How can everyone be having an economic crisis

Originally posted by Illusionsaregrander
Its better to let our economy totally collapse, and then force the American people to work for a lot less, and accept worse working conditions.

Globalization is actually a globalization of labor, which means more labor supply, same demand, lower price of labor. Means more money moves up, in terms of profit, into the hands of the rich, and less and less circulates among the people.

edit on 7-6-2011 by Illusionsaregrander because: (no reason given)

(0:36)



"Change"
"Fundamental transformation of America"
"Americans and Europeans will be required to do more, not less"
"Under my plan, electricy rates will necessarily skyrocket"

I think you're dead on. I don't think they're going to kill us all(at least not soon), my theory is we're the ones who are going to be made to build this New World Order.

reply to post by BlackStar99


I agree, I dont think they plan on killing us all, not deliberately. Although its a real possibility that their reckless and rapid swinging of the worlds economy could end up in food shortages, or, even a war.

When you shift wealth around rapidly like that, you create all sorts of social upheaval. Look whats been going on in Europe. These guys are greedier than they are brilliant. And that means there is always a wild card in play.

reply to post by siren8

Actually, I think it might be you who is seeing this issue from an individual perspective. If you have $100 in cash and you buy food with that $100, the $100 is still in circulation; it just transferred from your hand to the grocery store.

Unfortunately, the economy doesn't work much with such direct transfers of money.

Look up 'fractional lending'. It is when a bank loans many times the amount of money they actually have. As long as a normal number of loans default, they still receive enough money to cover their responsibilities. If too many loans fail, then they begin to take on a loss... and a loss means the bank will soon either close owing its depositors or be liquidated by the FDIC.

Take that missing $900,000. Yes, it makes sense to many people that the equipment was bought for $1,000,000, which is still circulating. But in reality, what happened is that the company who bought the equipment never cut a check for that $1,000,000 in the first place. They took out a loan from a bank. That bank then transferred $1,000,000 to the account of the manufacturer in another bank. No actual money changed hands. The company who bought the equipment then made regular payment on the note they signed to get the equipment. They don't hand money to the bank every month; the payments are nothing more than a change in the account balance of their account. Chances are the company who sold the equipment also never saw cash; it is likely they simply cut checks on their account to their suppliers and employees, who then deposited their checks into another bank account somewhere.

Very little of that $1,000,000 was ever in cash. More likely, no more than $1000 of it was.The value of that equipment was simply an entry in an account ledger from the start. In the meantime, the banks involved have used those deposits to loan more millions of dollars which are also all fictitious 'money'.

That's what has been lost: not real hard cash, but fictitious money created by the banking system via fractional lending. And that is what we live on, what the economy runs on. Fictitious money that exists only as numbers in an account.

That is also the cause of the inflationary cycle we seem to be locked into. As banks 'create' more and more of this fictitious money, people buy more and more, and pay more and more for it. The economy booms. Then, when that bubble bursts, when the cycle slows down because too many people are defaulting on loans to allow the fractional lending to be safely profitable, all that money we thought was real has suddenly disappeared.

In truth, it never existed in the first place.

I hope that makes more sense.

TheRedneck

reply to post by Illusionsaregrander


My resoning here I though twas obvious. For everyone to be in the red, most individuals, buisnesses, banks and countires all to be having a crisis, the money isn't circulating. That has nothing to do with individual losses. What you invest in a house is a personal investment. You loose money if it deflates, but the money you spent on it should be circulating about. The economy as a shole does not loose money if your house deflates. You spent $100k and now its worth 50k. Bad for you, but the money should still be out there. There is a difference between personal loss and circulating money.

For every counrty to go broke and every industry to be doing worse, it means the money isn't circulating like it should.

Not everyone is in a recession/depression .. most Western countries are because we all followed the same path of outsourcing and globalization. Some countries are still doing well though.. Germany comes to mind. Other countries are still economically expanding, albeit at a slower pace but they not declining. China, India, Canada, Vietnam, Korea are all doing strong. Australia is very strong, as is Sweden, and most Scandinavian countries. Right now the "winner" is going to be exporters..

Another important fact: Money does vanish. During the economic crash of 2008 trillions were lost, much of which never returned. The Federal Reserves main job through bailouts of "capital infusion" in other words replacing money that was lost, or generating new money to cover a variety of liabilities.

Originally posted by siren8
reply to post by juleol
So all the wise men out there who were cunning enough to acquire all this wealth just somehow lost thier marbles and forgot how to invest? Or they like seeing thier investments fail?

There isn't even a serf class if people aren't working. There are just people

They're investing all right. Just not in music. Think Apple, Facebook, Linked, etc. And oh, BRIC countries.

Originally posted by siren8
Umm... except that houses apreciate not depreciate. That means a 200K house would be worth 300K. And that 300k is in a bank somewhere in money that can be spent as the value. I could still buy 300K of whatever I choose. Not that many houses dropped in value.

It will only be worth 300K if someone is willing to buy it for that.

Originally posted by siren8
Well, while some of that makes sense what doesn't make sense is how are all of these people going to get along as one nation? How are the rich people going to get along?

Create a group and give it a fancy name like Bilderberg and party around bonfires and giant owl statues?

Originally posted by siren8
Its still in someone's hands, it doens't vanish. It doesn't dissapear. It should still be in the economy somewhere.

More like in someone else's economy, not yours. Think French handbags, French wines, foie gras, first class Qatar or Emirate flights, Italian Maseratis or German BMWs...etc.

Originally posted by siren8
I am talking about the existance of the money plain and simple. If a bank loaned you $100,000 to buy a house, the money did not dissapear.

The value of money doesn't stay the same. If 100K can buy 5 houses, 5 years from now it could only buy 3 houses.

Originally posted by siren8
reply to post by Cthulhu33

 

Money is an illusion. It only has a perceived value. The same goes for most traded and stockpile-able commodity's. So, yes, it did just disappear, kinda. One day a house is is worth $200,000(which you can trade for money or borrow against). The next day the value of that house suddenly drops to $100,000. Now the economy has $100,000 less to trade with. It hasn't been spent in cash as in $100 dollar bills. The value of what it can be traded for and the value of the traded items is what changed. At least thats how I understand it.

Umm... except that houses apreciate not depreciate. That means a 200K house would be worth 300K. And that 300k is in a bank somewhere in money that can be spent as the value. I could still buy 300K of whatever I choose. Not that many houses dropped in value.

Even metaphorically speaking, say by "house" you mean any random commodity, the value of everything doesn't just drop like that. Some things here and there might but not everything.

What are you talking about, houses absolutely depreciate in value. In fact, where I'm from they appreciated tremendously during the housing boom & now they'll losing their value day by day

reply to post by siren8


ive been saying this for years, money isnt a volatible substance, it doesnt dissapear into thin air, even though it can be made out of thin air.

if someone is loosing it and having losses, well someone is winning and someone is profiting.

this is the most important answer and question about this so called finantial crisis, the one no one is asking.


we just hear about losses and bankrupcies, and how everyone is in debt.

so well uh, who's making the profit, and gaining what everyone else is loosing, and if everyone is in debt, who is in the credor.

now i know some of these answers and im sure others here do know too, but whatr if everyone else knew?

we would go from an economic crisis to a worldwide civil war.

I have been in business for quite a long time, and been through a couple of recessions in my industry. In 2005 I began to notice less cash payments, and people began to cut back. We were officially in boom, but to me, it felt like the start of a recession.
By the time Northern Rock went pop in 2007, it was full blown tough trading. My exact words were "it feels like all the money has been sucked out of the world"

I asked a city boy (I'm in banker belt here) why I felt that way. His reply was that the money had never existed in the first place, It had all been credit fuelled rather than based on real money and growth.

In my industry there has been wage deflation, mainly due to cheap immigrants and people trying to hang on to their jobs.
We also have price stagnation/slight deflation while costs have risen.

For years we were fighting a benefit system which paid people more money to stay off work than they would make in a job. We had that happen to us many times.

Personally I think a huge amount was sucked out of the economy by government to pay inflated public sector demands. I would expect the velocity of money to have been unchanged though, and the velocity of the economy really slowed right down.

The current spike in commodity prices is, I am certain, down to commodity speculators. They can't trade mortgage backed securities anymore, so are trading coffee, wheat futures etc.

The third world starves so that Goldman Sachs continues to make profits.

When are these sick people gonna say "I have enough thanks" ?

It is not the AMOUNT of money in circulation that is the problem. It is the VELOCITY that the money moves around that has slowed down, and why we are all feeling skint.

The troubling thing is: if the world economy goes BOOM, what do the TPTB have to gain? With many of them associated with the Bilderberers and Club of Rome I think we have to come to the conclusion that their end game has dire consequences for us all unless we start exposing them. I honestly believe that they are playing a game now, getting rid of national governments, consolidating laws and regulations in one place (UN), and breaking individuals financially, religiously, etc - all of which only leads to a future where there is an unelected ruling class and serfs. Now the really scary part is that these groups clearly state their end goals : a world with a lot less people and who worship the Mother Earth. Frightening. I know that I'll probably be thought of as a freak, but psychopaths and power are intertwined. Having a net worth of trillions enables individuals to buy anything - specifically governments and laws.

I think a lot of people are getting to the truth of this situation and I've been saying it for a long time.

Money is an illusion. Its a point system. Its worth about as much as your stars and flags (only you can't spend those, yet). There are people in the world who are collecting the points and basically just hanging onto them cause seriously, how could Carlos Slim Helo spend 74 BILLION dollars? He can't, so he just hoards it.

Then there's the imaginary points, which most of us call "interest". When banks guesstimate their value, they include that interest - so if you're paying 9% (and thats low and unusual) on $10,000 - they write it up as they're worth $12,454 assuming that $2,454 exists - it doesn't - its fake, its just on paper - especially now when so many people are defaulting on these loans.

It all starts with the imaginary credit scoring - they tell you when you're young that you can never own anything without a good score, so you get your first credit card, and start spending (cause an inactive card is the same as not having any credit, they insist on seeing those monthly payments so they can make those extra interest points look like good on their own paperwork), Money you never had, and may never have, that never actually existed.

Forbes Richest People of 2011 - www.walletpop.com...

You are absolutely right that the money does not just disappear and someone has it.
When the 401k's were all going in the toilet (kind of funny how Bush pushed the 401k to replace SS and shortly after they all tanked) i called and asked the institution the same thing and asked them where my money went and to whom but they said they couldn't answer.
All states have two sets of books, the one they tell us about that is supposedly broke and the one that has billions in an overseas account that is hidden.
If everyone ran their household like the gov't or banks or some corporations then the crisis would've already happened decades ago if no one was able to account for where their money went or able to balance their checkbook.
It does however amaze and befuddle me that people actually believe the USA and the states and some banks and the pentagon say they are broke and have no money and believe these entities are even capable of speaking one word of truth let alone one sentence of truth.
Everyone knows the answer and the reason and the truth but it is better for most to live in denial then to face the truth as the truth is a living nightmare for most and simply can't handle it.

reply to post by persianista


Also on top of profits, corporate coffers have swollen to historic levels. It's not that corporations are not making money.. in fact, American corporations are doing very well right now..

It's that they are not spending the profits they make.

The other side of the coin is that with those profits the dividend payments (share of profit) is increasingly being given to overseas share holders. There are now more foreign holders of US corporations than ever before.

It's almost like we are nothing more than the custodian of the World's wealth, but we the workers have none our selves.

reply to post by lastidealist


Erm.. money does "vanish" .. when stock prices drop it's not a physical loss of money until it's sold for the current perceived value. When you look at your 401k and you see you own x amount of shares for y dollars that is not how much you actually have. It's how much you potentially have. If the prices drop and the shares are sold for less than the perceived highs then you see a "drop" the difference of the two prices, your perceived high value and the actual sold value is "lost".

There are numerous ways to "loose" money.

Some people lost money because corporations declared bankruptcy. If you owned stock in Black Rock, or Lehman, or one of the numerous banks that fell .. the price of your perceived high vs the settled value of the stock is "lost" value. Simply gone. No one has it.. it just vanishes into thin air. If we take Lehman for example you take the value of the stock, subtract the value of liability, minus the cost of debt restructuring, plus the offered price you end up with a very high negative value. So the liquidation of assets from furniture and office plants to assets like mortgages is calculated into the offer price .. Lehman if I'm not mistaken was given $3 a share.

When i read posts such as this, I can't help but remember something a very wise old man once told me --

"When the price of food gets to high, we will find the least expensive things to eat, most likely each other.

Just remember those who have the most money will be the best fed.

That is when we can all start to eat the rich."