2013 5:32:59 PM PDT by 2ndDivisionVet
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To: 2ndDivisionVet

The ‘Rats will try to find a way to tax it to death.


2 posted on 04/26/2013 5:34:22 PM PDT by BenLurkin (This is not a statement of fact. It is either opinion or satire; or both)
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To: 2ndDivisionVet

This is one of the reason they hate bitcoin. Every cent in and out of a bank is tracked. They can’t track bitcoin.


3 posted on 04/26/2013 5:36:34 PM PDT by E. Pluribus Unum ("Deficit spending is simply a scheme for the confiscation of wealth." --Alan Greenspan)
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To: 2ndDivisionVet

I am sure that is much practiced here, such as with scrape metal scavengers.


4 posted on 04/26/2013 5:42:22 PM PDT by daniel1212 (Come to the Lord Jesus as a contrite damned+destitute sinner, trust Him to save you, then live 4 Him)
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To: 2ndDivisionVet

Black markets thrive under communism.


5 posted on 04/26/2013 5:47:21 PM PDT by clearcarbon
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To: BenLurkin

Sounds a lot like Mexico.


6 posted on 04/26/2013 5:50:12 PM PDT by TruthFactor (The Death of Nations: Pornography, Homosexuality, Abortion)
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To: E. Pluribus Unum

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.


7 posted on 04/26/2013 5:55:32 PM PDT by bigtoona
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To: 2ndDivisionVet

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...

Mark


8 posted on 04/26/2013 5:55:49 PM PDT by MarkL (Do I really look like a guy with a plan?)
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To: 2ndDivisionVet

Food is the ultimate currency.


9 posted on 04/26/2013 5:58:50 PM PDT by gorush (History repeats itself because human nature is static)
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To: bigtoona
We need something that governments are prohibited from touching under penalty of death.
10 posted on 04/26/2013 6:02:30 PM PDT by E. Pluribus Unum ("Deficit spending is simply a scheme for the confiscation of wealth." --Alan Greenspan)
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To: 2ndDivisionVet
From the recent past.. home equity loans keep the economy going.

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.

11 posted on 04/26/2013 6:05:05 PM PDT by WilliamofCarmichael (If modern America's Man on Horseback is out there, Get on the damn horse already!)
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To: 2ndDivisionVet
"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.

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.

12 posted on 04/26/2013 6:19:36 PM PDT by Baynative (Lord, keep your arm around my shoulder and your hand over my mouth.)
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To: Baynative

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.


13 posted on 04/26/2013 6:46:49 PM PDT by angry elephant (Endangered species in Seattle)
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To: angry elephant

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.


14 posted on 04/26/2013 6:57:58 PM PDT by Baynative (Lord, keep your arm around my shoulder and your hand over my mouth.)
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To: E. Pluribus Unum

Bitcoin is a vaporware ponzi scheme. I would prefer being paid in American Gold Eagles.


15 posted on 04/26/2013 7:05:46 PM PDT by SVTCobra03 (You can never have enough friends, horsepower or ammunition.)
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To: E. Pluribus Unum

We need something that governments are prohibited from touching under penalty of death.”

My new handgun.


16 posted on 04/26/2013 7:14:50 PM PDT by Grams A (The Sun will rise in the East in the morning and God is still on his throne.)
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To: 2ndDivisionVet
Only 8%?

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.

17 posted on 04/26/2013 7:30:58 PM PDT by sphinx
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To: SVTCobra03

You can’t buy a loaf of bread with a double eagle. Or a gallon of milk.


18 posted on 04/26/2013 7:32:05 PM PDT by E. Pluribus Unum ("Deficit spending is simply a scheme for the confiscation of wealth." --Alan Greenspan)
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To: clearcarbon

Making a buck is now a crime, before the income tax law it wasn’t illegal.


19 posted on 04/26/2013 7:48:07 PM PDT by cradle of freedom (Long live the Republic !)
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To: 2ndDivisionVet

Growing underground economy = Going Galt.


20 posted on 04/26/2013 8:09:00 PM PDT by catnipman (Cat Nipman: Vote Republican in 2012 and only be called racist one more time!)
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To: E. Pluribus Unum
You can’t buy a loaf of bread with a double eagle. Or a gallon of milk.

An American Gold Eagle is not a double eagle. And when the fiat money and the economy collapses you can buy a loaf of bread with a mercury dime.

21 posted on 04/26/2013 8:13:54 PM PDT by SVTCobra03 (You can never have enough friends, horsepower or ammunition.)
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To: Baynative
I've not met a contractor in over two years who isn't willing to barter or work for cash.

I saved a bucket of money having about 400 sq. ft. of ceramic tile laid by paying cash and am about to save another bucket by paying cash to have a double wide drive way and a patio paved. All by reputable contractors. Some may disagree about the "reputable" part, since they have no intention of paying taxes on what they receive from me for the work but I'm way past the point of caring.

I save a lot of money, the contractors save a lot of money and all that money is kept out of the hands of big spending and wasteful government. To me, that's a triple win!

22 posted on 04/26/2013 10:34:23 PM PDT by Graybeard58 (_.. ._. .. _. _._ __ ___ ._. . ___ ..._ ._ ._.. _ .. _. .)
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To: Graybeard58

It starves the beast.


23 posted on 04/27/2013 4:50:05 AM PDT by castlegreyskull
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To: SVTCobra03
An American Gold Eagle is not a double eagle.

It's no more fungible.

24 posted on 04/27/2013 7:28:21 AM PDT by E. Pluribus Unum ("Deficit spending is simply a scheme for the confiscation of wealth." --Alan Greenspan)
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