30 Jan 13
Originally posted by Metal BrainIt isn't quite as simple as the money goes out of the country. A lot of money in private hands goes out of the country on airlines, and cruise ships. A lot comes in, when Toyota, Honda, Nissan, BMW, Mercedes, and others all build plants here and hire Americans.
Outsourcing has changed where some of the investing is spent. If you buy stock shares of Apple Corporation much of that money ends up in China.
Not all spending is the same anymore. Even if I accept your conclusion investing is not equal in creating domestic jobs. The rules have changed.
Ask yourself if thoughtless consumerism, buying ridiculous junk impulsively is long term good for our economy. In the end, economics is thoughtful people acting in their best interests. Some spend week to week, and others routinely save a portion for later. Some specifically seek entrepreneurial activity in which to use their money to improve themselves. Each individual is a part of a market, and fills some role in it. And all of this requires no force of coercion to work.
That some money ends up in China, or Indonesia isn't a bad thing. People have to live there to, and wish to improve their lives.
30 Jan 13
Originally posted by normbenignInvesting is not spending in the same amount. If I buy stock in Apple Corporation is all that money I invest going to spending? I doubt it. If Apple stock drops by 25% does that equate to 25% less spending? If the stock price increases by 25% does that mean 25% more spending?
Investment is spending. It is just spending on goods of higher orders. Before investing, saving is required, which is diminished consumer spending, that is refraining from satisfaction present want, delaying satisfaction of those to a later time.
Comparisons of one to the other is fruitless, as those actions are the results of thinking humans acting i ...[text shortened]... of somehow calculating the best way for hundreds of millions of thinking acting people, to act.
Some money that is saved is put in a savings account. The bank loans some of that money to businesses. This means some savings is actually used for investment because of fractional reserve banking. Whether or not you or others are aware of this doesn't change this fact.
Your assertion that comparing one to the other is fruitless is an error in your judgement. There may not be a simple answer because it is very complicated, but the question deserves some serious analysis that is not being done to the extent it should be.
You are clearly oversimplifying things.
Originally posted by Metal BrainThe value of Apple stock is entirely speculative. Generally, the churning over of so called "investment" in financial assets is entirely unrelated to the productive economy. For that reason, the needs of the financial sector are not the same as the needs of the productive economy. Other types of self styled "investment" include property, whose value can be inflated to staggering levels and can plummet to zero without laying a brick, and diverse luxury goods which demonstrate status without offering any productive benefit. This of course is where most of the wealth of the rich sinks without trace.
Investing is not spending in the same amount. If I buy stock in Apple Corporation is all that money I invest going to spending? I doubt it. If Apple stock drops by 25% does that equate to 25% less spending? If the stock price increases by 25% does that mean 25% more spending?
Some money that is saved is put in a savings account. The bank loans some of s that is not being done to the extent it should be.
You are clearly oversimplifying things.
By contrast, wealth that is redistributed to the population generally (for example as earnings) enters into circulation in the form of everyday consumption and generates the economic activity on which a modern economy depends.
By sucking wealth out of the economy into the hands of the wealthy, our economies are being starved of both demand and productive investment.
01 Feb 13
Originally posted by finneganThe notion that welfare money is more effectively spent than that spent on luxury goods is pure fantasy.
The value of Apple stock is entirely speculative. Generally, the churning over of so called "investment" in financial assets is entirely unrelated to the productive economy. For that reason, the needs of the financial sector are not the same as the needs of the productive economy. Other types of self styled "investment" include property, whose value can b ...[text shortened]... ds of the wealthy, our economies are being starved of both demand and productive investment.
The rich and poor alike spend money frivolously, and in either case they are consumers whose demand is filled by capital and labor in combination. Capital without labor is, and labor without capital tends to be wasted effort. You can't do without either.
01 Feb 13
Originally posted by Metal BrainWhat happens to Apple or any other stock on any exchange reflects what consumers are saying about that product or service. Speculators win or lose on those markets the same as in other more direct markets.
Investing is not spending in the same amount. If I buy stock in Apple Corporation is all that money I invest going to spending? I doubt it. If Apple stock drops by 25% does that equate to 25% less spending? If the stock price increases by 25% does that mean 25% more spending?
Some money that is saved is put in a savings account. The bank loans some of ...[text shortened]... s that is not being done to the extent it should be.
You are clearly oversimplifying things.
Every businessman, from giant corporations to a simple street vendor does the same thing. He speculates on the consumer's mood and desires. Those who do that well make profits. Others make less or lose money. The variation of this rule is where government intervention creates industry protections or even monopolies.
I am very much aware of fractional reserve banking, and of its tendency to inflate money, and that in turn tends to create boom and bust cycles. Intentional inflation of the money supply has never sustained an economy long term, and the longer the inflation cycle, the longer the bust following the bubble.
Keynes tried to demonize savings over spending, but his ideas were Tom Foolery. Ultimately, sound economics requires both cash and capital reserves so that people can care for emergencies, start speculative projects, and buy goods without resorting to borrowing. Pumping fiat dollars into an economy may create temporary "prosperity", but it ultimately punishes those who are most involved in the bubble created by the artificial inflation, the most recent US examples being the internet bubble of 99 and 00, and the housing bubble of 08.
01 Feb 13
Originally posted by finneganI don't agree that rising stock that makes some people super rich sucks wealth out of anything. The economy is not a zero sum game. If I create a company that hires 100 people and makes me rich, all 101 of us are benefiting, even if I am benefiting more than the other 100. While it's certainly possible that the company's profits are not being most efficiently distributed for the greater good if I take a huge salary, my salary is not necessarily at the expense of any pre-existing wealth. Great new companies create wealth; they don't consume it.
The value of Apple stock is entirely speculative. Generally, the churning over of so called "investment" in financial assets is entirely unrelated to the productive economy. For that reason, the needs of the financial sector are not the same as the needs of the productive economy. Other types of self styled "investment" include property, whose value can b ...[text shortened]... ds of the wealthy, our economies are being starved of both demand and productive investment.
01 Feb 13
Originally posted by sh76Wealth is not money. Rent seeking behavior provides money to individuals which is a limited resource by design without any increase in total wealth.
I don't agree that rising stock that makes some people super rich sucks wealth out of anything. The economy is not a zero sum game. If I create a company that hires 100 people and makes me rich, all 101 of us are benefiting, even if I am benefiting more than the other 100. While it's certainly possible that the company's profits are not being most efficiently d ...[text shortened]... xpense of any pre-existing wealth. Great new companies create wealth; they don't consume it.
02 Feb 13
Originally posted by AThousandYoungWealth is not all money would be a more accurate statement. Money is wealth, but not all wealth is money. Money simply makes indirect transactions more simple and therefore more likely, and real wealth in the form of consumer products, capital goods, real estate, can be more easily traded and produced.
Wealth is not money. Rent seeking behavior provides money to individuals which is a limited resource by design without any increase in total wealth.
02 Feb 13
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Originally posted by sh76That entirely depends on the reason the stock is rising. Back in the old days the rule was a companies stock was worth 10 times its annual earnings. If it was growing then you'd have the expectation of it generating higher earnings in the future and so a higher price to earnings ratio is acceptable. So people speculate and history is littered with stock bubbles because greed overcame fear. A bubble sucks capital out of companies that can grow.
I don't agree that rising stock that makes some people super rich sucks wealth out of anything. The economy is not a zero sum game. If I create a company that hires 100 people and makes me rich, all 101 of us are benefiting, even if I am benefiting more than the other 100. While it's certainly possible that the company's profits are not being most efficiently d ...[text shortened]... xpense of any pre-existing wealth. Great new companies create wealth; they don't consume it.
Right now we have a problem that QE and other measures have propped up failing companies so they aren't going bust and releasing their niches to new players who may do better. Too much wealth inequality creates its own problems.
02 Feb 13
Originally posted by normbenignMoney is not wealth.
Wealth is not all money would be a more accurate statement. Money is wealth, but not all wealth is money. Money simply makes indirect transactions more simple and therefore more likely, and real wealth in the form of consumer products, capital goods, real estate, can be more easily traded and produced.
03 Feb 13
Originally posted by DeepThoughtBailouts, 'too big to fail', and QE are taking the risk out of the markets. If government will step in whenever there are losses, then money managers will take bigger and bigger risks.
That entirely depends on the reason the stock is rising. Back in the old days the rule was a companies stock was worth 10 times its annual earnings. If it was growing then you'd have the expectation of it generating higher earnings in the future and so a higher price to earnings ratio is acceptable. So people speculate and history is littered with sto ...[text shortened]... niches to new players who may do better. Too much wealth inequality creates its own problems.
If socialists will bail out your bad business decisions 'to save jobs', then as a rich person you can make a lot MORE money by taking bigger and bigger chances.
No wonder the rich are getting richer. Socialist policies are causing the very wealth gap they purport to be against.
It's often that way. If you abandon sound principles (which have nothing to do with most political party planks -- especially today's parties) and simply do what the popular vote seems to be in favor of at the moment, that's always were you end up.
03 Feb 13
Originally posted by DeepThoughtPropping up failing companies is government interventionism. The more it is done, the less effective the Darwinism of the market is in eliminating bad investors, spenders, and generally failing policies.
That entirely depends on the reason the stock is rising. Back in the old days the rule was a companies stock was worth 10 times its annual earnings. If it was growing then you'd have the expectation of it generating higher earnings in the future and so a higher price to earnings ratio is acceptable. So people speculate and history is littered with sto ...[text shortened]... niches to new players who may do better. Too much wealth inequality creates its own problems.
Supporting them encourages others to follow their bad examples.