The idea that easing up credit for businesses and they will hire more workers is bullshit

[NNN0LHI]

Only one thing is going to cause business to hire more people. More demand. If I owned a business and had access to more credit I would not hire anyone to manufacture widgets or to provide a service until the demand for what I was offering increases. I am not going to hire a bunch of people to fill up a warehouse full of widgets that no one has the money to buy. Or hire a bunch of new workers to sit around waiting for someone who can afford to use the service I provide. That is nonsense.

And there is only one thing that is going to create more demand. Higher wages. That is it. There are a lot of things I would like to hire done around this house or something I need to purchase if I had the money. Raise my income and I will start planning to do that.

And more easy credit is not the answer for increasing demand either. Easy credit is what got us into the mess we are in right now. Screw that. Put some more real money into regular peoples hands with wage increases and watch the hiring begin.

Don

[mmonk]

1. Yep, you got it.

[The Last Blue Dog]

2. Your comments defy economic reality.

The only thing that will create more demand, is less debt.

[lonestarnot]

3. Dee te dee.

[Leftist Agitator]

6. Umm...

[DCBob]

7. "The only thing that will create more demand, is less debt." -- that defies common sense.

and is 180 degrees wrong.

[mmonk]

8. Care to present data to back that up?

Less demand contracts economic activity, thus less taxable income creating less revenue. Thus more debt.

[The Last Blue Dog]

19. They are calling it the the "Great Recession."

Most economists agree that World War II was responsible for ending the Great Depression. Believe it or not, we paid for that war by raising taxes and tapping into the personal savings of the American People. Unfortunately, neither of those options are available today.

First, tax burdens are much higher today than they were prior to WWII, and that makes raising taxes extremely unpopular. Secondly, Americans purchased $186 billion worth of war bonds (a believe it or not worthy of Ripley's recognition), that constituted 3/4 of federal spending from 1941—1945!!! Today, Americans don't have enough savings to pay for our current spending, let alone to pay for an expansion in government spending that would = $20 trillion in today's $. Even if we could convince the Chinese to loan it to us, we could never pay it back.

The goal of a Capitalist economy is to increase productivity and raise living standards. During WWIi, 17 million civilian jobs were created and industrial productivity increased by 96%--the most extraordinary expansion of an economy in the history of the world. However, much of our increased productivity was diverted to the front lines, while consumer goods were rationed back home. The statistical results of wartime spending were astonishing, but it was the cutbacks in domestic spending that enabled it.

The simple truth is that we cannot spend our way out of this; no matter how many Keynesian fairy-tales you hear. Even if we spent on infrastructure, we still lack the means to fund it. Besides, in today's corrupt political environment, spending decisions are based on politics, rather than economics, and building thousands of bridges to nowhere is not a sensible economic policy.

What we need is more savings, more free enterprise, more production, and a return of American competitiveness in the global economy. Indeed, in 2011, we need Americans working their asses off in the private sector creating, innovating and making things that don't launch missiles, explode, or kill people.

To do this, we need less government spending, not more.

[mmonk]

20. The US recovered because of the New Deal policies before World War II.

I know the common theme since the attack on the New Deal has gained steam. Doesn't make it correct. And the irony of course is that the spending for war works but the rest doesn't argument. If you look at the data from when FDR took office in 1933 up to the attack of Pearl Harbor in 1941, you will see what I mean. If war spending, domestic spending cut backs, and tax cuts are good for the economy, then what is wrong currently? We've had the "trifecta" of this ideology for over a decade.

[Name removed]

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[Name removed]

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[NNN0LHI]

25. I sure can bring out the best in people can't I?

Always had that knack for some reason.

Don

[lumberjack_jeff]

39. Do you read what you write?

1) "tapping into the personal savings of the American People" = Borrowing from them. "Borrowing" = "Debt".
2) The top tax rate in 1933 was 63%. The tax burden prior to WWII was much higher than it is today.
3) the rebound from the depression was the ultimate proof of Keynsianism.
4) you're a git. It doesn't matter who the customer is. Private businesses making ferries, bulldozers, computers, MRI machines don't care that the customer is the government, and they don't care that their productivity is purchased by tax dollars.

[girl gone mad]

40. We can never "lack the means to fund" government spending.

This is really, really basic stuff that you're getting wrong here.

[Name removed]

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[girl gone mad]

52. Actually, that's not what the Germans were thinking.

First of all, their debts were not sovereign debts. Germans owed in dollars, gold and other foreign currencies.

Second of all, Germany's productive capacity had been wiped out by the French and Belgian occupation.

No one in Weimar believed that expanding the money supply was a solution to these problems. They simply had no alternative since their creditors threatened that default would result in further pillaging.

All historical examples of hyperinflation have the above factors in common. They are always preceded by a loss of productive capacity, and the country's primary debt obligations are foreign-currency based.

In addition, hyperinflation always involves the government's loss of its ability to tax.

The USA doesn't meet even one of these criteria for hyperinflation. Hyperinflation is not a real threat to our economy. You're simply engaging in irrational right wing religious economic thinking.

[Name removed]

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[JVS]

23. Speaking of defying economic reality...

[Name removed]

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[fascisthunter]

31. funny, your way of thinking brought us to this massive debt

my gawd, we have serious problems in this country with critical thinking. Right Wing corporate shit media has brainwashed way too many folks.

[Name removed]

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[fascisthunter]

36. mine huh? Go for it, it's not like we don't hear that lie ad nauseum

from the right wing corporate media.

[Name removed]

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[fascisthunter]

63. your philosophy is killing this country

and the fact you won't see it, even now when it is so evident, tells me you are brainwashed into a "belief system" that is not based in reality.

[Name removed]

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[fascisthunter]

65. wrong.... you equivocate Government, "We the People" with Wall Street.

Private interests that have so much influence on this country should NEVER supersede the majority. If you believe it should, you are anti-democratic and do not believe the people should have that much of a say. Your philosophy is killing our country economically, politically and a direct affront to democracy. We all should have a say on how people's private interests impact millions of people.

Your point of view is EXTREME... don't fool yourself that you are a moderate, you aren't and never will be considered as such.... you are just a bi-prodcut a new phenomena, a fascist ideology that has ceded too much power to the 1%. You are a directly responsible for the OWS movement because you support a machine that enriches only the wealthiest JUST for crumbs. It tells me what your "priorities are" and how little you care about what the majority wants or believes.

[Name removed]

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[girl gone mad]

46. Specific realities:

Government debt is not true debt since there is no corresponding private sector liability.

The public sector deficit represents a surplus in the private sector.

We operate on a sovereign fiat currency system and as such our government is never financially constrained.

The only real constraints to government spending are resource and capacity constraints.

We currently have excess productive capacity, high unemployment and widespread resource availability.

Therefore, our government can and should expand the national deficit, thereby putting more money into the private sector until such time as any of the above mentioned constraints take precedence.

[Name removed]

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[girl gone mad]

53. If the government were to give everyone $1 million dollars..

I imagine that most people would dramatically increase their spending on goods and services and we would quickly reach those capacity and resource constraints. This would result in inflation.

I think our government should be a little wiser when determining how it spends, don't you?

[Name removed]

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[girl gone mad]

55. Our political are lacking in wisdom.

So now you see that what we have is a political crisis, not a fiscal crisis.

You can't solve a political crisis by pretending we're running out of money.

[Name removed]

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[county worker]

28. I think you have your ideology mixed up with economic reality.

That's the problem you have when you don't have any critical thinking skills and only rely on Fox News for opinion.

Demand comes from the ability of a sector to consume. The ability to consume comes from having the financial ability to purchase. There are three ways to acquire financial ability to purchase, you can steal, borrow or earn money.

Demand has nothing to do with less debt and is created by one of the means above which is debt.

Now borrowing by a company is called leverage. That is you borrow to purchase material, labor and overhead to create something that is worth more than the cost of the input. Now you sell those goods for an amount that allows you to pay back the debt with interest and make a profit, then you borrow again. It's called a business cycle.

Now turn off your fucking stupid wing nut media and go to school and learn some critical thinking.

[fascisthunter]

30. touche!

[Name removed]

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[county worker]

35. And? I produce do you? Everyone wants the chance to produce and earn

The problem is that your type sends the chance to produce to other countries. And China will lend because your type rob the treasury to give to the 1% while cutting the revenue needed to pay for it. Your type rob the middle class and call it your wealth making ability.

Don't come here with your holier than thou bull shit!

[Name removed]

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[lumberjack_jeff]

41. Dishonest or low information. Pick only one.

Either you know the truth and have chosen to parrot the dumbshittery or you've bought into the dumbshittery.

[Name removed]

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[lumberjack_jeff]

45. How can anyone who knows how to type reconcile this set of beliefs?

Taxes are bad for the economy, because the stuff government buys from the private sector is irrelevant. Unless you're spending the money on WWII, in which case it is a panacea. And borrowing is bad. The best way is to recover from catastrophe is by bor... err "using" american's personal savings.

There is PLENTY of capital to recover this economy, but it's not in the hands of people who will spend it.

[Name removed]

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[girl gone mad]

48. Conservatives treat economics as if it were a religion.

Their faith in these irrational conservative economic principles is unshakeable.

Government spending is always bad. Taxes are always bad. Free markets always work. The private sector is always good and pure.

This is dogma, not science.

[hifiguy]

60. Exactly. nt

[fascisthunter]

62. well said....

[county worker]

58. I don't know what you are and I don't care. You views are those that

are spoken buy those that put us in this mess. You have nothing to teach me. I despise what you represent. We are heading to a world of oligarchs and you favor that.

[Name removed]

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[Cali_Democrat]

44. How so?

[reACTIONary]

4. You are right... Consumer demand is key...

... and higher wages for those who have jobs is a good idea. But I would focus first on making sure folks who do have jobs don't lose them through support for the states in retaining and hiring back teachers and expanding construction. Going from nothing to something is a huge wage increase.

I wouldn't discount easy consumer credit in the short term however. That avenue might be tapped out, however.

And the third alternative is inflationary monetary policies that can increase short term demand.

[Chan790]

5. I do think small-business credit would create jobs...

I'm surrounded by people who like myself are self-employed and/or employ freelancers. I've got to turn away work right now because I can't afford to hire help and I can't get S/T loans to hire people so that I can accept those contracts.

[FarCenter]

15. Raise your prices to balance demand, increase profit margins, accumulate capital, hire more workers

If you are "turning away work", you aren't pricing right.

[madinmaryland]

9. The sure fire way to create demand is to have a substantial government stimulus.

It would have acted to supplement the downturn in the private sector until it could recover. By substantial, I mean $2trillion. This would have kept public sector workers employed in addition to providing the private sector demand for their products.

[ZenaD]

11. Which is why embracing austerity and deficit reduction right now is insane

I am astonished that the President turned to deficit reduction right after he extended the Bush tax cuts.

[sarcasmo]

10. I think it's a right wing talking point, my brother in law who is a rabid

wing nut will say. When Obama is out the banks will start lending money again. I am pretty sure rush limp balls must be saying this daily.

[Capitalocracy]

61. The right-wing talking point is that Obama has anything to do with it

It is a problem that banks won't lend to the subset of small businesses that actually have demand and want to hire but need to borrow to fund hiring, and new small businesses... although the biggest problem is what the OP says, demand.

But that's not something the banks are going to change when Obama is out of office... it's something they'll change when it becomes more profitable to loan to small businesses than to bet their money on derivatives knowing they'll get bailouts if they lose, which won't happen until the rules of the game are changed.

[notadmblnd]

12. income goes down, the price of everything else rises.

I wouldn't mind making less money so much if the price of things like natural gas, electricity, cable and health care decreased as our wages do.

[JoePhilly]

13. There is a way that easing credit helps create and maintain jobs.

For many businesses, their cash flow is uneven. For instance, let's imagine you own a company that paints home exteriors in the Northeast. You generally can't do much work between November and the end of March. The weather gets in the way.

So you do most of your work between April and October.

What should you do in the winter months? Lay-off your crews? You trained them ... and now they go off looking for new jobs. So in the spring you have to train all new folks. Terrible business model. In addition, the more people you have working for you, the larger the swing during the down months.

So you use short term business loans to even out your payroll. That's not to say that you over-extend on such loans, but you need a certain amount of money to make it through the off months. That way, even if the swing is rather large, you can manage it.

When the credit markets tightened, lots of small businesses were unable to continue to get the same short term business loans that they had used for years to maintain a larger work force. And so they had to lay off LOTS of workers to get to the point where they could continue to pay some of them during the down period.

And since then, those small businesses have remained in their shrunken state, because they can't get those short term business loans to manage through the swings.

Importantly, these loans were NOT the ones that caused the collapse, any more than auto loans were too blame. The loans that killed the economy were mortgage backed derivatives. Those were bad because the lenders had been given the ability to chop up risky loans and repackage the parts, kind of like a mortgage loan sausage. The idea was that you'd take 1 risky mortgage loan, and mix it with 20 good mortgage loans, and reduce the risk.

What happened is that the rules were so weak that lenders began to take 20 bad loans, chop them up, and then mix them back together, and then sell that as a safe investment. Every big lender started to do this. And suddenly, you have a collapse.

Back to loans that create jobs. Auto loans also help create jobs. When people can't get an auto loan, demand for new cars decreases, you need fewer new cars, and you need fewer people to make them. And you lose jobs.

[unblock]

14. the fact of the matter is banks are absolutely ACHING to lend to businesses that have real demand.

they would LOVE to lend to businesses that are in a position to expand and buy equipment and hire people if the demand is there to make a profit.

the reason that doesn't happen much is because two classes of businesses make up nearly all of the economy: (1) profitable companies with more cash than they know what to do with and (2) unprofitable companies who would use any new debt to pay down older debt.



far too many idiots and ideologues in washington, far too few engineers. they can't or won't properly diagnose the problem, which is that the economy is, as you point out, demand-staved. instead we get tax cut solutions to problems that don't exist, deregulation solutions to problems that don't exist, austerity solutions to problems that don't exist (at least not yet).

[postatomic]

16. Not entirely

Companies that make widgets for other companies to sell to the end user are having a pretty rough go right now. They have to wait to be paid by the companies they sell to so they can make more widgets. Some are forced to cut back on materials and payroll because they can't afford to produce due to the fact they are juggling receivables with payables.

It would help these companies out if they could get lines of credit to cover their costs to fill the void they experience while waiting to be paid.

But, I agree, it all starts with the person buying the shit or service.

[Nikia]

17. Some small businesses need loans

They may have demand for widgets but need loans for to build on to their building or new machines to product them and hire more people. Not all businesses that apply for credit will be successful at business though and may fail and be unable to repay their loans. These things must be balanced.
Regardless, the big businesses, already have money to respond to demand, which why it is so ridiculous that they are given tax credits to build a store in another town.

[emulatorloo]

18. Small businesses need more credit.

[blindpig]

21. Yes, but every nickle beyond bare subsistence is capital....

gone to waste. Just ask the capitalists.

It's a fucked up system.

[kenny blankenship]

22. A picture for anyone who thinks the current interest rates under Obama are historically high

[fascisthunter]

29. hey everyone... give me your money and I swear, everything will be much better

[SomethingFishy]

32. Can't argue with that K&R...

That's the entire problem with our economic system. Some people need to have billions of dollars sitting in offshore accounts to feel good about themselves, and they make others suffer because of it.

Sorry but no CEO works as hard as a guy who fixes roofs for a living. Sure the guy eating with the silver spoon is always going to make more than the guy who made the spoon. But is it fair that he makes 1000 times as much? Considering that without the spoon maker silver, spoon man would not be fucking eating with utensils?

The inherent greed and selfishness of a few is screwing the rest of us.

[lumberjack_jeff]

43. Exactly right.

The only reason it would have any influence whatsoever is if a business might be encouraged to buy a new labor saving doohickey to gain advantage over the competition, in which case it decreases employment.

Get money into the hands of people who buy shit by raising taxes on the people who sell it.

[Hosnon]

49. You're wrong.

I've known people whose businesses failed because, despite there being plenty of demand for their product, they couldn't get the necessary credit to bridge temporary slumps.

Businesses will most certainly hire more workers when credit eases if lack of credit is the reason they can't hire more workers to meet current demand.

[dkf]

67. It's the opposite...lack of credit causes layoffs, especially in times of turmoil.

It's funny you assume that we are out of the water, stable and looking to hire so you pooh pooh low rates. I am not that optimistic.

[fascisthunter]

68. ever read this book?

"the sociopath next door"... incredible insight into why there is this ideological phenomena which serves only the wealthiest over the rest of the planet.

[dkf]

69. Can't say I have. What is the connection?

And what ideology are you speaking of?