More US Politics: The Economy

[Tag]

The recession is extremely cut and dry.

1. 9/11 happens
2. Fed cuts interest rate to prevent impending recession, credit expands (basically more dollars to spend) and people go out and spend it.
3. People go overboard with spending
4. Fed raises interests rates back to normal level, credit contracts, interests rates rise back to pre-9/11 levels. People can no longer afford what they bought.
5. People panic, how could they have ever forseen that the interest rate might go back to its normal position?
6. People default on their loans, bussinesses lose money, growth falls
7. Fed cuts interest rate to prevent impending recession.....

This time the affects of cutting the interest rates are even worse. The first time we already saw a fall in the value of the dollar and inflation rise. Now that it's happened again so soon, the dollar is dropping like a brick and
people are getting rid of them by buying oil (which the dollar is pegged to), causing already skyrocketting oil prices to skyrocket even more. Larger amounts of inflation then what weve been used to the past 20 years is soon to follow.

[rounds1]

Being I just bought a house a couple years ago, when the boom was in full affect, I can tell you that another problem is mortgage companies or banks or 3rd parties will tell their client what they can "afford" to the very penny of what that person might be able to afford. My wife and I were given permission to spend 100k more on a house than we did. Had we spent the alotted amount, we'd be screwed today.

People don't realize that taxes go up, gas goes up and everything else in the world. If you buy a house that you can barely afford today, odds are you WON'T be able to afford it tomorrow.

Plus, everyone thought they were going to jump in the lucrative housing market and make a killing. Then look what happened...

[dz06lt]

Originally Posted by fiasco8

Alright, let's touch on something that hits a little closer to home.

Does anyone think that these housing pains could have been stymied more if wages had kept up better with inflation? After all, every year we hear of companies having to raise prices on products due to the rising costs of make them. Where does this extra cost land? With us. Do we have a choice of charging more for our labor? Not really.

I think this, coupled with risky lending had lead to the housing problem. After all, the less money people have to put on a down payment due to their stagnating wage, the more they rely on credit.

This is another commom problem people think well if they are hurting lets just increase their wages. Sounds good right? problem solved?? Absolutly not! Raising wages or the minimum wage has exactly the opposite effect your looking for, meaning you raise someones pay you now have to charge more for your products than you did yesterday. This hurts the less fortunate more than anything bcuz now they have more money but what they need to buy costs more usually alot more. So they now end up with less in their pockets. This could lead to even worse things. lets say I own a small business and employ 10 people and then all the sudden someone comes in and say well now you have to pay them all more. What am i gonna do to cut costs? 1. Raise the prices I charge for my goods and services(which could hurt me in the long run by losing me customers) or 2. I will fire some employees to keep my prices the same but then i make my employees work harder for the loss of the fired people(employees become unhappy). So this answer doesnt EVER work

[chedabob]

Maybe I don't have a proper understanding of the economy, but I'd say the wealthier members of society are wrecking the economy. By having lots of money tied up in bank accounts and property, there isn't enough to go around for the rest of the economy, so inflation rates rise.

Also, reliance upon imported goods is another problem. Every dollar spent abroad is a dollar taken from the economy. Bringing jobs to America eats into profit margins, but you're giving people jobs to the people that need them, and you're strengthening the economy.

[rounds1]

Originally Posted by chedabob

Maybe I don't have a proper understanding of the economy, but I'd say the wealthier members of society are wrecking the economy. By having lots of money tied up in bank accounts and property, there isn't enough to go around for the rest of the economy, so inflation rates rise.

Also, reliance upon imported goods is another problem. Every dollar spent abroad is a dollar taken from the economy. Bringing jobs to America eats into profit margins, but you're giving people jobs to the people that need them, and you're strengthening the economy.

Well, with how things are structured today, the wealthy are very important. Everyone says "tax the wealthy!" which is good in theory, but hurts in other ways. If you take money from them, they're going to take from you to make up for it. The wealthy hurt and help, but I don't think they're the major cause for our issues today. If not for them, nobody would be employed. It's a double-edged sword.

With America in the shape it's in today concerning jobs, even though people see it as a negative that many companies are outsourcing, it may not be as bad as they believe. The baby boomers over the next 20 years are going to start retiring, leaving us with huge holes in our work force. We need to outsource today to ensure someone is doing that job tomorrow.

A lot of our issues simply come down to the boom we went through a few years back. Those types of events never come without repercussions.

[dz06lt]

Originally Posted by rounds1

Well, with how things are structured today, the wealthy are very important. Everyone says "tax the wealthy!" which is good in theory, but hurts in other ways. If you take money from them, they're going to take from you to make up for it. The wealthy hurt and help, but I don't think they're the major cause for our issues today. If not for them, nobody would be employed. It's a double-edged sword.

With America in the shape it's in today concerning jobs, even though people see it as a negative that many companies are outsourcing, it may not be as bad as they believe. The baby boomers over the next 20 years are going to start retiring, leaving us with huge holes in our work force. We need to outsource today to ensure someone is doing that job tomorrow.

A lot of our issues simply come down to the boom we went through a few years back. Those types of events never come without repercussions.

Remeber history kids taking from the wealthy and redisributing to everyone else is communism. Communism = BAD

[InsightGoalie]

Originally Posted by dz06lt

Remeber history kids taking from the wealthy and redisributing to everyone else is communism. Communism = BAD

Communism poorly done = bad. The theory of Communism works pretty well. Right now as it stands we need our government to step up to the plate and force the rich to quit fucking us over. We need raises for the working class and we need them without price gouging.

[dz06lt]

whoa whoa did you just say communism is good.... you are way off the map if you think that

[InsightGoalie]

I said the theory is good, which most would agree it is. Problem is, it will never work in practice. Instead Socialism finds much more success.

[dz06lt]

so lets say hypothetically you are a millionaire you would feel differently also socialism is a disaster