<p>You seem unable to grasp both micro and macro economic principles. Why should we pay off a 6% debt when we can pay off a 20% debt? If you had a loan of $1,000 at 6% and a loan of $1,000 at 20% which one would you pay off? The national debt doesn’t affect the average american right now and it will not in the future. The interest rates on the national debt is kept steady. Giving $$ back to Americans to pay off their own personal debt (often at much higher interest rates than the national debt) is much more to their benefit. </p>
<p>Ken Fisher, one of the worlds most renowned economists, says the samething. When the govt borrows and spents money it passes through many sectors of the economy, which stimulates it. Debt, now, is also a much lower percentage of our GDP than it was in the 1950’s/1960’s and the return of our debt (how much we get in assets compared to what we spend) is insanely high right now.</p>
<p>The American public is supposed to spend the bailout money. </p>
<p>Why not loan Americans money at 2.5% like we do investment banks and commercial banks?</p>
<p>Then Americans can really cut down their 20% debt.</p>
<p>Do you think it is the government’s job to supply the American people with lower interest rate loans when the American people spend beyond their means?</p>
<p>Saying your views reflect one man is about as bright as saying your views 100% reflect that of a political party. </p>
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<p>Who do you think creates more wealth. Investment Banks or individuals? You think this money sits in the vault of an IB? No, they spend it and stimulate the economy…arguing that it’s unfair that big business gets lower interest loans is BS because big business does much more to help this economy than a single person.</p>
<p>No. IB’s use that money they borrow from the government and leverage it 30 to 1.</p>
<p>The American people have the ability to do that too.</p>
<p>If the American people are in trouble, why can’t the government loan them money at 2.5%? Why does it have to go through a commercial bank or an investment bank?</p>
<p>“Who do you think creates more wealth. Investment Banks or individuals? You think this money sits in the vault of an IB?”</p>
<p>You do know that the US was headed for a depression, no small thanks to the leverage used by the investment banks and the commercial banks, but luckily, they were and are getting bailed out by us.</p>
<p>You do know that $1 trillion is in the process of being put into the system. </p>
<p>You do know that some measures of the money supply are now increasing at a 12% rate.</p>
<p>You do know the US borrows $2 billion a day from countries you are worried about like China and countries from the Middle East.</p>
<p>You do know that I trade interest rate products for a living. :)</p>
<p>Debt is starting to creep up to a fairly high % of GDP. We need to at least slow that growth now. Some small tweaks to SS taxes will do wonders.</p>
<p>Lax: Obviously. My question is whether you’re aware of the economic policy tools you’re espousing, or if you just rattle off people supporting your position for fun. ;)</p>
<p>Keynesian stimulus might just work in this instance, since I suspect the current recession (or beginning of recession) is demand-deficient… but in the long term we need a better strategy, because major and mounting exogenous oil shocks are going to be the new economic challenge.</p>
<p>Sorry, missed the point of your comment. No, I know economics. I’ve taken numerous classes on them and have been offered positions in economic institutions. Surely I don’t know as much as economists but I feel like I know more than your average joe (which might not be saying much). </p>
<p>Anywho I have a meeting to go to. I shall return.</p>
<p>"Sorry, missed the point of your comment. No, I know economics. I’ve taken numerous classes on them and have been offered positions in economic institutions. Surely I don’t know as much as economists but I feel like I know more than your average joe (which might not be saying much). "</p>
<p>I never acknowledged that. I said that massive behavioral changes would be necessary for anarcho-capitalism (or any system for that matter) to be virtually problem-free.</p>
<p>I know anarcho-capitalism will work better than statism because of the empirical evidence and logical consistency in favor of freedom, whereas statism has neither (remember the problem economic calculation?).</p>
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<p>So, as you can see, I do not base my principles on faith. I base them on empiricism and logic. If you visited the website I provided, you would get some idea of the truth of freedom. Statism requires faith in politicians to not be bad for the sake of other humans; this makes no sense since politicians are human themselves.</p>
<p>What is this vague goal of a system to “work”? Please be more descriptive and avoid vagueness so I can gather why exactly you believe statism is fundamentally and realistically better equipped for solving problems.</p>
<p>If a “working” system is the complete abolition of force, then that falls under massive behavioral changes. If a “working” system is cutting the roots of evil and coercion where they exist (e.g. mercantilism, corporatism) to the lowest levels possible, then anarcho-capitalism is wholly desirable and achievable.</p>
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<p>If somebody could accurately predict how something as complex as an entire society and market would pan out, then wouldn’t we not be having this conversation?</p>
<p>In my previous posts, I gave only suggestions as to how a voluntary society would deal with the problems of today. To suggest that it can only happen one way is to “not critically determine whether or not their ideas will transfer well to reality”. I used my imagination and came up with some orthodox solutions for problems; imagine how much better the solutions would be when the market chooses it and specialized innovators come up with the solutions. Maybe people won’t form capitalist-based governments. Maybe people would prefer communes or whatever. The possibilities are endless and accurately predicting outcomes is completely impossible.</p>
<p>You know what we call people who think they can predict the whole market? Keynesians.</p>
<p>Good to know. Many here (and on the Internet in general) would just post the reference as some kind of deus ex machina… appeal to the higher power of the “qualified economist” as it were. ;)</p>
<p>This all specifically relates to your question:
“Who do you think creates more wealth. Investment Banks or individuals?”</p>
<p>The answer is real investment (e.g. not the mercantilistic nature of investment banks). If spending, spending, and spending created wealth, then why not break every window to create business for the window-maker? See the broken window link above for the answer.</p>
<p>You’re right about the outdatedness. Still, it is hard to evaluate the Fed’s current policy without knowledge of all the tools of the Fed and interpreting them. Back in February, everybody thought the Fed was inflating.</p>
<p>The monetary base doesn’t measure debt creation. It’s too small a measure.</p>
<p>"The monetary base, however, is only one of two determinants of the M1 money supply - the amount of currency plus checking account balances - that governs our liquidity and the level of prices.</p>
<p>The other determinant is bank lending. If banks stop lending, there will be less money deposited in checking accounts. That means less money to be re-lent, deposited, etc., via what’s called the money multiplier. Without this lending, M1 can contract and prices fall.</p>
<p>This is what happened in the '30s. The Fed expanded the monetary base by one-fifth, but the banks stopped lending. So the money multiplier fell. On balance M1 contracted and prices started falling. The same thing happened in Japan in the 1990s."</p>