Idea To Fix Economy

[Militarycom.]

This idea is quite simple, all the u.s. has to do is put large taxes / tarrifs on imported goods so that it would be more beneficial for companies to have there business in the U.S . Then after they start having business here rather in other countries we will have alot more jobs and anything bought in the u.s. would go to right back into the u.s. economy rather than another country. Please post any suggestions.

[kk.]

lols k.
for starters, its not just the US in a recession. near enough every country is. Secondly, its not profitable for a lot of companies to be in the US, such as manufacturing electricals or clothing. So no, not a way to 'fix the economy'.

[Caution]

i'm surprised you haven't been headhunted yet..

[Jackk]

the solution to the financial crisis is on habbox forum.

[-:Undertaker:-]

It is simple, keep taxes lowered so people will be more inclined to spend, slash public sector spending and force the banks to loan out money to collapsing companies so they can survive/secure the loans they need which keeps people in work/keeps people and the business paying tax to the government.

[Militarycom.]

Duh thats the problem for it not profitable to be in the u.s. so you make it unprofitable for them to be in other countries so they have to be in the u.s. and if we buy american it would become profitable, also the guy with lowering taxes if you lowered taxes you eased budgets somewhat but then what you still would have no job and be broke. The whole thing is o make jobs not have lower prices.

[nvrspk4]

Nah that's protectionism and would mess over everyone else, plus do you have any idea how much we get from abroad? More problems than solutions.


It is simple, keep taxes lowered so people will be more inclined to spend, slash public sector spending and force the banks to loan out money to collapsing companies so they can survive/secure the loans they need which keeps people in work/keeps people and the business paying tax to the government.

Nah because the tax will mostly go back to the rich who will save some of it, the MPS and all that business. If its taxed and spend by the government the MPS (marginal propensity to save) doesn't enter the picture and a larger percentage of the funds are used.

And how exactly do you force banks to loan out money? :P

[FlyingJesus]

This idea is quite simple, all the u.s. has to do is put large taxes / tarrifs on imported goods so that it would be more beneficial for companies to have there business in the U.S . Then after they start having business here rather in other countries we will have alot more jobs and anything bought in the u.s. would go to right back into the u.s. economy rather than another country. Please post any suggestions.

You're right, making everything expensive IS the answer! Or do you expect companies to be forced to start production in a country that costs far more than their current outsourcing and still keep product prices the same for consumers?

[5,5]

Than everyone would just hate us more. Dumb plan.

[Militarycom.]

True other countries would hate us for it, but china, japan, and other major economies put large taxes on our goods. By the way the person who was being sarcastic about expensive stuff, you're missing the point things would'nt go insanely high. I meant the it's better to be employed and have good business rather than having slightly lower prices. And having really low prices does'nt help because all the low priced items usually come from companies in other countries to pay off those workers instead of us. I'm not saying its a full solution to the economy but it would help. Other stuff would be giving proper loans, fixing housing market, and lowering plus maybe even getting rid of taxes put on companies to make the U.S. a profitable place.

[5,5]

Well what do you expect other countries to do when they hate us? Bomb us. Simple as. Itll just start MORE wars which will make us spend billions more every month and put us right back where we are now, probably worse.

[nvrspk4]

True other countries would hate us for it, but china, japan, and other major economies put large taxes on our goods. By the way the person who was being sarcastic about expensive stuff, you're missing the point things would'nt go insanely high. I meant the it's better to be employed and have good business rather than having slightly lower prices. And having really low prices does'nt help because all the low priced items usually come from companies in other countries to pay off those workers instead of us. I'm not saying its a full solution to the economy but it would help. Other stuff would be giving proper loans, fixing housing market, and lowering plus maybe even getting rid of taxes put on companies to make the U.S. a profitable place.

To impose such a restrictive tax so as to make American products more competitive than foreign made products there would certainly be a huge hike in prices. When they have people working for dollars a month and we have a minimum wage of $7.50 an hour we're not competing with manufacturers.

Beyond that, the wage spiral would kill us. There are two possibilities.

1) Wages stay at lows, but prices have gone up. Things are now too expensive for people to buy. Sure they're employed but the Cost of Living has gone up so much that they might as well have been unemployed in this economy than employed in that economy. Also, because demand for products go down businesses close up as demand cannot sustain supply, people go out of business, now there's a higher CoL and again with no job!

2) Wages respond to the increase in the CoL. Then this costs the company much more on payroll, prices go up, wages, prices wages (this is called a price-wage inflationary spiral)

Giving proper loans and fixing the housing market will definitely help, but its not like poof :P Its a very difficult task, I was a part of my school's Fed Challenge team and the challenges are daunting. Surprised Bernanke hasn't committed suicide.

As far as reducing taxes, thats a huge nono, because government spending has increased so it would be irresponsible to lower taxes unless you plan to make up for it elsewhere.

[Skajo]

do what the germans did and print more money!

[Niall!]

There is no point in fixing Americas economy, America is soon going to go bust. I have a book by another Niall, not sure of his last name, and it is, he says, an insecapable fact. America already owes trillions of dollars, so when the debt is called they will go bankrupt, but before that they will try and take back the money other countries owe them.

This will cause the entire world to go bankrupt. Enjoy worrying about the economy at the moment when soon enough, there won't be an economy left to worry about.

[Militarycom.]

Ok I got the point this probably wouldnt work then, But who negative repped me without even showing there name because this was only an idea... Btw 5,5 They'd be angry but they would'nt war on us. It'd be quite dumb to war on some one just for trying to get there own companies back.

[Mentor]

If americas aim was to try and finish its economy off once and for all, while handing over dominance of the world market place to china (which is close to taking it anyway), it would be a great plan.

If ruining the economy wasnt you goal though, i'd possibly look in to getting a vague understanding of how the global economy actually works "/
TIP: Stopping other countries investing in the US (bringing more money in) while making it harder to sell to other countries (again limiting the money comeing in) - is not good business practice...

[-:Undertaker:-]

Nah that's protectionism and would mess over everyone else, plus do you have any idea how much we get from abroad? More problems than solutions.

Nah because the tax will mostly go back to the rich who will save some of it, the MPS and all that business. If its taxed and spend by the government the MPS (marginal propensity to save) doesn't enter the picture and a larger percentage of the funds are used.

And how exactly do you force banks to loan out money? :P

It is the rich who provide the jobs, punish the rich you punish the poor as business then closes and it makes it even harder for business to survive and grow, the United Kingdom in 1979 is a prime example of this. Tax cuts would help those struggling so much, and would allow higher classes of people to be able to spend more.

Emergency legislation, or like here in thre United Kingdom the government now owns most banks yet refuses to use its powers within those banks to help the people who funded the bank buy outs, the ordinary people of this country.

[nvrspk4]

It is the rich who provide the jobs, punish the rich you punish the poor as business then closes and it makes it even harder for business to survive and grow, the United Kingdom in 1979 is a prime example of this. Tax cuts would help those struggling so much, and would allow higher classes of people to be able to spend more.

Emergency legislation, or like here in thre United Kingdom the government now owns most banks yet refuses to use its powers within those banks to help the people who funded the bank buy outs, the ordinary people of this country.

On one hand you're suggesting a hands-off policy (laissez faire) and on the other hand you're suggesting a command economy :S

As far as the banks go, they hardly have enough money to give out tons of loans in these conditions, they wouldn't be solvent if they were forced to make loans, it is very important to ensure that banks stay solvent, more important in the long term than giving out loans, because if the bank collapses less places to get loans, consumer confidence plummets, TED spread widens and so does LIBOR and that will tighten lending even further.

With the comment "the rich create the jobs" etc. etc. the theory you're referring to is, in essence, the trickle-down theory adopted by Republicans many years ago which has been summarily disproved by economists time after time after time.

If you give money back to the rich, it doesn't go back to the poor 100%. First of all, they usually go to luxury items which go to other rich people, and the profit made down the line cuts away so much from the poorer and middle classes that there's little left. On top of that there is what's called the marginal propensity to save which is calculated to show that for every X dollars that you recieve Y dollars will be saved (there's also a marginal propensity to consume) however the point of the MPS is now there will be even LESS money available for the lower classes. Now if you inject the funds at a lower level of the spectrum, ie: public works projects, perhaps still not all the money goes to the poor (though it does with welfare and such) but a lot more of it gets to them.

[-:Undertaker:-]

On one hand you're suggesting a hands-off policy (laissez faire) and on the other hand you're suggesting a command economy :S

As far as the banks go, they hardly have enough money to give out tons of loans in these conditions, they wouldn't be solvent if they were forced to make loans, it is very important to ensure that banks stay solvent, more important in the long term than giving out loans, because if the bank collapses less places to get loans, consumer confidence plummets, TED spread widens and so does LIBOR and that will tighten lending even further.

With the comment "the rich create the jobs" etc. etc. the theory you're referring to is, in essence, the trickle-down theory adopted by Republicans many years ago which has been summarily disproved by economists time after time after time.

If you give money back to the rich, it doesn't go back to the poor 100%. First of all, they usually go to luxury items which go to other rich people, and the profit made down the line cuts away so much from the poorer and middle classes that there's little left. On top of that there is what's called the marginal propensity to save which is calculated to show that for every X dollars that you recieve Y dollars will be saved (there's also a marginal propensity to consume) however the point of the MPS is now there will be even LESS money available for the lower classes. Now if you inject the funds at a lower level of the spectrum, ie: public works projects, perhaps still not all the money goes to the poor (though it does with welfare and such) but a lot more of it gets to them.

I don't see anything command about it, the United Kingdom owns the banks therefore as the taxpayer paid to keep these banks afloat, the taxpayer which is home owners, business and so on should be able to secure the loans needed to keep them afloat. Until the banks start giving out the money again then the problem will drag on and on, because business keeps closing and more people go unemployed, meaning less tax to the government and in turn, less growth.

The case in the United States is differnent as far as I can see, you i'm sure haven't nationalised the banks so the only option I can think of is for the government of the United States to negociate with the banks on the issue of money flow, the answer though is not (which the UK government seems to think is) to print more money - proved it doesn't work back in the Weimar Republic and the Soivet Union where the currency was worthless compared to the Pound Sterling or American Dollar.

It may of been dismissed by left econominists, however if you look at the prime example of the United Kingdom from 1945 to 1990 then you will see it works. This country suffered with post-war decline, the government had too much power and business was leaving and closing in droves - until the Conservative government of 1979 came in and sorted the economy out, now in the United Kingdom we retain our position as a Great Power on the world stage both economically and with influence, and most importantly; life has never been better thanks to that government.

Public works projects do not help the economy at all, while we do need new bridges, roads and so forth as do you in the United States - it was World War II which ended the last depression as the economy boomed during that period with weapons manufacturing, agriculture and mechanics.

[nvrspk4]

I don't see anything command about it, the United Kingdom owns the banks therefore as the taxpayer paid to keep these banks afloat, the taxpayer which is home owners, business and so on should be able to secure the loans needed to keep them afloat. Until the banks start giving out the money again then the problem will drag on and on, because business keeps closing and more people go unemployed, meaning less tax to the government and in turn, less growth.

The case in the United States is differnent as far as I can see, you i'm sure haven't nationalised the banks so the only option I can think of is for the government of the United States to negociate with the banks on the issue of money flow, the answer though is not (which the UK government seems to think is) to print more money - proved it doesn't work back in the Weimar Republic and the Soivet Union where the currency was worthless compared to the Pound Sterling or American Dollar.

It may of been dismissed by left econominists, however if you look at the prime example of the United Kingdom from 1945 to 1990 then you will see it works. This country suffered with post-war decline, the government had too much power and business was leaving and closing in droves - until the Conservative government of 1979 came in and sorted the economy out, now in the United Kingdom we retain our position as a Great Power on the world stage both economically and with influence, and most importantly; life has never been better thanks to that government.

Public works projects do not help the economy at all, while we do need new bridges, roads and so forth as do you in the United States - it was World War II which ended the last depression as the economy boomed during that period with weapons manufacturing, agriculture and mechanics.

Nationalizing banks IS a command economy. Partially anyway.

Banks cannot lend because of a lack of funds due to bad investments. You can't create money out of nowhere, you lend out of reserves and based on the required reserve ratio, but if none of that exists then how exactly are you meant to loan? It just can't happen. Putting the funds into even more risk would be silly because it would just get you back into the same situation.

Obviously printing more money would be hugely inflationary, quantitative easing is a better solution but by no means perfect. What needs to be done is to weather out the hard times until banks can begin lending again when the economy starts to stabilize. Until then all governments can do is promote stability, but they will not in and of themselves end depression, it will be consumer confidence that does that. And in fairness, the stock markets which are a good indicator of consumer confidence along with the UMich survey show decidedly improved consumer confidence since the recession hit.

That is incorrect, giving the rich money does not promote long term prosperity, it promotes short term prosperity. It will, as they say, make the rich richer and the poor poorer. You talk about World War II ending the depression, yes it did and guess what WWII was a huge government expenditure, as was the stimulus roads project. What sustained the boom? The largest middle class in American history, also the most prosperous time in American history, and sustained too due to the education provided in the GI bill. It is the middle class, not the rich, who determine the prosperity of the country.

[-:Undertaker:-]

Nationalizing banks IS a command economy. Partially anyway.

Banks cannot lend because of a lack of funds due to bad investments. You can't create money out of nowhere, you lend out of reserves and based on the required reserve ratio, but if none of that exists then how exactly are you meant to loan? It just can't happen. Putting the funds into even more risk would be silly because it would just get you back into the same situation.

Obviously printing more money would be hugely inflationary, quantitative easing is a better solution but by no means perfect. What needs to be done is to weather out the hard times until banks can begin lending again when the economy starts to stabilize. Until then all governments can do is promote stability, but they will not in and of themselves end depression, it will be consumer confidence that does that. And in fairness, the stock markets which are a good indicator of consumer confidence along with the UMich survey show decidedly improved consumer confidence since the recession hit.

That is incorrect, giving the rich money does not promote long term prosperity, it promotes short term prosperity. It will, as they say, make the rich richer and the poor poorer. You talk about World War II ending the depression, yes it did and guess what WWII was a huge government expenditure, as was the stimulus roads project. What sustained the boom? The largest middle class in American history, also the most prosperous time in American history, and sustained too due to the education provided in the GI bill. It is the middle class, not the rich, who determine the prosperity of the country.

Indeed it is, and I was against the United Kingdom nationalising the banks anyway because our government couldnt run a sweet shop let alone a bank and government and business should be kept seperate. The point i'm making is that the United Kingdom did nationalise the banks (whether I agreed with it or not), and from this point in time the government should be forcing those banks to lend out to business and so forth.

The banks take out loans and so on to fund it, the banks are rich even when in debt hence why the management of the banks still splash out on partys that cost millions - the argument that the banks have no money doesn't wash with the public. They have our money which we put into them to hold them up.

The middle class to support the economy aswell yes indeed, they own the smaller business and the upper classes own the larger companies. The Labour government in the United Kingdom (which is a left leaning government) has punished every single class with tax after tax slapped on them, which is not good for business and is not good for the economy - something which they dont seem to understand.

Public works programmes do not contribute a lot to stimulating the economy, while a lot of these things need replacing - the government of the United States is in dangerous levels of debt and the same being with the government of the United Kingdom. Governments job is simply put like this; “It is the duty of Her Majesty's government neither to flap nor to falter.” - Harold MacMillan

Today we still practise Thatcherism both in the United Kingdom, United States and across Europe and the world. It has its ups and downs, but it works and will continue to work well into the next boom. Government cannot get a country out a recession, it can help ease it - but it is business & banking which ultimatly ends a recession.

[nvrspk4]

Indeed it is, and I was against the United Kingdom nationalising the banks anyway because our government couldnt run a sweet shop let alone a bank and government and business should be kept seperate. The point i'm making is that the United Kingdom did nationalise the banks (whether I agreed with it or not), and from this point in time the government should be forcing those banks to lend out to business and so forth.

The banks take out loans and so on to fund it, the banks are rich even when in debt hence why the management of the banks still splash out on partys that cost millions - the argument that the banks have no money doesn't wash with the public. They have our money which we put into them to hold them up.

They may have lavish parties which is silly, I agree, but that doesn't mean they have the money to give out loans on a large scale especially with the precarious lending environment at present. Its a question of liquid assets versus the so called toxic assets. You may not believe it but its the truth. Those parties are a drop in the bucket (and not as common as you might think, just that the off parties are sensationalized by the media - and rightly so.)



The middle class to support the economy aswell yes indeed, they own the smaller business and the upper classes own the larger companies. The Labour government in the United Kingdom (which is a left leaning government) has punished every single class with tax after tax slapped on them, which is not good for business and is not good for the economy - something which they dont seem to understand.

I don't know enough about British government to comment on Labour but its better to tax everyone than to reduce taxes on the rich, the taxes should be reduced first on the poor and middle classes then the rich if at all.


Public works programmes do not contribute a lot to stimulating the economy, while a lot of these things need replacing - the government of the United States is in dangerous levels of debt and the same being with the government of the United Kingdom. Governments job is simply put like this; “It is the duty of Her Majesty's government neither to flap nor to falter.” - Harold MacMillan

Public works programs put people in business, give the hurting construction industry something to work on, and help to alleviate the pains of the recession while we wait for a pickup. On the backend, the policies of Geithner and the Fed are helping to shore up the banking system so that prosperity can return. The debt is absolutely high but a study done by goldman sachs shows quite conclusively that comparatively the level of debt is not high in relation to the GDP, we've been in much worse situations before and the debt has room to grow, if necessary. I haven't seen any similar studies on the British but I know that its true for America.


Today we still practise Thatcherism both in the United Kingdom, United States and across Europe and the world. It has its ups and downs, but it works and will continue to work well into the next boom. Government cannot get a country out a recession, it can help ease it - but it is business & banking which ultimatly ends a recession.

To call it Thatcherism is a misnomer because although she adopted it she did not create it. And no, Thatcherism is not widely practiced anymore. As far as economics, she practices what is called "monetarism". "Monetarism" has been once again, disproved time and time again. Now, governments across the world use Keynsian theory, which is monteristic intervention (not the same thing as monetarism) in addition to fiscal policy to stimulate government. So no, governments more practice Keynsianism than Monetarism.

[-:Undertaker:-]

They may have lavish parties which is silly, I agree, but that doesn't mean they have the money to give out loans on a large scale especially with the precarious lending environment at present. Its a question of liquid assets versus the so called toxic assets. You may not believe it but its the truth. Those parties are a drop in the bucket (and not as common as you might think, just that the off parties are sensationalized by the media - and rightly so.)

I don't know enough about British government to comment on Labour but its better to tax everyone than to reduce taxes on the rich, the taxes should be reduced first on the poor and middle classes then the rich if at all.

Public works programs put people in business, give the hurting construction industry something to work on, and help to alleviate the pains of the recession while we wait for a pickup. On the backend, the policies of Geithner and the Fed are helping to shore up the banking system so that prosperity can return. The debt is absolutely high but a study done by goldman sachs shows quite conclusively that comparatively the level of debt is not high in relation to the GDP, we've been in much worse situations before and the debt has room to grow, if necessary. I haven't seen any similar studies on the British but I know that its true for America.

To call it Thatcherism is a misnomer because although she adopted it she did not create it. And no, Thatcherism is not widely practiced anymore. As far as economics, she practices what is called "monetarism". "Monetarism" has been once again, disproved time and time again. Now, governments across the world use Keynsian theory, which is monteristic intervention (not the same thing as monetarism) in addition to fiscal policy to stimulate government. So no, governments more practice Keynsianism than Monetarism.

I'm sorry but they do have the money, we bailed them out and funded them to survive - they do have the money yet are refusing to lend it out because they are scared they will not get the money back incase the mortage collapses/business collapses and until that fear is gone then the recessions of the world will continue.

It is better to tax everyone, however more tax should not be introduced that is the point I am making, and taxes should be reduced to help out smaller business and so sorth, whilst also helping struggling families. I do not know what the tax situation is like in the United States but I know that over here we are taxed to our eyeballs and this government had introduced more stealth taxes than that of any other. If taxes were to go up on the rich they would simply just move their fortunes overseas meaning the government would be recieving no tax at all, rather than more tax - that is what happend in the 1970s in United Kingdom.

Public works programmes funded by the government do not work, its the same with state jobs - they contribute nothing, unless they are needed such as teaching and health. The government pays someone £30,000 a year. They pay, say £15,000 in total taxes back to the government. They then have to pay VAT on food and so on, which means in the end they have very little to spend on themselves and most of the money goes back to the government in taxes, which is paying for other peoples wages who are in the same position, employed by government. Private enterprise solves a recession, not a government or its silly work programmes which, if attempted in the United Kingdom would no doubt cost billions in red tape, fall apart shortly after built or eventually be scrapped anyway. You can see in communist countrys where public works programmes were attempted, didn't solve anything and only made things worse.

I'd be worried about debt if I was you, you can have as many studies left, right, centre written as you like - doesn't mean they are right. The fact remains that the apparently most rich country in world and most prosperous is in dire levels of debt; that is not at all healthy. What was the ultimate downfall of the Soviet Union?, it went bankrupt.

Thatcherism is still practicised widely, the United Kingdom and United States being the leaders in it while even countrys like the Peoples Republic of China are opening up to it. Thatcherism basically means capitalist liberalism which we all are and if that had not been implemented, the world would not have seen the growth we saw over the past twenty years or so. Thatcherism worked and has worked so greatly, that even the Labour Party had to re-think itself fully even to be reconsidered for office again in the United Kingdom. It killed socialism.

Government intervention has only come in (Keynesian economics) because the banks would not of been allowed to collapse as that would of created a far worse situation. This though, as always; was only in emergency.

I can gurantee that when within a decade or so when the new boom is in full swing that we will be fully back to Thatcherism and the calls for more government intervention will once again be laughed at, no one could of stopped this and its actually good that it happend in the long term and it will happen again, and again... and again and thus, the cycle of capitalism continues.

[Skajo]

@5,5 - it was a joke. Sarcasm. In case you've never heard that phrase before. I am aware what printing money would do to the economy.

[Casanova]

This idea is quite simple, all the u.s. has to do is put large taxes / tarrifs on imported goods so that it would be more beneficial for companies to have there business in the U.S . Then after they start having business here rather in other countries we will have alot more jobs and anything bought in the u.s. would go to right back into the u.s. economy rather than another country. Please post any suggestions.


It would work on an ignorant point, but it wouldn't work on a bigger scale. Trade is one of the most political actions a country makes - think of countries like Zimbabwe that get presented with trade embargo's; they suffer and bad. You need trade to keep relations well, make money and most importantly to keep your country running. Everything from fruit and veg to alcohol and tobacco would suffer. You would keep the country in jobs, but most of it in poverty with the giant hike in prices - aswell as the country losing many of it luxuries.

The only thing that wouldn't suffer is...
toilet paper!

During the cold war period russia suffered a giant lose of toilet paper because America is the worlds biggest supplier of toilet paper.

Part of russia's downfall is thought to be because the paper they used to wipe their arses was everything from silly letters to top secret documents.

American agents were sent to russia with the sole task or rummaging through the toilet bins to read faeces covered documents :).

[luce]

The last time the US had large tariffs on exporting goods it contributed to the depression. In the 1900-1920ISH there was a policy of "Isolationism" although because the companies had to keep producing to give their employees work they over produced and couldn't trade with anyone else so they were stuck with warehouse after warehouse of things like Model-T Fords and Fridges..

I can't remember which president it was i have a feel it was Hoover because i know Roosevelt came in after him and had to sort things out with the new deal. Yeah it was hoover because they had "hoovervilles"

So yeah if you want to reconsider i suggest you Google the "Wall street crash" and then go to causes and i'm sure over production and tariffs will be on the list.

I really would reconsider your idea before you put it forward to Obama :)