Originally posted by buddhasystem
Collapse with respect to Euro?
Look, I don't plan on using my 401k money in Europe, why should I care?
Maybe because the value of your money is dropping, and thus the things you buy will keep getting more and more expensive? I just explained this in
the news thread, but I'll do it again here.
Lets say you have a total of $100 in the economy. Lets says there are a total of 10 apples you can buy. Supply and demand states that each apple has a
value of $10 each. If you own $10 of the $100 total in the economy, then you own 10% of the entire wealth. You can buy 1 apple with your wealth.
Now then, add in the federal reserve. They come in and create another $100 out of thin air and give it to the corporations they loan the money too.
Now there is $200 in the economy, but still only 10 apples. Supply and demand states that each apple is now worth $20 each. Your $10 has changed from
10% of the wealth, to only 5% of the wealth. You can now only buy 1/2 an apple.
That is inflation. What happened is you just had half your wealth STOLEN from you. Yeah, you still have $10, and if you are dumb you will say - what
are you talking about, I still have my $10, nobody stole anything from me. But when you look at your purchasing power, you've lost half your
Those stock prices are just doing the same thing the apple prices do in this inflation.
And this is not even mentioning the fact that we have to pay that $100 the fed created back(national debt) + interest. Interest which they do not
print the money up for. So they end up getting the $100 back, plus part of the original $100.
This is the transfer of wealth in this country. Looking at the stock market prices, rather than the value is going to give you a false understanding
of what is happening.
As long as they keep adding money into the system(more inflation) people will be able to use the newly created money to keep up. This however lowers
the value of the dollar(increasing the prices) and eventually it has to stop. Then comes deflation. And when deflation sets in, then it's a mad
scramble to pay that interest and money back, except there is never enough money in the system to actually do that(because the interest money is never
created). And that is when the bankruptcies/recession start to kick in.
The people who took out the loans are then dealing with increasing costs at the same time, and they can't afford to pay it back. So they themselves
go bankrupt and then whoever is left with cash comes in and buys things up for cheap. Just like they did after the great depression. Then the economy
picks up again after, and these same people then resell them at full price + interest.
This is a very simplistic example, but hopefully it gets the point across.
I think that is a pretty good reason to care.