Government spending has only increased since Obama became a president.
The Stock market is the most retarded piece of shit ever invented by man, and needs to be destroyed if we ever hope to have any kind of economic stability. As long as the Stock Market exists, the economy is going to fail. Repeatedly. And people will make billions from it. Repeatedly.
The stock market originally existed to raise money for capital investment. The East and West India Trading Companies financed massive construction of seaworthy vessels - which isn't cheap. But the return was enormous on trading missions. The same principle applies to IPOs - Initial Public Offerings. Basically the company offers a share of profits or ownership in return for an investment. Keep that in mind before you diss the entire market principle. No company larger than a mom and pop store would exist without the market.
At a time of recession all governments increase spending in order to stimulate the economy. Can you imagine if you all of a sudden earned half the money than you did 6 months prior, or even had no job, but all your taxes and costs stayed the same? Government spending helps decrease costs while allowing corporations to turn a profit so they may create jobs, resulting in higher demands for workers and increased wages.
Keynesian.
I'm not entirely sure that the cycle is necessary (i.e. Austrian). I mean minor movements are all reactionary, but big movements should be market driven, not false input like printing money or government bailout. Companies fail - it happens. They put the wrong person in charge, and they gamble on the wrong side of the market, and they lose. It's a fact of life. Should have put a smarter guy in charge of planning.
Government subsidizing corporations to create non-essential jobs is just stupid. Creating jobs isn't necessary if innovation drives growth.
No. The stock market does none of that anymore. Its not about buildup capital or anything. What its about is fuckheads in Wall Street trying to make money. They dont "invest" money in company and hope to make money. They simply day trade. They just buy stock and sell stock in hopes to gain just a few cents from each stock. There is nothing about startup capital going on anymore. It started out as a good ideal, but now its just shit. No company starts out as a Corporation (Unless they have a financor), and eventually they go public (Or stay private) and start selling stock. Day trading causes thousands of new companies to fail every day. Because they artifically grow the stock price, sell it off, and the stock price drops horribly low. Then the company has nothing.
Do you even know what venture capital is? Not all stock investments are people trying to ride from bottom to top. Most people are content to invest in a strong company with a solid product and revenue flow. Day trading is a market action. Price reflects all the current knowledge about a company's worth. Of course some people don't actually do the research bit, and just follow the market trend. So yeah, there are always late sellers, late buyers - it's how it goes.
The stock market was the cause of the Great Depression. It is the cause of the current depress that we are suffering. The entire economic world is centering around stocks. Rather then stocks being a way for companies to gain startup investments, its now about "Whats this company worth?". I'm sorry, but Apple is not the most valuable tech company. They are still tiny. And Dow Jones being a measurement of the economy is just fucking stupid. As numbers go down, people freak out and start selling their stock. When the stock market crashes because of that, everything gets fucked up, because everything is now tied in with the stock market.
No. The market is only a reflection of people's actions, and therefore cannot have caused the Great Depression. It has no intrinsic decision making apparatus - it isn't sentient. But price reflects what thousands upon thousands of sentient beings think about any given company. The problem in 1929 was that price reflected wild expectations of growth.
You're right, apple isn't that good. Google is bigger. Microsoft is bigger. It's just that Microsoft has many many more shares, so the price is lower. The Dow Jones Index reflects what Dow Jones thinks are the quality stocks in the market right now, not what everyone thinks of the market right now.
Name me one time the stock market was strong, and the economy wasn't? Oh wait.... The stock market is the center of fucking everything. It needs to be destroyed and improved.
Do they brain wash you in school? Taxes are going to be increased, not decreased in so many states (Yay for budget deficits). We just signed in a fucking 800 billion bailout, and a trillion dollar health care plan (That will keep rising in costs). THIS IS NOT LOWERED FUCKING SPENDING. The national debt is up 3 trillion in the last fucking year. 3 trillion.... Thats not decreased spending by even the smallest amount.
You're a fool if you think we can't justify 3 trillion over the next ten years for our domestic wellbeing. Do you know how much we spend on foreign wars? Aide monies to Africa? Or Asia? Or South America? 3 trillion dollars is nothing to the medical companies. You need your priorities straightened out.
Okay, I will say this, and I will reference it to the Great Depression, since you've mentioned.
You can either A) Blame the Great Depression on the stock market crash. Which would mean that stocks dropped resulting in recession, then people like you were all like "omgawdz deh stawk mawwwwket is stoopid" and refused to invest in the stock market because they simply didn't understand economics... causing things to spiral downwards further into a depression.
or B) You can blame it on the Government for not acting when the stock market crashed by reducing money supply during a recession and not stimulating consumer and business spending which resulted in a depression.
As a matter of fact, these points have been debated over and over. If you want to read about it you don't have to hang around this thread. You can just google it.
As for this recession; you can blame your banks. They gave out money to people who couldn't afford it, then they started losing money and had to foreclose on a bunch of n00bs, then all those american n00bs baawwwed about it and had no choice but to either downgrade homes or reduce spending, which reduced production needs and profits for companies, which resulted in less jobs (since less products are produced) which resulted in even less spending, etc etc.
(By the way, I've been reading finance for well over 8 years, and school for 5. However, your 3 years is impressive. You almost graduated from Finance High school.)
The point is, you're right in the fact there are flaws, because there are. However, it is a pretty good system. I am up for a debate with someone about flaws or what needs to be improved or what can or will happen in the future, but I will not debate with ignorance.
EDIT: Also, you're not in power and never will be. Sometimes its best to accept the world for what it is and not for what it should be. If you continuously deny the world for what it is, you will miss out on great opportunities.
I read The Economist. I think you should too.
Also, loose credit from huge banking firms is also responsible for housing busts. Fucking idiots.
A)When the stock market crashed. stock purchases actually increased, because a group of rich people started buy large amounts of stock to stabilize the market. This still didn't work. What does that tell you?. Even more importantly, if the stock market is how companies gain capital in order to grow/expand. How come when it crashed the Great Depression started? If the business's are not expanding, but staying the same, then this would mean the ECONOMY WOULD STAY THE SAME. The stock market is a complete failure because its what destroys the economy. If it was only for giving companies capital, and helping people invest. Things would be perfect. If the stock market died, companies would grow slower, not die out. Since the great depression, it has only gotten worse. Day trading means that people buy and sell thousands of stocks based upon random guesswork. So imagine what happens when they freak out, and sell all of the stock of a company? The company would die. The economy would die. How is this in any way a good thing? Its an unregulated monster.
B) So its the governments fault that the Free Economy failed? Do not go around dissing on government interference, and then complain when everything goes bad and you need it. Talk about biting the hand that feeds you.
Yeah, the banks played stupid. But why is it the banks fault that people borrowed money they couldn't pay back? And it all comes back to the stock market. When the stock market crashed, the value of these mortgages lowered (After all, they were simply investments), and thus the people didn't any have "fake" money like they thought that they did.
Congrats. You have had plenty of teaching on common sense. I am so proud of you. All of you're school did a good job teaching you that When people dont buy stuff companies cant make money. Shocking.
Please stop flaunting you're education like it means something. This isn't rocket science.
Actually it's harder than rocket science. At least in physics you can write out the equations. Such-and-such thrust applied over another-number time will give you an escape velocity of something-else. Economics is far from an exact science. That's why it's interesting - it's all a bunch of choice theory. You can't dumb it down to a basic if-then statement. It isn't entirely logical
This topic is locked
