Less Government or Lower Wages? You Decide.

[Kevin_Kennedy]

The nationwide revelry surrounding our apparent economic recovery was disrupted this week by the release of lower-than-expected retail sales data. However, rather than sending a chill up the spines of those hoping for a quick end to the downturn, the numbers should be welcomed. Though this may come as a surprise to most observers, lower retail sales are precisely what our economy needs.

To return our economy to health, we must first allow market forces to ring out the excesses of the bubble years. Even government economists acknowledge that this decade’s spending boom resulted from a combination of asset bubbles and the dangerous overextension of consumer credit. Yet the same economists balk at the logical need for spending to drop now that the stimuli are no longer in effect. They argue for the resumption of spending by any means, regardless of its ultimate cost. This is a recipe for momentary gain and lasting pain.

Less Government or Lower Wages? You Decide. by Peter Schiff

 

[Skull Pilot]

Hey Kevin,

How psyched am I?

Peter Schiff for Senate 2010*|*Home

[YOUTUBE]VJcMrOpeFWE&eurl[/YOUTUBE]

 

[Kevin_Kennedy]

Hey Kevin,

How psyched am I?

Peter Schiff for Senate 2010*|*Home

[YOUTUBE]VJcMrOpeFWE&eurl[/YOUTUBE]

Hopefully very psyched. He's already broken the fundraising record previously set by one of his opponents, so I'd say Schiff is doing great so far.

Are you from Connecticut?

 

[Skull Pilot]

Hey Kevin,

How psyched am I?

Peter Schiff for Senate 2010*|*Home

[YOUTUBE]VJcMrOpeFWE&eurl[/YOUTUBE]

Hopefully very psyched. He's already broken the fundraising record previously set by one of his opponents, so I'd say Schiff is doing great so far.

Are you from Connecticut?

yes and I can't wait to get dodd the eff out of office.

Peter is the first candidate I've ever given money to.

 

[Kevin_Kennedy]

Hey Kevin,

How psyched am I?

Peter Schiff for Senate 2010*|*Home

[YOUTUBE]VJcMrOpeFWE&eurl[/YOUTUBE]

Hopefully very psyched. He's already broken the fundraising record previously set by one of his opponents, so I'd say Schiff is doing great so far.

Are you from Connecticut?

yes and I can't wait to get dodd the eff out of office.

Peter is the first candidate I've ever given money to.

I don't blame you, and congrats on having such a great candidate to support. Ohio isn't so lucky, so far, in our upcoming Senate election.

 

[editec]

Basically what lowered consumer spending means is that people are doing without.

And while I appreciate that many of you imagine that's exactly what this nation needs, I suspect that few of you understand how that becomes a vicious cycle of economic misery.

As consumers spend less, more people lose their jobs, necessitating that as they spend less, still more people lose their jobs.

And since, as people are losing their jobs, state revenues (on sales taxes, mostly) decline, therefore the states end up broke.

Since MOST services that all of us need are paid for by the STATES, the quality of all our lives goes down.

Now thge books might look great as this happens, but our lives are going to shit at the same time.

 

[Kevin_Kennedy]

Basically what lowered consumer spending means is that people are doing without.

And while I appreciate that many of you imagine that's exactly what this nation needs, I suspect that few of you understand how that becomes a vicious cycle of economic misery.

As consumers spend less, more people lose their jobs, necessitating that as they spend less, still more people lose their jobs.

And since, as people are losing their jobs, state revenues (on sales taxes, mostly) decline, therefore the states end up broke.

Since MOST services that all of us need are paid for by the STATES, the quality of all our lives goes down.

Now thge books might look great as this happens, but our lives are going to shit at the same time.

As Peter points out in his article, if we don't start living within our means now then we'll eventually be forced to live within our means whether we want to or not.

Consumers Don't Cause Recessions - Robert P. Murphy - Mises Institute

This article exposes the fallacy of the so-called Paradox of Thrift.

 

[PeterS]

The nationwide revelry surrounding our apparent economic recovery was disrupted this week by the release of lower-than-expected retail sales data. However, rather than sending a chill up the spines of those hoping for a quick end to the downturn, the numbers should be welcomed. Though this may come as a surprise to most observers, lower retail sales are precisely what our economy needs.

To return our economy to health, we must first allow market forces to ring out the excesses of the bubble years. Even government economists acknowledge that this decade’s spending boom resulted from a combination of asset bubbles and the dangerous overextension of consumer credit. Yet the same economists balk at the logical need for spending to drop now that the stimuli are no longer in effect. They argue for the resumption of spending by any means, regardless of its ultimate cost. This is a recipe for momentary gain and lasting pain.

Less Government or Lower Wages? You*Decide. by Peter Schiff

I'm a bit confused. Both the 2001 recession and our current recession are products of over-capitalization. Over-capitalization can only occur when government steps away. Cyclical 'washing' of assets, as the author seems to be promoting, is fine unless unless the economic cycle is shortening as now seems to be the case. This isn't a recipe for a higher quality of life but lower since there is never enough excesses incurred to cover lean years.

It isn't a question of big or small government but smart government. The regression line for business spending and investment turned negative at the end of 1997 due to over-capitalization but government continued policies to encourage capitalization. The end result was a bubble that when it collapsed the government action was to encourage further investment. In short, it was one dimensional thought, in this case less government, that lead to our current dilemma.

We are a democracy so it isn't a question of whether government will act-it will. That being the case we are better off to stop electing ideologues and start electing leaders to take the steps necessary to address the problems at hand...

 

[Skull Pilot]

Basically what lowered consumer spending means is that people are doing without.

So? A lot of us could do without a lot of things.

And while I appreciate that many of you imagine that's exactly what this nation needs, I suspect that few of you understand how that becomes a vicious cycle of economic misery.

An economy based on blind, rabid consumerism has led us where we are. So would you rather a cycle of booms based on false prosperity (credit) and the inevitable busts or a long term outlook that values thrift, savings and investment?

As consumers spend less, more people lose their jobs, necessitating that as they spend less, still more people lose their jobs.

And the market will find ways to serve the new attitude of the masses. Or maybe serve the blind consumerism of others in the world. Imagine an economy based on providing the best value at home while reaping the benefits of another's wanton consumerism.

Kind of like our blind consumerism enriched other countries for the past few decades.

And since, as people are losing their jobs, state revenues (on sales taxes, mostly) decline, therefore the states end up broke.

Since MOST services that all of us need are paid for by the STATES, the quality of all our lives goes down.

Government has been the worst offender of misfeasance. As tax revenues grow, the need for government spending does not necessarily grow at the same rate. But as a gas will expand to fill the space available so will government spending expand as to waste all tax revenues collected. But where a gas cannot exceed the volume of any given space, government spending almost always exceeds the tax revenue collected.

Now thge books might look great as this happens, but our lives are going to shit at the same time.

Sorry Ed but as my tax bill has risen, the level of services from my government has not. So IMO our lives are lessened when government demands of our resources for diminishing services.

 

[Supposn]

PeterS,
I obtained this definition from a World Wide Web site entitled
"Businessdictionary.Com":

"Over capitalization"
Definition
Situation where a firm has more capital than it catered-for or needs. Thus, its assets are worth less than its issued share capital, and the earnings are insufficient to pay dividend and interest. This situation is remedied generally by buying back issued shares (stock) or by paying off debt".

PeterS, from this definition, I understand “over capitalization” being a financial problem of individual investors and corporations. It is overwhelmingly, if not fully a matter regarding the transfer of wealth. I fail to see how it is of the nation’s economic concern?

Among, if not the most significant USA economic indicators are the GDP and median wage. The GDP is a comparative indication of national production of goods and services. The median wage proportion to the per capita GDP indicates the extent of that production’s distribution among our population.

Transfers of wealth are for good economic reason deliberately excluded from the calculations of GDP.

Respectfully, Supposn




























Among, if not the most significant USA economic indicators are the GDP and median wage. The GDP is a comparative indication of national production of goods and services. The median wage proportion to the per capita GDP indicates the extent of that production’s distribution among our population.

Transfers of wealth are for good economic reason deliberately excluded from the calculations of GDP.

Respectfully, Supposn

 

[Kevin_Kennedy]

The nationwide revelry surrounding our apparent economic recovery was disrupted this week by the release of lower-than-expected retail sales data. However, rather than sending a chill up the spines of those hoping for a quick end to the downturn, the numbers should be welcomed. Though this may come as a surprise to most observers, lower retail sales are precisely what our economy needs.

To return our economy to health, we must first allow market forces to ring out the excesses of the bubble years. Even government economists acknowledge that this decade’s spending boom resulted from a combination of asset bubbles and the dangerous overextension of consumer credit. Yet the same economists balk at the logical need for spending to drop now that the stimuli are no longer in effect. They argue for the resumption of spending by any means, regardless of its ultimate cost. This is a recipe for momentary gain and lasting pain.

Less Government or Lower Wages? You*Decide. by Peter Schiff

I'm a bit confused. Both the 2001 recession and our current recession are products of over-capitalization. Over-capitalization can only occur when government steps away. Cyclical 'washing' of assets, as the author seems to be promoting, is fine unless unless the economic cycle is shortening as now seems to be the case. This isn't a recipe for a higher quality of life but lower since there is never enough excesses incurred to cover lean years.

It isn't a question of big or small government but smart government. The regression line for business spending and investment turned negative at the end of 1997 due to over-capitalization but government continued policies to encourage capitalization. The end result was a bubble that when it collapsed the government action was to encourage further investment. In short, it was one dimensional thought, in this case less government, that lead to our current dilemma.

We are a democracy so it isn't a question of whether government will act-it will. That being the case we are better off to stop electing ideologues and start electing leaders to take the steps necessary to address the problems at hand...

Not quite. It was the Federal Reserve's policy of low interest rates that caused both bubbles to form and inevitably bust. That means it's a direct result of government policy, not of the free market.

 

[Supposn]

Editec,
Retail sales certainly affect current business climate, they do not in the long term affect our nation’s economy. That’s because long term retail sales volume is driven rather than drives the economy.

Respectfully, Supposn

 

[Paulie]

Why is it so hard for people to grasp the concept that artificially low interest rates entice excess borrowing, leading to unsustainable leveraging? That's precisely what we've watched transpire over the past 10 years specifically.

Too much money was created to reflate prior bursted bubbles, and that money was malinvested. That brought us the housing bubble.

It's a never ending cycle. Creating more money to fix a problem that was caused by creating too much money is a fine example of the definition of insanity.

The Fed creates money, buys securities, which in turn increases reserve amounts of federal reserve member banks from which the Fed purchases said securities, and lowers the federal funds rate. Those extra bank reserves are lent out excessively while the interest rates are low, and now an excess amount of money enters the economy. That excess money looks for places to grow, rather than depreciate in value due to inflation, and that's why bubbles form.

What else can you expect when there's billions upon billions of dollars of new money entering the economy? People would be fools to just let it sit in cash form and lose value, so they look for that special place to find maximum growth. Eventually a specific asset class becomes the hot item, and you have yourself a bonafide bubble forming.

That malinvestment is only going to be controlled by not creating so much new money anymore. If we don't stop repeating our mistakes, we're toast.

We're not even close to deleveraging ourselves to sustainable levels, and the government's already doing everything they can to get us into more debt. It's ridiculous.