This chart from dvorak.org not only portrays just how deep the most recent recession was, it also conveys an important point about the economic system that has been in effect for the last 40 years and which is now running out of road.
Notice how each successive recession in the last handful has taken longer than the previous for recovery to take hold.
The response to each deflation has been a reflation of the same bubble and then a couple new ones along with it. This is why the next recession is inevitably worse as the prior bubble was never allowed to fully deflate and malinvestment to fully liquidate.
We should be expecting a pretty horrible recession in the near future.
In this clip, Ben makes the great assumption (or exclusion) that a wealthy businessman can only give back to his community by way of funneling it through taxes (the figures he uses are a bit over-the-top anyway).
No. Bill the businessman can also invest in capital in order to expand his business. This includes labor. Bill can employ Joe himself if he was able to keep more of his profit. What’s better, Joe getting paid to contribute to production, or Joe not working and getting paid by Bill anyway? That’s an easy answer.
To the extent that his profit doesn’t contribute to the expansion of his business, Bill would have a number of choices with his income. He can either save it or spend it. It’s quite simple.
If he spends it, then he’s doing exactly what Bernanke and Pelosi are suggesting is such a wonderful thing for business (and it is a good thing for business, but only certain sectors of business within the overall economy. The continual attempt by politicians to prop up retail and services sectors shows a complete ignorance of what economic health means.)
If Bill doesn’t spend his money then he will make an attempt to capitalize on his wealth by saving it. Because he is a wise entrepreneur, motivated by the root of all evil, he won’t likely hide his money under his mattress, so he will invest it.
Whether he stores it in a bank, invests in hedge funds, buys stocks, bonds, or goes out and makes a straight investment as a venture capitalist, Bill is offering up his extra wealth to others so that they can grow their businesses. Of course, Bill wants something in return if those investments pan out.
Lastly, it’s important to point out the subtle hint of animosity towards business, in general, that underlies the entire commentary by Bernanke. Never mind the fact that politicians’ disdain towards business is often just lip service (although I suppose the difference is between free business and business that is shackled by government or else in bed with them. Free business is where their disdain is directed.) What’s more important is that in order for a business to gain enough disdainful excess wealth, they must provide the individuals in the community with goods and services at a deal that is fair enough to be deemed so by entire sections and demographics of the market. That sounds like a great thing to me.
I don’t know if i shoudl (sic) just say duh or think you may be on to something? Lets just say even it were possible for a highly skilled individual with 20 years of experience were able to get a minimum wage job or collect a higher amount on unemployment. You would have to be stupid to take the minimum wage job. There is a reason the government doesn’t want this to happen. We do not need to be in a race with the third world toilets to have our wages become the lowest. I does not help the country in any way. You need to think about the big picture other than simply individual pride
Tony is saying that we should continue funneling wealth from businesses, so instead of them paying for additional labor and investing in additional capital, they pay their would-be workers to sit on their butts.
And why should we continue doing this? Because we don’t want our workers to earn low wages!
Unemployment benefits are the mark of an advanced society. Individuals going out, getting work, and being productive is not. That’s what third world countries do.
