

WSJ: U.S. still employs 5 million fewer workers than before the recession - littledreamer
http://online.wsj.com/article/SB10001424052702303877604577383831309732816.html

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jeffdavis
This is an honest question, albeit vague:

The media keeps telling us that consumption is good for the economy, and that
we need a lot of spending right now (whether in the US or Greece).

I understand that the economy is a dynamic system, initial conditions matter,
and that occasionally you need to kickstart it or "prime the pump". But that
seems to have been lost to the general notion that we should always consume
and spend more.

Does spending and consumption really lead to prosperity? What's wrong with
saving, investment, moderation, and conservation?

If nothing else, this constant pressure to spend more (to the point we need to
ask the government to force us to spend) has to take a serious toll on the
environment. And I can't see how that level of waste actually helps anyone
prosper.

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wissler
Sorry if this post doesn't do justice to a complicated issue, but to summarize
somewhat imprecisely:

The monetary system we now have creates perverse incentives. If people save,
then it means they save money, which means that nothing happens. If they
spend, then that causes economic activity.

Under a proper monetary system, saving would be of something of value --
saving would be _of_ wealth, ergo economic activity would be required in order
to save. But under our perverse setup, "saving" just means flipping some bits
in a computer.

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jeffdavis
Hmm... I guess that's the difference between saving and investment, although
it's a somewhat fine line.

I would think that foregoing consumption (i.e. saving) would make it easier
for someone else to borrow that money and do something more productive with
it. But perhaps that's not necessarily true.

Anyway, complex issue, and I don't expect to understand it by the end of this
thread.

~~~
wissler
No, I don't think it is the difference between savings and investment because
the dichotomy itself is an arbitrary artifact of the monetary regime. Saving
should mean things like "saving grain for the next season". That's a real
thing that one can use in the future. There are higher-order savings as well,
such as futures.

Under our arbitrary centralized monetary dictatorship, one that is coercively
foisted upon us against our will (whether you agree with it or not is beside
the point -- you can't opt out if you wanted to), if everyone "saves," then
nothing happens. Economic activity halts. But if savings is in things of
value, then to save must mean to _cause_ economic activity.

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reoronin
The economy like many complex living organism in nature. There are periods of
growth, steady state and decline. The notion that organism that is not growing
is failure and unnatural is just ignorant. Society should embrace periods of
steady state and decline as periods of rest and recuperation,because
deprivation and hunger can be good catalyst,for the next growth spurt.
Actually during prosperous times people tend to be wasteful and complacent. So
stop rationalizing and just accept this as the temporary new norm and
recultivate the industriousness along with creativity to foster growth again.

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cma
If you take into account state and local cutbacks, there was no government
stimulus, we actually had austerity.

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wavephorm
Flagged, subscription necessary.

