The Federal Reserve =has= to print money because otherwise we'd have deflation, which is death to an economy.

The present problem is that even with the Fed running the printing presses, so much wealth is being hoarded into so few hands that we have de facto deflation, along with all the problems that creates.

The middle and working classes have less and less money at their disposal, primarily because of predatory employment practices that we're locked in a vicious cycle where business continues the race to the bottom with manufacturing costs to maintain or stimulate demand (as well as extract massive profits, which are then hoarded as cash with companies like Apple), retailers race to the bottom with pricing, and workers -- middle and working class -- have less and less money.

The only silver lining in the otherwise stormy cloud of economic data is that consumer debt is declining at a very rapid clip.  This is bad news for businesses, since business owners rely on credit for expansion (the big money banks are trying to strangle the economy as a way to take some control back from the Federal government after their complete trashing of the economy in '07-08), but when the banks and the super-rich are finally forced, most likely through the ballot box in '12, to quit treating the economy like their own personal playground, consumers will be in a much better position.

Rigged system - just like the Garden of Eden.

Why can't I fly when I face into the wind and flap my arms?

Does that mean I really am incapable of making any decisions on my own, like getting a private pilots license?

I CAN'T FLY WITHOUT A PLANE!  I'M COMPLETELY INCAPABLE OF MAKING ANY DECISIONS ON MY OWN!  I'M A ROBOT!

No, you don't have a credible argument either.

B.S.,

In many cases, businesses RIGHT NOW are simply refusing to hire workers that are needed to do the work because they know that workers are desperate enough for jobs that they aren't going to complain if they are working 50 or 60 hours a week.  I was at a business recently where a number of workers up and quit because their employer was working them too many hours in an effort to save money.

It isn't a question of paying people for make-work, it's a question of how businesses are exploiting the present situation.  In many instances, companies are acting in ways that =will= bite them in the ass when the economy does improve.  Employees who are sitting tight right now =will= jump to other employers as soon as the market permits them to do so.  Companies that have been abusing employees will then lose out as they have to train replacements for the employees who got fed up and left, as well as having to pay whatever the new prevailing wage happens to be -- which when labor becomes tight again =will= be higher.

I saw this back around '00 after the dotCom bubble burst.  We were all working like crazy, then the bust, and we all hunkered down.  As soon as things improved, everyone bolted and management started handing out raises to stem the losses.  A few years later, our expenses were out of line and layoffs were in vogue again.  Keep in mind -- there was NO reason for us to work like crazy, except that some executives decided that running around in circles was a good business decision.  It wasn't.

Ok, psychology lesson time!

In an earlier post I mentioned how I used to have a coworker who instead of getting more education or a better job simply sat around and griped about our current jobs and that there were no other jobs to be had.

While I went and got one. 

When people start blaming the rich and claim that they are all somehow blocked from being able to enjoy in any of that wealth, well that can be explained by modern psychology.

Some people in this thread seem to have what is called "Learned Helplessness".

You don't need to tax the rich into stagnation or turn your country into a socialist utopia.

You just need therapy.

So what you are saying is that it is beyond your control, right?  That no matter what you do the rich and the poor economy will prevent you from increasing your wealth?

People who were born into poverty, lived in bad neighborhoods all their lives, went to schools in those poor neighborhoods, had friends who were in gangs/jail/shot - often have learned helplessness.  What success looks like to someone who is raised in that kind of neighborhood is different than what success looks like to someone who has lived elsewhere all their lives.  Like eating regularly or staying alive.

Those of us who used to be middle class and have only recently become poor haven't had time to learn to be helpless.  We are searching for jobs, going to school - the group with the most new student loan debt is the 30-40 age range, and we are attempting to get back on our feet.  Once you have been turned down for almost 400 jobs - any where from $100,000 a year to $10 an hour - it gets to be hard to keep your feet moving forward.

My feet are moving forward, thank you.  The new job is part time $12 an hour, but it is a start and maybe it can be more.  I am also continuing my education.  I am not in the throes of learned helplessness.  If I need to see a therapist, I'll make an appointment.  Thank you for your concern.

Taking the tax rate back up to what it was before the Bush tax cuts will not make the country socialist.  The correct definition of socialism is "the state owns the means of production."  See anything there about taxes?  Redistribution of wealth?  No?  Didn't think so.

I am NOT talking about redistributing wealth.  In the sense of tax them and send me checks.  (I get bored too easily to stay at home and not drive everyone around me insane.)  I am talking about hiring people to do the work society needs done - infrastructure, defense, and so on.  Build the useless fence along the border that won't prevent illegal immigration.  At least a lot of people will have work.  Hire people to patrol the fence - at least they will have work.  Replace the bridges that have structural problems.  It is a huge number across the country.  People will have work.  And so on.  When more people work, they buy more stuff, pay their bills on time.  And then people are hired to sell them that stuff.  More stuff has to be stocked, manufactured, shipped, tracked and paid for - all requiring people to work.  It is called the law of supply and demand - Econ 101.

Exactly.  Many large companies are currently sitting on funds that they are not investing in R&D or expansion and are not using to hire.  If the government starts hiring like mad - spending and spending - on salaries and health insurance and all that - people newly employed will want to buy.  And companies will respond by spending some of that money currently tied up in nonproductive ways in responding to that demand.  And the economy should gradually start back up.

It was never going to be an overnight job to get things going again.  And boom and bust cycles will repeat and repeat as long as we are stupidly trying to be a "free market" by insisting on capitalism for the individual and socialism for corporations.

B.S.,

I'm sorry, but the Neo-Con analysis of the impacts of Universal Coverage are Beyond Stupid.

What harms insurance companies right now is that they get stuck in the "death spiral", where they raise rates because people who are "healthy" take the crap-shoot that they don't need insurance.  This makes it economically advantageous for more people to take the bet, so the temporarily-healthy opt-out, further raising rates and shifting more expense to public-sector health care.  Also known as the Emergency Room.

What "Obamacare" will do is force people who are gambling with public health dollars to pony up.  That's it.

The other thing "Obamacare" will do is force =companies= to provide health care, rather than making it advantageous to dump employee expenses back into the public sector, all the while not even beginning to pay a "living wage".

What Neo-Cons want to do is further engage in a "race to the bottom" in which the objective is not behaving like members of the society in which they live in, but as a new form of Aristocracy, with political influence far beyond their number.  Also known as "One Man, One Vote."

Companies that have had cash on hand to invest during economic hard times have historically done well.  What =should= be happening right now is companies should be acquiring assets, including human capital, while costs are low so that they have an economic advantage as the economy continues to expand.  What they are doing instead is hoarding cash and failing to make lower-cost investments in property, plant and machinery, as well as failing to snatch up lower-cost workers.  What =will= happen to the business owners that have been busily hoarding cash is that as costs rise, their "cash" will buy progressively less.  To put it in terms I'm sure you understand, they are trying to do the stock market equivalent of timing the market -- which you should very well know doesn't work.  The unemployment rate has come down 1.5%, from a high of 10.1% to the current seasonally adjusted reading of 8.6%.  That represents a significant decline in excess workers, which always indicates higher labor costs.  This is very basic Conservative economics.  Not Rush Limbaugh fan-boy Neo-Con economics, tried and true, very boring, very historically valid economic behavior.

Health care is unique in all of the forms of insurance.  It is the only form of insurance that a consumer can use to make a claim with no other reason than they feel like it.  You cannot make a car insurance claim because you want a new paint job, you cannot make a claim for fire damage to your house because you burned a pot roast, and you cannot make a claim for crop insurance losses because you planted barley and everyone wanted wheat.  You walk into the doctor's office, tell the doctor you "don't feel well" and put the insurance company on the hook for hundreds, if not thousands, of dollars in expenses.

Health care providers also engage in practices that are completely unrelated to delivering health care, such as defensive medicine.  Because the American Medical Association has a monopoly on who is, and who isn't, a "doctor" (Rush recently had yet another tirade about how evil "nurses" are because they want to get out from under the control of doctors ...), doctors can charge whatever the market will bear, not what the market would pay in a free market scenario.  Because health care is a matter of "life and death", there is inelastic demand for services.

Another major cause of high costs is cost-shifting, where the cost of providing services to one person is dumped on another, simply because they can.  In the case of Medicare, low Medicare reimbursements are made up by billing non-Medicare patients at a higher rate.  Some justify this by saying that the government can "negotiate" a lower rate because they buy so much service, but if that were the case, doctors would run screaming away from Medicare patients -- they'd be soaking them up from a "volume purchaser".  That's not at all the case.

Finally, "end of life" care is a major drain on Health Care expenses.  I'm not talking about killing grandma because she's 93 and needs oxygen to keep chasing great-grandchildren, I'm talking about family members making decisions about end-of-life care that are under their control.  Instead the control of family members who are engaged in futile efforts, which aren't based on sound medical science, and whose only long-term outcome is spending money and keeping someone who is already dead "breathing".  Despite numerous reassurances from my father's doctor that my father was, in fact, "dead" (undiscovered heart attack that resulted in clinical brain death ...), my two brothers engaged in the same sort of Terri Schiavo "oh, look -- he looked right at me!" wishful thinking.  The only result, in both the case of Terri Shiavo and my father, was to waste limited financial resources because people think that denial really is a river in Egypt.

There is something that has not been discussed in this thread.  We have inverted demographics.  To explain further, we have in the USA, an overall population of around 300 Million or so.  Of that 300 Million is a workforce of approx 153 Million.  Of that 153 Million, 92 million are babyboomers approaching or are at retirement age.  People who are approaching retirement do not spend like they did when they are younger and the kids lived at home.  Instead, they are feverishly paying off debt and saving for retirement.  They are no longer spending on things such as houses, cars, and kids education.  In fact, if you ever do a marketing study of demographics, you will find that people's spending tapers off drastically once the kids leave the nest. 

If you study the economy of the United States historically, there have been two huge babybooms in American history.  The first after the Civil War and that generation fueled a huge economic expansion in the westward expansion and brought forth the assembly line and invented electricity even early television as early as the 1890's but was never developed until the 1940's and 50's.  That generation that was born post war Civil War peaked out in the 1920's and slowed down in the 1930's and at that time you had demographically more older people than younger people.  That is not healthy for an economy. 

Our second babyboom and the biggest in recorded history (this was a world wide phenomenon) was the post WW2 babyboom.  Everything that generation would spend money on distorted the market.  Back when that generation started to school, the schools were bursting at the seems.  You also saw a huge youth culture.  Just go back and look at the popular movies and games of the time.  You saw companies we know in toys and games that are common place now burst on the scene.  By the time those kids went to college, besides contending with the Vietnam war, they had to contend with colleges that were bursting at the seems.  Once they started to work in the early to mid 1980's you began to bring the economy back in a big way.

This brings me to now.  We are very soon to have 1 person working for three retired. The generation that came after the babyboomers (born 1946 to 1964) you have Gen X (born between 1965 and 1976 or even as late as 1980 depending upon who you read) and those of us who are part of that generation were only around 30 Million. 

When you have 92 million babyboomers plus some even older and you have only 30 million Gen Xers plus a very few millenial age kids in the work force, there is going to be far fewer people paying in and a HUGE (to the breaking point) demand for services.  The system is going to implode.  If you are a babyboomer and think you are going to get social security, I have a piece of land in the Everglades I want to sell you.  The only way to have a stable or growing economy is to have more younger people than older.   Even if you tax EVERYBODY at 100%, there is simply not enough to keep the system as it is composed now going. 

This inverted demographic makeup will last for around 10 more years until the millennial generation (the kids of the babyboomers) is ready to enter the work force and make the money to drive the economy.  The result of this inverted demographics is that we will see actual deflation due to much less demand.  The governments of the world will be powerless to stop the falling prices.  There is not even a demand for any borrowing as you are seeing interest rates at near zero.  If there is no demand, there is no borrowing and productions stops or slows to a crawl...with a few exceptions.  The areas that will be in HUGE demand will be healthcare, and travel-entertainment sorts of things the babyboomers could not afford with the kids still at home.  In about 10 years, there will be a big demand in funeral plots, caskets, crematoriums, lawyers for estate planning and wills.  The things that are dead to any real degree manufacturing; cars, homes, business attire, etc. 

You are seeing now and it will really accelerate soon the deflation trend.  People are destroying personal debt, either by paying it off or bankrupting it.  You will even see commodities such as gold, silver, oil (yes not kidding) will fall.  The bubbles are in the process of bursting.  You should see the US dollar rise by at least 50% compared to the rest of the world currencies as in a depression CASH IS KING. 

The bad thing about deflation is that it kills banks.  The banks of the last 30 years or so were using the home values of the mortgages they held as collateral to make more loans.  With home prices falling it throws a serious monkey wrench into their balance sheet.  They fall below their legally required capital levels for loaning money.  If a bank is not loaning money and receiving payments, guess what, THEY GO BANKRUPT, thus we had TARP and the other bail outs which will ultimately fail.  I encourage people not to keep any large amounts of money in a bank, credit unions are better as they operate under a different set of rules and they are much more sound. 

The good thing about deflation is that it makes everything much more affordable.  The thing that made housing unaffordable in the 1990's and early 2000's is that the demand for the babyboomers buying their last homes, and most expensive, was that it was that older, more affluent age group, was the ones driving the demand.  You could not get as many people wanting starter homes.  In about 10 years, you will see the millenial wanting starter homes after 10 years of real estate deflation, they will get nice homes for a song.  There will be a rise in demand and prices. 

Anyway, that is some information you will not get on the lame stream media. 

Yes...but they are not going into debt anymore.  That is the key.  They are just doing what they have to do to get by.  They are not earning the wages they did at age say....45, 50, 55.  The wages they make now are, in most places at best say....$10 to $13 per hour.  The key to real demand is how much debt people are willing to take on.  It is debt that has driven up prices.  Think about it, you buy a home, most likely you will use a mortgage and let's say you paid $150,000.  When you sell the place, you want to make more than you paid for it, thus an inflationary drive.  Most of the babyboomers are not buying homes or new cars.  That is the industries that drive the economy. 

You do realize how absurd that sounds, right?  Technology is phasing out jobs and the last thing employers want are old people filling the slots that younger people can fill for LESS pay and LESS, maybe even no, coverage.  If you have an older person on the payroll, employers will opt to keep him/her around if they are in no position to put a significant wage dent in their budget plans or ask for more money any time soon.  There's a reason part-time is becoming more common place because it's like splitting the bill at a restaurant; the total amount paid is the same if you were to hire one full-timer or two part-timers.  It's sneaky and underhanded, but that's what it's come to.  Job growth is a myth in this country; they just slash hours and hire more people for less pay.

A MONETARY-economy, sure.  There are also a lot of other factors like supply and demand, which improperly defines a monetary system by the way, but that's more of a resource-based economy which should be the standard today.

No debt required??  Are you shitting me??  Every dollar has a percentage of debt on it.  Every single fucking dollar.  Read the front of any paper currency in this country next time REALLY carefully when you get the chance.  The "great mystery" is that people don't seem to understand that our money system is based on a giant lie and our paper currency has no legitimate value, banks are scamming people for loans with money that they don't have and the Federal Reserve can print as much money as their are trees on this fucking planet.  The financial term "debt" was created when the Federal Reserve printed money to devalue the buying power of the dollar and it's been that way ever since it's been around.  It doesn't take a genius to see the shit storm that's coming as a result.  Hell, OWS and The Zeitgeist Movement are fully aware.

Your current life expectancy is a statistic, not based on your sole lifestyle.  Do you eat right?  Do you work out?  Do you avoid fast food?  Eat raw foods?  Take vitamins every day?  Drink water all the time?  If not, you might as well cut down that 84 to about 60.  Of course, life is uncertain, but based on how well you treat your body, you can read all the lame ass studies you want because it doesn't pertain to YOU; it's just a statement of generalization.  Financially speaking, if the current trend keeps up, expect a lot more than "scraping to get by" and "trying to live" because the standard of living, unemployment and "job growth" will just keep getting smaller and smaller.  Educate yourself and stop buying into the news and media.

I am going by actuarial and birth rate charts along with historical data.  Plus it is worked out in a mathematical way.  Also, if you go by the marketing information, you can get the life cycle of customers and what they buy at each stage of their life.  Even though there are many retired people going back to work, it is not the majority of them by any means.  There may be about say.....20% who really have to go back to work full time.  As for debt...it is the thing people use to buy big ticket items, cars, homes and others.  Historically and the demographic charts bear this out, but the aggregate number of people who buy their last homes are at around age 43.  After that, the only major expense is getting the kids through college, after that  the big spending is over.  What else are they going to buy?  Think about it.  Look, I am not trying to badmouth babyboomers....not at all, I am just looking at it mathematically. 

Ask yourself...what causes the money to exchange hands?  It is people deciding to buy.  What causes people to buy...need or want of a certain product or products.  How is that need measured?  Demand.  When you have a very large group of people wanting, needing, desiring to buy a certain level of goods, it drives the price higher until the production rises to meet the demand.  When the price is higher than the money they have on hand, they will go into debt to buy it.  That is simply common sense.  When you have a very large number of people who's demand has been forcing prices up and using debt to finance it,  causes the prices to go up.  It is the demand.  Most people have to use debt and that debt forces prices higher because if they only sold for cash, there would be less production.  Think about how many people are involved in the production of home, cars and other manufactured goods, not JUST the people who assemble it, but go back to the miners who mine the metals or refiners who get the resin from oil that produces the plastics that goes into the parts that goes into the final goods of those items you buy at the store or car dealer or where ever it is purchased.  In order to produce 1 car, if memory serves me correctly, it takes about 10,000 people all along the way.  When you create currency by using debt, it allows people to purchase something that would not have otherwise been able to buy it.  If those people could not buy it, the prices would be lower due to less demand. 

Those elderly people will be working but remember....MOST elderly don't have the health to work like they did in their 40's and 50's.  Plus social security limits how much they can work and still draw it.  They cannot make more than around $30,000 or they lose it for that year.  Plus, you have no choice, at least as it stands now, you HAVE to draw social security by your early 70's. 

That is you personally, if you take the aggregate retirement and mortality age, it is, as of now age 78.  I know there are many people who will live longer but the aggregate has not budged.  As for that nasty financial surprise, there are MANY your age, and mine.  I am just a few years younger than you.  I am 46.  The money to retire may not be as large as the babyboomers but as demand falls, the prices fall.  We are seeing it now in home prices, hell, it my neighborhood, homes went from the mid 160's in 2006, now the average price asked for on homes for sale is around $60,000, NO KIDDING.  That is happening to one degree or another in MOST places in the USA.  We are seeing a corresponding drop in demand for cars, look at all the car companies who needed a bail out.  The greatest demand before things turned down was the big SUV's.  When the oldest boomers started to gear down for retirement, they switched to more efficient cars and travel less and in retirement, how many older people do you see putting the miles on their car they did when they were younger and working?    I understand there are individual cases where the numbers are different.  That is a fact, but the vast majority of them line up. 

There is a way to make money when everybody around you is losing.  You have to get people to bite though....for those who don't understand it is called 'Shorting'.  You make a bet that the market will be down.  There are people who will take your bet and bet long.  The problem is if you bet the end of the world, you win but lose because there is nobody to collect from.  The problem with shorting is that if it becomes too prevalent, the government steps in and stops it. 

There is also something that comes along with the inverted demographics.  That is less consumer demand.  Remember, once the kids leave the nest, the demand to spend on large ticket items drastically decreases and the demand to earn more decreases.  There are some areas of course that will have a greater demand but it is not the labor intensive areas, with one exception, healthcare and because income starts decreasing for those older folks, so does the ability to pay for it.   Thus, there will be some form of rationing either by the market, industry or government. 

Along with less demand for consumer goods, there is less of a need for borrowing money.  Banks make their money from interest on borrowed money.  When demand for goods goes down the prices drop and correspondingly a drop in demand for borrowing and the banks lower interest rates and actually end up lending less.  That starts a downward deflationary spiral.  That precipitates more problems.  Banks use the home values they hold mortgages to set interest rates and how they rate their solvency.  When the home values drop (again, due to lack of demand), that lowers the balance sheet of the banks and less solvent ones go bankrupt.  That started in 2008 and it continues today and not just at the private level but also at government levels. The reason the banks can loan less money is that the pool of people needing money and who can afford the debt is fewer.  Add to that the corporate numbers the banks has to meet to keep their stock price up by meeting their corporate projections, that forces them to do more drastic and stupid things like the sub-prime and alt-a mortgages.  The pool of babyboomers passed through and they don't need to borrow anymore and the Gen Xers, a group around 1/3 the babyboomer size simply doesn't have the volume to support an industry geared to support the babyboomers. 

Add to that less demand, you have the babyboomers who are starting to retire and become consumers of more services such as Social Security and Medicare.  Those systems are starting to implode.  Remember what I said earlier, there is about to be a ratio of 1 person working to three who are not.  Definitely not sustainable. 

But it is consumer spending on those durable goods that account for 70% of the economy. 

Again, it is those durable goods that drive the economy.  70% of the economy is made up of consumer spending.  That extra income they now have goes to retiring debt.  That is a demographic fact.  If this site would allow me to post links I would to show you.  Most empty nesters which make up that 50+ group go on a mad rush to save for retirement. 

The banks are not a requirement for the number of people still breathing but it is essential for a functioning economy.  Next time you are in the bank go talk to the banker, not some clerk, but the bank president and ask him/her what would happen if suddenly people could only buy with cash on hand.  You would find the economy slow to a virtual stop.  How many people do you know who buy cars and homes for cash?  Less than 1% of the population.   Also, ask them how they use for collateral when they loan money.  You will find that the majority of it is real estate.  Now, there are some banks who will only have $1 collateral for $10 loaned out, technically called 'Fractional Reserve' and that is crazy because that is the situation that has blown up several banks not just in the USA but all over the world.  With the demand for homes due to fewer people wanting to buy them, has been, and is still in the process of cratering.  That does indeed lower the value of the collateral used by the banks.  It goes from a 1:7 fractional reserve ratio to 1: 15 or 20 or 30 and is then insolvent.  Most of those collateralized assets are insured for loss, but when the losses are so huge they totally swamp the insurance, you end up with something like AIG.  They were swimming naked when the tide went out. This whole system is a house of cards that has been collapsing and all the government bailouts simply forestalls the big collapse.  There is nothing that can stop them. 

yes...you are correct but there was about a 10 year displacement.  Also, those older buggy whip maker's skills did not fit with the new economy, they could not suddenly drop their tools they used for making horse buggies and buggy whips and then pick up wrench and know automatically about building or working on a car.  They were too old to retrain.  Plus, there was not quite the demand for the new until much later.  It was not until the kids of those older workers were out working and able to afford to buy those new cars. 

Then why don't you explain to us ignoramuses why unconditional welfare payment don't create a massive moral hazard for the future? How does punishing sucess and rewarding failure not produce even more failure?