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We need a debt stimulus for the lower class, by lower I mean the bottom 90%. Back when they gave the stimulus to the banks, it almost would have been better to

We need a debt stimulus for the lower class, by lower I mean the bottom 90%. Back when they gave the stimulus to the banks, it almost would have been better to get money/stimulus to the people to use strictly to pay down debt (credit card, home, student loans). Even if it was only a chunk, not only would this have helped free up debt load, it would also go directly back to the banks that had been lending to the lower 90% all along. Instead they gave money to banks to help with loans/lending, overlooking the fact that it does nothing to help consumers. They gave it to groups that weren't really lending to the 90% of consumers. Trickle up is not just trickle up, it is trickle up and down. When you give money to the lower 90%, most of them give it right back. When you give it only to banks and upper 10%, it typically stays locked up in that 10%. Anybody surprised by this consumer economy sputtering hasn't been looking at it and doesn't get that you need to get money to the lower classes to prop up the upper classes and banks. Wages have stagnated this entire century so far, when people were surprised in 2008 when it came crashing down, it wasn't housing alone, it was that people had no money, less raises, while costs rose immensely. I won't go into the trillions on war spent on credit by the country as well that further harmed the downturn. We financed the wars with China's credit, it is almost as if China wants to break us with debt and ongoing, un-winnable wars. We aren't playing the game very smart and the greed is thick. In the future, stimulus should mean lowering debt loads of personal and state debt from the bottom up. Again, rich people mad by this aren't thinking it through, it is a two step hop and it is right back to them. But you'd have the lower classes now with more debt room and or room to spend. This is the only fix. If you were playing a simulation to create a good economy in a game, you'd probably do something like this instead of enrich modern day kings to hold onto, hoard and lock up more money in the upper 10% backdrift that does not make it's way to the lower 90% with enough force.

themartorana 11y ago
It's surprisingly short sighted of businesses (banks) to not have pushed for consumer bailouts with say... vouchers for paying down mortgages or other bad debts. The banks collect, and people are left with a lighter load, and are more likely to re-spend. Do banks assume that bailout + people making payments on underwater mortgages is, in the end, more profitable than bailout + lower debt loads and increased spending? An awful lot of people just walked away from their homes and mortgages.
- SturgeonsLaw 11y ago
  ...and the banks ended up with those houses. Which were then packaged up and sold as rental back securities[1]. Rent-seeking in the most literal sense. 1. http://www.bloomberg.com/news/articles/2013-11-06/blackstone-lures-investors-to-home-rental-bonds-credit-markets http://www.bloomberg.com/news/articles/2013-11-06/blackstone...
  - whoisthemachine 11y ago
    It's an interesting theory that this was a conspiracy by the banks. Either way, a lassez faire market naturally forces this type of evolution without proper controls by a governing body. It makes complete sense that profits can be maximized if "consumers" (what the rest of us call people /s) have to continuously pay to use things that they depend on.
- sitkack 11y ago
  And the banks already get a handout with the mortgage tax deduction. We should have said, listen you fucks, collectively, across the board, you are writing off a massive amount of debt owed. They get money at 0 to negative rates and screw over the public at the same time.
chris-hexx 11y ago
Honest question, here - I don't have much of a theoretical or practical economic. how distinct is your proposition from actually, explicitly, printing money?
- drawkbox 11y ago
  Printing money lessens the value of the dollar and makes lower class dollars worth less. Mostly because they are paying interest and many don't or can't invest in the market which sees offsetting gains when the value of currency goes down. Short answer: when you print money, borrowers and non investors lose money, while lenders and investors gain more. It creates more imbalance. Printing money does not get to consumers to spend, the 90% we are talking about, not the upper class which already knows how to make money when more money is being printed. Our economy is heavily consumer focused, there aren't enough wealthy people to spend needed amounts to account for the whole populace/economy. Wealth by nature is hoarding/saving and only investing for returns. If you look at it like a distributed system, giving money to lower class to improve the economy is to bittorrent/distributed decentralization where giving money to banks and the wealthy only is more like a centralized single point of failure that leaves many out. When you do a stimulus for the lower 90% you will have guaranteed spend and increased buying from all areas of the economy, when you do a stimulus for banks and wealthy you only fund endpoints (wealth centers/investment/loans) throughout that have too much demand on each endpoint. The lower will spend at any time, even in down turns, the wealthy only spend in booms or extreme busts due to the nature of investing. If we looked at stimulus more like a distributed system, we might be better off. Side note: The Iraq war cost for instance 1.7 trillion and will go up to 6 trillion: The U.S. war in Iraq has cost $1.7 trillion with an additional $490 billion in benefits owed to war veterans, expenses that could grow to more than $6 trillion over the next four decades counting interest, a study released on Thursday said [1] There is 1.2 trillion in student debt. What was a better purchase? Iraq war or paying off student loans here that will turn into a huge lower end stimulus? It isn't just an offset either, the country has 1.2 trillion in student loan debt and upwards of 6 trillion in Iraq only war debt. So really we have 7-8 trillion in debt out there between just those two things, because we aren't making good choices. [1] http://www.reuters.com/article/2013/03/14/us-iraq-war-anniversary-idUSBRE92D0PG20130314 http://www.reuters.com/article/2013/03/14/us-iraq-war-annive...

themartorana 11y ago

It's surprisingly short sighted of businesses (banks) to not have pushed for consumer bailouts with say... vouchers for paying down mortgages or other bad debts. The banks collect, and people are left with a lighter load, and are more likely to re-spend. Do banks assume that bailout + people making payments on underwater mortgages is, in the end, more profitable than bailout + lower debt loads and increased spending? An awful lot of people just walked away from their homes and mortgages.

SturgeonsLaw 11y ago
...and the banks ended up with those houses. Which were then packaged up and sold as rental back securities[1]. Rent-seeking in the most literal sense. 1. http://www.bloomberg.com/news/articles/2013-11-06/blackstone-lures-investors-to-home-rental-bonds-credit-markets http://www.bloomberg.com/news/articles/2013-11-06/blackstone...
- whoisthemachine 11y ago
  It's an interesting theory that this was a conspiracy by the banks. Either way, a lassez faire market naturally forces this type of evolution without proper controls by a governing body. It makes complete sense that profits can be maximized if "consumers" (what the rest of us call people /s) have to continuously pay to use things that they depend on.
sitkack 11y ago
And the banks already get a handout with the mortgage tax deduction. We should have said, listen you fucks, collectively, across the board, you are writing off a massive amount of debt owed. They get money at 0 to negative rates and screw over the public at the same time.

chris-hexx 11y ago

Honest question, here - I don't have much of a theoretical or practical economic. how distinct is your proposition from actually, explicitly, printing money?

drawkbox 11y ago
Printing money lessens the value of the dollar and makes lower class dollars worth less. Mostly because they are paying interest and many don't or can't invest in the market which sees offsetting gains when the value of currency goes down. Short answer: when you print money, borrowers and non investors lose money, while lenders and investors gain more. It creates more imbalance. Printing money does not get to consumers to spend, the 90% we are talking about, not the upper class which already knows how to make money when more money is being printed. Our economy is heavily consumer focused, there aren't enough wealthy people to spend needed amounts to account for the whole populace/economy. Wealth by nature is hoarding/saving and only investing for returns. If you look at it like a distributed system, giving money to lower class to improve the economy is to bittorrent/distributed decentralization where giving money to banks and the wealthy only is more like a centralized single point of failure that leaves many out. When you do a stimulus for the lower 90% you will have guaranteed spend and increased buying from all areas of the economy, when you do a stimulus for banks and wealthy you only fund endpoints (wealth centers/investment/loans) throughout that have too much demand on each endpoint. The lower will spend at any time, even in down turns, the wealthy only spend in booms or extreme busts due to the nature of investing. If we looked at stimulus more like a distributed system, we might be better off. Side note: The Iraq war cost for instance 1.7 trillion and will go up to 6 trillion: The U.S. war in Iraq has cost $1.7 trillion with an additional $490 billion in benefits owed to war veterans, expenses that could grow to more than $6 trillion over the next four decades counting interest, a study released on Thursday said [1] There is 1.2 trillion in student debt. What was a better purchase? Iraq war or paying off student loans here that will turn into a huge lower end stimulus? It isn't just an offset either, the country has 1.2 trillion in student loan debt and upwards of 6 trillion in Iraq only war debt. So really we have 7-8 trillion in debt out there between just those two things, because we aren't making good choices. [1] http://www.reuters.com/article/2013/03/14/us-iraq-war-anniversary-idUSBRE92D0PG20130314 http://www.reuters.com/article/2013/03/14/us-iraq-war-annive...