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Thread: The Future

  1. #11
    Senior Member Anja's Avatar
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    I think we all make a mistake when we focus on our material subsistence to guage how well off we will be in the future. People are capable of living in poverty if they have the bare minimum of things needed for existence.

    What concerns me more is the values system of the culture and I see many warning signals that things are not going to go as well for us as we would like to hope. The quality of life is dependent on the personal quality of the physical, emotional and mental health of the people who comprise it.

    No matter what shape the machine is in, if the people responsible for running it are impaired it is not going to function well. And we live in an extremely psychologically unhealthy society today.

    I won't even mention the number of environmental disasters which loom on the horizon.

    No. Things are not nearly as secure as we would like to believe.
    "No ray of sunshine is ever lost, but the green which it awakes into existence needs time to sprout, and it is not always granted to the sower to see the harvest. All work that is worth anything is done in faith." - Albert Schweitzer

  2. #12
    Senior Member LostInNerSpace's Avatar
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    Quote Originally Posted by reason View Post
    No, just no. Bad idea. Americans have to stop borrowing money.

    Keynesian monetary and fiscal policy are both veiled methods of borrowing. In some circumstances they do little damage and may even appear beneficial (so long as future earnings are not overshot), but right now they are a recipe for disaster (especially since the deflation we are currently witnessing is temporary, and crucially, not due to a decrease in the money supply). The Federal Reserve just shouldn't exist--worst idea ever.
    Do you have a better idea? Should we sit back, cross our fingers, and hope Santa stuffs peoples stockings with wages in exchange for milk and cookies?

  3. #13
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    Quote Originally Posted by LostInNerSpace View Post
    Do you have a better idea? Should we sit back, cross our fingers, and hope Santa stuffs peoples stockings with wages in exchange for milk and cookies?
    Do nothing. That is a much better idea. The government can do nothing to fix this problem--that train has sailed! It can, however, deepen the problems considerably, and all its policies seem bent on doing just that (if it were my intent to covertly destroy the US economy, I'd be doing exactly what they are doing). Sure they might delay the inevitable, but just as the addict can delay the crash by consuming more and more drugs, doing so will only make the inevitable more intolerable.

    That said, the government can do something to help the economy. It can rein in spending, eliminate bureaucracies, deregulate, cut taxes, and stop doing all the other things it does to slow the economy, such as promoting protectionism, subsidising farming, steel, or any number of other economically stupid activities. The government can help the economy by doing far less.
    A criticism that can be brought against everything ought not to be brought against anything.

  4. #14
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    The Fed is pursuing an expansionary monetary policy to counter deflation.

    However, deflation, that is, a decrease in prices, has many possible causes. One cause is a contraction of the money supply. Another cause is a decrease in expected future income--people spend less today when their future expected income decreases.

    The credit bubble maintained the illusion of high future income, so people borrowed and spent more today. But the bubble has burst and the illusion it created betrayed. People are now spending less, and rightly so. Deflation is the result.

    Inventories are now overstocked. Ordered to meet a demand which is fizzling out as the credit bubble bursts, companies are now selling items at knock down prices. And these inventories are not being replaced in full, and why would they? Too many Americans have spent all their money and cannot afford to maintain the same rates of consumption.

    The money supply, meanwhile, ought to remain constant. While these inventories are being shed there will be deflation, but it will cease once inventories adapt to the new and reduced demand. Prices would then rise again and settle somewhere near where they were before.

    Unfortunately, the Fed is treating this deflation like a contraction of the money supply (such that occurs during a spate of bank runs) and prescribing inflation by increasing the money supply. But once the deflationary bump caused by a decrease in expected future earnings has passed, the US will be lumped with a much larger money supply and substantial inflation.

    This will further deteriorate what little savings the US has and disincentivise saving in the future.

    (I hope that I am wrong).
    A criticism that can be brought against everything ought not to be brought against anything.

  5. #15
    Senior Member LostInNerSpace's Avatar
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    Quote Originally Posted by reason View Post
    Do nothing. That is a much better idea. The government can do nothing to fix this problem--that train has sailed! It can, however, deepen the problems considerably, and all its policies seem bent on doing just that (if it were my intent to covertly destroy the US economy, I'd be doing exactly what they are doing). Sure they might delay the inevitable, but just as the addict can delay the crash by consuming more and more drugs, doing so will only make the inevitable more intolerable.

    That said, the government can do something to help the economy. It can rein in spending, eliminate bureaucracies, deregulate, cut taxes, and stop doing all the other things it does to slow the economy, such as promoting protectionism, subsidising farming, steel, or any number of other economically stupid activities. The government can help the economy by doing far less.

    You're living in an idealistic fantasy. Explain in depth why these measures would work or how they would be practical. I agree with "rein in spending and eliminate bureaucracies", although I'm more likely to say "eliminate inefficiencies".

  6. #16
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    Quote Originally Posted by LostInNerSpace View Post
    You're living in an idealistic fantasy.
    The way I am describing the current situation is anything but an idealistic fantasy of mine.

    Explain in depth why these measures would work or how they would be practical. I agree with "rein in spending and eliminate bureaucracies", although I'm more likely to say "eliminate inefficiencies".
    I will explain in as much depth as I feel is necessary.

    In any case, most of the policy suggestions are basic stuff and would help regardless of any recession. The prospect of a depression would just make them more timely and help ease the abrupt changes that will otherwise occur. Unfortunately, many politicians are actually trying to increase spending as though in a Keynesian induced stupor.

    Then again, perhaps they just want to be seen to be "doing something", that's what many people seem to want. Who cares if they cause major inflation and slow the economic recovery, at least they're trying to do something, right!?

    The words "eliminating inefficiencies" are almost interchangable with "eliminating government interference".
    A criticism that can be brought against everything ought not to be brought against anything.

  7. #17
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    I'm not in the mood to articulate this at great length, but I honestly think we're on the verge of a new era that'll parallel the early Medieval period in many ways.

    Hence why I often joke about being a Neo-Medievalist.

  8. #18
    Senior Member Anja's Avatar
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    I liked your thought, Peguy. I've thought about this as well. I think we will see a need for more human interdepence and cooperation. Perhaps we'll see more of the bartering system again. Small groups of interdependent "families."

    And probably increased brutality in the sense that we will find ourselves living closer to the bottom of Maslow's Pyramid of human needs.

    We're already seeing an increase in interest in spiritual matters which some would call superstitious.

    The center cannot hold, and as history has proven time and again, the pendulum will swing. We appear to be at the crux.
    "No ray of sunshine is ever lost, but the green which it awakes into existence needs time to sprout, and it is not always granted to the sower to see the harvest. All work that is worth anything is done in faith." - Albert Schweitzer

  9. #19
    Senior Member LostInNerSpace's Avatar
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    Here is an idea. Feel free to trash it with constructive criticism. It is said small business is the engine of job creation in this country. I don't know if that is true, I have not seen any hard data. But let's assume it is true. Access to liquidity from banks to fund operations is hard to come by in this environment. Cash flow is the life blood of any company. A profitable company can go bust just because they have insufficient cash flow to meet their obligations. A significant portion of the operating expenses of a company are often services that other companies provide or can provide. The idea is basically to setup a barter system. Companies can offer to provide a service in exchange for barter credit. In return, they can redeem earned barter credit for whatever service they need. Most people are risk averse in a recession. Less borrowed money means less risk exposure. Of course, barter transactions would still count as liabilities (risk) or assets so long as the transactions are at arms length.

  10. #20
    Sniffles
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    Let me put it this way: If a small company goes under, the wider implications are far less than if a big company does.

    A small company tends to be more rooted in the places it operates, and by default will be unable to outsource itself. It can certainly do business in other countries or entities from those countries, but it's abilities to actually pick up and move are limited.

    With smaller businesses, you can have numerous competitors within just one industry - rather than one, two, three big ones.

    In other words, you may actually have a real free market as opposed to a mere oligopoly - which is largely what capitalism has degenerated into.

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