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 ...
One sure way to slow down “V”, the velocity of money, is to let the government spend it. Amongst other things they are not very efficient at is shoveling money out the door.
"Never confuse motion with action." --Benjamin Franklin
Exemplified by Hillary's ongoing two week road trip sucking up to foreigners. She has accomplished nothing. But she gets an ego boost plus some hidey time with Huma
...good quote and relevant anecdote! Hmmm...money...paper. Maybe I should look into costs of a tiny facility for producing toilet paper, pads, and the like. Those might be in great demand within the next two or three years. Where there’s great need, even the highly educated hag-wives and cousins (erroneously known as enviros) of former competitors won’t get in the way. ;-)
Sardonic familyop
Here's a real life nondeflation example. I would love to pick up another (or several more) Husqvarna Rancher 20 inch chainsaws. They are 399 or as low as 379 in some stores. I got mine for 300 and 350 over the past few years. Are they ever going to drop to 350 again? Fat chance.
Who listens to Ben Stein? A has-been who never really was.
Ben’s gone ‘round the bend. Anybody who can read the news knew well before 2005 that the housing bubble and thirty years of throwing money at insolvent institutions would end very very badly.
No it’s because Alia is in full denial.
LOL must mean he still has his job...........the old line - a recession is when my neighbor loses his job.........BTW I notice Ben Stein is still working.
The local mall was packed on Sat. Couldn’t even find a parking place. Either there were a lot of browsers or people are starting to spend money. That’s the busiest I’ve seen it since Christmas.
Spring, after taxes have been paid and/or refunds received is typically a time of increased consumer spending. People shop for summer clothing, there are lots of parties for various reasons, people buy supplies for yard work and home improvements and people buy recreational equipment. Also people start to travel and spend more money on gas, food, lodging and recreation. I just read an article about people feeling more comfortable traveling this year because gas prices are half of last year’s.
Also, housing sales increase in the spring and summer as families relocate due to job changes and the kids are out of school.
There might not be as much spending as in previous years, but the pent up demand for goods and services may be released to a certain extent. People can’t do without purchases forever. Things wear out and replacements are needed. Kids need lots of stuff.
So sad that Obama and his followers don't have the power they expected. Some people are so afraid of Obama's socialism that they are not spending: "velocity" drops.
Some of us are not afraid, but we're so angry at Obama's overthrow of our government and economy that we're on strike as shoppers, reducing the "velocity" just as effectively as fear would.
Some of us know that by hunkering down, we make ourselves stronger whatever happens, while the reduced "velocity" makes Obama weaker: a win-win situation.
Whether we have a deep recession that lasts until the GOP takes Congress back in 2010 or a depression that lasts until 2012 or even beyond, no economic catastrophe could compare with the damage that a permanent transition to socialism would do to our children and our grandchildren. It's all about the next generation, and socialism will fail. Better that socialism should fail quickly, as national socialism did in Germany 1933-1945, rather than slowly as soviet socialism did in Russia 1917-1991. Either way, it's a nightmare of evil, but the socialists can do less lasting damage to our children and grandchildren if they fail sooner rather than later.
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