Thursday, February 5, 2009

February 5, 2009

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things are going to be horrific if they keep passing these stimulus packages, the problem with the US economy has always been to much spending and borrowing, the solution is the recession, the real crisis is not here because that is going to be the fall of the dollar, the economy grows because of production not because of spending


  1. O my god! In that third video where the guy says "we are going to make sure we never ever have such a crisis again". Sounds alot when they created the federal reserve "economic crisis are a thing of the past, no inflation anymore, only economic growth".

    I wonder if the founders knew about what we are doing to this country they would change the constitution and forbid government intervention in the market.

  2. In October of 2008 I mentioned to the Staff where I work that I was getting out of the US stock market and would begin to start buying silver and gold. Laughter ensued and a few people told me that I was crazy. they said that the government would "save the day."
    Since then I have turned nearly all of my assets and liquidity into precious metals. (the kind you can hold in your hand.)

    This morning one of the October laughing boys told everyone that his retirement had been wiped out. The man was devastated. I said nothing.

    Why is it that people can not see that the difference between the government debt and an individual's debt is the same thing. DEBT is DEBT. No one in their right mind who was filing bankruptcy would go out and max out 10 more credit cards believing that by doing they would be providing themselves any "stimulus." Why does our government and individuals who back these so-called "stimulus" packages think otherwise? Have we lost the capacity to reason in the US?

  3. To answer your question of "why people have lost the capacity to reason",I think we have to look to the "paradox of thrift" which has been popularized. It is a fallacy but it is hard to get ones mind around it. The lady interviewing Peter certainly was thinking of this "paradox" as Peter said we have to produce and not spend.

    I don't pretend to be able to completely unravel this "paradox of thift", however, as we produce and do not buy (what Peter suggests), we tend to drive prices down. This has to be helpful in rebuilding our economy on stronger foundations. I also think, that certain lines of production will cease or greatly shrink this way, while others grow. One challenge will be for workers in the shinking sectors to successfully transition over into the lines of production that pick up.

    I think Peter would argue that some of the lines of production that will greatly increase will be manufacturing while others like restuarants will shrink.

    some thougthts
    JE Dorner

  4. JE Dorner thank you for your posts, I always read them! Thanks you.

  5. Thank you. Here is the only article I ever came across that debunks the "paradox of thrift" fallacy.

    The second section is where he goes at it in earnest. It would be great if somebody could come up with a pithy version of this to allow us to start "deprogramming" the public, the politicians and the mainstream economists.

    all the best,
    JE Dorner

  6. How about...

    Saving builds wealth.
    Spending erodes wealth.

  7. I think I'll put it on a bumper sticker.