The Wedge Between Rich and Poor

[Vinster]

The downward spiral started when the democrats became the majority in jan 2007... Derp derp

It started way before that, it started slowing in 2000 actually, Clinton's last year in office, it's just the economic lifecycle. Sh*t hit the fan because of the deregulation banking system and Wall St. Not sure who it was either Clinton or Bush. And the bail out was something Bush did also. It's going to happen again because we didn't fix the problem we put a bandaid on a gapping wound. That's why this country is so f'ed up everyone's memory only goes back 4 years. If you want to hedge your bets buy gold

[canusayinsanity]

Ditto. Ur absolutely correct. People only really started paying attention after bush's second term.

[Six]

Oh yes, Obummer the great satan.....


People forget all too quickly where the nose dive started. Under Bush, the republican... Derp, derp.


If you are all gonna point fingers, better get to pointing at BOTH sides....

Its not that we forgot it's that we're educated enough to know that Democrat Housing policies that forced Fannie and Freddie to bundle toxic mortgaes and that threatened banks with charges of racism and unfairly lending to those with good credit and a down payment is ACTUALLY what caused the 2008 Crash.

Look up "The Affordable Housing Act" and try and learn something.

Obama just made the recovery from that debacle far less likely with his stupidity.

Its what happens when people stupidly elect a nobody to be President.

[Six]

It started way before that, it started slowing in 2000 actually, Clinton's last year in
office, it's just the economic lifecycle. Sh*t hit the fan because of the deregulation banking system and Wall St. Not sure who it was either Clinton or Bush. And the bail out was something Bush did also. It's going to happen again because we didn't fix the problem we put a bandaid on a gapping wound. That's why this country is so f'ed up everyone's memory only goes back 4 years. If you want to hedge your bets buy gold

It had nothing to do with deregulations or Wall Street.

Thats just the lefts "eat the rich " narrative that far to many people have bought into.

Govt policies that forced easy and free cedit under " The Affordable Housing Act " caused the bubble and the subsequent collapse.

Read up on Barney Franks involvment.

And he and Chris Dodd, the two most responsible got to write the banking legislation to " prevent this from ever happening again.

Unreal.

By 1995 all loans bundled and sold by Fannie and Freddie HAD TO BE SUBPRIME.

Some of you guys need to educate yourselfs.

[canusayinsanity]

I've always agreed the house market was a big factor for crash. Besides the housing market crashed due to unfair lending to individuals who couldn't afford the loan in the first place. Example; 10.00hr guy got a 300,000 a loan. Housing began the snowball in 1999 people were too mesmerized to see it.

[Southern Mech]

I've always agreed the house market was a big factor for crash. Besides the housing market crashed due to unfair lending to individuals who couldn't afford the loan in the first place. Example; 10.00hr guy got a 300,000 a
loan. Housing began the snowball in 1999 people were too mesmerized to see it.

Not only that, but banks apraising a home saying its worth 350k and only worth 150k, then loaning dumbass' 200k to go buy rv's, boat's, harley's etc.

You are right the housing market took a sharp razorblade sharp rise from 1999 to 2003, and by 2006 is when it all went to hell in a hand basket.

So for me to forgive this govt to bail out banks that shoulda been out of business is just assanine and I will never back a business decision those sob's in the white house circus again.

Our money could have been better spent

[Space Racer]

OP edited and re-posted as one comment
(suitable for forwarding, if you are so inclined):

The Boost and the Wedge

The Boost

Let's say you are a one-man country. You live on a very small island you
own in the North Pacific. Other people live on the island, but they are
residents, not citizens. They live by your rules. Some of them work
for you.

You make a living by building widgets and selling them to small companies
in various Pacific Rim nations. You import the raw materials. You borrow
money from Singapore from time to time to keep your operation running
smoothly. You make a profit after expenses of 10%. You plow half of your
profit back into the company. You put the other half in the bank.

You have started your own small bank. You take deposits from and make
loans to the residents of your island. This is the bank where you put
your own money.

You started your bank with a $100,000 deposit. This is money you
generated from your business. This is real money.

Now let's say you go into the computer and add a zero to the 100,000,
making it 1,000,000. Have you increased your wealth? No. You have
injected $900,000 of phony money. You have devalued your currency.
You have made yourself appear to be wealthier than you are. You have
taken the first step in building a house of cards.

You are a Bernanke.

Can you get wealthy this way? Yes, of course. You can loan more
money and collect more interest. You can invest your bank profits in
assets that appreciate in value.

Not only that, you can help your residents buy nice houses. With all
this new money, you can provide cheap loans for everyone who wants to
buy a house. You are happy to help them, so you encourage them to buy.

But what else happens to the residents? Over a period of time, prices
go up and buying power goes down. Their money is now only worth one
tenth of what it was before the injection. So are their retirement accounts.

Soon, all their money goes to food and clothing. They have nothing left to
pay the mortgage with.

If your intention was to help your residents buy nice houses in which to
live out their lives, you have accomplished the exact opposite.

They would have been better off renting from you.


The Wedge

This side effect of cash injection and subsidized homeownership can
be summarized simply:

Inflation is the wedge that drives the split between rich and poor.

http://www.essortment.com/inflation-...ion-61410.html
http://www.bbc.co.uk/dna/mbiplayer/A27371298

People blame the greed of large corporations and rich businessmen for
their accumulation of a disproportionate amount of wealth. Some even
believe that the accumulation of wealth by rich people is responsible
for their own relative lack of wealth. But poor people stay poor because
all their assets are in cash. Rich people get richer because they convert
their excess cash into assets that hold their value and assets that
appreciate in value.

But when government pours more cash into the economy, it does two things:
It allows people who make a profit to invest more cash in goods that hold
their value.
It depletes the resources of people whose assets are only in cash and
assets which are not easily converted into cash (like houses and cars),
especially when those non-liquid assets are not paid for.

(By "people who make a profit," I mean people who live beneath their means,
not just businessmen. If you spend less than you earn, you make a profit.)

So when the government decides to “boost the economy” with subsidies and
cash injections, with the proclaimed intention of improving the unemployment
rate and enabling small businesses to survive, it is in fact making the
economic situation worse. It causes temporary relief from economic
pressure; it causes people to believe the economy is improving; it buys votes
for the ruling political party; but it destroys the economy in the process.

Instead of injecting more cash and subsidizing voters and corporations and
unions with cash, government needs to cut spending.

This is the only way to reduce inflation and its disastrous effects.

This is the only way to level the playing field between rich and poor.

Unfortunately, it's a painful process, and it's a good way for the ruling political
party to lose popularity.

[Gib's Son]

Zerodegeec,

Your last post was removed. Please do not post links to your web site. Please read site rules.... esp. #4.... get your post count up and apply for professional membership. Thanks.

[Space Racer]

What can we cut to balance the budget?

[Tool-Slinger]

We could start by eliminating entire departments, just dis-band them and send them home.