Creating Trillions out of Thin Air

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vito

Hunter
Joined
Jan 2, 2005
Messages
2,719
Maybe the President's plan to give "bailouts" to ordinary Americans suffering due to the coronavirus crisis will work. People will certainly welcome a government check reaching them for $2,000 or whatever to help buy groceries, pay the rent, put gas in the car, etc. as they are sitting at home and wondering if their jobs even exist anymore. The reality that the government just creates this money is an interesting concept. I had learned in a basic economics class about a million years ago when I was in college that if the amount of money increases, chasing a fixed amount of goods, the cost of the goods will increase as a function of supply and demand, thus creating inflation. This was how it took wheelbarrows full of Reichmarks to buy a loaf of bread during the worst of the Depression in the late 1920's in Germany. But somehow we have gone from a national debt of a few trillion dollars to the current 23 trillion, with little apparent harm. Maybe this reflects the instability of the rest of the world's economies, so that the American system, even with the massive rising debt, was still trusted and seen as safe by most everyone, with people still happy to accept dollars in return for the goods and services that they were producing. But for whatever reason, our government has been adding trillions to the economy and so far we have seen very little inflation, if any at all. Maybe every American can receive a few thousand dollars, increasing the national debt by about $3 trillion, and no one will blink an eye. I hope that this is the case.

But when you think about it, it really is amazing how we accept dollars, or even just an electronic number showing our wealth in some bank or brokerage house or wherever, and accept it as something real. If suddenly a lot of people said "these pieces of green paper are just paper, and I am not willing to give you the crops that I worked so hard to grow and transport to you in return for this paper" or "my factory used labor and resources to produce the goods in front of you, and I am not sure I should give them to you in return for those green pieces of paper" then our entire system would collapse like a house of cards. The whole concept of money is strange and somewhat mystical, and is our reality only because we knowingly share in this mass delusion that money has some true value that will be exchangeable in the future for real "things".

This current virus crisis is already, only a short ways into the sacrifices being made, devastating whole industries and millions of people. How many restaurants will close and never re-open? How many people, now home from work, will be told shortly that the company they worked for no longer exists, and that not only will their paychecks be gone but there will be little hope for them to ever find a new job again? If added to this, people start to question whether the folding money in their wallet is real, or whether that balance in their bank account has any meaning whatsoever, we are in for a total collapse of our economy, and even of our whole society.

I am trying to be hopeful that we will, in fact, survive this pandemic and not see it become "the end of the world as we have known it" within the next few months. I am trying to be hopeful that images of a post apocalyptic world, with people killing each other for a can of beans is not what awaits us very shortly down the road. So I am starting to think that maybe the best way to handle this pandemic would be to do nothing. No shelter in place, no closings of stores and factories, no changes whatsoever. Maybe we should just go to work as usual, go to stores and restaurants as we were doing, and to let the virus run its course, treat as many sick people as possible, and accept two or three or four million American dead and then be left with a population not that much smaller than it is now and with virtually everyone now with antibodies protecting them from any re-infection by this virus. In effect, the economic impact of this virus might be worse for the nation than the health care impact, even at its worst.

Just a few weeks ago I was somewhat dismissive of this entire issue, saying it was more political than health care. But now I am starting to get quite frightened about what the future holds for us, and the future means a month or two from right now. Or maybe its just a bad day here on a cold, rainy day while I am stuck indoors and worried about my kids and my grandkids. End of rant.
 

Watchman

Buckeye
Joined
Jan 26, 2009
Messages
1,369
vito said:
So I am starting to think that maybe the best way to handle this pandemic would be to do nothing. No shelter in place, no closings of stores and factories, no changes whatsoever. Maybe we should just go to work as usual, go to stores and restaurants as we were doing, and to let the virus run its course, treat as many sick people as possible, and accept two or three or four million American dead and then be left with a population not that much smaller than it is now and with virtually everyone now with antibodies protecting them from any re-infection by this virus. In effect, the economic impact of this virus might be worse for the nation than the health care impact, even at its worst.

I totally agree with this. It is far less concerning than the consequences of the things being proposed, which will only result in a world wide depression and economic catastrophe. Not to mention loss of Freedom and Liberties permanently, as we declare a "war on disease" that is as ambiguous and ridiculous as the "war on terror" or the "war on drugs".

If people feel at risk, then it should be up to them to take responsibility for their own welfare. Shelter in place, avoid others or whatever, but allow this disease to run it's natural course.

If we allow this disease to wreck our economy, what happens next year when another health scare emerges? Are we going to panic and destroy our economy (what's left of it) all over again?
 
Joined
Nov 20, 2007
Messages
5,075
I don’t disagree with your assessment of our current situation. How do you pay back $23,000,000,000,000? Things are getting crazy. I hope for the best but have a nagging feeling about the end result...
 

radicalrod

Hunter
Joined
Jan 9, 2004
Messages
3,567
Well don't worry....JOE's about to save us....OK just joking...he won't remember what is happening or get elected...RR
 
Joined
Oct 24, 2007
Messages
11,164
And for entertainment you could read The Creature From Jekyll Island, as has already been mentioned elsewhere here. Be forewarned . . . it's not a comedy.

:roll:
 

Rook

Blackhawk
Joined
Sep 13, 2015
Messages
712
Remember what crazy Joe said in a town hall meeting back in July 2009? He said we need to spend our way out of debt. I guess Trump is going to give it a try. What's another couple of trillion in debt when you're already 24 trillion in the hole. :roll:
 

Jeepnik

Hawkeye
Joined
Dec 16, 2005
Messages
5,219
Back when a bunch of irresponsible fools got loans on houses they couldn't afford the government offered as much as $100,000 to bail them out. Well, I paid off my house like we were taught to do and what did I get. Oh yea, I had to cover part of the $100,000.

Now they want to give more money away. I'm still working because I chose a field that was actually necessary. So I guess I'll have to fork over more tax money to support those who didn't think about what is necessary and what isn't.
 

bogus bill

Hunter
Joined
Dec 25, 2009
Messages
3,969
I just wrote this on another site. Dragged it over here.
[I have been thinking about that rumor. I haven't talked it over with my wife yet but if she dont fight me on it, I am inclined to send the money right back to them on private principaled reasons. Not that I couldn't use it. I never got unearned money in my life and that go`s against my grain.]
 

Mobuck

Hawkeye
Joined
Dec 25, 2007
Messages
6,889
"But when you think about it, it really is amazing how we accept dollars, or even just an electronic number showing our wealth in some bank or brokerage house or wherever, and accept it as something real. If suddenly a lot of people said "these pieces of green paper are just paper, and I am not willing to give you the crops that I worked so hard to grow and transport to you in return for this paper" or "my factory used labor and resources to produce the goods in front of you, and I am not sure I should give them to you in return for those green pieces of paper" then our entire system would collapse like a house of cards. The whole concept of money is strange and somewhat mystical, and is our reality only because we knowingly share in this mass delusion that money has some true value that will be exchangeable in the future for real "things"."

The use of paper money is "convenience" accepted by most. Should anyone choose to revert to the barter system, give it a try but you won't like it. If you want milk, you'd better hope the dairyman wants what you have to trade.
 

eveled

Hunter
Joined
Apr 3, 2012
Messages
3,770
Who do we actually owe the money too? More importantly how can they force us to pay?

Very good post Vito.
 

SAJohn

Hunter
Joined
Jan 6, 2007
Messages
2,300
Using the Feds inflation calculation formula before 1980, we are experiencing 10% inflation. Historically, at this 10%, interest rates were 6 to 8 % but now is near 0%. Think what this means to those of us old folks on "inflation" adjusted pensions and social security.
 

Bear Paw Jack

Hawkeye
Joined
Dec 19, 2001
Messages
9,443
Heliman said:
I don’t disagree with your assessment of our current situation. How do you pay back $23,000,000,000,000? Things are getting crazy. I hope for the best but have a nagging feeling about the end result...

I'm concerned about this too. For the last 3 years democrats have said they want the economy to collapse so they can get rid of Trump. They criticize Trump for making his own decisions, and now he's listening to the "experts". Most of those experts worked for Obama and what if they feel the same way as the rest of the democrats. I worry they are walking Trump down the prim rose path. This goes much longer and there is no digging out of this. I was thinking about dropping a good size lump of cash into the market while it's low, but I'm not as convinced that it will come back like I thought, at least for a while.

I also believe that the outcome may very well be worse than the disease.
 

exavid

Hunter
Joined
Jan 2, 2011
Messages
3,071
I'm beginning to be glad I'm so old and have done and accomplished just about everything I ever wanted to do. From now on I'll not worry about what is happening in the world, what will be will be and there's not a damn thing I can or could do about any of it. There may or may not be major conspiracies. The coronavirus may or may not be a biological attack or just damn bad luck. I can't have any effect on that either. I hope this pestilence is gotten under control and feel very sorry for those damaged by it. But that's about all I can do other than howl at the moon that just takes too much energy for too little return.
 

Jimbo357mag

Hawkeye
Joined
Feb 22, 2007
Messages
10,124
Rook said:
Remember what crazy Joe said in a town hall meeting back in July 2009? He said we need to spend our way out of debt. I guess Trump is going to give it a try. What's another couple of trillion in debt when you're already 24 trillion in the hole. :roll:
Some lessons are never learned.

Short term economic stimulation can help the economy get going but long term tax cuts for those than don't need them (business and individuals) will hurt the economy.
 

Colonialgirl

Hawkeye
Joined
Dec 7, 2008
Messages
7,580
Jimbo357mag said:
Rook said:
Remember what crazy Joe said in a town hall meeting back in July 2009? He said we need to spend our way out of debt. I guess Trump is going to give it a try. What's another couple of trillion in debt when you're already 24 trillion in the hole. :roll:
Some lessons are never learned.

Short term economic stimulation can help the economy get going but long term tax cuts for those than don't need them (business and individuals) will hurt the economy.

:shock: :shock: :shock: OH SURE !!!!!!!!!!!!!!!!!!!!! :roll: :roll: :roll: :roll: :roll:

HIGH TAXES is SOOOO great for the economy and all the people; :roll: :roll: :roll: WHO are you and WHY do you "think" the government should be able to grab the money and WASTE it? You DO NEED to do some research and learn what a gigantic waste pit the governmnet is when it comes to taxpayer money; HOW many Trillions got lost JUST in the Pentagon last year?
 

Bull Barrel

Hunter
Joined
Feb 22, 2008
Messages
3,279
What is meant by, "not needing a tax cut"?

Its more money in the hands of the people who earned it.
 
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