Why would putting money directly into the consumers pocket not work?

First most people would not pay down their debt but instead would buy more crap they don't need. A stimulus of cash to citizens might temporarily boost the economy, but not over the long hall because it would not create jobs.

Second it solves nothing, but actually makes the problem larger because you are actually increasing debt. Some citizens would use it to pay debt down, and other more irresponsible citizens would use it as a down payment for more debt like a new car. Any way you cut it, it would be a net gain in debt. Government debt is still debt the citizens will be paying for either through some combination of higher taxes or inflation.

If you are paying attention to the treasury auctions you would notice that foreigners no longer want our debt like they used to, yet we still have more than 1 trillion to be sold this year, more than the total for all of last year. There is only two possible solutions to this problem.

The first is to allow the market to work which will increase the interest rate paid on our debt dramatically so that our treasuries are actually attractive to capital. The problem with this is the interest rates of everything goes up, meaning all loans interest rates go higher, which is not helpful in jump starting the economy, but actually has to happen to before things can get better.

The second solution is for the fed to create a bunch of money out of thin air and buy the bonds from the treasury with the new money themselves. This will be inflationary and is essentially a tax on everyone who holds dollars. Either way it is bad for the economy, and is unavoidable barring something miraculous occurring.

There is no quick fix, this cannot be put off forever, the excess debt must be defaulted and that means many years of a very ugly economy. The only way things will get better is for our economy to heal itself, this takes time and the government getting involved will only make it take longer.

reply to post by Tank2/8


You want an answer?

Very easy.

From an economical academic POV,

A stimulus is meant to do exactly that - STIMULATE the economy. If money goes into the pockets of Americans all over, guess what would happen?

People would SAVE.

i.e. they would take the money given to them, and instead of spending it on the consumer durables, bill payments, and luxury goods, they would stash it away in banks where it will 1) not be of any use to the economy anymore and 2) get used by lousy good-for-nothing bank executives.

And that is why the economic stimulus is going to the big firms - because they are more likely to need help to NOT crash and cause more trouble, and also because if they can get past this period they can then start to make money for the US economy.

reply to post by proximo


If they put it into buying new cars - it would actually help.

Spending boosts the economy.

Contrary to what you all think, Expenditure WILL get an economy out of a recession.

It's the SAVINGS that would not help.

Saving all that money would result in more loanable funds trapped in the bank system, which would all go to waste because no firms are investing right now due to poor business sentiments.

SPENDING WILL HELP...

But only if you CAN afford the good in the first place - now a little extra cash will help you afford more of it... and maybe also settle some bills, etc.

But it is clear you don't believe spending will save the economy, which is why not much stimulus benefits go to you.

It's all about spending within your means, and saving as minimally as possible, because the economy needs an income boost.

Originally posted by Tank2/8
Wouldnt everyone spending it be a good thing? Assume that the majority paid off dept. Dept that was plaguing the banks. Would the consumer not be quicker to continue to spend and keep the flow going?

Exactly. YOU GET how the economy works.

if consumer spending increase it WOULD be good.

Debt would be paid off and the economy would atcually increase.

But, see, consumers won't spend. They'd rather save for a rainy day. They'll put off a couple of bills, maintaining the debt, and by saving, they'll further remove the money from the economic flow - which is not good.

That's why the money CANNOT go to the consumers.

How about instead of stealing the money from taxpayers just to give it back to them in the form of 'stimulus', we just don't steal it from them to begin with? LOWER everyone's taxes by introducing SMART government spending and the people will have more money to spend.

DUH!

Originally posted by KarlG
If they put it into buying new cars - it would actually help.

It would help the car manufacturers in Japan.
No one wants to buy cars made from bankrupt American companies.
Their products stink and/or are too expensive.



[edit on 7/8/2009 by FlyersFan]

reply to post by KarlG


Please, be real....save. How many saving accounts increased $600-$1200 when they sent out the last checks? I think not too many. People mostly ran out and bought new tv's and other needless crap.

The big picture here is that we, the people of the world, are being scammed. TPTB control what happens with the economy. If anything, the latest actions are being done to introduce a future savior for the economy and usher in the NWO agenda.

Just my personal opinion..........

Originally posted by I Am Spartacus

Originally posted by Tank2/8
reply to post by I Am Spartacus

 

The consumption tread mill will never stop. Is it benefiting us that the banks are using our bail out to pay their foreign dept??

The consumption treadmill is borrowing money to pay for crap that you absolutely HAVE to have right now and can't wait until you can afford it (not to mention NEED it), even if you can't - and the fact that you and everyone else do it and accept it is what creates our bubble economies.

And yes, it does HAVE to end.

This debtors world that we created is not that old.

Very good point.

[edit on 8-7-2009 by Tank2/8]

Originally posted by KarlG

Originally posted by Tank2/8
Wouldnt everyone spending it be a good thing? Assume that the majority paid off dept. Dept that was plaguing the banks. Would the consumer not be quicker to continue to spend and keep the flow going?

Exactly. YOU GET how the economy works.

if consumer spending increase it WOULD be good.

Debt would be paid off and the economy would actually increase.

But, see, consumers won't spend. They'd rather save for a rainy day. They'll put off a couple of bills, maintaining the debt, and by saving, they'll further remove the money from the economic flow - which is not good.

That's why the money CANNOT go to the consumers.

Basicaly the same thing the Banks are doing. Personally, I would still rather see it burning a hole in my pocket then a bank CEO's



[edit on 8-7-2009 by Tank2/8]

Why wouldn't it work?

Here's why:


Say the government sent a check for $1,000,000 US to every household in the nation.

Now we have a nation of millionaires.


Even though a lot of pre-existing debt would be paid off, there would still be a lot of money available to make new purchases.


Now think about what happens when retailers recognize that there is a large pool of discretionary income in the hands of consumers; a sellers' market.


Do you think that the prices will go down or up?


For a clue, remember what happened when the real estate market was flush with inflated house-value cash.



Remember how we got into the trouble we're in now!




"Those who do not remember the past, are doomed to repeat it".

Originally posted by KarlG
reply to post by Tank2/8

 

You want an answer?

Very easy.

From an economical academic POV,

A stimulus is meant to do exactly that - STIMULATE the economy. If money goes into the pockets of Americans all over, guess what would happen?

People would SAVE.

i.e. they would take the money given to them, and instead of spending it on the consumer durables, bill payments, and luxury goods, they would stash it away in banks where it will 1) not be of any use to the economy anymore and 2) get used by lousy good-for-nothing bank executives.

And that is why the economic stimulus is going to the big firms - because they are more likely to need help to NOT crash and cause more trouble, and also because if they can get past this period they can then start to make money for the US economy.

I would maintain a lil nest egg. But I would be spending. And I am not sure how accurate the data is that says 'nobody will spend, they will save' From my own experiance, I have met far more people that spend then hoard money.

Forget the $600-$2,100 stimulas the tax payer did get in '08. That was a joke. It really blows my mind that anybody, let alone "experts" expected that to do a dam bit of good!
I like Jon Stuarts line....(in his good jersey accent) " ...sorry we #ed up your economy. Here's a couple dollars, take your wife out to dinner"
That is about all it amounted to.

But if the majority of that $800,000,000,000.00 would have been divi'd up amoung the tax payers, I believe the majority of folks would feel comfortable enough to do some good spending. They would feel they could afford it because they just used the stimulas to pay off some serious dept. They would be lining up to give the money right back. I do not think as many people would pile the money into the matress as you think

[edit on 8-7-2009 by Tank2/8]

reply to post by Bhadhidar


Talking about everyone getting 1,000,000 is just talking stupid. Asking me if I think prices would go up or down is insulting. I get your main point. My first part of this thread I said this...

TextAbout the only down side I can think of this is that the price of things would get jacked up because buisnesses would know that everyone has $50grand in their pocket. But price gouging could be stemmed to a point.

reply to post by Bhadhidar


I also said this.

they would be back to financing cars and home theaters in no time. Just try to control it a bit better. Screen for better credit. Come up with better systems to keep people who cant handle the credit they where given.

As far as the housing market falling apart. Please go back and do some research on how and why that happened. You will then see that your comment is not very relevant to what I am trying to say. Yes, big mistakes were made in the houseing industry that is a main factor in why we are at where we are at.

Originally posted by Tank2/8
Wouldnt everyone spending it be a good thing? Assume that the majority paid off dept. Dept that was plaguing the banks. Would the consumer not be quicker to continue to spend and keep the flow going?

The problem isn't that spending is good or bad but how it's spent. If everyone was given a portion of the 800b, they would spend it on everything and anything. This would lead to hyper inflation to an extreme.

Just imaging everyone getting 3 million dollars. Would you have any reservations on buying a gallon of milk for, lets say $25.

Well, $25 for a gallon of milk would actually be an extremely conservative cost. Auto's, homes, candy bars would sky rocket. Now, what happens when everyone spends their 3 million dollars. How do you expect people to pay for a $5,000 mortgage or $100 a week for milk?

I thought this long ago. Trickle up economics? Is that what it would have been?

It would have worked better than these bailout and stimulus travesties in the past year or so. How much would that have been per person? Wow. That would have gone a long way. But see that's not what "they" really want.

Way longer than the extra $25 the fed chips in for state unemployment...what's that ONE tank of gas? or the paltry $300 or so in the "checks" they sent us (after they taxed THAT it's all it was really)...weee enough to pay one month's heating bill. what a joke.

[edit on 8-7-2009 by ~Lucidity]

Originally posted by Bearack

Originally posted by Tank2/8
Wouldnt everyone spending it be a good thing? Assume that the majority paid off dept. Dept that was plaguing the banks. Would the consumer not be quicker to continue to spend and keep the flow going?

The problem isn't that spending is good or bad but how it's spent. If everyone was given a portion of the 800b, they would spend it on everything and anything. This would lead to hyper inflation to an extreme.

Just imaging everyone getting 3 million dollars. Would you have any reservations on buying a gallon of milk for, lets say $25.

Well, $25 for a gallon of milk would actually be an extremely conservative cost. Auto's, homes, candy bars would sky rocket. Now, what happens when everyone spends their 3 million dollars. How do you expect people to pay for a $5,000 mortgage or $100 a week for milk?

Yes Bearack, that would be a serious problem if everyone was handed a 1-3million dollars. I am not sugesting anywhere near that.

Talking about $10-100G's.

[edit on 8-7-2009 by Tank2/8]

As your can see trickle UP economics works. Look how well the clunker trade in is working. Now give everyone making less than 100K? a 100% tax deduction for health care costs including prescriptions.

Give consumers 10% tax deduction for buying American made products.

Hey bring the troops home to no end useless wars and save trillions! Limit the size of corporations so no single banks or other entities can endanger the Nation.

Build freakin Nuke plants.

It is all solvable just need to find a way to eliminate undue influence on our elected officials. Perhaps single term limits would help.

reply to post by Xeven


SEE! Know why can guys like us not be up there running the show?? Politics really makes me sick. They have there own agendas, they do not care what the public who voted them in wants.....Tom Clancy's book...the title is on the tip of my tongue but the president down to....well then entire political head gets cut off and they start from scratch with a real american. sounds nice


[edit on 5-8-2009 by Tank2/8]

One day you will realize that the collapse was put in place in order to concentrate the wealth and consolidate the banks into the large ones (Goldman, Morgan etc) - this is exactly what happened in the last great crash, it is exactly what I predicted would happen and is exactly what has happened -

I even posted a thread showing EXACTLY how it was done, something never before seen on this site and no one gave a toss - the RIYAL was pushed through the roof causing an oil price spike which pricked the housing bubble - that simple - and is there on Google finance for anyone to look at simply pull the handles at the bottom of the graph to show you the year 2007 - the oil price spike followed that - what is SCARY AS HELL is that we have another one staring us in the face - here we go -----

www.google.com...:SAR

reply to post by audas



Good tracking bro. I need some more guns.

BEcause it would cause inflation to skyrocket. If every American was given... say 50,000. then Businesses would end up jackign the prices. A bottle of coke would cost 10. A roll of toilet paper would cost three, and so on.

ON a personal note, they way I see it, everyone would be paying off bills and mortgages, so it would go to the banks anyways.