In the Loop

If the U.S. economy was your child, what would you do?

Posted at 3:44 PM on September 15, 2008 by Sanden Totten (2 Comments)

When your kid does something really stupid and ends up in a heap of trouble, what do you do? Punish them? Let the consequences of their actions be punishment enough? Help them out or maybe try to fix everything they messed up?

U.S. financial institutions have done something really stupid. They are in a heap of trouble. A lot of people are wondering, how should the government handle this?

Experts often break parenting styles down into four different categories: authoritarian, permissive, authoritative, and uninvolved. Each has it's pros and cons, and oddly enough, each seems to have an economic equivalent. Authoritarian sounds a lot like hard-line communism. Uninvolved would be pure market capitalism. Authoritative might be like a tempered capitalist system, the kind with some big government thrown in on the side. The sad thing is, the one our current situation most closely resembles is permissive or indulgent parenting:

"These parents are generally lenient. They allow a variety of behaviours by their children that some would describe as immature. Essentially, they let the children look after themselves and avoid confronting them at all costs."

As far as the economy goes, the damage is done. The question now is - what to do about it? Do you punish the financial industry? Do you let the consequences of their actions be punishment enough? Help them out or maybe try to fix everything they messed up?

Comments (2)

Does this mean I'm not getting an advance on my allowance?!? Whatever, Government! You can't tell me what to do - you're not my real dad!!!

Posted by Alex Franzen | September 15, 2008 4:56 PM

I would start 'spending' money into circulation to pay for production that benefits everyone (roads & Bridges) and stop creating all new money as loans and uncreating the principal when repaid.

Let's all face the fact that we were duped when our money was changed from an evidence of wealth to an evidence of unpayable interest-bearing debts.

We are always suppose to be fearful of inflation yet this week over 1 Trillion was 'infused', 'pumped', 'injected' into the increase in money supply with no corresponding increase in production. That should cause inflation by the authorities own (incorrect definition) of inflation...."too much money chasing too few goods." Do you actually believe we are anywhere near having too much money and too few goods when we are in debt beyond our abilities to repay? And...where is the interest suppose to come from? That money was never created at the time of the loan. Sidebar: Bonds are not money. They are collateral against new money created as loans. We spend the loans not the bonds.

Why is it always okay to increase the money supply as loans but not okay to increase the supply debt-free as a payment for production?
It must have something to do with benefiting the special interests of a few who gain and maintain control of everything (I'm not talking about Congress) It doesn't seem to bother Americans whether it's corrupt and destructive or not.

Let's stop referring to it as the 'taxpayers' money. If it's ours, why do we have to borrow it and pay it back with more than was created. It's the taxpayers 'obligations'. Why should any 'free people' need to borrow from someone else to have a medium of exchange to do commerce?

Let's get honest about what it is we use for money (bank liabilities), how it's created (as a book entry on a bank ledger) and how it's put into circulation (as loans).

All enemies; Foreign and domestic.

Just have the U.S. Treasury (the people's bank) create the money and spend it in for the building of public roads and bridges in lieu of taxation or bonding.

That will provide money to pay the interest on the debt-created loan principal.

Then place a 'windfall profits' tax on the banking industry. Otherwise they'll get all the new money as interest payments. Then also use the windfall tax to fund the roads and bridges again.

Posted by Gregory K. Soderberg | September 18, 2008 11:31 AM

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