A funny state of the economy

See it's videos like these that make me mad for taking my head out of the sand to watch them.

It has all the makings of a plot for an evil horror movie.
 
I know very little of how the US economy works, but those parts that I do know weren't represented correctly in this video. Namely, deflation doesn't mean just that "people can buy more things" and it is not generally a good thing. This makes me wary of the many other factual statements made in the video.
 
I know very little of how the US economy works, but those parts that I do know weren't represented correctly in this video. Namely, deflation doesn't mean just that "people can buy more things" and it is not generally a good thing. This makes me wary of the many other factual statements made in the video.

Deflation is how the market corrects after a period of artificial inflation (i.e. money creation). "Printing" money distorts natural market activity and misallocates resources, creating artificial demand. This is how "bubbles" form. When reality sets in, those bubbles pop, and resources must be reallocated to productive parts of the economy.

Deflation is not the enemy, deflation is a sign of a recovering economy where the prices of artificially-inflated resources are being adjusted to reality.

Inflation is the enemy, and the US is going to experience more rapidly rising prices than folks can even imagine, at this point. QE1 and QE2 guarantee it. When Helicopter Ben can fool the banks into believing that the economy has begun to recover (printing-up another bubble), the banks will lend. The banks have over $800bn in reserves at the FED. Banks only have reserve limits of 10%, meaning that they can lend out 10x what they hold in their vaults. This is called the "money multiplier effect". What's $8,000,000,000 x 10? Think this might have an effect on prices, once it's in circulation?

It's pretty simple, if you can detach yourself from the bogus econometrics that Keynesian professors have indoctrinated kids with, for several generations now. If your money purchases more, you're wealthier for it. If it purchases less, over time, you're becoming poorer.

This video is *excellent*. It has been circulating on Facebook for a few days now. I re-posted it myself, last week.
 
This video is *excellent*. It has been circulating on Facebook for a few days now. I re-posted it myself, last week.

I fear that the information provided in the video will be lost by those who won't see past the fact that it is a cartoon.

I feel the video would be taken more seriously if it was a conversation between Oprah and Snooki.
 
I fear that the information provided in the video will be lost by those who won't see past the fact that it is a cartoon.

I feel the video would be taken more seriously if it was a conversation between Oprah and Snooki.

I'm not going to trash anyone's preferred form of entertainment, but if folks would spend a little bit of time understanding the basics of Austrian economics and the fundamentals of Human Action, instead of watching Oprah and Snooki, they just might get by more comfortably.

I sincerely feel bad for the folks who believe that the current situation is a "recession" and the economy will somehow recover. Silver is still incredibly under-valued and inexpensive and I would recommend that everyone buy as much as they can possibly afford.
 
I'm not going to trash anyone's preferred form of entertainment.

I'm sorry if anyone takes offense to my comment. I appreciate distractions as much as the next person, (namely DW).

Maybe a Stewart / Colbert re-enactment?
 
I think the "childlike images" do a great job of enforcing the simpleton viewpoint. As for the facts, I just don't know enough about the US economy mechanics to comment. What I do know is, messages that even get close to "don't worry, things are starting to improve" are so far off the mark, it's untrue. My generation will survive this, but my kids generation will be blighted for decades. Job opportunities for my son & daughter have all but vanished, & I don't see that changing anytime soon.

As the western world economy bumps along the bottom for the next 10 years or so, the Eastern economies will move forward big time. By the time western economies are balanced again, they will no longer be the driving force of world economics. I don't have a problem with that. There is an inevitability about global financial wealth balancing, frankly, it's long overdue. In a few hundred years or so, I don't think there'll be individual country economies. Hopefully, by then, we'll have got over our possession orientated "I'm more equal than you" mentality. Trouble is, by then, we'll be so resource poor, population rich, we'll all be worse off.

Anyhow, many western economies have moved from producing stuff to consuming stuff, & non more so than the US. As Eastern economies move forward at a time of Western economy weakness, their economies will balance domestic consumption with Western fluctuation to ensure continued manufacturing growth. The only way forward for Western economies to keep with the program is to shift from consumption to production. There's only one Western economy that's well placed to do that right now, & that's Germany. Because the rest, & especially the US, are in no position to do that quickly, you'll see a resorting to protectionism. Via the back door at first, but eventually full on confrontation. If we reach that stage, all us hitherto cosseted western types will screw ourselves to the floor. The US will no longer be protecting the largest global domestic market. The Chinese, followed by India, followed by Europe, then the US will be the new order. So who do you think will be worse off by closing the import doors & driving their insular economy based on producing to domestic consumption?

Crap, I clearly have too much time on my hands!
 
I don't have a problem with that.

I think the reason everyone in America is freaking out is because they do have a problem with meeting the end of their golden economic age.

Maybe people think that out of nowhere they're going to lose everything.
 
It's pretty simple, if you can detach yourself from the bogus econometrics that Keynesian professors have indoctrinated kids with, for several generations now. If your money purchases more, you're wealthier for it. If it purchases less, over time, you're becoming poorer.

Hey zambizzi...just curious if your an economist or something similar. I'm currently studying economics so i'm learning about all that stuff. I was under the assumption that its the neoclassical and monetarist stuff that has been getting taught since the 70s, until about 2 years ago where there seems to be a bit of a revival of Keynesian economics with the whole global financial crisis. I do agree with you that there is alot of merit in learning the basics of Hayek and the Austrian school of thought though.
 
thanks for the video. I think my country (UK) is going down the pan, both economically and socially. One of my main goals is to get out when the opportunity arises.
 
thanks for the video. I think my country (UK) is going down the pan, both economically and socially. One of my main goals is to get out when the opportunity arises.


And go where? Liberals are everywhere. : )
 
The balloon that was the US economy popped during the previous administration. The current mob were always going to be blamed for the mess they inherited.

and this is why nothing ever gets done.. everyone blames someone else.. so tired.
 
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Zambizzi is a long time critic of the Fed and a seriously smart guy. He can Maynard with the best of them...

Pol, not sure if the administrations had much to do with the slump other than the economic consequences of a war without an end in sight. Its a gradual unravelling of long term fiscal policies, and tectonic shifts in the global economy..

...
 
And go where? Liberals are everywhere. : )

No idea, it is only a plan after all, and no opportunity has arisen as of yet. Ideally somewhere in Europe. Perhaps I can one day retire on one of those floating houses that various movements have set about constructing, maybe I could just sail around the world for a bit until I trespass on a countries waters & am disposed of.
 
No way, those tea party guys seem crazy, along with that dude who always cries on the TV.
 
No way, those tea party guys seem crazy, along with that dude who always cries on the TV.

Yup, a punk attitude can be cool in music but when it comes to running a country, I'll take intelligent, qualified practitioners every time.

Abe, agree that the problems didn't start and finish with the previous administration - there were a number of factors - but they did start with a surplus and finish with record debt. Of course, debt is fine when you have a whole lot of new, useful infrastructure to show for it ...
 
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