Hi all,
I've put together a few thoughts . My first interest was history including comparative economic history which I developed an interest in in high school, so long ago. I began by studying economics at Uni. These are a few thoughts I agree with.
Fred Thompson On The Economy
(at end don't click on more or the play button, just "again" if you want to listen again)
28th December 2008 - 10 minutes
The Australian stimulus package to ape the US one was hurried through parliament during the week of the bushfires. My understanding from listening to the TV was that question time was stopped for the entire week(due to it being considered not decent for politicians to name-call each other during the bushfires I think ?). I watched on the news one female politician say it was "unpatriotic to question the stimulus package" I formed the impression it was being said that you would virtually be a traitor if you didn't support the stimulus package.. ie the handouts and take them and spend spend spend. How this is supposed to help, except in the very short term for retail shops is beqyond me!! The Xmas one was spent on the pokies and in buying plastic etc for Xmas, mostly I assume made in China , Japan. I hope their economies benefitted a little?, although I didn't hear any mention of any multiplier effect felt over there either. Some was used wisely (I think) to pay off mortgages and credit card debt.
It did keep shops open and profitable up to February, but unfortunately, and not surprisingly, it had little if no effect for the positive.
The negative effect, sadly, will be felt in the future when we are short of money and taxes are put up(affecting those working) or pensions reduced or inflation from printing money reduces the purchasing power of everyone on a fixed income and all savers including retireees trying to eke a living with their reduced purchasing power. This new stimulus is going the same way, and I think should prove to be just as useless, at best.
Luckily our govt has a money tree(TIC), the mint, and they can print as much money as they like. Taxes can only be increased so far( I Think it was up to 75% in the 30's? in some countries- perhaps that was just the marginal tax for higher income earners)to help pay back the stimulus package. Pity for those with any savings they were hoping to live on in the future, those near retirement who have worked and saved all their life, and those reliant on fixed income, their money will not hold its value. The inflation from printing money to increase the money supply to prevent deflation is the worry. With a larger proportion of our population nearing or in retirement this was always the concern for the future. Now it will be harder, and with inflation corroding their savings almost impossible. Deflation(to a mild extent) will at least keep the value of whatever savings are left, although making if more difficult for borrowers to pay back what they owe, perhaps the easieless onerous task for future generations. Any drop in prices in housing for example will mean that many can then afford a house in the future, something they had previosuly given up any hope of. Unlike the US we did not have nonre3course home loans, with little up front savings needed!
Homeowners are no worse off if they sell and buy another house and kids inheriting also no worse off, as they can still buy the same amount of housing with hwat they sell the parents house for. Any savings will retain their value and purchase the same amount of goods if not more and this may help make up for the 40% loss(some more, some less) in their savings they have lost so far. (Unfortunately the figures quoted I fear only include up to End June 2007.)
Those on fixed incomes will be better off, but perhaps they can be taxed to give debt payers a break?
I question whether we have to have these stimulus packages and massive govt borrowings to avoid this deflation scenario. Is it soo bad?
Isn't it a good thing to have cyclical gradual deflation to help hold the value for everyone.
Yes, it would stop overspending and spending before needed so may slightly slow the economy, but in the end we all only need so much food and so much clothes and so much electricity and cars.
It would cause more thriftiness, but is overspending and living beyond one's means in the longer term a great thing?.. surely the growing debt will eventually have to be paid if not by you or putting the future of your kids wuth massive tax bills, then by a lowering of the value of money for everyone(by printing more money as is happening I gather)
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FIAT EMPIRE - Why the Federal Reserve Violates the U.S. Constitution
12th June 2007 - 60 minutes
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Inside Story on Septembers Financial and Economic Meltdown
20th February 2009 - 56 minutes
http://www.marketoracle.co.uk/Article9012.html
pls use this link if above does not work
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http://www.youtube.com/watch?v=xderHvi5mDU
Ron Paul: Stimulus "Waste of Money" Sad Day for America CNN 2 16 09
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Ron Paul- the Economic Crisis
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That’s a 10-day chart of Wachovia Bank (W
, the nation’s fourth largest bank, whose “price discovery” resembled Mr Toad’s Wild Ride, before crashing in Citigroup’s (C) lap. Just remember this, the next time the SEC bans short selling, and an insolvent bank’s market cap jumps $20B overnight - SELL
http://static.seekingalpha.com/uploads/2008/10/2/saupload_wb10.JPG
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http://seekingalpha.com/article/124062-a-stairway-to-retail-heaven-part-1?source=wl_sidebar
I did notice the US spending around the world. I've wondewred how their ndollar could hold up so well, thus giving them their buying power. _________________________________