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If the government doesnt borrow enough then the banks are left with depositor money in their banks that they have to loan back out in order to pay their investors.
This loaning money then goes into the private sector businesses which of course creates jobs.
Banks have no choice but to loan the money out because they cant invest it per federal law.
The less money the government is borrowing, the more economic activity occurs in the private sector.
But if the economy is bad, and jobs scarce, how do you get people/businesses to borrow money? i.e. take on even more debt.
This is the fundamental issue addressed by QE. (BTW, they did create that bank)
But if the economy is bad, and jobs scarce, how do you get people/businesses to borrow money? i.e. take on even more debt.
This is the fundamental issue addressed by QE. (BTW, they did create that bank)
People always want to borrow money because there is always someone who wants/needs to cash out of their ventures, in this instance, due to a bad economy.
People have no problem taking on debt, most wealthy individuals got that way through debt.
Why not? You're looking at the high point and low point. Oil is a commodity and speculation is a factor, but we have a supply glut of oil on top of lowered projected global demand due to lower growth.
We had barges full of oil sitting idly when oil was $145 also.
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Government small or big or whatever talking point you make up isn't the issue.
Big government has to feed itself constantly more and more.
No, speculation really isnt a factor. Thats another left wing kook talking point.
For every individual betting the oil price will go down, there is another one betting it will go up, otherwise the commodity transaction cant take place. There is no money economic impact taking place by simply changing who holds the oil contract.
Its complete hogwash..
Speculation? I believe the words used was unreasonable exuberance.
People always want to borrow money because there is always someone who wants/needs to cash out of their ventures, in this instance, due to a bad economy.
People have no problem taking on debt, most wealthy individuals got that way through debt.
That didn't answer the question. People might want to borrow money for a house, but that doesn't mean they are willing to do it, nor that they will be qualified to do it.
For example. If the Federal Reserve increased its balance sheet by $60B, and "loans" this money to BofA @0% which then takes the money and then deposits that money back at the Fed and earns 3%. BofA is getting profits which helps BofA.
But how does this money make it's way into the economy? What does BofA do to get this money, which works out to be $600B in real currency into your pocket and everyone elses? Remember that next month, another $60B will be coming, and the month after that .............
It's not a black and white issue. And Europe is made up of many nations and those who have enacted austerity are not doing too well.
That's doublespeak! They had to enact austerity BECAUSE THEY SPENT THEMSELVES INTO UNSUSTAINABLE DEBT!
No matter how you play with numbers or how creative the accounting is, the crow will come home to roost. The only alternative to paying off the debt, is to go bankrupt! The world powers are already pushing to replace the once mighty USD with another currency. They have good reason since our politicians seem to think the credit card is limitless.
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Originally Posted by pknopp
If a person had to pick 5 places to live in this world Japan would make the list in a high percentage of cases.
They have experienced long lasting deflation. Has it turned them into the mess so many other countries are?
Nope! In fact the Yen has done far better against the dollar than the Euro and AUD. If I'm not mistaken the CAD has done quite well also, and look how Canada turned around their debt (through austerity in a sense) back in the 90s and their economy has exploded. They stopped spending more than came in.
That didn't answer the question. People might want to borrow money for a house, but that doesn't mean they are willing to do it, nor that they will be qualified to do it.
For example. If the Federal Reserve increased its balance sheet by $60B, and "loans" this money to BofA @0% which then takes the money and then deposits that money back at the Fed and earns 3%. BofA is getting profits which helps BofA.
But how does this money make it's way into the economy? What does BofA do to get this money, which works out to be $600B in real currency into your pocket and everyone elses? Remember that next month, another $60B will be coming, and the month after that .............
Let's face it... the collusion between the FED and the banks is tantamount to a scam on taxpayers, just as the "too big to fail" bailouts were as well.
Banks have no reason to disperse cash into the economy when they can skim 3% (on billions) from the very taxpayers they borrow the money from. It's a big smoke and mirrors circle jerk.
Let's face it... the collusion between the FED and the banks is tantamount to a scam on taxpayers, just as the "too big to fail" bailouts were as well.
Banks have no reason to disperse cash into the ecomomy when they can skim 3% (on billions) from the very taxpayers they barrow the money from. It's a big smoke and mirrors circle jerk.
Most people don't realize that the Federal Reserve didn't even exist for most of the USA's history (created in 1914) and didn't become 100% responsible for issuing the USD until 1971.
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