imotion s14

It almost always is when it comes to the economy.

That's like saying "if only we regulated people walking off cliffs". The government could have regulated it. But that was not politically palatable.

Fannie and Freddie's political goal was to give low income earners a chance to own homes and meet lending quotas for HUD. Lending standards went out the window because government interfered in housing. Economic reality took a back seat to political pandering.

They we're just encouraging home ownership, they had their hands all over it. They chartered Fannie and Freddie, they made it possible for theses high risk loans possible. Home ownership is a HUGE financial commitment. It takes financially disciplined people to be homeowners.

And who was it that were purchasing those junk mortgages?

Good ole government chartered, Freddie and Fannie. Government's commitment to making sure every American had a chance to own a house, financial stability and credit worthiness be damned.

Like I said.. there is the politics and economic reality.

I got it from the WSJ.

Portals - WSJ.com

Milton Friedman destroyed the very basis of Keynes' general theory and proved it in the 70s. Why are we still following that non-sense?

Keynesian theory is that the government should run up a deficit to put money into the hands of people, in theory the people would take that money and spend it and circulate it int he economy to creating aggregate demand.

But this falls flat on it's face because it doesn't take into account where the money comes from. Government has no real wealth, they don't create things, merely re-distributes what it takes/borrows.

For government to stimulate the economy they have to take from the economy or borrow it. They say that it would be a boost to consumer spending instead of letting cash sit idle.

BUT!

Where do we all keep our money?

The bank.

Money in the bank as you know does not sit idle. It's invested back into the economy.

AHA! But in this kind of economic environment, banks won't loan!

To that I say what ever stimulus we get in this type of economic environment we're more then likely to save it, so the money goes into the bank anyway.

Japan spent trillions of yen to revive their asset bubble in the 90s, public works, propping up failed businesses. They cut rates, just massive government stimuli packages and what did it achieve?

Nothing, they have never fully recovered from that. All that resources was misdirected and wasted instead of being spent on boosting economic productivity.

Politicians generally don't know dick about the economy and we're saying they should be directing the economy during times of recession? That makes no sense to me, the market will correct itself, that means we have to let people face the consequences of their actions.

That's the very source of the problem is that we refuse to let people fail because it's not politically palatable to do so. If we let them fail, the people who are competent takes over the resource and make better use of it.

Instead we bailout and prop up failures and tell them they are too big to fail and create a moral hazard where they have a perverse incentive to take bigger risk because they know down the line they will get bailed out.

The problem with public works is it doesn't create productive work and it's a shitty investment. It's work just to work and it produces absolutely nothing and takes away resources for a real recovery.

Well that's my point, the whole recession is like a fever for our economy. The fever is just a symptom that tells us our body is working to destroy the sickness.

The sickness being our debt-based consumption and service economy. We became a world economic power because of our manufacturing and savings. Over the last 20 or so years we became an economy that needed unlimited amounts of credit to keep our bubble economy going.

That just isn't possible. What the government wants to do is get rid of the fever because they think the symptom is the problem when it's actually the solution.

The writing is on the wall. If you don't want to see it, refuse to see it then oh well.

The Feds announced they are buying up unlimited bonds in the future.. BAM bond market rallies out of nowhere. Risk free profit for bond speculators looking to short government bonds in the near future. No one is buying bonds to hold to maturity. It's all speculation because the Feds put it all out in the open EXACTLY what they are going to do.

They're not trying to hide the fact they are trying to re-inflate the bubble. They're doing it by running up massive deficit.. yet you see absolutely NOTHING wrong?

Oh I forget you're a Keynesian, government is suppose to run up huge deficits.

I'm down! I wish I had the money to grab some stocks tho.. really once in a lifetime opportunity to get some really good stocks with good yields.

The market was fixing itself, unemployment was at a ~9%. But then came the government to solve everything. Smooth-Hawley was passed because they wanted to make it so people would buy domestic goods. That would solve the nagging unemployment by creating more demand for domestic goods thus solving the unemployment issue! All it did was ignite a huge trade war because trade is a 2 way street. Now American companies were cut off from a world market and unemployment shot up rapidly.

it's happening, but like I said you're a mainstreamer, a Keynesian so everything the government is doing is correct in your view.

How do you figure? it's the poor people who are better off with a gold standard. The dollar you make today won't buy a dollars worth in the future. Unless you think inflation is a good thing. I think of it as a hidden tax.

Fiat Currency and Fractional Reserve Banking are 2 separate beast.

Fiat currency is currency that has value because the issuing government says worth and not because of intrinsic value.

Fractional Reserve Banking is the practice of keeping only a fraction of deposits on hand and loaning out the rest hoping that all the depositors (or a significant number of them) don't come to claim their deposits at.

It won't add up to any where near what we owe. I looked it up and the us was a net creditor of something like 3 billion in the mid 80s. Now we owe something like ~11 trillion.

Well they aren't hiding the fact they are gonna run the printing presses. What else can they do? The interest rates can't get any lower, The supply of money has done nothing BUT increase.

Their idea is to buy time and run up huge deficits in hopes of reviving the bubble economy and then pay it off later on, like the fat guy who keeps saying next week he'll get on a diet.

Never mind that the economy they thought was so good was 2/3rds consumption with borrowed money. I mean it doesn't take a rocket science to see it's a giant ponzi scheme of finding the next sucker to buy up our debt.

I think the countries who lend us money are know realizing somewhat that we're never going to pay them back. The only reason we haven't totally collapse is because people still have the perception that we're good for it.

Economic liberty IS individual liberty.

I don't know about that video, but he's already broadcast to the world what he intends to do. He's going to run up the deficit, because in the short run that doesn't matter, we need to ease the pain now and by dig ourselves further into a hole. We can't take the pain now.. yet these clowns in charge promise we'll eventually do it.. when the pain is much more severe down the line? It makes absolutely no sense.