How Are Economic Bubbles Not Economic Growth? (money, state, federal)
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I disagree, in so much as I think our economy should be diverse enough that bubbles, which I agree will always recur, are balanced out by other sectors. If everyone runs on one direction, the downturns are too devastating. Also, it seems like the poor are the ones who seem to disproportionately get the shaft in massive bubbles.
Also, large bubbles hide structural problems that sometimes need to be dealth with at the time the bubbles are in full inflation, rather than afterwards when capital has landed in too few hands.
Not necessarily. The use of Capital often varies greatly by the type of economic sector. Some sectors are heavily dependent on cash/credit, while others are dependent on skilled-labor or well-trained workers with a particular skill-set, and still others are dependent on getting either raw resources, processed resources, or semi-finished products at constant prices and delivered in a timely fashion.
Also, if you take Capitalist Property Theory into consideration, remember that there are two Corollaries: Diversification & Specialization.
An economy using Capitalist Property Theory will Diversify & Specialize faster than under any other property theory, and very diverse and specialized economic sectors are often insulated from the effects of certain "bubbles," in part for the reason I mentioned before, and that is Capital requirements.
I would agree that large bubbles can hide structural problems. Those problems can be systemic. When you have a natural bubble, the government's role (if any) should be to minimize impact once it collapses, but where you have artificial bubbles, the government's role should be to prevent them from occurring, especially since they are typically the result of interference or manipulation (and no, the government shouldn't be creating bubbles either).
We already have lower taxes. Taxes have little to do with economic behavior. Taxes were higher under Clinton, yet there wwas economic growth.
its the tax cut, which creates economic growth. Clinton cut capital gains from 28% to 20%, and taxes on 90% of businesses in 1997 to jumpstart the economy after he raised them and stopped growth in 1993.
Blame the private banking institutions who gave out bad mortgages. Don't blame the federal reserve or politicians.
Wrong.. those mortgages were issued under federal standards becuase they were bought up by fannie/freddie and then resold using governmental guarantees.. Without those guarantees, they would never have been made by the banks.
Wrong.. those mortgages were issued under federal standards becuase they were bought up by fannie/freddie and then resold using governmental guarantees.. Without those guarantees, they would never have been made by the banks.
Most of those garuntees had a fee atatched along with PMI. What happened to all that money?
Most of those garuntees had a fee atatched along with PMI. What happened to all that money?
It went to cover those who were upside down and lost their homes. PMI insurance covered 20%, the taxpayers the rest.. This is why the plan was doomed for failure but Democrats wanted more and more of it, even just a few years ago calling for increased leveraged borrowing for Fannie/Freddie.
And what about the 2% federal loan garuntee fee payed at closing by the buyers?
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