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  1. #11
    Yeah, I can fly. Aleksei's Avatar
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    Quote Originally Posted by Blairvoyant View Post
    Rich people have a lower marginal propensity to consume. That is to say, rich people will save more of the money that they make.
    Precisely. Ergo they have a higher marginal propensity to save, naturally leading to a higher marginal propensity to invest. And guess where paying jobs for the regular schmo come from?
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  2. #12
    Oberon
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    Quote Originally Posted by Blairvoyant View Post
    No dollar that is spent disappears unless it goes into a savings account.
    It doesn't disappear then either... it goes into paying for somebody else's house.

  3. #13
    Energizer Bunny Resonance's Avatar
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    Quote Originally Posted by Aleksei View Post
    Precisely. Ergo they have a higher marginal propensity to save, naturally leading to a higher marginal propensity to invest. And guess where paying jobs for the regular schmo come from?
    Not Cristiano Ronaldo's bank account. Nor even his mutual fund.

    Yes, a tycoon might have $60mil instead of $55mil to invest in his new china shop chain. He's still putting $3million more away in a Swiss bank account per year, which is more than the 1200 plebes doing road construction are saving, combined.

    What about outsourcing?
    Quote Originally Posted by oberon View Post
    It doesn't disappear then either... it goes into paying for somebody else's house.
    Banks aren't limited to only loaning the amount of money that they have saved. Most stable banks have about 20 times their net worth in debts floated. Some of the ones involved in the credit crisis, I'm told, had lent out close to 50 times that much.

    What if the government built houses for people to live in, instead of making people get mortgages that take decades to repay?
    The beauty of a living thing is not the atoms that go into it, but the way those atoms are put together. ~ rCoxI ~ INfj ~ 5w6 so/sp

  4. #14
    Yeah, I can fly. Aleksei's Avatar
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    Or somebody else's stamping machine. I think the fact people associate savings with consumer credit is indicative that something is very wrong with the US economy.
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  5. #15
    Yeah, I can fly. Aleksei's Avatar
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    Quote Originally Posted by Blairvoyant View Post
    Not Cristiano Ronaldo's bank account. Nor even his mutual fund.

    Yes, a tycoon might have $60mil instead of $55mil to invest in his new china shop chain. He's still putting $3million more away in a Swiss bank account per year, which is more than the 1200 plebes doing road construction are saving.

    What about outsourcing?
    Well, it's true that offshoring (not outsourcing, I used to work for an American outsourcer company) and deindustrialization are major problems, but that's another matter entirely, which isn't gonna be solved by diverting money into consumption and away from savings (especially given that 70% of consumer goods in sold in the US are imported, as is all consumer spending growth). Savings, when they don't fuel consumer credit, are generally used to buy capital goods, which are the only thing produced in significant quantities in the US anymore.
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  6. #16
    Energizer Bunny Resonance's Avatar
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    Quote Originally Posted by Aleksei View Post
    Or somebody else's stamping machine. I think the fact people associate savings with consumer credit is indicative that something is very wrong with the US economy.
    Why? How is it supposed to work?
    The beauty of a living thing is not the atoms that go into it, but the way those atoms are put together. ~ rCoxI ~ INfj ~ 5w6 so/sp

  7. #17
    Oberon
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    Quote Originally Posted by Blairvoyant View Post
    Banks aren't limited to only loaning the amount of money that they have saved. Most stable banks have about 20 times their net worth in debts floated. Some of the ones involved in the credit crisis, I'm told, had lent out close to 50 times that much.
    Poor regulatory oversight, with which I profoundly disagree. Still, your assertion by no means proves that a dollar "disappears" when it's deposited in a savings account.


    Quote Originally Posted by Blairvoyant View Post
    What if the government built houses for people to live in, instead of making people get mortgages that take decades to repay?
    Feel like living in a house built under government contract? That means a house in which every component and every hour of labor is sourced from the lowest bidder.

    I'll pass, thanks.

  8. #18
    Energizer Bunny Resonance's Avatar
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    Quote Originally Posted by oberon View Post
    Poor regulatory oversight, with which I profoundly disagree. Still, your assertion by no means proves that a dollar "disappears" when it's deposited in a savings account.
    Well, 'stops moving' anyway...

    *shrug* I'm mostly regurgitating stuff my econ prof said, regardless of whether it makes sense to me... there was this other person who kept taking up the class time by arguing with crap he didn't understand, so I didn't really feel like I had room to argue with any logical inconsistencies I perceived.

    Honestly it seems like making rich people richer should accelerate the economy, since in theory each dollar gets multiplied by 20 every time it passes through the banking system. I don't think that's actually the case though.

    Quote Originally Posted by oberon View Post
    Feel like living in a house built under government contract? That means a house in which every component and every hour of labor is sourced from the lowest bidder.

    I'll pass, thanks.
    I'm ok with that... *hides*
    The beauty of a living thing is not the atoms that go into it, but the way those atoms are put together. ~ rCoxI ~ INfj ~ 5w6 so/sp

  9. #19
    Don't Judge Me! Haphazard's Avatar
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  10. #20
    Senior Member Pixelholic's Avatar
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    Quote Originally Posted by oberon View Post
    Feel like living in a house built under government contract? That means a house in which every component and every hour of labor is sourced from the lowest bidder.

    I'll pass, thanks.
    What about a house built by a private contractor where the price is inflated to pay for some exec's pay and the lowest quality materials are used (like say, drywall from China that's contaminated with lead) because it makes the profit margin larger?

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