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Old 09-16-2011, 12:23 PM   #161
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Which is exactly what we want.



Viewing economics as a morality tale often leads us to wrong conclusions. Market economies have one function, to allocate resources. As much as some would like to think otherwise, their purpose is not to reward the virtuous and punish the wicked. The economy doesn't care.

If only the indebted suffered, one could make the argument that doing nothing was just. But that isn't the case. As just one example, the unemployment rate for recent college graduates is at the highest level since the 1970's. 22 year-olds didn't cause this problem, and yet they suffer. And they'll continue to suffer if we pretend that the economy is dolling out justice, when all it is trying to do is allocate resources in the face of a broken pricing mechanisim.

My thoughts are that we need to fix the economy by fixing the pricing mechanism.
No morality intended. We should avoid encouraging a behaviour which is destructive for overall economic performance. The "sufferers" should be those that borrowed beyond their capacity to pay and those that lent to uncreditworthy borrowers.

The 22 year olds, like everyone else, are out of work because there is insufficient aggregate demand in the US and their price of labor is globally uncompetitive. Borrowing to finance a fiscal deficit may employ them but it also returns us to the same behaviour that led to this problem in the first place. At some point the US, both households and public sector need to live within our means.
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Old 09-16-2011, 01:18 PM   #162
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The 22 year olds, like everyone else, are out of work because ...
If I was a 22 year old and couldn't find a job I would join the military.
You get paid, you get experience, and you get benefits for the rest of your life, not mention you can serve your country.
It's a win-win-win
TJ
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Old 09-16-2011, 01:29 PM   #163
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Interesting article on deleveraging...


Households making progress on deleveraging - MarketWatch First Take - MarketWatch


"The root cause of the financial crisis and the great recession that followed was excessive household debt, which doubled from 2000 to 2008, peaking at nearly $14 trillion. Full recovery canít occur until that debt is no longer excessive. "
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Old 09-16-2011, 01:42 PM   #164
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If I was a 22 year old and couldn't find a job I would join the military.
You aren't the only one . . .

Army Exceeds Recruiting Goals

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In the active component, the Army sought 54,200 recruitments through July. It gained 55,131 -- 102 percent of its goal. The active Navy, Marine Corps and Air Force all hit the 100-percent mark. The services are also on track to meet their yearly retention goals, according to the release.
I'd like to see statistics on how many people applied and were turned away, versus say 2007.
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Old 09-16-2011, 01:46 PM   #165
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If I was a 22 year old and couldn't find a job I would join the military.
You get paid, you get experience, and you get benefits for the rest of your life, not mention you can serve your country.
It's a win-win-win
TJ
However short it may turn out to be...
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Old 09-16-2011, 02:57 PM   #166
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It is interesting. Rex asks:
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Remember the generation that wouldnít even go into debt to buy a new car, much less a vente mocha latte with skim milk?
Who is he talking about? Me? (Born in '42, and I've never bought a new car, nor gone into debt to buy any car. Hate debt.)
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Old 09-21-2011, 12:21 AM   #167
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Another Nobel laureate economist that certain factions oppose for ideological reasons:

Peter Diamond withdraws Fed nomination with scathing attack on GOP - Political Hotsheet - CBS News
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Old 09-21-2011, 07:15 AM   #168
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Another Nobel laureate economist that certain factions oppose for ideological reasons:

Peter Diamond withdraws Fed nomination with scathing attack on GOP - Political Hotsheet - CBS News
The Nobel prize is a political award and is almost meaningless.

See latest news about the fed wanting to do more monetary trickery to get us to leverage up, while the rest of us are trying to de-leverage. Clearly we have a disconnect between us and the economists with PHDs from the ivy league schools.
TJ
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Old 09-21-2011, 07:42 AM   #169
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The Nobel prize is a political award and is almost meaningless.
+1

Quote:
See latest news about the fed wanting to do more monetary trickery to get us to leverage up, while the rest of us are trying to de-leverage. Clearly we have a disconnect between us and the economists with PHDs from the ivy league schools.
TJ
The Fed is drunk with power..........
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Old 09-21-2011, 07:46 AM   #170
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Clearly we have a disconnect between us and the economists with PHDs from the ivy league schools.
TJ
My late sister was a PhD. She said that the adage of PhD as "piled higher and deeper" was not as outlandish as you might think. Or as she put it after an international conference: "Just another big meeting where the smart people showed how dumb they really were"..........

Man, I miss her!
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Old 09-21-2011, 08:35 AM   #171
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the fed wanting to do more monetary trickery to get us to leverage up, while the rest of us are trying to de-leverage.
Yep...... Unless we have some unanticipated technological breakthough regarding energy or food production, it may be time to realize that the growth days here on planet earth are over and it's time to make the best of and conserve what we have left. Im content to see things level off in terms of both population and economic production. The fed seems intent on stimulating growth fueled by additional borrowing.
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Old 09-21-2011, 09:11 AM   #172
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Yep...... Unless we have some unanticipated technological breakthrough regarding energy or food production, it may be time to realize that the growth days here on planet earth are over and it's time to make the best of and conserve what we have left. Im content to see things level off in terms of both population and economic production. The fed seems intent on stimulating growth fueled by additional borrowing.
Good luck with that...

I would argue, though, that the FRB is not so much trying to stimulate growth as it is trying to prevent disinflation.
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Old 09-21-2011, 09:24 AM   #173
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Good luck with that...

I would argue, though, that the FRB is not so much trying to stimulate growth as it is trying to prevent disinflation.
I suppose you could make that case and I respect your opinion. I'll stick with my opinion that they're trying to stimulate growth and will likely become more and more aggressive in that regard unless political tides stop them.
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Old 09-21-2011, 10:15 AM   #174
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I suppose you could make that case and I respect your opinion. I'll stick with my opinion that they're trying to stimulate growth and will likely become more and more aggressive in that regard unless political tides stop them.
+1 Right now I think the Fed is more powerful than Congress, they act like we should all genuflect at the feet of Ben Brenanke and his "computer models".............
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Old 09-21-2011, 11:22 AM   #175
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Thanks, all.

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