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How can there NOT be a crunch every couple of years in Capitalism?

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posted on Aug, 4 2012 @ 11:38 AM
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Lets assume the ammount of money in the economy is fixed. At some point, the people who are able to turn a profit own most of the money until the general public has none left to spend.

Of course the ammount of money is not fixed, it keeps increasing, by the very nature of capitalism the money flows in the pockets of those who have the means to turn a profit a money pool if you will, this money is taken out of circulation. So new money has to be infused driving inflation up. The only alternative would be to replenish the money supply by taking money out of private hands and infusing it back into the system.

With means to conduct buisness at an ever faster pace, are shorter cycles with more frequents busts, OR never seen before inflation rates, as money needs to be infused at a greater pace unavoidable in a capitalist system?




posted on Aug, 4 2012 @ 01:06 PM
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Originally posted by Cassius666
Lets assume the ammount of money in the economy is fixed. At some point, the people who are able to turn a profit own most of the money until the general public has none left to spend.

Of course the ammount of money is not fixed, it keeps increasing, by the very nature of capitalism the money flows in the pockets of those who have the means to turn a profit a money pool if you will, this money is taken out of circulation. So new money has to be infused driving inflation up. The only alternative would be to replenish the money supply by taking money out of private hands and infusing it back into the system.

With means to conduct buisness at an ever faster pace, are shorter cycles with more frequents busts, OR never seen before inflation rates, as money needs to be infused at a greater pace unavoidable in a capitalist system?


This is predicated on the argument that when a business owner receives profits that they will stuff it away forever. You are assuming a 100% rate of stuffing money in mattresses. Sure, the mega rich are a bunch of greedy assholes, but capitalism works best when the middle class is prosperous. The real engines of economic growth are small businesses, founded by individuals, families, or groups who are typically of the middle class. These people use their profits to meet their daily needs (keeping the money in circulation and not stuffing it in mattresses) and to expand their business (also circulating the money). Or they could buy a car, or a boat, or a house.

Even the mega rich need to buy crap and invest in new or existing business ventures.

The real problem is that this isn't a captialist country at all. Economically it is closer to a fascist system, where big ass corporations buddy up with the government and become state backed demi monopolies.



posted on Aug, 4 2012 @ 01:13 PM
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reply to post by Mkoll
 


To your point, the vast majority of profits are spent by shareholders, and therefore, reintroduced into the economy.

What gets us into trouble, however, is when commerce is manipulated by fraud or regulation, producing irrational pricing, supply and demand issues.

edit on 4-8-2012 by loam because: (no reason given)



posted on Aug, 4 2012 @ 06:08 PM
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reply to post by Cassius666
 


There usually is? Under a "healthy" Capitalist system there is a more severe crunch, usually ever 5-8 years. Keynesians within government usually produce BS reports to hide negative economic information like inflation and unemployment.

Under a Keynesian system you often don't "see" the "crunch" either because the Government makes it invisible. What? You're poorer than you were 5 years ago, lost your job, money not going as far as it used to? But Chic-fil-a doesn't like gays!




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