How can the US break out of the recession?

College Confidential Community
1

<p>I know it's not official yet, but I believe the US is in a recession. Any ideas?</p>

2

<p>[It</a> Happens.](<a href=“http://tutor2u.net/economics/gcse/images/big_picture_business_cycle.gif]It”>http://tutor2u.net/economics/gcse/images/big_picture_business_cycle.gif)</p>

3

<p>How about everyone starts saving some money rather than blowing it all on designer clothes, beauty products, home decorations, gasoline, fancy dinners, and little gadgets that no one would ever use. If people had saved before, this wouldn’t have happened.</p>

4

<p>Recession cycles are due to government(economic agency) interference and regulation. If we move the economy to a purely capitalistic laissez faire system, recession cycles are utterly impossible and non existent.</p>

<p>The reason we had the depression in the 30’s and 40’s was due to government intervention(Smoot-Hawley Tariff Act to be exact). The stagflation in the 1970’s was the same reason of to much regulation and then again in 1988 and again in 1998.</p>

<p>Austrian and Chicago school economics work, its simple as that. Most if not every economist knows this, even the ones who preach socialist ideals. Even Marx himself, knew this. To bad they don’t teach this in schools, instead of teaching anti-capitalism and government love bull.</p>

5

<p>^ ??? The only reason the Depression happened was because there was no government regulation. Only FDR’s reforms and WWII brought it back. </p>

<p>And I highly doubt a purely capitalistic system would even work. Take into account of human behavior.</p>

6

<p>Austrian economics =/= Chicago economics </p>

<p>There’s no math in Austrian school, how are you going to prove it works?</p>

<p>Also, to claim that one act caused the Great Depression is a gross generalization. Ben Bernanke has said that the Great Depression is still not fully understood by economists, and to understand its cause is the “Holy Grail” of economics. </p>

<p>Purely capitalistic systems cause inefficiencies as consolidation will lead to monopolies in most major industries. I agree with you that government intervention with tariffs is a terrible idea, but sometimes the government needs to intervene to encourage competition, e.g. anti-trust laws. Sometimes greed needs to be curtailed as well. Lack of banking regulations in history has time and time again led to over-extension of credit, and in turn recessions. You can’t have a purely capitalistic system just like you can’t have pure communism, there has to be a balance.</p>

7

<p>Ben Bernanke will likely go down as the worst fed chairman in the Feds existence to date, so his words don’t mean much. watch the Feds briefings on Cspan, they are hilarious as to what Ben Bernanke actually knows. You can find many on youtube also.</p>

<p>Even Keynesian economics, has come to the realization that the over taxing and its result of contraction of money lead to the GD. Such things such as the Check Tax destroyed the market place. Placing a tax on the rich, which forced them to contract monies.</p>

<p>As per FDR, I don’t think so. Read this great article which shows that FDR did nothing to stop or slow the depression, he actually prolonged it.
[University</a> of California - UC Newsroom | FDR prolonged – not ended – great depression](<a href=“http://www.universityofcalifornia.edu/news/article/6550]University”>http://www.universityofcalifornia.edu/news/article/6550)</p>

<p>As per greed and monopolies in Capitalism, if you have studied the topics, these things only happen in crony capitalism. Which is what we have now.</p>

<p>In pure capitalism, when monopolies are formed, there is only a greater desire to by entrepreneurs and non-monopolies to defeat and bring down that monopoly. I really dont see much wrong with having a monopoly. If you take Google for instance, if they were to become one, which they will or already are, that would be a good thing, because they treat there employees(20 K of them) very well. If the consumer doesn’t like the practices of a given large corporation, there is always the option to not buy there product and buy a better cheaper or local product. If consumers, no longer like the products of lets say General MIlls, well they just don’t buy there products and the company will fall and maybe Post will make a better product and they will then be the big company. I don’t believe in any anti-trust laws, as I believe it takes away individual desire and the desire to invent and improve.</p>

<p>I do not believe in any govt intervention in the economy. It has never helped. You mention the over-extension of credit, well that is only possible due to regulation that allows the Fed to debase the fiat currency at its own will. In capitalism we don’t deal with central banks, one of the reasons its unconstitutional for anybody but congress to coin or print monies. Fiat money, due to regulations and the regulations themselves on the market are what cause recession cycles.</p>

<p>You can have pure capitalism, I believe strongly in that. On the other hand it is impossible to have pure communism without every other state in the world also being communist. Karl marx mentions this in many of his works, as he states that if there is a state of capitalism in a world of communism, then the states of communism would fall behind in almost all sectors(technology, agriculture, etc) where as the state of capitalism, would prosper infinitely and eventually the communist states would die out. This is the reason why there was such a enormous push for Marx/Lenin communism. They knew that it was all or none. Another reason why socialism or communism(without full world use) will always fail is due to the “Economic Calculation problem”, in which states that those states will never be able to measure the worth of its capital goods and eventually will either pay to little or to much and eventtully the central policy makers will destroy the system as it will go broke. This happened in the SU, where in the 70’s and 80’ the russians were actually paying for access to see data of capital goods markets in the USA and Japan. They needed some sort of source that could give them some idea, on what the capital goods are worth.</p>

<p>The idea of balance, is BS and that’s crap you are just taught in school. There is no need for a balance. Purely capitalistic economies work best, and even better when the currency is tied to commodities.</p>

<p>Human nature is the reason why capitalism works. It works because you assume that people will always due whats best for them. The idea of govt regulation is ultimately flawed. If you belive that with human nature there are flaws that need to be controlled by a govt. But then on that same hand, the regulators are people themselves. I find this to be utterly stupid and foolish. If you think people are to stupid to make there own decisions, then how can people who are also just to stupid to make there own decisions, make a decision for a large group of people. If this is the case and this is the thought and foundation of socialism and socialist economics, then the regulations must in fact be flawed themselves, as there makers are also flawed.</p>

8

<p>

</p>

<p>My econ teacher actually considers himself an anarcho-capitalist, nice try though.</p>

<p>

</p>

<p>Desire isn’t enough to break down the barriers of entry that come along with monopolies. If it was, there wouldn’t be any monopolies. </p>

<p>

Monopolies create dead weight losses, which are obviously not optimal.</p>

<p>

</p>

<p>For the purely capitalistic system you have proposed to work, the free market has to remain, well, free. Trusts do the exact opposite of that.</p>

<p>Edit: Ben Bernanke had a 1590/1600 on the old SAT, went to harvard, and got his Phd from MIT. To say the man knows nothing just because he’s a poor speaker seems like a stretch.</p>

9

<p>Not to bash anyone, but it would be a good idea to take everything said in this thread with a grain of salt. This forum, after all, draws mostly high schools students. There are probably some college students and even fewer adults, but I doubt if anyone responding is an economist by profession.</p>

10

<p>No, I’m definitely not an economist, lol. I’m just tired, hungry, and feel like debating.</p>

11

<p>Well that’s good of him and I consider myself the same, but I was no implying college economics professors, I was talking hs and below. </p>

<p>As per the idea that no monopolies would exist, is foolish. All it would take is for some company at a given time to have the absolute best product. if that comany had the best product and others couldn’t figure out a better way to produce it, then you have a monopoly and I see nothing wrong with that. </p>

<p>If we look at MS, they obviously are and have been a monopoly. They have been to court for it and its debatable if they currently are. With there current and past market share, I would still say they are. Well lets look at apple, and google, mozilla and now even Linux. To say that it is not possible is foolish and new bright ideas come out everyday. Apple was sure able to create there OS even with MS at a 97% market share. Now there market share is close to 10%. Google is almost itself a monopoly of search engines and Mozilla is itself coming in for browsers and it increase every day. </p>

<p>So you say its not possible, I say it is and it happens all the time. </p>

<p>Does a monopoly cause a dead weight losses, sure its possible, but there are some companies that don’t, such as Google. Competition is always a good thing, but by babying people, you loose desire you don’t gain it. Success is not given its earned. The antitrust laws in this country have destroyed innovation. Just search on your favorite search engine, which I think will be Google “America Innovation Dead”. America’s invention is in deep decline, why, well that’s simple enough, life is to damn secure and easy. People have no need to work hard and contribute to the economy. Theirs a reason the majority of the millionaires in America are foreign born. </p>

<p>As per Ben Bernanke, its not that he is not smart, is he makes ****ty decisions. A fiat money system will never work, to think humans can control a economy with so many variables is foolish. Super computers cant even do it. It is just to volatile. But do you know what can? A free market with currency based purely on commodities. </p>

<p>what are you in a frosh micro or macro course? I’m a grad student in computational economics.</p>

12

<p>Some regulation is definitely necessary, especially regulation that deals with safety. I feel much better if I can go to the store and buy shampoo without worrying if it has harmful chemicals in it, because those save money. However, I’m not sure that government regulation of the economy helps very much. For instance, all that stimulus money would have been better spent by providing mass transit to a larger percentage of the populace. Cutting big checks might work in the short term, but were the economy to go sour again in the near future, a well-developed mass transit system would be much more effective, as people would have alternatives to driving (which can get very expensive), and everyone would have transportation to work, thus reducing unemployment, which is less money the government has to pay in benefits.</p>

<p>I still stand behind what I said about saving. Saving is the single best way to avoid economic trouble, and no government action is necessary (except for FDIC insurance). If people had saved, they would have been able to make a few mortgage payments after they lost their jobs, they would have been able to buy a new car to drive to work when the old one broke down, and they would have been able to spend money on essentials that keep the economy growing.</p>

13

<p>Well JB that’s the thing, you still cant even with govt regulation. I am a health freak, especially when it comes to body care products. Here is a list of chemicals that are in 99% of body care products you buy at almost any given store.</p>

<p>ammonium lauryl sulfate
sodium lauryl sulfate
ammonium laureth sulfate
sodium laureth sulfate
ammonium Myreth Sulfate
Sodium Myreth Sulfate
Dimethicone
PEG/PPG
Phthalates
parabens
Sodium Tallowate
DMDM Hydantoin
Propylene Glycol
derived from coconut oil
Mineral Oil
Oxybenzone - use Titanium Dioxide instead
Avobenzone - use Zinc Oxide instead</p>

<p>I made this list to help me stay away from these chemicals as they are bad for your health. look up each one individually and see for yourself. Remember the top 10 on this list are in 99% of all shampoos, soaps, conditioners that are sold in America. My hair was thinning at 23 and I stopped putting junk in my hair, started taking and using a natural biotin based shampoo and it is slowly coming back. so even though you think they are safe, you are still putting industrial cleaning products on your body, the same ones used before you buff a floor in a supermarket. Safe? NO. Cheap to produce yes, and all of this under crony capitalism, where a company takes advantage of you because you trust a govt. Look at FDA, it sucks. They do a horrific job, to many lives have been lost because American citizens and people world wide trusted this organizations word.</p>

<p>To be allowed to give out the stimulus checks or build better transportation the govt needs to have that money. Which it doesn’t have so it needs to borrow in a sense of giving out iou’s. It does this by selling treasury debt, such as T-bonds and T-bills. By doing this, we as a country go even further into debt. When this happens the federal reserve lowers interest rates and debases the currency usually for its own gains. When the fed creates the currency at any rate it wants, it can create 1 million or any amount it wants in the blink of an eye and buy t-bills from the us govt. So now the fed can make all the money it wants and buys the T-bills from the govt. So the Fed is getting the interest that the US govt pays the Fed to loan it the currency on top of the interest of the T-bill itself. We have no idea who the private panel on the Fed is, its a private organization, but the US govt pays the fed about just under 40 Million in interest per hour, oh yeah plus any treasury interest. Other countries also buy up these iou’s, as you can see by this link.
<a href=“Front page | U.S. Department of the Treasury”>Front page | U.S. Department of the Treasury;

<p>Doesn’t look very good and it cant help us. Giving out money was one of the worst idea any govt has ever come up with. The stimulus checks didn’t work now and they sure as hell didn’t work in the last 1920’s.</p>

<p>Somebody would need to pay for the transportation system, and I don’t think it should be the govt. Let a private industry make it, because everything any govt touches turns to garbage with corruption.</p>

<p>JB, also you need to know that economy’s grow via the transfer of money. So if everybody is saving, stagflation becomes possible also, which is worse than a recession. So if everybody saved, the economy wouldn’t grow as fast.</p>

<p>Oh yeah, if you want good organic natural soap and shampoo. Try Dr. Bronners products.
[Dr</a>. Bronner’s Magic Soaps All-One!](<a href=“http://www.drbronner.com/]Dr”>http://www.drbronner.com/)
try the Peppermint Castile soap. Its the best soap ever made.</p>

14

<p>Stop starting wars.</p>

15

<p>The only proven cure for stag-flation is Reaganomics.</p>

16

<p>

</p>

<p>and then theres the crap that the fda allows to be put in food and drinks:
aspartame
high fructose corn syrup
sodium benzoate
monosodium glutamate
fluoride</p>

<p>etc</p>

17

<p>The food ones are the ones I don’t like. I’ve pretty much gotten ridiculous about checking ingredients on food labels. I wish fresh foods had labels too. Even though they’re not processed, I’d still like to know what chemicals are going on them. I’m not totally sold on organic for various reasons, but I would like to know what’s in my food.</p>

18

<p>Try Farmers markets or a respectable organics store. Body care products are hard because there is really no definitive USDA certified organic label. And the products that are, usually only need to be around 90% organic.</p>