The problem with the economy, IMO.
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07-01-2013, 07:32 PM
The problem with the economy, IMO.
The finance sector.
The idea behind pumping money into the finance sector is that they will then lend out to small business owners to help expand their businesses, or new business owners, or that young couple wanting to buy their first home etc.. etc.. etc..

The problem with this is that lending money to the first time business owner is risky and often does bring a high return.
Instead the money intended for small business and home owners is spent on things within the finance sector that return high returns over long periods of time.
This makes the finance sector rather wealthy but has consequences on everyone else.
Simply put, the money doesn't flow down to small business or other places it should and doesn't get distributed across the board which in turn halts growth and progress.

Because small business is halted in progress mom and dad that work their are also halted in their wage potential.
And so as costs rise, weekly paycheck remains the same.


I believe this to the problem because if the money that is going into the finance industry was being spread around the small business and home owners like it should I believe we wouldn't be in this recession. And talking about recession, if banks were to lend more to small business and home owners they'd spread their wealth around which reduces risk.
The problem with the housing bubble wasn't so much that house were being given to any despite credit (well, that was the leading factor) it was that the bundles of these things were traded around and depended on by the finance industry.
This is what I mean when the money is being kept in the finance industry. If banks had lent money on a case by case, sensible, bases and not traded these "bundles" around, then the financial crisis would never have happened as if someone defaults on a payment the bank is covered by the billion other people who are paying their mortgage.
This is what I mean, the finance industry needs to individually (the individual bank etc..) lend to business and home owners etc.. and generate their (the banks etc..) wealth that way. This not only reduces risk (which is good for us because when they fail, we fail) but distributes the wealth around all industries and promotes growth.



The solution to the problem is not an easy thing. One thing is clear though that self policing will not work. The finance industry can earn more money pumping it back into their own industry so that is what they're going to do (that's not a "all bankers are evil!!!", that's human nature). I suppose the only option is more government regulation and/or incentives (through taxation most likely). However government regulation/intervention is always dismissed as too abrasive, the whole "you can't tell me what to do!" thing. And so as long as this thought continues the problem will persist and nothing will change. Growth will continue to b slow, the rich/poor divide will continue to grow and those with fantastic great ideas and skills will never get the support that they should.

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10-01-2013, 05:33 PM
RE: The problem with the economy, IMO.
You cannot create new money without creating debt.... this needs to change or we will forever be going around in the circle of depression, growth, depression, growth.

I dont think this recession will ever end. Not for the likes of me (the middle class) anyway.

There is too much debt and them creating more (from QE) is only papering over the cracks.

For no matter how much I use these symbols, to describe symptoms of my existence.
You are your own emphasis.
So I say nothing.

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10-01-2013, 07:48 PM
RE: The problem with the economy, IMO.
Get out!!! Buy gold!!!!

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11-01-2013, 01:35 AM
RE: The problem with the economy, IMO.
(10-01-2013 05:33 PM)bemore Wrote:  You cannot create new money without creating debt.... this needs to change or we will forever be going around in the circle of depression, growth, depression, growth.

I dont think this recession will ever end. Not for the likes of me (the middle class) anyway.

There is too much debt and them creating more (from QE) is only papering over the cracks.
And how do you suggests this changes?
Banks (or whoever) lend to you or I at a risk to them.
Interest is compensation for this risk. If there was no interest then there would be no lending.
Perhaps I'd lend you a hundred bucks because I know you're good for it sort of thing, but if a bank received no compensation good luck getting a house or anything more then $0...

People complain about loan sharks, but they lend to the unlendable so of course their interest rates are high, they need to be heavily compensated because the risks are so high.


It is all well and good saying that "creating money from debt is bad", but what do you suggest?

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11-01-2013, 01:59 AM
RE: The problem with the economy, IMO.
(10-01-2013 05:33 PM)bemore Wrote:  You cannot create new money without creating debt.... this needs to change or we will forever be going around in the circle of depression, growth, depression, growth.

I dont think this recession will ever end. Not for the likes of me (the middle class) anyway.

There is too much debt and them creating more (from QE) is only papering over the cracks.

Just attended a lengthy meeting at a school about the district's budget realities. It's bleak. They're already cut to the bone, over the past few years and still they insist on rearranging the deck chairs on the titanic for what amounts to aesthetic reasons. They need to stop thinking about just next year and start some long-term planning because right now...they're just thinking too short-term.


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Like something is brewing and about to begin
Can't put my finger on what lies in store
but I feel what's to happen has happened before...


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11-01-2013, 06:55 AM (This post was last modified: 11-01-2013 07:11 AM by bemore.)
RE: The problem with the economy, IMO.
(11-01-2013 01:35 AM)earmuffs Wrote:  
(10-01-2013 05:33 PM)bemore Wrote:  You cannot create new money without creating debt.... this needs to change or we will forever be going around in the circle of depression, growth, depression, growth.

I dont think this recession will ever end. Not for the likes of me (the middle class) anyway.

There is too much debt and them creating more (from QE) is only papering over the cracks.
And how do you suggests this changes?
Banks (or whoever) lend to you or I at a risk to them.
Interest is compensation for this risk. If there was no interest then there would be no lending.
Perhaps I'd lend you a hundred bucks because I know you're good for it sort of thing, but if a bank received no compensation good luck getting a house or anything more then $0...

People complain about loan sharks, but they lend to the unlendable so of course their interest rates are high, they need to be heavily compensated because the risks are so high.


It is all well and good saying that "creating money from debt is bad", but what do you suggest?
Simply stop charging interest.

I know people will say "well what would be the point in lending money then" because they couldnt profit off it. Which is great because I dont see how it is fair in society that will live in for private banks to take part in fractional reserve banking and to "lend" you money that they simply have created from your promise to pay it back (alongside any assets you have placed down as a guarantee).... and charge you interest that doesnt actually exist in the system yet. If that system is to continue then they need to they need much higher percentages of money to hold back in reserve. Like 90% or something, so if they do fail and go bust then they can at least pay everybody back some of their money and be allowed to fail.

People will not be able to earn a living off the interest off the money in their accounts, which is also great seeing as they have basicly allready done this today to try and stimulate the economy. That £million you have in the bank, if you want it to grow then go and out and do something productive with it.

I dont see how we can live in a fair society when people can be born into money, that then fuels their lifestyle by simply existing in different accounts, who never have to do a days work in their life or contribute.... compared to somebody who is born in nothing who has to work all of their lifes to live and struggle from day to day.

Nobody would buy goverment bonds caus it would not be worth their investment, great. Then the goverment should issue the currency themselves seeing as they are meant to be the ones in "power", the people who create and dictate the laws. Why are they even borrowing off private banks? Caus this is where conspiracy theories are born and where people question that if their exists people/organisations that hold more money than a goverment, with money being the key factor that makes this world turn, then who is potentially the most powerfull and influential?

Also if banks do something that is deemed "illegal" or bad, then those people should go to prison. Its no good just giving them whacking great fines because that is no deterent.

"Hey you sold all that personal protection insurance to all those people who didnt need it, even though you told them that they did or you just charged them for it anyway without telling them"

Thats fraud, the banks should pay back all the money (which they are doing) and also the people who are ultimatley in charge of the decision making should go to prison for allowing such fraud to take place.

The Libor scandal, the biggest fraud that has ever took place on this earth that affects every single one of us, the people who orchestrated that should go to prison... they should bring in more regulations that actually check what the banks standings are rather than simply trusting them to give a number.

If we are to keep interest on money than all banks should be made co-operatives, owned fully by the people for the people. The interest that is built up should then be put back into the public sector, it should go back to the people, not n the pockets of private individuals.

Money should just be used as a means of exchange. It should not be used to make rich people/organisations even richer off the efforts of the lower classes.

I have allways said that if everybody knew fully how the monetary system works, then we wouldnt have that same monetary system anymore.

For no matter how much I use these symbols, to describe symptoms of my existence.
You are your own emphasis.
So I say nothing.

-Bemore.
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11-01-2013, 08:46 AM
RE: The problem with the economy, IMO.
(10-01-2013 05:33 PM)bemore Wrote:  You cannot create new money without creating debt.... this needs to change or we will forever be going around in the circle of depression, growth, depression, growth.

I dont think this recession will ever end. Not for the likes of me (the middle class) anyway.

There is too much debt and them creating more (from QE) is only papering over the cracks.
Of course money and wealth can be created without debt.

I go out to my back yard, dig, discover a vein of gold ore. Voila, wealth, not debt.

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Science is not a subject, but a method.
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11-01-2013, 08:59 AM
RE: The problem with the economy, IMO.
I think that is just unlikely enough to be struck out as a possibility, Chas.

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11-01-2013, 09:02 AM
RE: The problem with the economy, IMO.
(11-01-2013 08:59 AM)Free Thought Wrote:  I think that is just unlikely enough to be struck out as a possibility, Chas.


No, it is not. There are many mines in the world producing wealth.

Skepticism is not a position; it is an approach to claims.
Science is not a subject, but a method.
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11-01-2013, 09:06 AM
RE: The problem with the economy, IMO.
I mean you digging up a vein of gold ore in your backyard.

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