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Student Lounge College Life
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<p>Comraded, </p>

<p>So China funds us money to buy their products…? Do you realize how rediculous that is. China has a billion people, eventually they are going to be keeps thier money and sell products to thier own people. Not only that, but we will no longer be able to consume the amount of exports we once did. For every dollar of GDP (in the bush presidency), we had 5 dollars of debt.</p>

<p>Keynesian was like the witch doctor of economics. He didn’t understand the concept. </p>

<p>Lastly to Logic Warrior, Why the hell would you quote Ben Bernanke? Did he predict this recession. No. Did free market economists. Yes. I don’t understand why people listen to the same idiots, when they are wrong year after year.</p>

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<p>“Comrade” the only reason why they agreed to sign the constitution was because there would be a bill of rights. It is not like they wrote the constitution then suddenly thought of writing 10 amendments.</p>

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<p>LOL. A Ron Paul supporter making fun of someone.</p>

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<p>^Yale in 2013? Really?</p>

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<p>hahaha
this was quite the funny read</p>

<p>thanks guys</p>

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<p>Actually my number one source for news has been Paul Krugman, who did predict this recession, who quoted Bernanke.</p>

<p>Almost all economists are Keynesian, by the way.</p>

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<p>Yes, many economists are keynesian, unfortunately. </p>

<p>Would you mind answering the questions I posted earlier? Like I said, If you can give me a senseable answer, I will accept it. No links to articles either</p>

<p>As for my economists/investors: the lengendary Jim Rogers, Peter Schiff, and Max Kieser.</p>

<p>If I don’t answer when you post, it is because I’m going out. Will respond when I get back though.</p>

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<p>which questions?</p>

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<p>1) What if oversea demand for the dollar ceases? China has already expressed concerns about their 2 trillion, so I can’t imagine that they would continue to keep buying.</p>

<p>2) If the debt to savings rate in the economy is so spread, why does the government insist on americans buying products/houses. Why wouldn’t we be encouraged to save? Isn’t that how recessions end. American’s stop consuming, save, and then are able to consume at a reasonable level again. You can’t really have a boom without a bust, can you?</p>

<p>Comraded already answered them with less than stellar answers :(</p>

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<p>I can’t give an educated answer to 1, but 2 should be obvious to a Laissez-Fairer like you. If demand goes down due to less consumer spending, business will have to lay off even more people because no one is buying their products or services. That’s basic FREE-MARKET economics. Laws of supply and demand were around long before Keynes.</p>

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<p>Well, I know my answer to number one. To put it concisely, the dollar would collapse. I was just curious to have a different point of view.</p>

<p>And for two, the question is why does the government insist we spend, instead of save. I want to know what a keynesian (if that is what you are) would say.</p>

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<p>I did answer number 2. Economists since Adam Smith have known that consumer spending is good for the economy as a whole.</p>

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<p>No. Absolutely false. Economies do not grow because we spend, we get to spend because economies grow.</p>

<p>The cause of the recession we are in now was precisely because of over-consumption and under-production. Did you not see the stat. During the Bush presidency (the boom), for every one dollar of GDP, there was five dollars of debt. That could not sustain itself. The bubble burst. The economy fell through. And now your solution to the americans with all this debt is to spend? No, The correct answer is to have them pay off the debt and establish capital. The savings rate is negative in this country, and you advise that the citizens spend? I just can’t understand you’re logic, LogicWarrior.</p>

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<p>Regarding 1.</p>

<p>That sort of thing is HIGHLY speculative. Besides, a massive investor, probably an actual nation state, would have to precipitate a collapse. Knowing that, it is highly unlikely because of the massive consequences for regional economies. The top holders of treasuries (nat’l debt) are China, Japan, Oil Exporting Nations, Brazil, the UK, other Euro Zone Nations, and the Caribbean Community. Do you think China, Japan, Oil Exporting Nations, the UK, Euro Zone Nations, Brazil, and the Carribbean want to see a collapse of the US dollar by dumping securities? No! All those nations have significant economic stakes in the US, and in nations that have significant stakes in the US.</p>

<p>I don’t think the current causes you state for this recession are so black and white, and actually have very little or nothing to do with the government’s deficit spending. It has been more of a problem with financial institutions growing through wacky things like ARM’s, sub primes, what are basically insurance policies on securities (credit default swaps), etc. Their false growth in turned affected the rest of the economy once the facade crumbled.</p>

<p>However, I do agree somewhat with your statements about the inevitability of economic crises , because that is the nature of capitalism. That said ,I disagree with your characterization of Keynesian Economics as hocus pocus. The massive depressions suffered by the US approximately every 50-60 years from 1837 until 1930 have yet to be experienced, and the current recession will not turn into a depression, probably somewhat due to gov’t intervention.</p>

<p>You consider them less than stellar answers because they don’t conform to your ideology and belief that doom is imminent, which is absurd and somewhat typical of Ron Paul supporters, which was my initial jest. So you basically proved my point.</p>

<p>

</p>

<p>This is why dates ARE important. The Constitution was adopted in 1787 and the Bill of Rights were adopted in 1791. There was a debate between the Federalists and Anti-Federalist before the Bill of Rights were adopted, and there were no guarantees. I agree it was an ongoing process, but its always been an ongoing process.</p>

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<p>Yes, I did exaggerate. But the assumption that China (and other nations) will buy treasuries at the same rate they have been or in greater amounts is highly unrealistic as well. The way I see it, a few things can happen, each hurting the US in varying degrees.</p>

<p>1) China still consumes US debt, but at a substantially lower rate. I can’t see how this would make sense to them though. Say the amount of t’s they purchase flatlines. The US, with its ambitious spending, will have to monetize thier debt. That of course will devalue the dollar. As you admitted, China doesn’t want to have a bunch of worthless pieces of paper and they don’t want th Yuan to appreciate, so I don’t know how this would seem logical to them.</p>

<p>2) China finds a new investment (itself, commodities) and dumps US treasuries altogether. Of course, this would be only if china is commiting long term to a more consumer-oriented economy. Sure it would be a loss for China, but they’re economy is in shambles right now too. They might decide to make a switch. Take into account that the US projected budget is HUGE, that the Federal Reserve will have to start printing more money (obviously devaluing the dollar),
that we will, at least for a while, will be consuming limited amounts of exports, and it really doesn’t seem that improbable. </p>

<p>And yeah, I was very vague on the cause of the recession. You are corect, it had ore to do with financials, housing bubble, ect.</p>

<p>The only reason I thought your answers were “less than stellar” was because they were kinda inexplicit.</p>

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<p>“No. Absolutely false. Economies do not grow because we spend, we get to spend because economies grow.”</p>

<p>If no one is spending, how can an economy grow? Please explain why you know better than economists.</p>

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<p>Think about it ;)</p>

<p>If there is no one producing goods, what do we spend money on? Furthermore, how do we make money if there is no industry to employ us?</p>

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<p>This thread got completely off-track, and is now heading towards Auschwitz.</p>

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<p>how can industry employ us if no one is spending money on their products?</p>

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<p>Are you for real? It’s okay to admit you are wrong once in a while. </p>

<p>I think we both know that production comes before consumption. Obviously, they are codependent, though.</p>

<p>And just to say, I didn’t really intend for this to be a whole, “which came first” argument. My initial question was not asking why we are encouraged to spend, but asking why we are encouraged to spend when we have debt. A economy can not sustain itself on borrowed money and credit is not unlimited. </p>

<p>Another cool quote; demand is infinite, but money isn’t. Get a job. By RonPaul2012</p>