The Great Recession

Conspiracies are not necessary. The current mess has been generations coming.

It represents the coninuing concentration and dilution of capital cycle that can be observed through all of recorded history.

It is not a conspiracy to note that those who wish to get rich will typically do whatever is necessary to get it, keep it, and expand it.

What is lacking in the last 100 years or so is the decline and near demise of the moderating influences of our collective culture that tended to be reflected both in legislation and throughout society.

@Laguna. I will defer to Mr Locke.

Reduced tax rates for the rich and increased taxes on the poor, in addition to trillions of dollars of debt, a growing dependence on a resource that will be gone in several decades, tops, along with an increase in severe weather due to global warming, a constantly increasing world population causing more shortages, and jobs being shipped overseas resulting in a higher unemployment rate and lower salaries.

There seems to be a knee-jerk reaction evident throughout this conversation that any criticism of the current economic system masquerading as free market capitalism is somehow an advocacy of Socialist Marxism or some other command economy.

I do not believe that to be the case, certainly not, speaking for myself.

The issues being raised here highlight the trend towards plutocratic measures whose effects are to stifle competition and use governmental authority to concentrate capital into fewer hands despite failure in the market place.

Adam Smith wrote the Bible of free market capitalism a few centuries ago, The Wealth of Nations.

Perhaps we should examine some of his words and compare their application to our current environment.

<!-Quote-!>Quote:

Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer.
Adam Smith <!-/Quote-!>

Are we seeing greater competition benefiting consumers?
More producers entering and competing in the marketplace or fewer, larger producers dominating?

<!-Quote-!>Quote:

It is not by augmenting the capital of the country, but by rendering a greater part of that capital active and productive than would otherwise be so, that the most judicious operations of banking can increase the industry of the country.
Adam Smith <!-/Quote-!>

Are we seeing capital being put to use in industry and business throughout our economies or is it being channeled into purely non-productive financial activities that benefit only the speculator?
Is industry growing or shrinking from lack of capital investment?

<!-Quote-!>Quote:

No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.
Adam Smith <!-/Quote-!>

US fact: Concentration of wealth has i{never} been higher than it is today.
95% of capital owned by 1% of household.
Is this trend continuing towards greater concentatration or less?
Are the lower and middle strata of society becoming wealthier or poorer?

<!-Quote-!>Quote:

To feel much for others and little for ourselves; to restrain our selfishness and exercise our benevolent affections, constitute the perfection of human nature.
Adam Smith<!-/Quote-!>

No commentary required.

<!-Quote-!>Quote:

Civil government, so far as it is instituted for the security of property, is in reality instituted for the defence of the rich against the poor, or of those who have some property against those who have none at all.
Adam Smith<!-/Quote-!>

Just food for thought.

<!-Quote-!>Quote:

US fact: Concentration of wealth has never been higher than it is today.
95% of capital owned by 1% of household.<!-/Quote-!>

That's a damn lie! [source]

No, John. That is what the data shows using the total definition of Capital.

You may cite any number of web pages or sources that will show any numbers from less than 25% through the upper 90% depending on definitions.

This sort of statistical chicanery is exactly the sort of thing that perpetuates the current system.

Though, I take note that you failed to take a swing at any other points.....

You have no data. There is no possible measure or definition of capital that results in 1% controlling 95% of capital. That "statistic" is such a massive lie as to have zero possibility of being true regardless of how broad or narrow the definition of capital is made.

As far as Adam Smith goes, I don't share his value system. Thus, his words regarding moral considerations mean little to nothing.

<!-Quote-!>Quote:

Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer.<!-/Quote-!>

Why is consumption the sole end of all production? If consumption is the sole end, then why should anyone produce more than they consume? Why should there be two separate groups, producers and consumers, of which on group provides for the others? Unless of course, everyone is only a consumer insofar as they are a producer. How can you consume that which has not been created? The market is merely an intermediary between production and consumption: allowing specialized professions to provide for themselves things other than the profession would create by engaging in voluntary exchange:
1. Production
2. Exchange
3. Consumption
In other words, production merely exists for consumption, yes, BUT not because of any moral imperative, but rather simple necessity: someone must be produce before they can consume. If one produces something, one must be assured that that labor will not go to waste . . . meaning that labor should it be engaged in production beyond what will be consumed must have a practical reason to do so. The reason being the accumulation of material wealth, which may further be extended to increased personal consumption or financial security. Otherwise, why should one engage in such labor beyond subsistence? The interest to the producer is pivotal because it is the only thing that promotes non-subsistence production in the first place. Further, there is NO REASON for separating producers from consumers. There ain't no such thing as a free lunch, right? Labor buys it, even if the labor is sold for cash which is exchanged for the lunch. All consumers MUST BE producers first. Any consumer that does not produce is merely a parasite.

<!-Quote-!>Quote:

It is not by augmenting the capital of the country, but by rendering a greater part of that capital active and productive than would otherwise be so, that the most judicious operations of banking can increase the industry of the country. <!-/Quote-!>

His standard of value is radically different. He isn't advocating capitalism insofar as it promotes individual freedom. He's promoting insofar as it raises societal good. If these two goals should CONFLICT, what then? Do we trample individual freedom to help out the masses? DOES trampling individual freedom help the masses, considering that the masses are all individuals? Is the implication here to limit what individuals may do with their money? It seems like that, but what do you believe he's implying here: government intervention, individual action? Ultimately, what gives anyone the right to tell anyone else how they should be spending their money?

<!-Quote-!>Quote:

No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.<!-/Quote-!>

I defer to my challenge on the accuracy of your statement.

<!-Quote-!>Quote:

To feel much for others and little for ourselves; to restrain our selfishness and exercise our benevolent affections, constitute the perfection of human nature.<!-/Quote-!>

Why is THIS perfection? There is no reason for self-negation to be a moral imperative and as for it constituting perfection, there is likewise no reason. As near as I can see it, selfishness is the guiding principle of most human action (eating for one) and there is NOTHING immoral or imperfect about that. It is NATURAL to be concerned with advancing your own interests. It is GOOD to take care of yourself first. Selfishness is so necessary to existence as to be INDISPENSABLE. I would not live long if I were incapable of acting in my self-interest. Why should I restrain a necessary trait and promote an ephemeral trait? I could definitely get by if I were never benevolent. What makes benevolence constitute perfection?

<!-Quote-!>Quote:

Civil government, so far as it is instituted for the security of property, is in reality instituted for the defence of the rich against the poor, or of those who have some property against those who have none at all.<!-/Quote-!>

Life, liberty, AND property. As long as these are preserved in their negative sense (as opposed to positive freedoms), the government is doing it job. As far as positive freedoms (entitlements), there is a tendency of these types of freedoms to only promote the rights of a few to infringe upon the rights of others.

Okay, I responded to the other points.

Wonderful counter-arguments, John. Bravo.

It will be a couple of days until I have time to respond in a manner worthy of your points.

However, my compliments on very well thought-out and presented arguments.

OK John, now that I have a few minutes, I will answer the questions you raised.

Starting with the first quote regarding production and consumption, what Smith was pointing out was the fact that Demand is the first and driving force in any economic system. Demand is universal and permanent as long as there are human beings. Supply only exists and has meaning as a concept in relation to being a means to satisfy demand. That is simple economic reality. Economics, itself, can be defined as the system by which goods and services are produced to meet demand.
On to the specific questions you raised:

Why is consumption the sole end of all production?

Without consumption, production is simply so much wasted time, effort, and resources. It has no utility to anyone and therefore no value. You could produce 1000 lead balloons and unless you, youself, have some use for them or gain some sort of satisfaction from making them, absent a buyer, they are so much lead, nothing more. Your production is meaningless in any economic sense.

If consumption is the sole end, then why should anyone produce more than they consume?

In order to sell their production, hopefully at a profit, to at least obtain the means to provide for their own consumption and with an excess for other uses.

Why should there be two separate groups, producers and consumers, of which on group provides for the others?

Those groups are terms which modern economic scholars have designated as entities in the interactions of the subject of their studies. The basic model used in the Circular Flow Model, which depicts resource markets. Modern economists use the term Firms, rather than producers as Smith did; but, the terms themselves and what they represent in discussions of economics have been around for quite awhile. You'll have to talk to an Econ professor if you want to know more about WHY those terms where created and the roles they play.

Unless of course, everyone is only a consumer insofar as they are a producer.

No. That is not what Econmics states. While everyone is a consumer to some degree, not everyone is a producer, neither in real or academic terms. There is some overlap, but the study of economics recognizes them as distinct groups for purposes of study as market participants.

How can you consume that which has not been created?

Not quite sure what you mean there? Have you taken a course in Micro or Macroeconomics yet?

Continuing on...Your description of a market is pretty good. The technical defintion is:
A mechanism through which buyers and sellers are brought together for the purpose of exchanging some good or resource.

Smith's implied moral attachment to the supremacy of the consumer has to do with the nature and purpose of his work, The Wealth of Nations. As primarily a social philosopher rather than an economist, he was rebuking Mercantilism and searching for central truths of economic behaviors, while proposing another system more conducive to reality and beneficial to society. That system was Capitalism. The moral arguments I happen to agree with. I suggest you read it before summarily dismissing it.

...someone must be produce before they can consume.

I assume you mean someone must be a producer before being a consumer? Is that accurate? Does an infant or child produce before consumption? An invalid? You may be taking a bit too narrow view. Step back at look at economic behavior in its entirety. Also consider primitive economies where the individual actor meets nearly or all of his own consumption requirements through his own labor.

The rest of your paragraph hazily describes the profit motive, which is correct, but the rest goes off base.

Further, there is NO REASON for separating producers from consumers. There ain't no such thing as a free lunch, right? Labor buys it, even if the labor is sold for cash which is exchanged for the lunch. All consumers MUST BE producers first. Any consumer that does not produce is merely a parasite.

First part, take that up with Academia, but you are out voted by thousands of PHD's.
The rest, that's so simplistic as to be utterly useless in any discussion of economics.
The last is not only not true; its rather repugnant.

The second quote under discussion, I will tie in with the last as the notions you broach are on the subject of Rights.

The middle quotes dealt with the correlation and integration of morality with economic behaviors. Statements of Smith's which I agree and you disagree. Little point in arguing them. Morality is a personal choice.

Back to the second and last.

If these two goals should CONFLICT, what then?
In a liberal society, society usually wins.

Do we trample individual freedom to help out the masses?

Sometimes yes, sometimes no. It's up to our elected representatives and the court system to decide if, when, and how individual rights are subordinated.

DOES trampling individual freedom help the masses, considering that the masses are all individuals?

Sometimes, sometimes not. You just broached 200 years of political history for which there are no clear or easy answers.

Is the implication here to limit what individuals may do with their money?

Yes. Absolutely.

It seems like that, but what do you believe he's implying here: government intervention, individual action?

Both, but mostly governmental intervention.

Ultimately, what gives anyone the right to tell anyone else how they should be spending their money?

The social contract that is the Constitution of the United States of America as well the various State constitutions whichever might apply to the state in which you reside. And by extension, YOU since you choose to live and work here.


Life, liberty, AND property. As long as these are preserved in their negative sense (as opposed to positive freedoms), the government is doing it job. As far as positive freedoms (entitlements), there is a tendency of these types of freedoms to only promote the rights of a few to infringe upon the rights of others.

Part one: There are several reasons why societies find it necessary for government to intervene in their economies.

First, experience has shown that society benefits when markets are highly competetive; therefore, governments seek to promote competition by enacting and enforcing antitrust laws, by prohibiting extra-economic discrimination, and generally ensuring a level playing field for market participants.
Where competition is impractical or greatly limited for technical reasons, governments impose reulations on producers to protect the public. Utilities are a good example of this.

Governments also implement stabilization policies in an attempt to avoid or mitigate the extremes of rampant inflation and economic depression. These are primarily through Fiscal and Monetary policy.

Most societies have also empowered government to deliberately intervene to modify the extremes of poverty and affluence, finding that both bear opportunities costs those societies are willing to exchange for increased social stability and justice.

Further governmental activity involves adressing externalities, both positive and negative, within free market systems.

And finally, governments provide Public Goods and Services that the market can't or won't supply to society's satisfaction.

Those are the Government "doing its job."

Last part. The American electorate has decided it wants entitlements, and is willing to trade some economic and personal freedoms to have them. That's a Democracy.

I believe that addresses all your posed questions?

My Turn.
You touched on this notion of Rights.

Here are some thoughts to ponder:

You have NO natural rights whatsoever.

Anything you might believe is a Right to you is simply a contractual promise to you within certain clauses of the Federal and State Constitutions. Those promises are only valid within the ability and willingness of governmental agencies to provide for and exercise means of redress when you feel they have been broken or violated.

Therefore, your Rights only exist insofar as our society has said they do and will enforce them.

Without society, you only have whatever you can sucessfully defend by yourself.

Good Luck with that.

Son of a b****, did you guys get your masters degrees in economics?

<!-Quote-!>Quote:

My Turn.
You touched on this notion of Rights.

Here are some thoughts to ponder:

You have NO natural rights whatsoever.

Anything you might believe is a Right to you is simply a contractual promise to you within certain clauses of the Federal and State Constitutions. Those promises are only valid within the ability and willingness of governmental agencies to provide for and exercise means of redress when you feel they have been broken or violated.

Therefore, your Rights only exist insofar as our society has said they do and will enforce them.

Good Luck with that.<!-/Quote-!>

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.

<!-Quote-!>Quote:

Part one: There are several reasons why societies find it necessary for government to intervene in their economies.

First, experience has shown that society benefits when markets are highly competetive; therefore, governments seek to promote competition by enacting and enforcing antitrust laws, by prohibiting extra-economic discrimination, and generally ensuring a level playing field for market participants.
Where competition is impractical or greatly limited for technical reasons, governments impose reulations on producers to protect the public. Utilities are a good example of this.

Governments also implement stabilization policies in an attempt to avoid or mitigate the extremes of rampant inflation and economic depression. These are primarily through Fiscal and Monetary policy.<!-/Quote-!>

I agree that this is needed, but I see very little effort by our current government to do any of these things. When is the last time we have seen any antitrust cases? It actually seems that the government is trying to help companies it likes(eg GE), and hurt companies that it dislikes.
Tax policy seems to favor large multinational corporations, and hurt small businesses. Banks are able to make a guaranteed profit buying tbills, since interest rates are low, and this dries up funds that could be lent to small business.
Also, I can't remember the last time the federal reserve tightened monetary policy.

Who cares, you're all going to die anyway.

Okay, I'm clearly no economist and do not mean to project myself as one. However, I can see when there is a political/moral argument being made and that is what I'm debating. Here's a better explanation of what I was saying in the first part:

Scarlet's Economic Thesis
Labor = Production = Money

Maybe I'm misusing producer as an economic term, but in any case, my point is that all work is production and all workers are producers - no matter if they are selling their work for a wage or working for themselves. Unless I'm totally taking this out of context or am mislead by what this appears to mean, I think even Adam Smith agrees:

<!-Quote-!>Quote:

Labour was the first price, the original purchase - money that was paid for all things. It was not by gold or by silver, but by labour, that all wealth of the world was originally purchased. -- Adam Smith<!-/Quote-!>

In my words, someone must produce before anyone can consume. Yes, an infant is a parasite taking the definition of parasite to mean something that lives off another thing.

<!-Quote-!>Quote:

Parasitism is a type of symbiotic relationship between organisms of different species where one organism, the parasite, benefits at the expense of the other, the host.<!-/Quote-!>

I'm using this as a rough approximation of what I mean since both parties are the same species. The parasite benefits (consuming) at the expense (work) of the host. The work of the parent is the production before consumption. Labor comes before consumption, make no mistake.

So a better explanation of what I mean by "everyone is only a consumer insofar as they are a producer" is that each person's labor is only valuable for what that labor produces. The value of the production that results from this equates to a value which is determined by voluntary exchange. Money, in its function as a medium of exchange, represents unconsumed production.

Any economic theory that would deny this seems fishy. I don't see what could possibly change on the macro scale that contradicts: I work. I produce. I exchange. I consume. Any imbalance between production and consumption on my level seems to be accounted for by my savings/debt/assets.

In other words, it really doesn't matter WHO does the production so "everyone is only a consumer insofar as they are a producer" is a bit rash. What should be said is that consumption can only exist because there was past production. Now, the reason for the rashness is that I interjected a simplistic version of justice: you reap what you sow. Therefore, barring charity or robbery, all consumers are producers first. In any case, this leads back into my main point:

<!-Quote-!>Quote:

Further, there is NO REASON for separating producers from consumers. There ain't no such thing as a free lunch, right? Labor buys it, even if the labor is sold for cash which is exchanged for the lunch. All consumers MUST BE producers first. Any consumer that does not produce is merely a parasite.<!-/Quote-!>

The quotes you're posting are arguing the moral basis of an economic system. I'm saying that separating producers from consumers is silly because of this. My entire argument here is: it doesn't matter one bit if production is directed toward consumption when gauging the ethical value of a system since consumption likewise requires production to exist - otherwise we would be talking about bare, unfilled need. Without production, demand is only unfilled need. I don't account for "gifts" of production (parents providing for children, charitable donations, and so forth), but that does not change the fact that someone who consumes and does not produce IS a parasite, albeit by the voluntary choice of the provider. I suppose that I could use a neutral term for when the parasitism is voluntary . . . but what I mean by the term should be clear now anyway.

<!-Quote-!>Quote:

First part, take that up with Academia, but you are out voted by thousands of PHD's.
The rest, that's so simplistic as to be utterly useless in any discussion of economics.
The last is not only not true; its rather repugnant.<!-/Quote-!>

I'm sure that I've said enough to make Laguna facepalm so bottom line: for the Academia, I don't see how production and consumption can be separated or one favored when making a moral argument. Yeah, you can't sell something undemanded so the consumer matters there, but you can't buy something unsupplied either so the producer matters there. One cannot exst without the other. For the rest, it ceases to be an economic discussion when you're posting quotes that argue the moral goals of an economic system. For the last, I've explained how it is true.

<!-Quote-!>Quote:

The middle quotes dealt with the correlation and integration of morality with economic behaviors. Statements of Smith's which I agree and you disagree. Little point in arguing them. Morality is a personal choice.<!-/Quote-!>

Regardless of whether you think there is a point in arguing them, I would like to point out that morality is so irremovably essential to any economic or political system as to be the FOUNDATION of them. I don't even know HOW we could have any meaningful discussion if we cannot agree upon a standard of value by which to measure the merits of the system . . . Utilitarianism isn't the only ethical system around, you know.

Scarlet's Politico-Economic Thesis
Any political or economic system is determined by a corresponding ethical system.
Corollary to Scarlet's Politico-Economic Thesis
Any ethical system that does not require the voluntary consent of the all parties involved is effed up.

In any case, let me pose this for you: what makes morality a personal choice and economic behavior NOT a personal choice? What is the ultimate difference between the two?

<!-Quote-!>Quote:

If these two goals should CONFLICT, what then?
In a liberal society, society usually wins.
Do we trample individual freedom to help out the masses?
Sometimes yes, sometimes no. It's up to our elected representatives and the court system to decide if, when, and how individual rights are subordinated.
DOES trampling individual freedom help the masses, considering that the masses are all individuals?
Sometimes, sometimes not. You just broached 200 years of political history for which there are no clear or easy answers.<!-/Quote-!>

I'll put it like this: an individual is the smallest minority of any society. What you're describing is just the majority oppressing the minorities. Oppression by a majority isn't what American democracy means at least. I don't think that sacrificing individual freedom can help the rest of society in any case, and if it did hypothetically work, I'd think that any claim morality has been sacrificed with the person's rights. I suppose the best quote to summarize this is:

<!-Quote-!>Quote:

Any society that would give up a little liberty to gain a little security will deserve neither and lose both. -- Ben Franklin<!-/Quote-!>

<!-Quote-!>Quote:

Is the implication here to limit what individuals may do with their money?
Yes. Absolutely.
It seems like that, but what do you believe he's implying here: government intervention, individual action?
Both, but mostly governmental intervention.<!-/Quote-!>

Okay, now, you were wondering this earlier why?

<!-Quote-!>Quote:

There seems to be a knee-jerk reaction evident throughout this conversation that any criticism of the current economic system masquerading as free market capitalism is somehow an advocacy of Socialist Marxism or some other command economy.<!-/Quote-!>

How much economic freedom should be limited before I would be justified in thinking you're advocating some partial variation of command economy?

<!-Quote-!>Quote:

Ultimately, what gives anyone the right to tell anyone else how they should be spending their money?
The social contract that is the Constitution of the United States of America as well the various State constitutions whichever might apply to the state in which you reside. And by extension, YOU since you choose to live and work here.<!-/Quote-!>

Assume the consitution was amended so that it gave the President "prima nocta" and the Supreme Count approved. Is the government justified in doing so? I'm not talking about social contract here. I'm talking about the natural rights of man and I'm re-proposing the idea that there are rights that are not justified in being taken away, no matter what society, corporation, individual, government, consitution, regime, gang, group, military, majority, minority, or anything else says.

<!-Quote-!>Quote:

Those are the Government "doing its job." [and everything preceding]<!-/Quote-!>

Okay, I didn't make it clear that this was building off the aforementioned notion of the inviolate individual. In any case, I would only support those economic interventions that have the goal of protecting people's rights which I do not see any reason to include anti-trust laws providing that the companies in question weren't engaging in coercion or fraud.

<!-Quote-!>Quote:

Last part. The American electorate has decided it wants entitlements, and is willing to trade some economic and personal freedoms to have them. That's a Democracy.<!-/Quote-!>

May I refer back to Ben Franklin? Yes, that is a democracy in the broadest sense. No, I don't support any democracy that doesn't support and protect individual rights. No, the "electorate" isn't trading economic and personal freedoms - the majority is agreeing to strip these freedoms from everyone, sometimes just select groups.

<!-Quote-!>Quote:

My Turn.
You touched on this notion of Rights.

Here are some thoughts to ponder:

You have NO natural rights whatsoever.

Anything you might believe is a Right to you is simply a contractual promise to you within certain clauses of the Federal and State Constitutions. Those promises are only valid within the ability and willingness of governmental agencies to provide for and exercise means of redress when you feel they have been broken or violated.

Therefore, your Rights only exist insofar as our society has said they do and will enforce them.<!-/Quote-!>

Here I am figuring that I have natural rights and wouldn't you know that I only have the rights that society says I do . . . wait . . .
I don't give a damn what rights society says I have. I have natural rights.

<!-Quote-!>Quote:

Without society, you only have whatever you can sucessfully defend by yourself.

Good Luck with that.<!-/Quote-!>

Have you also considered that those natural rights I get to keep are only those I can successfully defend by myself - FROM society as well as WITHOUT society. What difference does it make whether I'm defending them physically from a thug or verbally from a society? It's not like a society or a government can't use the threat of force to ensure obedience and take away MY NATURAL RIGHTS in the form of a police force or a military. The ONLY question that matters is whether these are threats to my rights or defenders of them. In America, these mostly defend my rights which I like very much . . . but I only like them because my rights are being defended. I only like democracy insofar as it is a device to protect my rights. The second these cease defending my rights I don't like them. Make no mistake, I've never associated natural rights with something that didn't need to be defended.

Long story short: I have free will; therefore, I have natural rights.

Hmm, it would seem that I'm partially equipped to answer this question of Laguna's:

<!-Quote-!>Quote:

I would like to know why some consider bailouts, quantitive easing and regulation factors that favor the crisis. And whatever more you have to say regarding monetary policiy that is not included in quantitive easing.<!-/Quote-!>

I consider bailouts to favor the economic crisis by favoring firms based on factors other than market forces. Aside from political/ethical reasons, I'm sure that it's not too far of a leap to say that supporting existing companies that would otherwise fail fosters inefficiency and stacks the deck against potential new companies by providing existing companies with artificial support. I would consider quantitative easing to favor the economic crisis because it seems to me that the value of the money supply would naturally seek equilibrium with the value of unconsumed production. This view would seem to indicate that injecting cash into a system merely promotes inflation, but I have no idea if this is what is happening. The exact effects of any of this on the larger system are a mystery to the uninitiated like myself. This lack of understanding on my end I imagine is to some extent translated on a larger scale with uncertainty over the future contributing greatly toward keeping the economy down - so my opinion would mainly be that any form of monetary policy that is perceived (the perception is more important than the facts for this) to be erratic harms economic recovery. The belief that the government will intervene drastically in any particular industry - the form of bailouts, regulations - or in the financial sector though monetary policy causes people, corporations, banks to be more inclined to "wait and see", and the US government at least appears to have no qualms with intervening. This incentive to "wait and see" would seem to explain the lack of noticeable economic recovery. Regardless of whether one type of policy with money is better or worse, a seemingly inconsistent one is doomed to be harmful.

I could be completely wrong, but as I hopefully made clear, my support of the free market is much less concerned with promoting material prosperity than with maintaining economic and political freedoms. I acknowledge that it could be wishful thinking that says that promoting economic freedoms leads to material prosperity, but at the same time, this is irrelevant to me.

@Laguna: You've called it a crisis, rather than a deep recession with an anemic recovery. Why?

<!-Quote-!>Quote:

I would like to know why some consider bailouts, quantitive easing and regulation factors that favor the crisis. And whatever more you have to say regarding monetary policiy that is not included in quantitive easing.<!-/Quote-!>

Bailouts of financial failures leave the people who made the bad decisions in charge of resources. They are more likely to mismanage those resources than those who have not failed. Also, others will see the bailouts and make some of the same financial mistakes, expecting the same bailouts. So they weaken the economy.

Regulation as refereeing of the economic players, allowing them to play the game but enforcing fair rules impartially, is useful and has much support. Regulators can under-regulate (Madoff), selectively regulate (Lehman, Bear Stearns), over-regulate (what banks are claiming now), or regulate incompetently (Fannie Mae/Freddie Mac). All these things can hurt productivity within a sector and cause damage beyond it.

As for easing and monetary policy: the worry is that excessive national deficits will build excessive national debt which will fuel inflation.

You don't mention excessive government spending (aka stimulus). The concern is that the more people government employs to do useless and crappy things, the fewer people will actually be working producing useful stuff and useful services; the more monetary incentives are paid to people, companies, states, etc for postponing facing up to their problems, the longer those impending problems will fester. Overall, we'll all be the less prosperous for it.

Again, John, very well reasoned response and I will get back to you Sunday evening.

@Laguna.

Despite the huge increase in both the US National Debt and that spread throughout the world Financial Community, nothing has really changed in terms of options.

The US will have to continue the balancing act between stimulus oriented Fiscal Policy and loosening/tightening Monetary policy to try to grow/inflate our economies past the red ink.

There are no short term fixes for this mess. What little growth we see will be generally anemic with frequent contractions for at least a generation.

Barring something dramatic, such as major currency collapses or defaults from some large actors, this will have to be a long, slow, frustrating process for investors, consumers, and financial authorities.

In terms of regulations, unless the regulatory firewalls are put back up between the different financial institutions, we will see more speculative bubbles burst within the derivatives and hedge funds markets.

I am just glad that I did my profit taking in the late 90's and when long on metals when they were at historic lows. And I will be sitting on it for the forseeable future.

However, what are your views, Laguna?

Laguna, The Depression was
flagged as a German Eagle Head.

Len Peat, BS in English from "theUniversityofWellhead".

http://applieddgepshycics202.blogspot.com/ study in Vancouver\/psychic Engineering Prices This is Free admission
Please note: Fowl at eCONo(mic)s now costs a Dollar.
Future economics: .http://fowlateconomics.blogspot.com/

The Student Loan crisis is next, bigger scandal than our sub-prime mortgages... stay tuned..

how is quantitative easing the cause of our economic woes?

with basic knowledge of the business cycle one can see that recessions and recoveries are self catalyzing vicious cycles and some sort of stimulus is required to begin a recovery

just read psycho honeys posts.... very enlightening many thanks

I'm doing great so as far as i'm concerned the recession is 0ver.

it aint started lol

yea baby keep booming like a bomb

lol

Hmm, @Psycho_Honey is one very intelligent woman indeed.

Wonders if she's single, haha oh boy.