"Our economy is based on credit."

[Shardik]

Carlos Gutierrez. Bush's Commerce Secretary.

Speaks volumes, doesn't it?

[BeatleBoot]

1. Ya' think?

Bush's people are so astute.

[dkf]

2. Our country makes money off consumption, not off production.

We have farmed our production out to other countries. Now the only things we produce are financial derivatives which allow us to consume more.

[HereSince1628]

7. I heard some DC bureauocrat say last week that 60% of the economy was consumer consumption

What the guy seemed not to understand was that consumers are generally people who are employed and thereby have money to spend.

I am quite surprised that the powers that be don't understand why retail is tanking. Virtually every family in the country suffered this summer due to the gouging of oil/gasoline prices. Many burdened credit cards and depleted savings accounts to make it through the summer. On top of this, in our country where about 15% of people (about 1 in 6) are either out of work or under-employed virtually every worker has either a close friend or a family member who is suffering from lack of gainful employment.

This quite justifiably makes people resistant to spending on anything but essentials. Getting money into the hands of consumers will certainly help fix our problems. We either get money into people's hands by putting people to work or we create a huge population on welfare. Which of those alternatives is the most attractive?

It seems obvious to me that we need to reconstruct our national economy so that manufacturing is part of it. The 20 year experiment with a retail-based economy now reveals it doesn't provide the means to get people back to work. Government spending on infrastructure isn't going to do any good for our nation if we hire foreign companies to do the work with imported materials. Although technologically in a better place, we are back in the same place where we were in 1789, which is desperately needing to develop an economy. Doing that will require the same sorts of things that the writers of the Constitution built into the Constitution for that purpose--the application of import taxes, tariffs and trade restrictions. That doesn't mean trade shouldn't be encouraged.

However, the promotion of freemarketering has been a Letter of Mark that has pilfered our treasuries and pirated our industries. Our developed nation has moved to a much reduced and hugely indebted status. A status that now hasn't the means of production need to meaningfully employ Keynesian solutions to this deepening recession. A significantly enhanced manufacturing base must be added to the economy and protected as a strategic necessity for long term national survival.

[GliderGuider]

3. That's why we're looking at a deflationary collapse rather than inflation.

Credit = Debt = Money.

When the credit supply collapses, it's exactly the same as pulling money out of the economy. That's the very definition of deflation. Printing presses run much slower than electrons, so there is no chance that the hole created by the electronic evaporation of huge amounts of credit can be plugged with cash, no matter how hard the central banks might try.

The entire world is on the brink of a deflationary depression.

[Karenina]

5. Whatever it is...

The Band played on.

http://www.youtube.com/watch?v=2-xQoNDFwlE

[Warren Stupidity]

4. Our economy is based on re-selling bottled farts

and on speculation around the bottled fart resale market.

Along the way we scrapped and shipped our industrial base to China.

[dbonds]

6. All the fatcats do make money off credit and money flow.

For the elites that is a true statement.

[Greyhound]

8. It is. That's why this mess cannot be fixed, only patched over in anticipation

of the next crash.

The whole Ponzi scheme is built on debt. Debt is the "backing" behind our currency, every new debt is based on the promise to repay a portion of an older debt and at the end there is nothing of real value to exchange for the mountains of debt issued on it.

A $100,000 house is used to leverage almost $1,000,000 of newer debt, once it starts to fall apart, as it inevitably does, we find that our currency is worthless.