Why the economy isn't working

Hello all,

This is my first post here on ATS, and I wanted to post this to share with you what is really wrong with the Economy. Why the Economy has gone the way it has, and why there is always an Economic bubble, even if it isn't one as large as this one.

Imagine a country, name the US or name it Gentile State, just for fun. This Gentile state has a labour market, which creates a value worth X. Let us now ignore all imports and exports, and merely take this states own internal economy as an example.

As anyone can imagine, you have to print some amount of money to pour into society. And the bills you produce must in some reflect the value of commodities within the society. Let us imagine, that a year balance here, is equivalent with one billion of our local currency. So, the country produces somewhere around one billion of our local currency, and there is one billion in circulation at any given time. This means, if I use a 100 million to buy commodities, 100 million of these commodities will be shifted, along side the 100 million of my local currency. So far, our cash is balanced and checked.

Now, what hapens if I suddenly print 2 billion of our local currency, but we produce the same amount? Obviously, you cannot buy 2 billion worth of commodities ... that is impossible. The amount of commodities within society, MUST ... take note of this, they MUST be evenly distributed amongs the value of our currency. For the sake of simplification, we assume each commodity is 1. Now, we have to change this value ... and each commodity, obviously, has risen in prize ... each commodity now costs 2.

This is a simplified case, but the reason I put it here, is to provide for you a case scenario of what happens in society.

We do not know the exact value of our commodities, these are done by Wall Street, that buys and sells stocks and commodities without them exchanging hands. But the amount of dollars is the same, so each comodity must rise and fall in price. But what happens, if I buy N amount of commodities and stock pile them, and then wait for a higher price to sell them ... there is obviously a mis balance here, that isn't reflected in the currency, isn't there. There is a "production" and "loss" of dollars, that actually don't exist. What iff, the government "prints" extra amounts of cash, to distribute over Afghanistan? that is also an extra amount of dollars. What if China buys dollars, for Yen and stockpiles them ...

I think most people can see the complexity of the system here, but what most people don't see ... is if I print 2 billion dollars in our local currency system, than buy the "gold" commodities at the price of 1 ... what happens? I've bought these at half the price ... and the other half will have to be payed up at some point. If it's allowed to time lapse, it will be an economic bubble that bursts, and the tax payer will have to pay the price ... price of commodities must rise as a result.

Ladies and gentlemen, this is why prices rise in society ... the above reason. You are being cheated upon ... and I haven't even touched upon the system of buying and selling dollars and yens, yet. What happens, if China buys dollars for yens? There are less dollars in the US economy, and there is an overflow of Yen. The US must balance this out, and therefore it must increase it's import of goods and services from China. China, must do the same, to use the dollars it has. A countries currency, has only a value to buy commodites that are in that currency ... for most countries, that include products, but for the US, that also includes oil. The existance of the currency in foreign countries, guaranties that these will be used to buy commodities. However, if the US government replaces these dollars that are shipped to foreign countries, with more dollars that are inside the US economy ... you again, arrive at the bubble stage. The US might do this, for the purpose of wanting to get an advantage on the exchange rate, but so might China do the same ...

Think about it ... now add to the complexity, the fact that bankers are lending of money 10 dollars for every 1 actual dollar.

what proof does the average citizen have the economy is not working.

one month cnn says we're in a recession, next month they say the economy is improving.

it all deals from your perspective. for some the economy is great and couldn't be better.

most people have the same job they had or in the same industry that they had when clinton was in power.

the only thing that doesn't change is min. wage and the tax rate for the average american.

what does make it seem worse is the banks. i haven't gotten 17 credit card applications a week from different banks like i used to.

That people cannot see such simple truth, and will believe outrageous lies, fills me with sadness. OP right on man. There are lots of us who know, can it be enough?

reply to post by randomname


Of course, it's always from a perspective ...

If you get to buy at half price, and allow the average tax payer to pay the rest ... then obviously, life is good.

The point, that I am making is WHY the bubbles are always getting bigger and bigger, every time ... because we aren't really identifying or dealing with the reason.

Today, the bank charges for services they didn't before ... with less people at work, and employment is gradually becoming less and less ... unemployment more and more ....

But, as long as we receive our social security checks ... and can eat, we don't really care ...

Do we?

the money creation & transfer part of the economy is controlled or else manipulated by the Fed & the banker cartel

it is their 'System' of rules and member banks that direct the social-economic engine in the USA///
money created for credit/debt will always lead to inflation
buying goods, services or equities is one thing...and it is based on supply & demans which makes your viewpoint valid

but brokerages and trading houses buy & sell commodities including money in an abstract futures market... wher the contracts can far exceed the physical supply of the commodity...
see, the buyer is betting against the 'house' (who will always be the counter-party). the 'house' gets a fee for the contract... and collects the relatively small increment of price/cost difference whether You want a Short position or a Long position....
the house can sell an infinite ammount of commodities...without ever having to ship actual physical commodities to the contract holder... You however, seem to think that a finite ammount of commodities are subject to either sale-or-trade thus making the price fluctuate opon the availability of the commodity (gold/silver/yen/renmembi/etc)



the reason the USA (nuts & bolts economy) isn't working is because the people have outgrown the industrial-revolution of the late 1800-thru-1900s, a century and 1/2 of growth & expansion

few of us desire harsh working conditions, dull & repetitive tasks, demeaning work, 40 years toil & a gold watch reward...
no sir... the average, & special individual wants to vacation 4 days a week, make $400 hr. when they do decide to engage in a productive activity, we all want Super-Bowl seats, $200 sneakers, every communication/social networking device there is to remain Tweeted' with the universe. to retire at 40 with a couple of million in spending money every year. homes in several locations on the planet,

are we not all celebrities and entitled to the best of everything...just because we were born


that, in a nut shell is why the USA (and the economy) is not working

Originally posted by St Udio

You however, seem to think that a finite ammount of commodities are subject to either sale-or-trade thus making the price fluctuate opon the availability of the commodity (gold/silver/yen/renmembi/etc)

Yes, because eventually you will always want to "cash in your chips". As far as I recall, the brokers call it exit stragedy ... they exit the "play-market" with a stragety to pull out the profit "air money", and turn it into "usable commodities" or hard currency.

are we not all celebrities and entitled to the best of everything...just because we were born

that, in a nut shell is why the USA (and the economy) is not working

We can all live that way, as long as we use robots or others to actually do the hard work for us ... and we ourselves live off the production.

But the production, still have to result in "real bananas", and "real apples" ... the "apple crop" that was bought, and sold on the stock market ... still has to turn up, at some place ... and the "extra" coins that were made by the brokery ... still needs to be turned into hard cash, or "real bananas".

It's not that we live so well, that is the problem ... it's the fact, that there is a lot of "air money" being made, and we have no clue of how much of it is actually "counterfit" money, as some have put it. The only thing we can see, which is the hint of the abuse of the system ... is the enormous inflation that has occurred ... it's proof of the abuse. But the average joe, does not understand the system. And therefore does not see that he is actually paying for the "air money", which time and time again, get's larger and larger bubbles. Because the amount of cash being brokered, and how much it varies from it's actual prise, gets bigger and bigger.