My idea will bring about ECONOMIC MIRACLES

[bathsheba666]

Posterior(ity).

My question still stands.

 

[Whomp]

My question still stands.

Then there was no Freudian slip.

 

[Red Stranger]

You guys do realize that spending the money doesn't mean go out and get the newest Wii game right? You can spend it on education or mortgage. In fact it will encourage people to spend it just that instead of saving the money for it.

The reason a lot of poor people remain poor is because they think about saving instead of investing and pay back. If you know you can make the payments for your education or your mortgage, then take the loan and pay it back. But most poor people won't do it because they don't want to pay the interest. So they save their money. But the houses just get more expensive, so they never get what they want. And the money they saved loses value because the value of everything else appreciates. My system will make them worry less about having to pay the interest, since they'll need to spend the money anyways.

 

[Whomp]

Poor people hardly save. You'd be better off giving the low income head of households a negative tax rather than lock up their money they can't afford to tie up or give the head of household a benefit let them have uncapped contributions and free withdrawls for any purpose from Roth IRA's.

 

[Red Stranger]

Thing is, this is very almost what happens, with a few things tweaked and a lot of things removed. If it was indeed beneficial to tweak and/or remove those things, don't you think it would have already happened by now?

Sorry, I don't buy into the "everything that can be invented has already been invented theory."

Poor people hardly save. You'd be better off giving the low income head of households a negative tax rather than lock up their money they can't afford to tie up or give the head of household a benefit let them have uncapped contributions and free withdrawls for any purpose from Roth IRA's.

I beg the differ. Poor people do save. That's why they're poor. The lock up their money instead of investing it. Those who are poor, but don't save are not investing their money. My system will encourage them to buy worthy things instead of drugs.

 

[Whomp]

Poor people consume not save and saving is investing. So differ all you want but you're wrong.

 

[JerichoHill]

Red, poor people do not save. They have to spend more of their income of current consumption, they simply don't have enough left over to save, or invest.

A trip to the US Census bureau and looking at savings rates based on PCI would tell you this in about 1 minute.

Trust me, I am, after all, an economist. Poor people lack the ability to save...by the very nature that they struggle with having enough disposable income to provide for the basic things they need.

Anyways, your idea fails because it removes liquidity from the monetary system. Its a pretty well established fact that removing liquidity causes recession and depressions

 

[Shylock]

Red, poor people do not save. They have to spend more of their income of current consumption, they simply don't have enough left over to save, or invest.

A trip to the US Census bureau and looking at savings rates based on PCI would tell you this in about 1 minute.

Trust me, I am, after all, an economist. Poor people lack the ability to save...by the very nature that they struggle with having enough disposable income to provide for the basic things they need.

Anyways, your idea fails because it removes liquidity from the monetary system. Its a pretty well established fact that removing liquidity causes recession and depressions

And an even mild depression will be dire for everyone. A company goes away, so does the purchasing power of all it's workers.

 

[Stylesjl]

Poor people spend more then they save. Only middle class and upper class people have the luxury of saving for investments

 

[Phlegmak]

The reason a lot of poor people remain poor is because they think about saving instead of investing and pay back. If you know you can make the payments for your education or your mortgage, then take the loan and pay it back. But most poor people won't do it because they don't want to pay the interest. So they save their money. But the houses just get more expensive, so they never get what they want. And the money they saved loses value because the value of everything else appreciates. My system will make them worry less about having to pay the interest, since they'll need to spend the money anyways.

Your premise is wrong from the beginning. Very few people put their money into a place where it earns no interest. Savings accounts are commonly used and they earn interest, just very little.

I beg the differ. Poor people do save. That's why they're poor. The lock up their money instead of investing it. Those who are poor, but don't save are not investing their money.

Totally and completely wrong. Poor people are poor for a variety of reasons and it's not because "they save money instead of spending it."

So, please state what you have learned in this thread.

 

[Pontiuth Pilate]

Investing is something you do with disposable income. Poor people do not have disposable income. Telling poor people that they should invest in some blue-chips only shows how ignorant you are of what it is actually like not to have your own stock portfolio.

iirc (Jericho can no doubt provide harder numbers) something like half the stocks in the USA are owned by 5% of the population. Not coincidentally, the richest 5%.

All your "grand economic theory" does is switch all payment and salaries to credit. Since this money doesn't actually exist, and since there is no cap on credit, you will eventually inflate and inflate until the bubble pops, the worker realizes he has been paid with worthless scraps of plastic for the past ten years, and the corporation waltzes away with everything. This is exactly what happened in the Great Depression. It also happened in the internet bubble of the 90s when people actually thought being paid with stock options was a neat idea. Credit and stock options are both excellent ways to pay a worker with something that doesn't exist and can later easily be defaulted on, with few legal consequences. Look at how little the workers at Enron are getting out of that company while the C_Os are still lounging at ski resorts in Aspen.

Naturally, as you are the one who would be waltzing away with everything, I can see how you would think this system rocks.

 

[JerichoHill]

Let's put it like this. For 1 person living alone, the break point at which one can start saving is about 30K, +- a few thousand depending on where one lives.

After that, the MPC and MPS take over (marginal propensity to consume / save. So the further up the income you go, the more your MPC and MPS are. Until you get to that point you simply cannot save.

For poor people, a traffic accident, an emergency visit, will wipe out what savings they did have. Therefore, they're not really saving for investment, but saving for disaster..if they can even be saving.

 

[Mise]

Sorry, I don't buy into the "everything that can be invented has already been invented theory."

But you agree with the rest of my post? Good.

 

[Lambert Simnel]

Granted. Like I said he's young and maybe this will teach him that delivery of the message is everything. I must admit some of the shock and awe posts around here get people's juices flowing.

You're a nice guy Whomp (and it's a pity you weren't able to make it over to the London drink this year.) And your subsequent replies (and those of others, to be fair, espesh JerichoH) are very considered - it's decent of you guys to give Red the patient rebuttal which some of the rest of us couldn't be bothered with.

Just out of interest though, if you had someone talking like this to you in a bar, or in the office over a coffee, would you bother discussing it, or would you jusr give up and walk away ? In a virtual sense, the "walk away" option is what I and some others have chosen to do with Red. When you're as old as I am, life's too short to bother with some of the more, err, extreme posters here.

 

[JerichoHill]

Let's just say that in my office, political discussion doesn't occur around the water cooler. I work in a very politicized section, and we just don't discuss these things. (though the 3 libertarians do have closed door sessions).

Among friends, I do make an attempt to correct an erroneously wrong train of thought. Most of the time I am able to be successful. But people really don't like having their worldview changed if they're afraid of change, and I've found that they go back even when they've acknowledged their wrong.

So yes, its futile to correct, but its also the correct to correct.

 

[Whomp]

Thanks Lambert. I was looking forward to meeting some of the new faces like you, Meli and Krys.

Most of my co workers have a similar mindset especially when it comes to managing money so we don't argue much on this topic.

However, we would revel at the thought of someone at a bar making these type of assertations. It'd be like sharks in bloody water on the person and I'm afraid they'd be the one who'd leave the bar from our drunken incessant beatdowns.

 

[blackheart]

I beg the differ. Poor people do save. That's why they're poor. The lock up their money instead of investing it. Those who are poor, but don't save are not investing their money. My system will encourage them to buy worthy things instead of drugs.

You're 100% wrong, don't even try to argue it considering you aren't poor nor have you genuinely interacted with poor people. People who save money aren't poor. AND I find it insulting that you suggest that all poor people spend their money on drugs. You can quit your self-superiority bullfeathers already.