Huge amounts of surplus cash is generated in the world economy each day. We don’t live in a subsistance economy. No where near it. The planet (net net) is saving astounding amounts of money each day. What you don’t get is that the current stock market is not a good indicator of our current productive capacity. Stock market can to zero and the world economy can churn out consumer and non-consumer products just same. At least for the time being. Why do you keep saying there are no savings. There are savings all around us: excess production capacity and ready, able, willing, trained labor.
Nobody is forcing anyone. We are talking about unemployed people here.
Nobody is forcing anyone. We are talking about unemployed people here.
And much of it goes to investment, which is why I asked you earlier to present data which shows the household savings average on the countries you keep citing. And then witness how those countries have experienced great economic growth.
I am not refering to the stock market specifically.
Because in the places that are experiencing the financial woes you describe, those places do not have savings. And int he places that have a heavy amount of savings, those places have seen the greatest amount of economic investment.
All of the places that are experiencing the financial woes you describe do not have much savings. The united states for example. People have little prefernece to save, and heavy prefernece to spend. That is why people are heavily leveraged in dept. They all have new homes,. new couches, new TV’s and very little savings or investments.
It has been a well known statistic for a very long time that savings in the US has fallen dramatically over the past 10 years. Other countries with similar monetary policies have the same problem. This stems from the following two points I mentioned earlier.
- If people know that their purchasing power will increase in the future(deflation) they will be motivated to save/invest
- If people know that their purchasing power will decrease in the future(inflation) they will be motivated to spend now, and not invest.
It just so happens that the world market is heavily leveraged into the US dollar, and as such the Federal Reserve. But it is OUR ECONOMY and OUR SAVINGS which is LACKING. It has been our inflationary policy which has driven consumers to spend, not save. We have very little savings in this country. Most recent business expansions are done on credit, not on investments from savings or in some cases not even from revenue.
There is a reason why Walmart ballooned to the top of the fortune 500 list, and why bestbuy and target and all of these retail stores exploded in growth. There is a reason why retail is the industry of america now, and it is because of an inflationary policy. Consumers desire to spend today, rather than invest and save or save.
You specifically mentioned incorporating social projects. Did you not? I will quote you if need be.
Social projects are coercive by their very nature.
You are talking about social projects are you not? Projects sponsored by tax payers. They are coercive in nature.
And most of these are not savings. You need to understand that capital is heteregenous A and that it takes time to re-allocate it B.
If I have 100,000,00 dollars in savings I can allocate it to any type of object I want on the fly. Money is always ready for employment as it is the most vendible good.
If, however I have a 100,000,000 dollar factory. It will take a very long time(sometimes years) for me to find someone interested in buying that factory and then placing it into employment for re-allocation.
Capital becomes idle after a bust because it is not mobile as money is. This is why excess production, capital, and labor sits idle after a bust. It takes time to be re-allocated.
Very very very very very very very simple when one takes the humble time and interest to learn the ABCT.
Are you kidding me. Capital moves at the speed of light now. What do you mean those other places have capital and we don’t? A factory does not care if a dollar came from China or Maryland to finance it. The planet is just one huge capital market. You mean our economy can’t use a Chinese laborer’s savings to finance a factory. Do you really believe that? If so many other people on the planet are over-producing (saving) then return on investments will drop and this will be a dis-incentive for us to save. So our behavior is rational.
Mansoor
Yes. Projects will be sponsored by tax payers. And no one will be forced to work on them. Jobs will be advertised and people will be offered jobs based on match just like a private employer would.
Also, best of all. When one is an a deflationary environment. There is no need to raise taxes. Just print the money and use it. Inflation won’t happen because the whole point we are doing a project is because we have deflatiion. Printing money is just issuing new equity shares (my definition of money) just as a business would do.
Mansoor
So your ACTUALLY telling me that a 1,000,000 dollar factory can be moved faster then 1,000,000 cash?
Monetary savings are mobile, capital is not.
You obviously did not read my example about datacenters. If I build a datacenter and use 5000 3 foot Cat6 cables specifically for the length of that specific datacenter. If My datacenter goes bust, I cannot easily re-allocate my 5000 Cat 6 cables as my other DataCenter needs 4 foot cables. As such I have to attempt to re-sell it else where. It sits idle, or is sold at a discount rate.
Bingo, and as a result China has been buying cheap American Assets due to our bust. Proof that their savings, is being placed into productive use.
I really don’t even know how you came to this crazy conclusion. I didn’t mention anything like it.
Are you going to continue to make this assertion or actually back your argument up with some citations?
Your statement makes no sense. How could such a scenario cause a poor return on investment? A return on investment is decided by consumers. Disabuse yourself of any other notion that profit comes from any other place.
Profit only comes from
A) Voluntary trade or
B) By force.
There is ALWAYS a return on investment if you satisfy consumers and as such there will always be a demand for investment as consumers always seek to further improve their situations.
But everyone is forced to pay for them. So they are done by FORCE.
Explain to me this, if your system works. Why don’t we rally up 90% of the work force to build one big gigantic pyramid. What would that do? Destroy roughly 90% of the natural resources, leaving 10% of the population to feed, produce, and serve the other 90%.
This situaton would cause massive deaths of starvation. Now lets assume just 1% of our population is used to build a pyramid. Well that means that we will probably squelch about 1% of the natural resources, and remove 1% of the productive labor force from the productive private market, placing them into a job that does nothing productive at all. If Pyramids made food rain from the sky that would be different, but as such government projects are always huge projectrs that produce nothing of desire.
In addition to that, 99% of the population would be paying for that 1% of the labor force to continue building a stupid object. They would also have a 1% price inflation as there would be 1% less natural resources.
Government projects ARE DONE BY FORCE, AND THEY DO NOT PRODUCE ANYTHING OF TANGIBLE VALUE. If they did, such projects would have been under-taken in the private market economy.
In all cases mal-investment on the private market would be more productive to the economy than governments coercive(Forced) projects which produce absolutely nothing and can never go bankrupt, as they are perpetually carried on over the shoulders of the tax payers.
Yes. Chinese are saving too much and they will end up buying much of America. if we don’t want that just stop trading with them. We are giving them the dollars they will use to buy most of our assets evenutally.
You cannot anticipate how much deflation there will be in the future. You can only guess, and inflate that much. You are not god, how many times must I tell you? No matter how much you wish you cannot see into the future.
And no printing of new money is necessary under deflation, as the economy as a whole would become radically richer! Why do you want to squelch the possibility of eliminating famine, starvation, shelter, ect…
Why do you want to constantly remove the poor from a more prosperous status? Deflation is by it’s very nature a sign of a healthy economy. It shows that more is being produced than was before, and that consumers now have access to more things.
Deflation is good. It’s like you telling me I should not strive to make money. I should just get 100 dollars(Or any other arbitrary number you come up with) and just keep it in my bank and stare at it.
Saying that deflation is bad is like telling people they shouldn’t improve their economic condition. It’s asinine, sorry to be rude, but it is sheer lunacy. You are so fundamentally confused it’s appalling that you continue to embarrass yourself this way. [:(]
From this point on we must do things to discourage hoarding. Encourage people to spend and invest only when investment opportunities are available. Humans are becoming too productive too fast due to the use of information technology, best practices in business processes and modern ways of managing people.
We have to find projects to do. This is not just a USA problem. This is a global problem. The world economy is like a body. You must maintain the temperature within healthy levels. Too hot or too cold will both leads to disaster.
This project is not one time. We will have to continue to find things to do for people if the market does not (i.e., if deflation ensues). From now on this is how it will have to be.
Again you just skipped my whole statement.
First off are you god? If you are not god then how can you magically know what is too much or too little savings for someone. Since you are not god you cannot know. So quit making foolish statements.
Second off their alleged “excess” savings has placed them in a position of economic prosperity. You have refuted your own argument. Congrats!
Better to have them purchased and employed, then sit abandoned and unused/idle.
Did you study the movie theater investment decision scenario I re-posted? We cannot make progress until you understand the issue exposed by that example.
Why hoarding is good? Why do would you NOT want to create economic growth?
But as a speculator you cannot decide for other people when to do this.
This is the second time you’ve made such a statement filled with folly.
Great pick up a shovel and start digging ditches. Let me know if food magically falls out of the sky in the process.
Great then lets round up the whole world and build a massive pyramid, and in the process starve since we are too busy doing a stupid government project, and forgot to let the market provide food/shelter/ect…
If left alone the market would have had us all employed in the first place.
So far you have read 10% of what I wronte, didn’t bother reading a single article provided to you here, and watched none of the videos’.
You are a zealot, not interested in learning but interested in being right.
You never re-poisted it but:
You don’t know the first thing about Money, Credit, and Interest. You don’t know the first thing about Capital, investment, and savings. If we cannot get the fundamental concepts correct, how is any story you fabricate going to make any difference?
The concepts come before your story.
I could make a story that says gravity doesn’t exist, such a story is not reality. I could make a story that all men stop investing, it would be just as silly as saying that all men magically turned murderous one day. All of these stories are fairy tales.
Those excess savings had to be consumed by us. That is why they ended up in this position. If we had not consumed those excess savings there would have been deflation in China. In a way they exported their deflation problem to us. Now we have to spend more or else the whole planet will engulf in a deflationary ball of fire.
Mansoor