Forbes' 400 Wealthiest People!

[BlueAngel]

The nation's wealthiest are poorer, according to Forbes.

OMG, I feel so terrible about that.

Oh, thanks, Forbes, for telling us about the richest people in America who aren't as wealthy as they once were.

Like I said, I feel so terrible for them.

Are they unable to afford private jets?

What have they been forced to do wtihout?

Plastic surgery?

We, the poor people, love reading about how wealthy people live in comparison to those of us who have recently lost their homes; are without a job and living in tent cities.

The rest of us who are starving and homeless are in desperate need of hearing about those who want for nothing.

Lifts our spirits.

the-forbes-400.html: Personal Finance News from Yahoo! Finance

[EireEngineer]

What you forget it is that it is these same people that invest the capital required for job creation.

[BlueAngel]

I didn't forget anything.

What jobs?

[ThisTime]

True. The wealthy keep the economy moving. But what happens when the wealthiest people cut back on spending?

[EireEngineer]

Thats exactly the situation we are sitting in now. Those with money to invest are holding back right now to see what the next move of the government is going to be. If ObamaCare passes, the credit markets will crontract even farther then they already have.

[BlueAngel]

The wealthiest people are employed and spending money.

Those who aren't wealthy, aren't employed and aren't spending money.

Therefore, the economy isn't dependant upon those who are wealthy to keep it moving.

[EireEngineer]

Originally Posted by BlueAngel

The wealthiest people are employed and spending money.

Those who aren't wealthy, aren't employed and aren't spending money.

Therefore, the economy isn't dependant upon those who are wealthy to keep it moving.

Those who are not wealthy do not have money to invest.

Without investment there is no capital creation.

Without capital investment, there is no industry.

Without industry there is no employment.

Therefore, yes, it is those with money that drive the economy.
If you want simplistic platitudes try MSNBC.

[BlueAngel]

Originally Posted by EireEngineer

Those who are not wealthy do not have money to invest.

Without investment there is no capital creation.

Without capital investment, there is no industry.

Without industry there is no employment.

Therefore, yes, it is those with money that drive the economy.
If you want simplistic platitudes try MSNBC.

Please take an ECONOMICS course.

The economy depends upon the circulation of money and the circulation of money depends upon the exchange of money for goods and services bought and sold.

When umemployment is high, the exchange of money for goods and services bought and sold diminishes and this causes businesses to fold which creates unemployment and the domino effect.

When one invests, money does not circulate.

IT SITS.

Obviously, those with money drive the economy and, at present, there are way too many of us without money so we are not driving the economy.

Thanks for proving my point.

I don't check MSNBC for anything.

[EireEngineer]

LOL. I have, but thanks. As is typical in this forum, I think that you are looking for a simple answer to a complex question here. However, there are few easy answers in Economics. Read some Milton Friedman sometime. Anyway, to your assertation...yes, spending does have something to do with economic stability, but it is a trailing indicator at best.
The real problem we have right now is a confluence of poor decisions, poor fiscal policy, and poor oversight. For years the government has been putting increasing pressure on banks to lend money to people that were not qualified to assume such debt. Anybody ever hear of a moral hazard? Read Adam Smith? No? Ok, thanks. Banks did this, grudgingly at first, but then learned that all of this sub-prime debt created an after market secondary source of income in the form of Mortgage backed securities. So long as someone was willing to buy the debt, the banks didnt really care about the loans.
To make things even worse, companies began to sell derivitives on these MBS, adding one more layer to this Ponzi Scheme.Now that the banks have recieved their TARP funds they are doing exactly the most predictable thing they could(Moral hazard? Seriously...you guys have never heard of it? Ok, thanks). They are liquidating what bad debt they have left, and holding onto the money like grim death because they know that uber inflation is coming and they would loose their shirts again if they loaned it out the way they were.
Now here is the problem. Without affordable credit, innovation stalls. Expantion of existing business is made FAR more difficult, and bridge loans are nearly impossible to get. What is worse is the effect all this has had on private investment. Many of these would be investors lost a ton in the MBS game, and have tightened their belts (and purse strings ) because of it. Inflation also affects their decision making, because any return on investment will be reduced if their is substantial inflation. The government cant possibly sell enough t-bills to cover TARP, much less ObamaCare if it goes through, so the FED will monitize it, and inflation will ensue because of it. Doubly so since the velocity is so low right now.
In short, yes, the fact that all of us are not spending does not help the economy, it is really the issue of job creation and capital investment that is killing it.

[BlueAngel]

Originally Posted by EireEngineer

LOL. I have, but thanks. As is typical in this forum, I think that you are looking for a simple answer to a complex question here.

Sorry, but I never indicated that I was looking for a simple answer to a complex question.

I've SIMPLY answered that which you perceive to be a complex question with a SIMPLE answer.