3 votes

Here's The Real Problem With The Economy

There's a lot of sturm und drang these days about who wrecked the economy. And there is a lot of yelling about how to fix it. But the economy is complicated, so it's easy to get fooled by someone who is yelling persuasively, especially if they play for your favorite political team.

Lots of things are wrong with the economy, but the main problem can be summed up with two simple facts:

Corporate profits are at an all-time high, and American wages are at an all-time low.

Some people argue that the way to fix the economy is to give tax cuts to the highest-earning Americans--the "job creators"--so that they can invest in new companies and create jobs. Well, we'd all like to pay fewer taxes, but unfortunately, the "tax cuts for the rich" approach almost certainly won't work. Here are a few reasons why:

The richest Americans and companies already have plenty of cash. The reason these rich Americans and companies aren't investing and "creating jobs" is that most American consumers (customers) are broke. Rich Americans actually don't "create jobs"--the whole economy creates jobs. We've been trying the "tax cuts for the rich" approach for three decades, and it is making the inequality problem worse, not better.

Now, some other people are arguing that the way to fix the economy is to increase taxes on the rich and companies and "redistribute" this wealth to American consumers. We will probably need to raise taxes on everyone a bit to reduce the budget deficit (even if we reduce spending--the gap is that big), but this "wealth redistribution" approach also almost certainly won't work. Here are a few reasons why:

The key to creating a sustainable economic recovery is to get the private-sector cranking, not the public sector. Having the government collect taxes and write checks to more than half the country to make things "fairer" will understandably ruffle the feathers of those who are paying those taxes. Class warfare won't help anyone. This is America: We solve our own problems in this country--we don't wait for someone else to come along and give us a handout.

So, then, if the answer isn't cutting taxes for rich Americans and companies, or raising taxes on the rich and giving the money to the poor, what's the answer?

Let's go back to the problem:

Corporate profits are at an all-time high, and American wages are at an all-time low.

If we want to fix today's ailing U.S. economy, we need many of our large corporations to share more of their vast wealth with their rank-and-file employees.

If the companies don't eventually see the benefit of doing this and do it voluntarily, the government (an extension of the people) will likely the mandate that they do it--either through taxation or by radically increasing the national minimum wage.
And given that government solutions are often terrible solutions, it would be best for everyone if we persuaded corporations to do this voluntarily. So what follows is an initial effort to do that.

Read more:
http://www.businessinsider.com/henry-ford-salary-increase-20...



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I really hate these tiring

I really hate these tiring left-right arguments about what garbage happens to be "real problems with the economy". There is not a shred of intellect present in any of these arguments.

Does that include your argument, too?

~

"Bend over and grab your ankles" should be etched in stone at the entrance to every government building and every government office.

Which one?

Which one?

Even if...

wages were increased it would do NOTHING to solve the structural problems of our currency caused by the creation of $QUADRILLIONS (many times the global GDP) of derivatives that were fraudulently created and sold to local governments and grandpa's and grandma's retirements.

To delay the ticking time bomb of eventual collapse of the $ caused by the derivatives, the Fed has been sending $trillions upon $trillions of freshly created new counterfeit $'s to foreign central banks since 2008.

It is the ability of the Fed to create new fake currency units in an unrestrained manner combined with the nearly 20 year con game of derivatives creation that is killing our economy and ability to create new wealth/jobs.

The frozen investment market and stagnating job creation is just a SYMPTOM of a non-free market enslaved by a fraudulent money system entering its end game in the face of extreme abuse.

To blame wages is just pure unadulterated Keynesian and Marxist nonsense and everything Ron Paul has stood against. If we had sound money and a free market then wages would take care of themselves.

Keep in mind ---> Money units are NOT wealth

.
~wobbles but doesn't fall down~

excellent! i really am

excellent!

i really am surprised that a website that "continually" talks about Austrian economics wouldn't understand that principle as well.

Money units are only used to provide an easy and consistent valuation between products, because, as we all know, products buy products.

Well Said!

It's amazing that people here on the DP do not understand this. The politically connected mega corporations that game the system got there through government intervention/protectionism subverting the free markets in their favor.

-----
End The Fat
70 pounds lost and counting! Get in shape for the revolution!

Get Prepared!

Bologna.

The $QUADRILLIONS soon to be made by our mega-corporations well affords them to give a true "living wage" back to their employees, which would help the middle class to survive in this crazy time of monopoly money. Your saying that "if we had sound money and a free market then wages would take care of themselves" is nothing but a cop-out which helps to allow these mega-corporations to continue in their unethical practices of greed.

-
"Stand up for what you believe in. Even if you stand alone."
~ Sophie Magdalena Scholl
"Let it not be said that we did nothing."
~ Ron Paul
"You must be the change you want to see in the world."
~ Mahatma Gandhi

ecorob's picture

i downvoted you because...

you don't know how to spell boloney!

its 'cos I owe ya, my young friend...
Rockin' the FREE world in Tennessee since 1957!
9/11 Truth.

No.7's picture

Sound money is trust

Saying that corporations and greed broke the economy is a "cop-out". You sound like Michael Moore and Karl Marx combined. The biggest problem with our economy is that the value of our money is manipulative and has lost almost 99% of it's value since the creation of the fed. This debases trust in money, which is half of every transaction.

Greed feeds, and one can only prosper from his greed in a free market capitalist society by helping others. Steve Jobs got rich purely for the sake of getting himself rich, a very greedy notion. However, his greed made all of our lives better with his products while creating thousands of jobs and opportunity for others. Greed is fuel for prosperity for all.

The individual who refuses to defend his rights when called by his Government, deserves to be a slave, and must be punished as an enemy of his country and friend to her foe. - Andrew Jackson

National and global economic output...

The GDP of the United States is currently about $15 trillion and the GDP of the entire planet is about $60 trillion.

$1 quadrillion is 66 years of economic output of the United States and 16 years of total economic output of the entire planet. Estimates of total derivatives creation are between $1.2 and $3 quadrillion. No mega-corporations combined with soon make $1 quadrillion in even gross revenue much less profit.

You need to rephrase your argument as "Ron Paul is a kook and EVERYTHING he has tried to tell us about money is absurdly and absolutely wrong. Karl Marx had it right."

Your message is PRECISELY that of Karl Marx and the exact opposite of Ron Paul's sound money philosophy. The ENTIRE MISSION of the Fed since day one has been controlling wages and prices. My original comment is a summary of Ron Paul's economic and monetary philosophy. Get a grip.

No money system ever could withstand the creation of 66 times it's total GDP in fraudulent/fake financial instruments with ZERO underlying real assets (derivatives and $ units themselves) and survive. Standard economic philosophy waves red flags when money creation EQUALS GDP much less multiples of degrees of magnitude (10x or more -- in this case 60x+).

It's a nice hippy love idea to desire that people have more money units and think that it will help them but good intentions don't necessarily (and usually don't) correlate with reality. Increasing wages WILL NOT fix the fraudulent structural problems of our monetary system and WILL NOT prevent the $'s collapse.

You are speaking from pure emotion and not from an understanding of economic systems and mathematics...

.
~wobbles but doesn't fall down~

You said,

"No mega-corporations combined with soon make $1 quadrillion in even gross revenue much less profit."

Nobody knows for certain how large the worldwide derivatives market is, but most estimates usually put the notional value of the worldwide derivatives market somewhere over a quadrillion dollars. If that is accurate, that means that the worldwide derivatives market is 20 times larger than the GDP of the entire world. It is hard to even conceive of 1,000,000,000,000,000 dollars.

So who controls this unbelievably gigantic financial casino [of derivatives]?

Would it surprise you to learn that it is the big international banks that control it?

The New York Times has just published an article entitled "A Secretive Banking Elite Rules Trading in Derivatives". Shockingly, the most important newspaper in the United States has exposed the steel-fisted control that the big Wall Street banks exert over the trading of derivatives. Just consider the following excerpt from the article....

On the third Wednesday of every month, the nine members of an elite Wall Street society gather in Midtown Manhattan.

The men share a common goal: to protect the interests of big banks in the vast market for derivatives, one of the most profitable — and controversial — fields in finance. They also share a common secret: The details of their meetings, even their identities, have been strictly confidential.

Does that sound shady or what?

In fact, it wouldn't be stretching things to say that these meetings sound very much like a "conspiracy".

The New York Times even named several of the Wall Street banks involved: JPMorgan Chase, Goldman Sachs, Morgan Stanley, Bank of America and Citigroup.

Why does it seem like all financial roads eventually lead back to these monolithic financial institutions?

http://theeconomiccollapseblog.com/archives/derivatives-the-...

So it looks like these 5 mega-corporations combined already control over $1 quadrillion in gross revenue...

-
"Stand up for what you believe in. Even if you stand alone."
~ Sophie Magdalena Scholl
"Let it not be said that we did nothing."
~ Ron Paul
"You must be the change you want to see in the world."
~ Mahatma Gandhi

Late! Late! ... For a very important date! Oh me, oh my!

Quadrillion?! All-in-one corporation now. We got trouble! Big trouble! Right here is River City!

How dare you belittle the Monopoly Boyz! Clear & Present Danger!

        Caution advised.

Disclaimer: Mark Twain (1835-1910-To be continued) is unlicensed. His river pilot's license went delinquent in 1862. Caution advised. Daily Paul

Hold on to your hats, boyz -

'cause you're not gonna believe this!

DTCC (Depository Trust and Clearing Corporation) is a company with shares closely held by private banks whose turnover in 2004 surpassed an almost unbelievable quadrillion (a million billion) dollars! It’s a figure so staggering (the Gross National Product of the entire world is only $40 trillion!) that it deserves to be spelled out:

$1,000,000,000,000,000

Any kind of detailed breakdown of this turnover figure is a closely guarded secret but DTCC’s 2002 Annual Accounts highlights showed that of the $917 trillion dollars in DTCC transactions that year, $540 trillion were government securities, representing massive interest-bearing debts incurred at taxpayers’ expense by federal, provincial/state and municipal governments.

It’s this bottomless purse that’s driving the global acquisition of public companies such as national airlines, railways, oil companies and telecommunication and postal services, under the clever guise of “privatization”. The global agenda is now being written not by our elected politicians, but by the private moneylenders represented by the IMF, World Bank, Bank for International Settlements and the NGOs they have spawned such as the Bilderbergers, Trilateral Commission, the CFR, the WTO and a host of others.

Directly relevant to this study, it is important to note that world-wide “privatization” is facilitating the process of totally centralized global control - and the world’s drinking water and gold have become major targets by supra-national companies like:

Suez, Ondeo, Vivendi, Thames Water and US Water (http://www.suez.com/groupe/english/histoire/index.php and Newmont Mining and Barrick Gold (http://www.gold.org/value/stats/statistics/gold_reserve/inde.... )

The financial paperwork for these daisy-chain connections is facilitated by private companies like CDS/DTCC.

http://warriorsofatlantis.com/dtcc%E2%80%99s-quadrillion-dol...

-
"Stand up for what you believe in. Even if you stand alone."
~ Sophie Magdalena Scholl
"Let it not be said that we did nothing."
~ Ron Paul
"You must be the change you want to see in the world."
~ Mahatma Gandhi

DTCC.com ~ Where your money goes! Follow the Quadrillions/year

Depository Trust Credit Clearing ~ Where your money goes!

$2 Quadrillion, as a river flowed through. 55 Water Street flooded DTCC
Submitted by Mark Twain

Running a $2 quadrillion annual racket.

Disclaimer: Mark Twain (1835-1910-To be continued) is unlicensed. His river pilot's license went delinquent in 1862. Caution advised. Daily Paul

Cyril's picture

Katherine,

Katherine,

I know I've commented twice on this thread of yours already, and I do reckon it was rather abstract (or too general). Now, for something much more concrete - on what is wrong with the economy - I just thought you might be interested in checking his recent, updated homework out :

Fast forward to mark 13mins 55secs - http://www.youtube.com/watch?v=GitCvGFXi2M

... till the end.

'HTH,

"Cyril" pronounced "see real". I code stuff.

http://Laissez-Faire.Me/Liberty

"To study and not think is a waste. To think and not study is dangerous." -- Confucius

DTCC...

is the clearinghouse for DERIVATIVES. It's entire value is bogus and is complicit in the crime. Try again. :p

.
~wobbles but doesn't fall down~

Oh, it is so much more. What yo uwrote is in their footnotes.

They control so much more. They are the credit clearing house for the Fed Boyz. They deal w/ $2 quadrillion "legal tender transactions. They take "follow the money" to the extreme.

Derivatives are one of there newer off-track betting rackets.

Storm Sandy cast wrath on 55 Water Street, NY. Securities vault? $37 Trillion?
DTCC per year:

  • $1.7 quadrillion. securities transactions
  • $39.5 trillion. securities issues
  • $500 trillion value of transactions... [Over the Counter] OTC derivatives

Disclaimer: Mark Twain (1835-1910-To be continued) is unlicensed. His river pilot's license went delinquent in 1862. Caution advised. Daily Paul

Sure...

the DTCC is a money-laundering operation for more than just derivatives. But it is hard enough to get people to grasp derivatives much less the other complex chicanery the Fed system energizes and feeds off of.

.
~wobbles but doesn't fall down~

Sure nuff. DTCC left their $1,000,000,000,000,000 footnotes.

It is amusing that the DTCC scrubbed their web site clean of their boats of $1 or $2 quadrillion per annum transaction flows. Yet, they left $1 or $2 quadrillion in their footnotes.

It is a very strange world we live in.... $1 or $2 quadrillion left in company footnotes; yet a mere $1,000,000,000,000 (trillion) is bandied about as the "fiscal cliff!" Oh me, Oh my.

Disclaimer: Mark Twain (1835-1910-To be continued) is unlicensed. His river pilot's license went delinquent in 1862. Caution advised. Daily Paul

A trillion here and a trillion there...

...and before you know it we're talking about some real money here.

Ron Paul message: Sound money, responsible governing & defense.

Rather than counting "Federal Reserve Notes" till the Fed's heart is content, we best realize the Fed has no heart. Nor sound money.

Henry Kissinger statement to the press after his coronary surgery, beguiled press: "The good news is that I have a heart."

Disclaimer: Mark Twain (1835-1910-To be continued) is unlicensed. His river pilot's license went delinquent in 1862. Caution advised. Daily Paul

And yet,

the bogus value of derivatives could end up crashing the entire global financial system.

If you took an opinion poll and asked Americans what they considered the biggest threat to the world economy to be, how many of them do you think would give "derivatives" as an answer? But the truth is that derivatives were at the heart of the financial crisis of 2007 and 2008, and whenever the next financial crisis happens derivatives will undoubtedly play a huge role once again. So exactly what are "derivatives"? Well, derivatives are basically financial instruments whose value depends upon or is derived from the price of something else. A derivative has no underlying value of its own. It is essentially a side bet. Today, the world financial system has been turned into a giant casino where bets are made on just about anything you can possibly imagine, and the major Wall Street banks make a ton of money from it. The system is largely unregulated (the new "Wall Street reform" law will only change this slightly) and it is totally dominated by the big international banks.

The highly touted "Wall Street reform" law that was recently passed will implement some very small changes in how derivatives are traded, but these giant Wall Street banks are pushing back hard against even those very small changes as the article in The New York Times noted....

"The revenue these dealers make on derivatives is very large and so the incentive they have to protect those revenues is extremely large,” said Darrell Duffie, a professor at the Graduate School of Business at Stanford University, who studied the derivatives market earlier this year with Federal Reserve researchers. “It will be hard for the dealers to keep their market share if everybody who can prove their creditworthiness is allowed into the clearinghouses. So they are making arguments that others shouldn’t be allowed in."

So why should we be so concerned about all of this?

Well, because the truth is that derivatives could end up crashing the entire global financial system.

In fact, the danger that we face from derivatives is so great that Warren Buffet once referred to them as "financial weapons of mass destruction".

http://theeconomiccollapseblog.com/archives/derivatives-the-...

-
"Stand up for what you believe in. Even if you stand alone."
~ Sophie Magdalena Scholl
"Let it not be said that we did nothing."
~ Ron Paul
"You must be the change you want to see in the world."
~ Mahatma Gandhi

You are just...

proving my point. That wages are NOT the number one problem. The fraud in the monetary system created by the Fed is. Exactly like I have been saying.

.
~wobbles but doesn't fall down~

Haha..

I think(?) :p

.
~wobbles but doesn't fall down~

It is later than you think! Your date has run up quite a tab!

She has all your credit cards, loans & government assistance programs. She has reached your credit limit!

Quadrillion?! All-in-one corporation. Here is your free credit report:

How dare you belittle the Monopoly Boyz! Clear & Present Danger!

        Caution advised.

Pay on the way out. ... Did you hear me say free? Ha! Your faith & confidence is what sustains me in my time of need. - Printer-That-Be (PTB)

Disclaimer: Mark Twain (1835-1910-To be continued) is unlicensed. His river pilot's license went delinquent in 1862. Caution advised. Daily Paul

Excellent article. Well worth reading.

This article portrays the problems facing the economy today and describes the best, fastest and safest solution available.

Thanks for posting.

And thank YOU

for your comment!

-
"Stand up for what you believe in. Even if you stand alone."
~ Sophie Magdalena Scholl
"Let it not be said that we did nothing."
~ Ron Paul
"You must be the change you want to see in the world."
~ Mahatma Gandhi

Complete Bovine Excrement!

Article misses the mark completely. The root problem is no sound money a monopoly on the credit based currency and exponentially devaluing the currency with the creation of loans/money from nothing creating huge bubbles that always pop... The real estate depression is just the first of the domino's.

Wish it would finish crashing already... I am sick of it all and am willing to take my chances...

-----
End The Fat
70 pounds lost and counting! Get in shape for the revolution!

Get Prepared!

The problem is an artificial economy period

While those who get SS and disability checks may feel entitled so they are better than those who collect food stamps and welfare checks,, the truth is, we have a society that is dependent on government checks, and people don't want to admit they get government checks.. so it adds to the illusion.

Where I live for example, I've heard for years that medical marijuana fuels the economy.. but the growers I met, were not spending money.. they were saving money for federal law suits, should they happen.. it occured to me that the truth was, damn near everyone was collecting a government check, though SS, welfare, and jobs with the city, county, state, and their departments, police forces.. that includes schools.. and while the hospital may issue non-government checks.. most of their income was from the medicaid programs..

Logging, fishing are crippled, and so is our tourist industry, because tourist season is when the city repairs streets, so people can not access the shops..

By default or design?

It is a vicious circle.

Although it is true that we have a society that is growing to be "dependent of government checks" - that is actually a symptom, not the root of the problem. The root of the problem is that corporate profits are at an all-time high, and American wages are at an all-time low. This fact is what has led to the disappearance of the middle class, which has led to the fact that we have a society that is growing to be "dependent of government checks". Can you see the vicious circle?

-
"Stand up for what you believe in. Even if you stand alone."
~ Sophie Magdalena Scholl
"Let it not be said that we did nothing."
~ Ron Paul
"You must be the change you want to see in the world."
~ Mahatma Gandhi