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Stein: Fear-Mongers Keep Us In Recession
CBS News ^ | March 8, 2009 | Ben Stein

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 ...


TOPICS: Miscellaneous
KEYWORDS: economy; obama; recession

1 posted on 03/09/2009 3:14:58 AM PDT by Scanian
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To: Scanian

Less fear and more beer, Stein!


2 posted on 03/09/2009 3:18:19 AM PDT by Jagman (POTUS Interruptus: The natural way to prevent unwanted stimulus packages!)
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To: Scanian
Right on the money, Ben. Yes, 92% of the U.S. is still employed.

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.

3 posted on 03/09/2009 3:19:14 AM PDT by Alia
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To: Scanian

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


4 posted on 03/09/2009 3:22:32 AM PDT by dennisw (Archimedes--- Give me a lever long enough and a fulcrum to place it, and I shall move the Earth)
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To: Scanian

Stein’s credibility on anything, let alone economics, went out the window the day it was learned that he contributed to the Franken campaign.


5 posted on 03/09/2009 3:28:24 AM PDT by TheLawyerFormerlyKnownAsAl
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To: Alia

The democrat shell game gave us this Barry/Barney market.


6 posted on 03/09/2009 3:37:40 AM PDT by abclily
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To: Scanian

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.


7 posted on 03/09/2009 3:44:44 AM PDT by Gumdrop
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To: Scanian

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.


8 posted on 03/09/2009 3:48:27 AM PDT by chainsaw (If you think health care is expensive now, wait until you see what it costs when it's free! -- P.J..)
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To: Alia
Right on the money, Ben. Yes, 92% of the U.S. is still employed

Those are government statistics aren't they? And we all know that our government would never try to sell us a line would they?

9 posted on 03/09/2009 3:50:52 AM PDT by ninonitti
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To: dennisw
This slowly imploding debt is the problem. Not a fear psychology which is quite justified by the way

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.

10 posted on 03/09/2009 3:52:58 AM PDT by palmer (Cooperating with Obama = helping him extend the depression and implement socialism.)
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To: Scanian

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.


11 posted on 03/09/2009 3:59:29 AM PDT by BuffaloJack (To stand up for Capitalism is to hope Obama fails.)
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To: Scanian
This recession isn't being caused the business cycle of over production.

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.

12 posted on 03/09/2009 4:02:05 AM PDT by DB
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To: chainsaw

It won’t be $25 when the company that made it is out of business and there are no more.


13 posted on 03/09/2009 4:07:51 AM PDT by DB
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To: Gumdrop
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??

MIllions? That's not even legal.

14 posted on 03/09/2009 4:08:57 AM PDT by raybbr (It's going to get a lot worse now that the anchor babies are voting!)
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To: DB

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.


15 posted on 03/09/2009 4:12:50 AM PDT by OldArmy52 (Mainstream Media cheered: Ascension of Castro, Chavez and now Obama.)
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To: ninonitti

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.


16 posted on 03/09/2009 4:21:01 AM PDT by Vaduz
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To: chainsaw; palmer
The other alternative is:
Why pay $50.00 for something today, when, if we wait two weeks we can get it for $25.00.

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

17 posted on 03/09/2009 4:21:35 AM PDT by dennisw (Archimedes--- Give me a lever long enough and a fulcrum to place it, and I shall move the Earth)
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To: palmer

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


18 posted on 03/09/2009 4:25:22 AM PDT by dennisw (Archimedes--- Give me a lever long enough and a fulcrum to place it, and I shall move the Earth)
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To: Scanian
"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..."

Oh, well, the globalists have been doing the right thing all along. Start handing money back and forth, quickly! That will save us. And be sure to avoid producing anything useful. The friction generated by handing money back and forth makes other countries send real products to us for free!


19 posted on 03/09/2009 4:30:37 AM PDT by familyop (As painful as the global laxative might be, maybe our "one world" needs a good cleaning.)
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To: All

http://www.freerepublic.com/focus/chat/2136635/posts

“Are you looking for a job?”

Note: This thread is updated on a regular basis.


20 posted on 03/09/2009 4:32:47 AM PDT by Cindy
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To: Scanian

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.


21 posted on 03/09/2009 4:32:54 AM PDT by gridlock (BTW, Mods... It might be time to add "Barack" and "Obama" to spellcheck)
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To: familyop
Oh, well, the globalists have been doing the right thing all along. Start handing money back and forth, quickly! That will save us. And be sure to avoid producing anything useful. The friction generated by handing money back and forth makes other countries send real products to us for free!

"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

22 posted on 03/09/2009 4:36:46 AM PDT by dennisw (Archimedes--- Give me a lever long enough and a fulcrum to place it, and I shall move the Earth)
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To: dennisw

...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


23 posted on 03/09/2009 4:48:58 AM PDT by familyop (As painful as the global laxative might be, maybe our "one world" needs a good cleaning.)
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To: dennisw; chainsaw
The deflation idea is overdone. The main reason for sinking markets is the collapse of credit and the banks. The pullback in consumer purchasing is partly a reaction to that, but also an inevitable retraction after a 20+ year binge. The days of borrow and consume are rapidly winding down.

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.

24 posted on 03/09/2009 4:54:19 AM PDT by palmer (Cooperating with Obama = helping him extend the depression and implement socialism.)
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To: Scanian

Who listens to Ben Stein? A has-been who never really was.


25 posted on 03/09/2009 4:56:05 AM PDT by Misterioso (Obama was elected not in spite of his color but because of it.)
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To: Scanian

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.


26 posted on 03/09/2009 5:18:30 AM PDT by jiggyboy (Ten per cent of poll respondents are either lying or insane)
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To: ninonitti

No it’s because Alia is in full denial.


27 posted on 03/09/2009 5:19:17 AM PDT by jiggyboy (Ten per cent of poll respondents are either lying or insane)
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To: jiggyboy
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.

28 posted on 03/09/2009 5:26:18 AM PDT by ninonitti
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To: Scanian

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.


29 posted on 03/09/2009 6:10:15 AM PDT by randita (Starve the beast - earn as little as you can get by on and spend even less.)
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To: Scanian
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.

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.

30 posted on 03/09/2009 12:35:51 PM PDT by TurtleUp (Turtle up: cancel optional spending until 2012, and boycott TARP/stimulus companies forever!)
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