What to do when interest rate cuts don't do it?

[murstein]

The Federal Reserve is supposed to regulate the economy. When the economy gets too busy, and there are bidding wars over illegal immigrant labor, they're supposed to cut off the flow of gas money. (Failure to do this, when it became obvious a housing bubble was inflating, is the reason that Alan Greenspan has gone from Wizard to Village Idiot, in

Comments

Let's add in the bonus effect

[bghsmith]

Hoard money and cut lower level jobs. OK, so now you have top heavy businesses. What happens when you chop away at the base of a tower? The whole thing falls down, that's what happens.

Look, the feds can cut interest rates all they want. If big employers continue to cut jobs at the lower level, all of these companies are going to fall. These top guys have to look at the numbers and see that their outrageous salaries are the problem and trim off the top branches.

The only good thing about this whole mess is that the Old Boy's Club is going to loose their clout and innovation from the peons and serfs will take the reins. It's about damn time too!

Re: Let's add in the bonus effect

[murstein]

It all depends on the way that things get worse. Will the peons and serfs have the resources for their innovation to work? Economically, the High Middle Ages were all about making sure they didn't, and that actually worked for several centuries. Something like Somalia today is one of several possible outcomes, if the short-term greedy are sufficiently effective at starving the government of money and other resources.

Re: Let's add in the bonus effect

[bghsmith]

That is a fair question. I am basing everything on how it happened in the past. The Steve Jobs of the world, as it were.

When the wealthy inbreed themselves into worthless pasty dimwits, they can be talked into sharing the wealth. The trick is getting them to really believe that it will get them more money.

The difference, as I see it, is getting individuals to pony up the cash instead of institutions.

I'm sorry, I'm not doing a very good job of explaining myself. I look at the past and see the new money coming up after times of depression and am hanging my hopes on history repeating itself.

This is why I'm still putting money in my 401K.

Re: Let's add in the bonus effect

[murstein]

Actually, the wealthy in the US keep forgetting the same basic question: If you succeed in vacuuming up all the money, how will your customers have anything to spend? We come up with a different answer every crisis, but part of the answer is almost always injection of capital from "outside the system." In the 19th Century, this usually meant opening up some new territory; it's good that we had a lot, because we had a depression every 15 to 20 years.

In the 1930s, it meant the government putting people to work directly, and financing it with deficit spending.

Pretty soon, we'll see what it means this time around.