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  1. #1
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    Neo-Economics: Savings As Sin, Spending As Virtue

    very interesting article about investment of different countries in US.

    http://www.mail-archive.com/assam@pi.../msg00470.html

    The US has taken over $5 trillion from the world.
    Today, to keep the US consumption going, that is for the US economy to work, other countries have to remit $180 billion every quarter, that is $2 billion a day, to the US! Otherwise the US economy would go for a six. So will the global economy.

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    Wrong very wrong. At least from Asian point of view , saving is for future. Consumption is for today. Capital investment need saving . Only with capital investment economy can prospered any other alternative are all temporary success.

    I follow the Austrian economist not the Keynesian / Neo Economist approaches. They encourage savings , less intervention and open economy.

    According to Keynesian, Debt is good. High debt level is good for economy. However it usually tempted most people to borrow against their income. It created unrealistics expectation of future income so people comsume more at present value of money.

    However many will fell into debt dark hole. Don't they seem to realise they need savings for their retirement, for children education and for investment at new and emerging technology such as cell fuel or even better Viagra

    The problem of debt is that it depress mental health as people worry about debt payment every waking hours. And yep if most people made wrong investment decisions and bankrupted whole Economy would be down the drain like a active volcano.

    People need resources to survive and breed but not overspending , overconsumption.
    And not to say the best thing in life are not thing.

    http://www.mises.org/

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    me so dumb in economics .... almost all passed thru my head

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    Sultan of Ping jofa's Avatar
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    From the article: "...Dr.Jagdish Bhagwati, the famous Indian-born economist in the US..."
    Isn't this a bigger problem for countries like India; people with higher education move to UK, US etc ?
    "People need resources to survive..."

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    Oops , his. I think I must improve my English. It is my 3th language. As you see I advocate saving as a way to preserve money. For example, you want to buy a computer.

    You collect USD $40 per month. After 10 months, you can buy a quite powerful computer. In economic term as I knew it, you bought it with USD $400 so USD $400 are spend on the computer. In one sense they earned USD $400 . It generates USD $400 in economic term. However if you bought computer with borrow money , you spent USD $500 on the computer plus interest. So there are 100/400 -- 25 percent more expensive but in economic term the economy is 25 percent better as it generated more money in the economy. Yipee, economy grow 25 percent.

    However you know that you had to pay more for the same thing. And that PC does not belong to you until you pay everything. However that's not the problem. Naturally people tends to buy more than what they need. However this problem is fueled by more and more credit cards. Use now and pay later. Normally, they loss control of their spending as money appear as nothing at all.

    Imagine shelled out 40 pieces of USD$10 and a wipe of credit card worth USD $400 , which one are more expensive ? That's where neo-economist and austrian eceonmists come in. Neo advocate spending like their are no tommorrow. Austrian advocate normal economic growth with normal growth rate and with minimum government intervention. Goverment just collect the right amount of revenue to maintax order and peace like the original USA government of Revolutionary world. With less intervention and natural growth, USA grow and became the most wealthy nation on 3rd Rock from the sun.
    The Original US was built by independent lovers that escaped from old regimes in Europe.Most died in the journey due to diseases and cannot adapted to local environment.(Not kill by Red Indian as shown in movies here in Asia). But enough live to continue their dreams. With normal economic growth they prospered and (Red Coat) British conquered America and turned them into their next tax colony. The rest is history.

    There are many type of economic concepts in 1900's as many as programming language floating around nowaday. However after Great Depression in 1930's Keynesian became dominant. The others are wipe out. Printing money to encourage spending. High interest rate for borrow money like King George colonial time. Currently all over in World , banks lend out at 18 percent/year in credit cards and pay 3.5 percent for saving accounts. So there are no wonder bankers had USD $6000 lunch. Hardworking people(American and whoever) worked hard and long to feed their family. However they are virtual slave forever paying interest rates for everything they owned. That's why 'Austrian' type advocate buying something in saving. A house costs 50,000 in units of currency doubles in units of currency need to be paid only after first 10 years.

    I major in Economy for a year before switch major as it is not even factual but that's fine. However the Economy are all lies legacy of 1930's Keynesian. I tried to understand their simplistics view of the world.

    For example, war is good as destruction of goods and services increased their scarcities. And more economic activities as the undead are going to buy new houses and cars. Programmers costs more as many died in war.Prostitues also costs more. Carpenters costs more. Soldiers costs less in peace time. With the same theory then Hitler is a saint as he made many Europe people replace their fine houses and belongings with new ones through destructions. They had more new houses than otherwise that's a fact. Interest rate down economy up. Yes, tigers eat vegetable.

    I knew that's hard to chew. But don't consider Keynesian as fact research the information yourself. Human still live in caves if everything known previously is facts.

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    ☆★☆★ silver trophy vgarcia's Avatar
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    Originally posted by jofa
    From the article: "...Dr.Jagdish Bhagwati, the famous Indian-born economist in the US..."
    Isn't this a bigger problem for countries like India; people with higher education move to UK, US etc ?
    "People need resources to survive..."
    It is a problem for developing countries, but even within the US, if someone with a higher education from a lower-income neighborhood stays there while making a lot of money, I'd be rather shocked. It's just simple human nature to live in the best surroundings you can afford.

    --Vinnie

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    Sultan of Ping jofa's Avatar
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    Of course, and you can't force people to move back to where they were born
    But you do agree that it would be nice if there were no lower-income neighbourhoods, or countries?
    And to develop, these neighbourhoods/countries need people with higher education

    New Years Resolution 2003; fix that problem...

  8. #8
    The Legend Indian's Avatar
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    Actually I'm hearing too much about "reverse brain drain" nowadays.

    And many NRIs are now coming back to India
    "A few don't want to come but a majority want to come back. It's a complex situation. The heart is here."
    http://www.nriol.com/content/experie...perience1.html
    Last edited by Indian; Dec 27, 2002 at 12:32.
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  9. #9
    Non-Member mmi's Avatar
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    Question simplistic??

    Originally posted by vipeint
    According to Keynesian, Debt is good. High debt level is good for economy.

    I major in Economy for a year before switch major as it is not even factual but that's fine. However the Economy are all lies legacy of 1930's Keynesian. I tried to understand their simplistics view of the world.
    can you find a reference in Lord Keynes' work where he said "debt is good"? - I struggled through the concepts he developed in, e.g, The General Theory of Employment, Interest and Money, but don't remember him making that argument

    I recall he did establish the theoretical foundation for modern capitalism, a system no longer plagued by extreme swings in the business cycle - the supply-siders currently pushing for big tax cuts for wealthy Americans were in vogue during that period (roughly 1830-1930) - "give them the money and they'll invest it in productive capacity" - problem is that in a downturn there's way too much capacity - what we need is jobs so consumption will rise - that, and that alone, will spur higher levels of investment

    I think the point is that public debt is preferable to a highly destructive contraction in economic activity - if yer car dies and you can't get to work, is it a bad idea to borrow money to buy a vehicle?


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