Posted on 03/09/2009 3:14:58 AM PDT by Scanian
Okay. Let me put on my weather-beaten economist's hat again and try to explain something important.
As we all know, we are in a recession that is bad and getting worse. So, basic question: How do we get out of it?
Well, look at it this way. The economy grows because of two factors: M, which is the quantity of money in the economy, which is controlled mostly by the Federal Reserve; and V, the velocity of money, or the rate at which it changes hands - or, as one might say, the speed with which it is borrowed, invested and spent.
Mr. Ben Bernanke, head of the Federal Reserve, has been doing a fine job of keeping the supply of money pumped up. Score one for him.
But the velocity of money has slowed dramatically.
People at every level are afraid to spend because they fear conditions will get worse and they're going to need the money in the future just to survive. So they don't spend it.
(Excerpt) Read more at cbsnews.com ...
Less fear and more beer, Stein!
However, once again, leave it to the liberals to water everything down to the lowest common denominator. 8% are unemployed -- RUN FER YER LIVES! Destroy the Economy. Pour TRILLIONS INTO bailing Tom, Dick, and Harry out.
Same old Democrat shell game.
Stein: Fear-Mongers Keep Us In Recession .........
If only it were so simple! But it isn’t. Go sit in the corner Ben with this dunce cap
We have a gargantuan debt overhang from years of senile old hippy Alan Greenspoon’s easy money policies. This slowly imploding debt is the problem. Not a fear psychology which is quite justified by the way
Stein’s credibility on anything, let alone economics, went out the window the day it was learned that he contributed to the Franken campaign.
The democrat shell game gave us this Barry/Barney market.
Ever since Ben and his Hollywood friends bankrolled the Al Franken Senate campaign, I do not watch him or read anything he writes.
Ben is off the radar for me, and he ought to be off every conservative’s radar too. How on aerth could he help elect such an idiot as Al franken and foist him upon the people of Minnesota through donating millions of dollars into his campaign fund??
Hollywood bought this senate seat and now we will all have to put up with it for 6 years.
Shame on you, Ben.
People at every level are afraid to spend because they fear conditions will get worse and they’re going to need the money in the future just to survive. So they don’t spend it.
The other alternative is:
Why pay $50.00 for something today, when, if we wait two weeks we can get it for $25.00.
Those are government statistics aren't they? And we all know that our government would never try to sell us a line would they?
If anything there is not enough fear. Most investors that I see are just numb, not afraid. The main reason the markets are down, especially in Europe, is the credit contraction pummeling banks and anything related.
Look Ben, you gotta understand, socialists can’t exist without an atmosphere of fear. Whether the fear is for genuine reasons or fabricated reasons, it doesn’t matter, they need the people to be in fear of something.
It is being caused by excessive debt on every front. The servicing of that debt is consuming everything.
You can't spend your way out of debt.
Obama is increasing the debt of the country while at the same time reducing people's incomes by wide spread taxation. From carbon taxes, healt care taxes, elimination of tax deductions and increased in tax rates.
All the wrong things.
So things will get worse.
It won’t be $25 when the company that made it is out of business and there are no more.
MIllions? That's not even legal.
Both Bush and Obama (even more so) have the same solutions to our recession....”more of the hair of the dog that bit us.”
Unrealistically low interest rates and too much easy money—that caused high debt speculation in housing and derivatives and much else—that caused this bust?
Solution: even lower interest rates and even more, dramatically more, easy money, spending and debt creation to solve it. Right?
After all, isn’t the best cure for a hangover, more swigs at last night’s booze bottle?
Morale: Our politicians have the same problem solving smarts as a wino. That their short term fixes cause the longer term problem to become ever more serious, is analysis miles over their heads.
Yes, 92% of the U.S. is still employed yes however the government employs 60% of the people so the numbers kind of change a tad.
Let's make it more reasonable.... Why pay $50 for what will be $40 in a few months??
This is what happens in a deflation. A 180 degree turn about on consumer psychology
Deflation really puts a crimp in the "consumer economy" that the powers that be have promoted for years
A "consumer economy" depends on inflation. The feeling that you buy today because it will only get more expensive
Every $1.00 in your mattress will be worth $1.05 twelve months from now
Even grocery prices are going down a bit...They have been the most resistant to deflation
People are numb and paralyzed to dump even some of their 401K that has already plunged and will most likely go down some more. That money isn’t coming back, same as that girlfriend who is never coming back
(I hope it does come back but I won’t bet on it) Stocks can be flat for years
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