"Steven L." <sdlitvin[at]earthlink.net> wrote in message
news:ENednVFpNMVvnLfUnZ2dnUVZ_o7inZ2d[at]earthlink.com...
- quote -

I think you are correct that people believed in thrift, but there was a lot
of credit in those days. No one paid cash at the store when they bought
stuff. People charged everything, then paid for it when the crops came in,
rarely with cash. Grocery stores carried people on credit, to say nothing of
hardware stores, dress shops, every kind of shop. This was true, not just in
the rural part of the US, but in cities as well, *until* World War II when
the economy grew and society became more mobile. It was at that time that
charge cards came into being so that credit could be more regulated, if not
by the "regulators", at least by those doing the lending.

Elizabeth Richardson

On Nov 24, 4:04*am, "Steven L." <sdlit...[at]earthlink.net> wrote:
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Hear, hear!

HW "Skip" Weldon wrote:
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That would make sense only in a long-term zero (or negative) inflation
rate environment.

It's the fact that the Consumer Price Index has risen steadily since
World War II that made it worthwhile to be in debt--you would be paying
off that debt with cheaper dollars than the dollars you originally borrowed.

It's not a coincidence that America's infatuation with debt occurred at
the same time that the U.S. Government decided that "a little inflation"
(which occasionally turned into a lot of inflation) was a small price to
pay to stave off another Great Depression.

In the 19th century, prices actually *fell* long-term, as the currency
remained stable (tied to the dollar) and improvements in technology made
goods cheaper and more widely available. And sure enough, back then,
Americans still believed in thrift. Because back then, a penny saved
was a penny earned.

In a long-term inflationary environment, a penny saved is half a penny
earned. Why bother saving it.




--
Steven L.
Email: sdlitvin[at]earthlinkNOSPAM.net
Remove the NOSPAM before replying to me.

Elizabeth Richardson wrote:
- quote -

Long term, the U.S. economy has to be rebalanced. We have a decaying
and declining manufacturing base; and before this financial crisis hit,
some 18% of the U.S. GDP was in the financial sector, the highest
percentage since the late 1920s.

IOW, we built too much of our economy atop these paper financial assets
like derivatives and so on. And those just evaporated now.

I think we've learned the hard way that the U.S. cannot just be a purely
service economy in which the biggest "industry" is financial speculation
on Wall Street.


--
Steven L.
Email: sdlitvin[at]earthlinkNOSPAM.net
Remove the NOSPAM before replying to me.


======================================= MODERATOR'S COMMENT:
A reminder to all posters: Please trim the post you respond to and try to be as succinct as possible.

"HW "Skip" Weldon" <skip5700removethis[at]yahoo.com> wrote in message
news:a9vqh4liq5rr52q9pvuedvths95k0ev3bl[at]4ax.com...
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I think there are valid things the government can do to make investments in
our society that would at least prevent a further deterioration of the
economy. We have bridges and other infrastructure that desperately needs
maintenance, but we have been building new roads, etc. instead. Perhaps we
ought to be looking at what needs doing in that area. As far as the
financial picture: the sub-prime mortgage situation is a real mess. Who owns
the mortgates? If a borrower wanted to refinance, would they be able to find
who owns the note to get permission to refinance? What about those folks who
are not behind, find themselves in a few years wanting to sell. To whom does
the payoff go? Many of these loans have been sliced and diced so many times
that unsnarling the mess may be more than we currently realize. It seems to
me the government could invest some money (jobs, etc.) into creating a
database for this inevitable future.

No, Skip, I'm not sure that spending our way out of this is exactly the
right way to go. However, NOT spending may not only deepen the pain, but
prolong it, and I'm not sure that is the right way either.

Elizabeth Richardson

themightyatl...[at]gmail.com wrote:
- quote -

You are right, and it is important to note, that trust is vital to my
proposition. I also agree trust is very hard to establish,
particularly when we see fatcat execs, whose corporations are being
bailed out on the little people's dime, continuing to indulge in
extravagances. The Treasury Secretary et al. picking and choosing whom
to bail out also does not inspire. It makes me less supportive of
helping the government in any way. Shades of the anti-government
militia crowd. I am not particularly optimistic about a macro-solution
to our economic problems. I think folks will have the best chance, now
and later, relying mostly on their own budgeting discipline.

On Nov 19, 10:29*am, honda.lion...[at]gmail.com wrote:

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I hope you are right. It seems to me to be the only way that a "gov't
first" strategy would work. As I said, I'm still on the fence in
regards to this topic.

A friend that does not read this group, but has been having a similar
discussion with me, sent the following in an email:

"The government is merely a servant -- merely a temporary servant; it
cannot be its prerogative to determine what is right and what is
wrong, and decide who is a patriot and who isn't. Its function is to
obey orders, not originate them." -Mark Twain

I just thought it was interesting and on-topic. I make no claim to Mr.
Twain's knowledge of civics.

On Nov 19, 11:29 am, honda.lion...[at]gmail.com wrote:
- quote -

There is the issue of trust, or lack thereof. Telling people now that
they can have pain now or more pain later only works if they trust you
that these are alternatives. If we save (or pay more taxes or have
less services) now, but the treasury is looted (figuratively or
literally) only the looters are better off, and most people just have
the same pain in the future as well.

To some extent, I think this is how the under 40 crowd fees about SS/
Medicare. They can pay the higher taxes into a trust fund now, but
they have no guarantee that this will not simply result in a lower
political will to restrain growth in payments to people who get to the
trough before them (the 40-60 crowd) so that when the 30 year old gets
to be 67, 70 or 75 there is the same amount of pain. The children are
told they must bail out the program (higher taxes for 25-45 years),
but the next generation who pays the higher taxes for a shorter time
has the political muscle to drive up the benefit rates. After all
there is always the next generation to screw over.


======================================= MODERATOR'S COMMENT:
A reminder to all posters: Please trim the post you respond to and try to be as succinct as possible.

kastnna wrote
- quote -

I understand. Thanks for explaining. <peace
- quote -

There is giving the people what they want in the short term and giving
them what they want in the long term. I think good leadership,
including the type that results in re-election, can explain to the
masses that what the masses say they want for the short term (e.g.
lower taxes) may conflict with the masses' long term desires (e.g.
continued Medicare for the elderly).

- quote -

Trickle down economics works if the trickle is forced and the people
at the top do not hoard the money.

I don't like the handout mentality where the government taxes, taketh
away and then redistributes tax free.

Creating incentives for working would then have
a) more people paying taxes
b) fewer people needing handouts
c) probable higher budget surplus

this might become know as trickle up economics?

I do not think trickle down works unless the trickle becomes a stream.
I do not like handouts because it removes incentive for people to
better themselves. This does not need to be the land of equal
opportunity, does it?
Trickle up is what we had under Clinton, but I have never seen anyone
else describe it that way. Less need for handouts because so many
people were working.

People will not "emerge from this process" if they are unemployed. I
think the government needs to be involved enough to enable most
people... but it does not need to enable everyone. If everyone has an
opportunity, that is good enough. The opportunities do not need to be
equal because so many outside variables affect what would be equal
(family, religion, state rules to name 3).

On Nov 14, 6:09*pm, "Elle" <honda.lion...[at]gmail.com> wrote:

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Sorry Elle. I just replied to the last post in the group. I thought I
deleted all statements from previous posters so it wouldn't seem I was
directing my comments at anyone. I apologize

- quote -

I don't think I follow.... What does the education level of the
elected official have to do with it? They could all be Einsteins, but
if they want to keep their jobs, their going to give the people what
they want (whether they think its best or not). It's a simple matter
of self-preservation.

"HW \"Skip\" Weldon" <skip5700removethis[at]yahoo.com> wrote:

- quote -

I certainly don't want to kick off a political debate. But I think that
approach is not widely supported in Washington. We had the first stimulus
package, but the recent packages have been more investment oriented.

As a side note, the first stimulus package was probably responsible for the
positive growth in GDP the second quarter. Without it, it we would probably be
three or four quarters into the recession. That's kind of a technical thing
without real meaning. Slightly more meaningful is the fact that about 30% of
the stimulus package went to savings or debt reduction.


- quote -

Classic Keynesian economics says that national governments should increase
spending during a downturn. The part the politicians didn't get is that
spending should be balanced with surpluses during the good times.

The Great Depression was caused by easy credit and fueled by balanced Federal
budgets along with contracting money supply. It was cured by Federal deficit
spending, increasing money supply, and just time to work through the debt.

If we are going to have another spending-oriented stimulus package, it should
be oriented towards building or repairing infrastructure. I guess that could be
viewed as investment as well. I've got a park near me that still has a lot of
roads, bridges, and trails that were built by the depression era CCC.

- quote -

It's the collateral damage that is the issue here. If one poor fellow is
foreclosed in his sub prime mortgage, that's his problem. If millions are,
that's everyone's problem. (Don't interpret that as advocating some massive
bailout.)

But fundamentally, I agree. We are just going to have to work through it. The
Feds can, should, and are doing taking drastic action to minimize the severity.
But we can't just spend our way out.

-- Doug

HW "Skip" Weldon wrote:

- quote -

Agreed. But it's the transition itself that's painful, both at he
personal level and the impact to the economy. For example, we use the
term (borrowed from David Bach) 'latte factor' to describe the seemingly
small expenditures that add up over time. Me, I make a big pot of coffee
once a week and heat a cup each day. If everyone decided to make their
own, the 10,000 Starbucks in the US would go under. Of course, they
don't have a monopoly, this is just an example.
We are now in a recession, I think that's not debated, and the question
is for how long and how deep will it be. At some point, spending needs
to return to some 'normal' level. Whatever that is.
Joe

"kastnna" <kastnna[at]auburnalum.org> wrote
- quote -

You followed my post. In case you were trying to paraphrase
me, I do not feel the above is a reasonable rendition of
what I wrote.

- quote -

For me, the following facts undo the arguments above:
Approximately 73% of the age-eligible (that is, about 25 and
older) population lack a bachelor's degree. Much of this 73%
does not even vote. By contrast, most elected officials have
a bachelor's degree.

Now that we are an Obama country "Omerica" we might as well face it.
The big government is going to give us play money (printed from the
press). Spend it fast becasue it's value will go down even faster!

Dont fight it! Spend it! You only have 4 years and then we have to
focus on fixing the country. So live it up!


Jim Knight
Senior Sales
StockTruth.com

- quote -

<snip
All,

I have been reading this group for about 3 years.

The ones of you with unlimited posting priviledges seem to be well educated,
knowledgeable and very helpful to those of us that have questions and
concerns about the savings/investments that we have been able to put away.

My wife and I are not well educated (high school, trade school and a little
college), we have been most fortuante in finding jobs that paid decent
wages, we will never be rich nor on easy street, but have managed to be debt
free. I have always had family health insurance, I paid out of hide, I
never let a credit card balance go over 90-days, nor a car loan over
30-months. We had a 25 year mortgage that we paid off in less than 20
years.

My thoughts on this are - Skip is on target. You can never borrow or spend
your way out of debt. All need to take responsibility for their actions;
people borrowing more than they can repay, banks lending to people that
should not qualify and the Government sitting back singing praises.

Now the banks, state government, credit card companies and numerous others
are waiting on hand outs - to me it is obvious that borrowing is not the
answer and if we keep doing the same thing and expect different results that
is the definition of ----.

To all I wish you good health and a Great weekend.

I don't have a firm stance on the topic, so please consider the
following nothing more than the off-the-head spoutings of a madman. I
invite answers to my questions and even factors that I may not have
considered. Perhaps it will help me (and others) better form an
opinion.

That said... The government's purpose is to serve the people. I'm
pretty confident on that last statement. As such, our government is a
reflection of the views of the electing populous. So why do we think
that the gov't should change first and the people will follow? It
seems to be a contradictory belief. If society elects officials with
similar views of the majority, why do we expect anything other than
spend-happy officials. It's what their EMPLOYER demands. Taking the
podium in front of a hands-out, spend-hungry society and telling them
you are going to reduce spending is a recipe for unemployment. Even if
penny-pinching officials could wiggle their way into power, they'd
likely be replaced with people who's vies more align with the
citizens.

I don't see how change can come about unless it comes from the
individual first. Only then will those individuals elect officials who
share their newly enlightened view. I've never understood the
propensity to blame our leaders. We put them there! We chose them
because, at least at one time, we backed their beliefs. Barring
trickery or deceit how can we not blame ourselves first?

[Side note: I am prediciting that exactly HOW one defines "wasteful
spending" will have a large influnece on one's beliefs. Some may
consider the war wasteful, while others do not. Some may consider the
stimulus package wasteful while, again, others do not. I imagine that
very few citizens actually support government over-spending. The
problem is they don't agree on what's wasteful and what isn't.]

The definition of "economy" derives from Greek "oikonomia" from
"oikonomos" household manager, from "oikos" house + "nemein" to manage
(source: Webster's).

Move the gentleman from MIFP's measure to immediate vote. Show of
hands. Approved. [Gavel sound.]

I think your statement is eloquently spot-on. Great way of putting it,
no apsersions, no whining, and very nice literary style as well.

Now for the next five months ... IMObservation, the short version is
that the financial sector borrowed a lot more than the consumer
sector. (In a bit more detail, as I see it, the *institutional* (aka
"professional money managers") financial crisis brought about by 30-
to-1 leverage on $14 trillion in the investment banking sector has put
pressure all the way down to cash. If consumers were overly indebted,
the financial sector compounded this. This has fed itself with FEAR
all across the boards. Hopefully, with the recent drop in LIBOR, this
institutional whirlpool is slowing down - or even dissipating. There
is still some carryover as equities are sold off.)

It is easier to negotiate problem resolutions from a position of
strength, and in that sense, a short term stimulus might be desirable
and advisable. But the biggest factor in this at present is
restoration of confidence, and that won't be accomplished by a short
term stimulus. Confidence will be restored by a return to more
conservative traditions and personal values, just as you outline.

But this has to, must, perforce, without qualification, include the
financial sector. What we are seeing today is a massive "stimulus
package" to the financial professionals, who are at present little
more than goons.

"HW "Skip" Weldon" <skip5700removethis[at]yahoo.com> wrote
- quote -

I agree. I have thought of it in terms of needing a cultural
attitude shift. If it germinates and begins to happen, it
will take several years at least. Government and business
leadership would be key to making it happen. While I think
some politicians and a few in business aim for this shift,
most do not.