Idea To Fix Economy

[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 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?

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.