Originally posted by Scootter
The economy is all about spending as it provides the impetus that allows companies to hire and grow. Whether that spending is on homes (allows those that build, sell, etc. to buy jet skis and beer) cars or golf clubs.
Spending itself isn't what drives an economy, it's capital investment that does. A company that makes profits from increased spending doesn't increase it's production
unless it invests it in captial to increase production.
Home sales also spark sales in appliances, lawn mowers, TV's, window treatments and such. Things not always associated with the construction of the home itself.
Increasing the speed of currency circulation doesn't increase production capability. You are just trading around money faster. Again, investing it allows companies to by more equipment to manufacture more goods.
When people spend, when the government spends, it causes growth in the economy.
It depends on what people are spending it on, if they are spending it on consumer goods they temporarily have a higher standard of living, but they don't get wealthier. If they invest it wisely then they will get wealthier, production capacity increases and everyone's standard of living goes up (more, less costly goods), and they get wealthier.
Government spending does not help an economy. The government steals money from people (where they would have spent that money on consumer goods or investments, but inevitalby on what they demanded)and allocates it to sectors of the economy where there is no demand. Thus misallocating scarce resources and hurting the economy.
Investing may not be good for the economy, proof? How about "investing in some real-estate with me. First send me a check for 100k and then lets see how it helps the economy.
Fair enough, let's say "investing wisely".
So what part about the growth in the economy doesn't sound good to you?
Well, the part of the growth that isn't really growth.
Remember someone’s personnel financial status does not need to be good but they are still helping the economy. Buying on credit may be bad for you personally but it still can be good for the economy (note I said can be good).
Buying on credit is imho one of the...let's say irresponsible things a person can do. Buying something you can't afford at the risk of defaulting on it not only hurts you but also the economy. Of course chances of defaulting changes with various factors. But as more people in your country and mine go further into debt, the chances of people defaulting increases. Remember demand means wanting something...and having the wealth to purchase it. When you buy something on credit, you inevitably skew the market outlook. People believe there is more actual demand for something than there actually is and invest accordingly....you said something about the housing market?
The unemployment rate is lower then it was under Bill Clinton and the economic growth numbers for the most part are better as well notwithstanding all the challenges never seen before such as the events of 9/11.
But the Clinton administration was heralded as providing one of the most robust economic times in our lives, this I don’t understand. But as we know it’s all about politics and who’s dog is in the fight …sigh!
I try and keep my information about the economy separate from politics. The only thing a President really can do to effect your economy is to just veto spending bills that come across thier desk. But no way a Democrat or Republican is going to do that, so what the hell.
As for employment numbers, apparently about half of those created in the past few years have been do to the housing bubble.
