Digging for Treasure Notes like digging for Gold

falkowsi said:
If you just look at the window suppliers, they would be happy. For the economy as a whole, not so much. Somebody has to pay for the windows, and they'd rather spend the money on something else.
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Right now people aren't exactly spending money on anything else. It's the reason for the continued slump.
 
daenku32 said:
Right now people aren't exactly spending money on anything else. It's the reason for the continued slump.
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They are spending all they have. If you break their windows, they'll cut spending somewhere else, or they'll put a piece of plywood over the window frame. Either way, it's not going to help the economy.

Random consumption spending isn't going to help. Money needs to be spend on something that will actually return a profit.
 
falkowsi said:
They are spending all they have. If you break their windows, they'll cut spending somewhere else, or they'll put a piece of plywood over the window frame. Either way, it's not going to help the economy.

Random consumption spending isn't going to help. Money needs to be spend on something that will actually return a profit.
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What about the Paradox of Thrift. It's holding on tight right now.

Maybe only the windows of the rich could be broken. They are sitting on piles of money.
 
daenku32 said:
Maybe only the windows of the rich could be broken. They are sitting on piles of money.
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If the rich are sitting on piles of money, it is because there are not enough businesses that return a decent yield that they could invest in.

ETA: this also answers the Paradox of Thrift. Even if people save their money, they'd still want the highest yield on their savings. They could accomplish that by buying stock instead of putting it in a savings account, and stimulate the businesses that would actually grow the economy.
 
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falkowsi said:
If the rich are sitting on piles of money, it is because there are not enough businesses that return a decent yield that they could invest in.

ETA: this also answers the Paradox of Thrift. Even if people save their money, they'd still want the highest yield on their savings. They could accomplish that by buying stock instead of putting it in a savings account, and stimulate the businesses that would actually grow the economy.
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Again, in this economy buying stock is not really 'investment'. If you purchase brand new stock, the company is more like to sit on the proceeds than use it to actually expand. If you purchase existing stock, well, you are just swapping stores of value with someone. It's more like savings. Corporations are already sitting on a trillion dollars of money that they could spend. You 'investing' in them is not going to result in more capital purchases. As it is they are still idling their existing machinery.

The rich would certainly see a good return for fixing that window. It would protect their belonging inside from getting soaked and ruined by, say, a hurricane. I doubt that they'd 'cut back' from spending on other things that they enjoy or that bring them returns. The offset would come from money that has the least amount of return, which would likely be their savings account or their safe behind the painting.
 
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daenku32 said:
Again, in this economy buying stock is not really 'investment'. If you purchase brand new stock, the company is more like to sit on the proceeds than use it to actually expand.
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Obviously, you'd pick a stock of a company with a high return. Companies like that help to grow the economy. Of course, the problem may be that there aren't enough of those companies. In which case you're getting closer to the real problems. Maybe there's not enough smart people with good ideas, or maybe the resources are getting scarce, or maybe there isn't enough well educated staff, maybe business laws are too restrictive. Blindly increasing consumption isn't going to fix any of those problems.
 
daenku32 said:
The rich would certainly see a good return for fixing that window. It would protect their belonging inside from getting soaked and ruined by, say, a hurricane.
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The rich would get an even better return if the window wasn't broken in the first place.
 
falkowsi said:
Obviously, you'd pick a stock of a company with a high return. Companies like that help to grow the economy. Of course, the problem may be that there aren't enough of those companies. In which case you're getting closer to the real problems. Maybe there's not enough smart people with good ideas, or maybe the resources are getting scarce, or maybe there isn't enough well educated staff, maybe business laws are too restrictive. Blindly increasing consumption isn't going to fix any of those problems.
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A high return doesn't mean that the company is investing. It means it's getting significant profits on what it is doing currently. For examples you can look for companies that are recording large earnings while laying off workforce.

Yeah, I'm hoping some Galtian superhero will soon invent something truly amazing that will transform our society. But I think that's more likely to happen if the economy has lower unemployment due to increased consumption. In current environment John Galt would have a hard time finding a company wanting to invest vast sums on money on a product that wasn't market tested.
 
daenku32 said:
But now you get to make windows for both, the new AND the old. I'm pretty sure the window suppliers are currently working well below capacity and would be happy to ramp the production.
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I think your failure to grasp this simple concept explains your failure to grasp a lot of other related economic concepts.
 
For examples you can look for companies that are recording large earnings while laying off workforce.
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Law of Diminishing Returns. Read about it.
 
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