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me-wonders

understanding economics 1

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Hi, I am looking for information about how to do survey to measure our present situation and the direction we are going. I came across an explanation of different types of recessions, and this explanation of the liquidty trap we are in. I have heard the feds have printed money to dump on the market. As far as I know this has not done yet, because it causes inflation. A lot of unemployed people and inflation is not a good mix. I kept wondering why when our economy is shrinking, prices on such vital things as food and electricity, goes up. Like this is not supply and demand economics. Any way, I think it behooves us to have a better understanding of our economic situation.

Liquidity trap

A liquidity trap is a Keynesian theory that a situation can develop in which interest rates reach near zero (ZIRP) yet do not effectively stimulate the economy. In theory, near-zero interest rates should encourage firms and consumers to borrow and spend. However, if too many individuals or corporations focus on saving or paying down debt rather than spending, lower interest rates have less effect on investment and consumption behavior; the lower interest rates are like "pushing on a string." Economist Paul Krugman described the U.S. 2009 recession and Japan's lost decade as liquidity traps. One remedy to a liquidity trap is expanding the money supply via quantitative easing or other techniques in which money is effectively printed to purchase assets, thereby creating inflationary expectations that cause savers to begin spending again. Government stimulus spending and mercantilist policies to stimulate exports and reduce imports are other techniques to stimulate demand.[20] He estimated in March 2010 that developed countries representing 70% of the world's GDP were caught in a liquidity trap.[21]

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Want to know how the economy works?

These guys we call bankers (or that other word that sounds similar with a W) loan our Governments money with interest. By the time our government runs the money through our system it comes back and they can't pay the interest... So they get another loan.... This is called the never ending circle of debt. (well it what I call it lol) Now the general public who don't actually have much knowledge on how the national banking system works blames the government for over spending and all sorts of mistakes they make with the money. But the truth is, it doesn't matter how they use the money it will never cover the debt. Because that is how the system works. That is why 1 family in the world owns half the worlds wealth and controls the other half.

ironically all these patriotic Americans don't realise that the civil war they had with the British was because they didn't want a National Banking system. (which the British had) It was acutally part of the constitution to now have a national banking system. Now the US has one after the Rothchilds and their fellow bankers tricked the US into getting one. (to long to explain this part google it to find info on it)

Oh Libya didn't have a National banking system either, until Gaddafi was killed. Now ther eis one there and it's flying Al Qaeda flags above it. (yes we helped Al Qaeda take Libya... Now start questioning 9/11)

The sooner everyone realises this fact the better.

Edited by Coffey
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So the banksters are running the world on a pyramid scheme.

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So the banksters are running the world on a pyramid scheme.

Yeah pretty much.

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There are many reasons why nations go into recessions. The USA is the global economic leader and when America gets financially into trouble it affects the whole world because the US$ is the world's reserve currency. The housing bubble exposed the derivative market scam and the scam continues. The stimulus plans and the quantitive easing techniques employed by the Federal Reserve are nothing but short term reliefs to a problem that needs fixing or it's going to self implode on itself. America over leveraged itself the last couple decades or so while at the same time businesses shipped employment abroad to cheaper labor markets. These jobs aren't coming back either. The Unions and lobbyists chased them off while lining their pockets at the same time. THe stimulus went to big business and it's big business who can afford to use low interest rates to further their own private business at the expense of the individual taxpayer. This is what marxism looks like, or fascism, or communism soon thereafter.

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If the rest of the World depends on the US economy then I feel sorry for them. Im an American and I dont even rely on it for day to day living.

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If the rest of the World depends on the US economy then I feel sorry for them. Im an American and I dont even rely on it for day to day living.

The rest of the world depend on the US$ more than it depends on it's economy. But this is going to change I suspect. Not entirely but to some extent. More nations or zones are going to get a stake in the new deal. And I believe Obama is there to sell it to the American people.

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Think globally not locally for economics then you can get a better understanding of what is happening. The whole system is pretty much a really crappy game of hot potato.

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Posted (edited)

I am glad there is some interest in this subject. Perhaps we should have started with what gives the dollar value in the first place. Since the time of Rome what gave money value was the metal it was made of. Gold, silver, nickle and copper gave our money value. This is no longer true.

The paper dollar was backed by gold held in a vault. Then it was backed by both and silver. This is very problematic, because there isn't enough gold and silver in the world, to back all the money in the world. This is what made discovery of gold in the new world, so important to the world! European economies were held back by the lack of gold, and starting with Britain, we went off the gold standard. Since then the value of money is backed by our Gross National Product. Gross National Product, used to mean something that was actually produced, a car, a widget, a house. Then that shifted more and more to just the movement of money. Gross National Product becomes a count of every time a dollar changes hands. Bartering takes the transaction out of the Gross National Product, unless it is reported to the government and given monetary value. Women who stay home to care for the family, are worthless, because they are not contributing to the flow of money, regardless of how fast they spend their husband's pay check. Women must be tied into the work force, the production of the Gross National Product, to have value, so maybe we can stop blaming gays, or atheist for destroying the family, because it is not them driving the problem.

For sure, the government does not want a decrease in employment! However, a free market, and shipping jobs over seas makes citizens of other countries part of what backs our dollar. That is all these workers become part of our Gross National Product, if they are producing for a US own company. Did I get that right, or am I making a mistake here? I am reminded of the Simi City, where the economy grows and grows, once you get past the difficult stage of the game. The problem is, Simi City is complete fantasy. In the real world you can not build industries without the resources and markets essential the the give and take of economics. Playing into this problem is robotics. Robots don't pay taxes, and we have not figured out how to make a machine do the work of 50 women, so those women can stay home and care for their children, and get those machines to pay taxes. Am I figuring this right? The IRS was created at the same time as the Federal Reserve, because the two go together. You are worth what you contribute to the Gross National Product, and your property has value. (just not as much as it did before the bubble burst).

This link might explain things better

http://www.nolanchar...-us-dollar.html

When a person, business or a country's debt goes beyond its ability to pay, it will sooner or later face bankruptcy. We are already seeing a huge rise in home foreclosures across the country caused by run-away inflation by new dollar creation by the FRB. The bankers are collecting on the debt by taking the very homes of our fellow Americans (as predicted by Jefferson those many years ago). This will be one of the greatest transfers of wealth from the middle class to the central bankers and government central planners in history.

Edited by me-wonders

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From what I remember the US has been "printing" lot of money and has called it Quantitative Easing. It is called Expansionary monetary policy. They keep inflation where they want it by controlling banking interest rates.

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Gross National Product, used to mean something that was actually produced, a car, a widget, a house. Then that shifted more and more to just the movement of money. Gross National Product becomes a count of every time a dollar changes hands.

I always find it amusing that everyone on Social Security, Welfare, Unemployment, SS Disability, and various other programs all count into the GNP. If we simply taxed them at 50% and then gave them twice as much... we'd probably improve our GNP, while spending the same amount of Fed dollars.

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I always find it amusing that everyone on Social Security, Welfare, Unemployment, SS Disability, and various other programs all count into the GNP. If we simply taxed them at 50% and then gave them twice as much... we'd probably improve our GNP, while spending the same amount of Fed dollars.

its gets worse, you pay somebody to sit on a chair 8 hours a day and you just have increased the GNP by the value of the salary and(sometimes) of the chair.

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Reminds me of when I was talking to my wife about the stupid "Record Breaking" movie weekends. Yeah... If they are going to charge $14 a seat, up from $11, up from $10, up from $8, up from $7, it is not hard to fathom why ticket sales continue to break records. Soon, they'll charge $18 for a 3D movie and $13 for a regular movie. Because they know that people will pay $13 because they are already paying $14 for 3D. Then we'll see stupid stories of even higher ticket sales, beating records set a year or two before.

The GNP does not always go up because there is growth going on.

Edited by DieChecker
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Reminds me of when I was talking to my wife about the stupid "Record Breaking" movie weekends. Yeah... If they are going to charge $14 a seat, it is not hard to fathom why ticket sales continue to break records. Soon, they'll charge $18 for a 3D movie and $13 for a regular movie. Because they know that people will pay $13 because they are already paying $14 for 3D. Then we'll see stupid stories of even higher ticket sales, beating records set a year or two before.

The GNP does not always go up because there is growth going on.

in fact many years of the last decades the GNP grew less than the total debt... they still call it growth...

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Credit exploded from 1 trillion dollars in 1980 to 50 trillion dollars today. Talk about growth! This economically sick age of "credit as money" is due to no lack of regulations, it's directly due to the bloody regulations. Guaranteeing stupid lenders their stupid lending and dumping the consequences on the innocent is unethical and unforgivable. This gimme-gimme generation still spending the youths' money on whatever junk result they scheme up next needs to come to an end sooner than later, but with the government punting its ponzi scheme for maximum life cycle, we're not done doing damage to the country yet. And when this fake economy implodes they're all going to BS that "we couldn't have seen it coming". Good topic, me-wonders.

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in fact many years of the last decades the GNP grew less than the total debt... they still call it growth...

of course they still call it growth.... just like they still reach their target of 2-3% inflation levels because fuel and food are no longer counted.... lol

we're living in an era of scams and schemes and it's the GOV doing it

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Wow you guys are great. We have a great comedy routine going here.

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The liquidity trap involves the value of currency and so does the exchange rate. Because oil is traded in dollars, the world wants dollars. Because everyone wants dollars, this keeps the value of the dollar up. Saddam began selling oil in Euros, which is great for Euros and devastating to dollars, and although no one said so, I think this was behind Europe's objection to the invasion of Iraq. Iran has played with the idea of selling oil in Euro's and this most likely would result in military intervention. At least that is who things look to me?

Like if the world is holding our dollars, don't we have to print enough for us to use? :unsure2: If we print too many dollars we are in trouble, but how can we not print them if they are held in other countries. And if a country is holding a lot of dollars, it surely doesn't want them to loose value. I hope you all come up with more good lines to explain the exchange rate and value of the dollar.

http://en.wikipedia....d_exchange_rate

Maintenance

Typically, a government wanting to maintain a fixed exchange rate does so by either buying or selling its own currency on the open market. This is one reason governments maintain reserves of foreign currencies. If the exchange rate drifts too far below the desired rate, the government buys its own currency in the market using its reserves. This places greater demand on the market and pushes up the price of the currency. If the exchange rate drifts too far above the desired rate, the government sells its own currency, thus increasing its foreign reserves.

Another, less used means of maintaining a fixed exchange rate is by simply making it illegal to trade currency at any other rate. This is difficult to enforce and often leads to a black market in foreign currency. Nonetheless, some countries are highly successful at using this method due to government monopolies over all money conversion. This was the method employed by the Chinese government to maintain a currency peg or tightly banded float against the US dollar. Throughout the 1990s, China was highly successful at maintaining a currency peg using a government monopoly over all currency conversion between the yuan and other currencies.[3][4]

On the 6 September 2011, the Swiss National Bank has imposed a franc ceiling, for first time in three decades, against the euro. In 1978 a franc ceiling was set versus the Deutsche Mark to stem currency gains.

Criticisms

The main criticism of a fixed exchange rate is that flexible exchange rates serve to adjust the balance of trade.[5] When a trade deficit occurs, there will be increased demand for the foreign (rather than domestic) currency which will push up the price of the foreign currency in terms of the domestic currency. That in turn makes the price of foreign goods less attractive to the domestic market and thus pushes down the trade deficit. Under fixed exchange rates, this automatic rebalancing does not occur.

Governments also have to invest many resources in getting the foreign reserves to pile up in order to defend the pegged exchange rate. Moreover a government, when having a fixed rather than dynamic exchange rate, cannot use monetary or fiscal policies with a free hand. For instance, by using reflationary tools to set the economy rolling (by decreasing taxes and injecting more money in the market), the government risks running into a trade deficit. This might occur as the purchasing power of a common household increases along with inflation, thus making imports relatively cheaper.

Additionally, the stubbornness of a government in defending a fixed exchange rate when in a trade deficit will force it to use deflationary measures (increased taxation and reduced availability of money), which can lead to unemployment. Finally, other countries with a fixed exchange rate can also retaliate in response to a certain country using the currency of theirs in defending their exchange rate.

Edited by me-wonders
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The liquidity trap involves the value of currency and so does the exchange rate. Because oil is traded in dollars, the world wants dollars. Because everyone wants dollars, this keeps the value of the dollar up. Saddam began selling oil in Euros, which is great for Euros and devastating to dollars, and although no one said so, I think this was behind Europe's objection to the invasion of Iraq. Iran has played with the idea of selling oil in Euro's and this most likely would result in military intervention. At least that is who things look to me?

It is entirely possible that the Euro thing was a factor in Iraq and might be in Iran also. It would be naive to believe that top politicians are not considering those things.

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The liquidity trap involves the value of currency and so does the exchange rate. Because oil is traded in dollars, the world wants dollars. Because everyone wants dollars, this keeps the value of the dollar up. Saddam began selling oil in Euros, which is great for Euros and devastating to dollars, and although no one said so, I think this was behind Europe's objection to the invasion of Iraq. Iran has played with the idea of selling oil in Euro's and this most likely would result in military intervention. At least that is who things look to me?

Like if the world is holding our dollars, don't we have to print enough for us to use? :unsure2: If we print too many dollars we are in trouble, but how can we not print them if they are held in other countries. And if a country is holding a lot of dollars, it surely doesn't want them to loose value. I hope you all come up with more good lines to explain the exchange rate and value of the dollar.

http://en.wikipedia....d_exchange_rate

What keeps the US$ the world's reserve currency is the Military Industrial Complex and of course the Federal Reserve Corporation. For the time being it really doesn't matter how much US$ are in world circulation because it's still considered the worlds reserve currency therefore the dollars are being used to trade petroleum. It's liquidity is what gives the dollar it's confidence. In essence, Petroleum = the US$. American military intervention into foreign nations is what keeps this charade of global currency domination, also the fact that the USA consumes a majority of the markets petroleum. Without these two factors the game ends. This is why the Fed is important to the scam. The Fed is Dr. Feelgood.

I also believe Iraq was invaded to stop Saddam from trading in competing currencies. It could have been anything... the Euro, the British Pound or it could have been something devastation to western Central banks.... gold and silver..... look what happened to Libya for example. Gaddafi was trying to encourage African leaders to support his petrol for gold plan.

What was the price of fuel at the gas station 10 years ago?... and how much is gasoline today? Yes, there is rampant inflation happening.... the oil market is demanding more US$ in trade. Factor in globalization and it's the big corporations who benefit from higher petrol prices whereas competition is decreasing. It's a balance beam. The larger the corporation the better leverage. Also remember that the inflation statistics no longer include fuel and food and it's easy to see how politicians can falsely claim that inflation levels are at 'normal' levels.

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Unemployment is a skewed number as well. They use this arbitrary number not considering that weve been in this non job growth since 2008 and many people just dont show up in the unemployment numbers anymore.

Many people just survive on less nowadays and that hurts our consumerist based economy.

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What keeps the US$ the world's reserve currency is the Military Industrial Complex and of course the Federal Reserve Corporation. For the time being it really doesn't matter how much US$ are in world circulation because it's still considered the worlds reserve currency therefore the dollars are being used to trade petroleum. It's liquidity is what gives the dollar it's confidence. In essence, Petroleum = the US$. American military intervention into foreign nations is what keeps this charade of global currency domination, also the fact that the USA consumes a majority of the markets petroleum. Without these two factors the game ends. This is why the Fed is important to the scam. The Fed is Dr. Feelgood.

I also believe Iraq was invaded to stop Saddam from trading in competing currencies. It could have been anything... the Euro, the British Pound or it could have been something devastation to western Central banks.... gold and silver..... look what happened to Libya for example. Gaddafi was trying to encourage African leaders to support his petrol for gold plan.

What was the price of fuel at the gas station 10 years ago?... and how much is gasoline today? Yes, there is rampant inflation happening.... the oil market is demanding more US$ in trade. Factor in globalization and it's the big corporations who benefit from higher petrol prices whereas competition is decreasing. It's a balance beam. The larger the corporation the better leverage. Also remember that the inflation statistics no longer include fuel and food and it's easy to see how politicians can falsely claim that inflation levels are at 'normal' levels.

I did not know "Gaddafi was trying to encourage African leaders to support his petrol for gold plan." Darn, now I feel sick to my stomach.

Remember when airlines were regulated and we had many large airlines? I wish we would return to this and also regulate the oil trade as well. It was genius to create anti monopoly laws, and perhaps we have created a monster by negating concern for the small guy and no longer protecting the small guy in favor of the big guy?

Edited by me-wonders
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Well around these parts the view of the economy is DDDDDDDDOOOOOOOOOOMMMMMMMM!!!!!!!!!!!

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What keeps the US$ the world's reserve currency is the Military Industrial Complex and of course the Federal Reserve Corporation. For the time being it really doesn't matter how much US$ are in world circulation because it's still considered the worlds reserve currency therefore the dollars are being used to trade petroleum. It's liquidity is what gives the dollar it's confidence. In essence, Petroleum = the US$. American military intervention into foreign nations is what keeps this charade of global currency domination, also the fact that the USA consumes a majority of the markets petroleum. Without these two factors the game ends. This is why the Fed is important to the scam. The Fed is Dr. Feelgood.

I also believe Iraq was invaded to stop Saddam from trading in competing currencies. It could have been anything... the Euro, the British Pound or it could have been something devastation to western Central banks.... gold and silver..... look what happened to Libya for example. Gaddafi was trying to encourage African leaders to support his petrol for gold plan.

What was the price of fuel at the gas station 10 years ago?... and how much is gasoline today? Yes, there is rampant inflation happening.... the oil market is demanding more US$ in trade. Factor in globalization and it's the big corporations who benefit from higher petrol prices whereas competition is decreasing. It's a balance beam. The larger the corporation the better leverage. Also remember that the inflation statistics no longer include fuel and food and it's easy to see how politicians can falsely claim that inflation levels are at 'normal' levels.

Amen brother.

Those are certainly financial motives for these wars acidhead. Unfortunately they need not win the tacit approval of all of government to wind up in our policies. Too many massive grand policy decisions are made by too few people in too tight of quarters. The Executive Branch is off the chain in this country and it's surprising how asleep we are about it. We just have way too much faith in the bomb blasts of bureaucrats when the bombs aren't going off over our own heads.

The OP is a great topic of discussion our media won't ask questions about, and that our policymakers don't want us to think about. Thanks, me-wonders!

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