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My daily expenses are minimal compared to my income. My co-workers kid me about this and my very conservative lifestyle. They of course are driving expensive cars and have large credit card balances.
Well, you are bringing down the aggregate demand for the entire economy! They call it a paradox of thrift!!
Anyway, there is a way to protect the aggregate demand. How? of course, by providing safety nets. If there are no safety nets, people stop consuming; if consumption goes down, the production goes down as well. If the production goes down, the wages go down; if the wages down, the consumption goes down! Here, you can provide HELOCs, so that consumption doesn't go down.
Bismarck, an anti-socialist, fought socialists. He is considered to be the father of modern safety nets like social insurance. How come an anti-socialist introduced safety nets? Why anti-socialists of today (say, repubs) wanna gut safety nets like social security? Without safety nets, consumption goes down! That's what happening in China, which produces $8T a year and consumes $1T a year.
Safety nets are necessary for capitalism to thrive!
Those who are trying to gut safety nets are killing their golden goose!
Anyway, there is a way to protect the aggregate demand. How? of course, by providing safety nets. If there are no safety nets, people stop consuming; if consumption goes down, the production goes down as well. If the production goes down, the wages go down; if the wages down, the consumption goes down! Here, you can provide HELOCs, so that consumption doesn't go down.
no, you need not reduce production due to lower domestic demand for goods and services you create. you expand beyond your borders and encourage exports.
.. have a Coke and a McDonalds Cheeseburger in China. Its American meat and wheat anyway.
Why anti-socialists of today (say, repubs) wanna gut safety nets like social security?
Social Security started out in the 30s, but there have been many changes since.
Do you think a early 20th century "safety net" still applies in the 21st century.. almost 100 years later ?
Time to rethink and modernize.... example.. wouldnt a personal retirement account in the tax holders control and name with option of buying US govt savings bonds be a plausible alternative ?
MisdemeanorRebel
2012 Aug 18, 3:03am
Time to rethink and modernize.... example.. wouldnt a personal retirement account in the tax holders control and name with option of buying US govt savings bonds be a plausible alternative ?
No. See Chile.
I, for one, think that maybe its time to increase the cost of living. Whoever thought that you should get to live free of charge? Best you always remember, that you owe someone else for the right to live, and it doesn't come cheap!
freak80
2012 Aug 19, 11:59pm
Well, you are bringing down the aggregate demand for the entire economy! They call it a paradox of thrift!!
Don't worry. The Fed will justly punish jvolstad with inflation and ZIRP.
How dare he try to protect his capital from theft by Crony Capitalists! The nerve!
I would, but my neighbors, the Joneses, just got a new car and deck built! So naturally, I need these things too.
MisdemeanorRebel
2012 Aug 20, 1:49am
Those who are trying to gut safety nets are killing their golden goose!
But the Market(tm) is always right. We should stand aside from this force of nature and not intervene in the slightest, no matter what happens. How dare humans attempt to regulate or mitigate the forces of nature?! Bow down before Mammon, do as He says, most Holy Market!
I'm glad we don't have this attitude towards Drainage Ditches, Earthquake-zone building codes and Hurricane preparedness.
Time to rethink and modernize.... example.. wouldnt a personal retirement account in the tax holders control and name with option of buying US govt savings bonds be a plausible alternative ?
If you think out how modern fiat monetary regime works, this is what you see sectorally:
gubmint deficits = private-sector savings.
You can also look cumulatively. Cumulative private-sector savings = cumulative gubmit deficits!
Of course, you may get confused by the existence of nominal assets. All assets are financialized; so, you need to start think in terms of financials.
We should look beyond what mainstream (including Austrians, neo-classicals and neo-liberals) is saying about montetary system.
So, the question is not so much about the risky nature of financial instruments (t notes, derivates, cd-s, money market funds, etc). Social security/medicare is not solvent if you beyond the false assumption that deficits and/or govt expenses are financed by taxes and/or t-notes sales.
wrote about that off balance sheet accounting. That allowed toxic loans to be hidden off the books of the banks awaiting securitization.
We should stop worrying about banks. Even if there were healthy banks, they do not increase the aggregate demand, which drives the production, which further drives jobs.
So, what we need is: a tax policy that favors local production; a fiscal policy that creates job in infrastructure and other things. Both libertarianism (Austrians) and mainstream economics (neo-classical and/or neo-liberal) espoused by both leftist and right economists prevent the latter fiscal policy for different reasons.
1. Austrians and mainstream economics operate with a false assumption that govt deficits are funded by borrowings.
2. What distinguishes mainstream left economists from the right? NAIRU, etc
I, for one, think that maybe its time to increase the cost of living. Whoever thought that you should get to live free of charge? Best you always remember, that you owe someone else for the right to live, and it doesn't come cheap!
I am all for it!! However, I hate the way things go: they are too slow for me. Accelerating the changes help bring in changes: otherwise, it is like kicking the can down the road!
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Politicians, economists, private citizens, public and private unions all want to have highly paid jobs. Not many such jobs exist. Why not these folks focus on cutting down the cost of living? For instance, food is damn cheap in the states. In countries like India, those in Africa, majority of their earnings go to the food. In the states, majority of it goes to paying rent (mortgage), health insurance, etc.
Manufacturing jobs are not coming back: even Foxconn in China is replacing humans with robots. JC Penney is replacing cashiers with self-check out counters. Big expense items for any company is labor and their health insurance. Companies, in order to beat the competition, find creative ways to cut down these expenses.
Why don't academics, thinktanks, politicians, economists, focus on CUTTING down the cost of living? Why waste time on generating highly paid jobs, only to have these wages taken away by rentiers?
What do you say?
#housing