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The Most Important Economic Question: What Causes Major Economic Downturns

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June 07, 2012 – Comments (24)

I don't think it's much hyperbole to call this the most important economic question that needs to be answered.  Many have tried to answer the alternative question: How Do We Fix a Downturn?  Unfortunately, this is often separated from the question posed in the title of this blog.  That leads you to the obvious problem: how can you fix a problem when you don't know the cause?

Of course, there are reasons given for major economic downturns, and we'll investigate those in this blog. But what you'll see (I hope) is that there isn't very much teeth behind them.  It is far more common for those in power to want to get things fixed than to figure out what broke in the first place. That's the nature of government.  Detailed study and diagnosis doesn't win votes. The common man wants a "person of action" in charge. It seems to be so even when the common man is convinced those actors are complete blithering idiots (re: approval ratings).  In other words, the common man tends to be quite confused about the nature of government, as well as economic law.  The reasons for this are not for this blog, but I believe it safe to conclude this is the case.

I'm going to frame this question in a certain way, which I think helps us understand the problem more clearly. If you disagree with the way it's framed, let's discuss it below. (I want discussion here. I will be open to all opinions. Honestly =D).

If the market rewards entrepreneurs and business leaders with greater capital and greater responsibilty, how can it be that at certain periods of time, so many of them fail at once?

In other words, the reason entrepreneurs gain in wealth is because they provide value beyond the value of the capital used in production.  They employ capital, earn returns when that capital is employed in accordance with consumer desires, giving them more capital at their disposal.

No entrepreneur is safe from the loss of capital. No industry is safe from the changes in consumer preferences or the introduction of new technology and processes from a competing entrepreneur. Businesses fail. That's the sign of a healthy economy. Industries become marginalized and sometimes, outright obselete. We don't mourn the loss of the horse carriage industry.

But these events are different than the major economic downturn. These explanations do not satisfy the question asked. Why would entrepreneurs across several industries suddenly all fail at once?  That is not healthy market activity.

Luck

One simpleton explanation is that entrepreneurs are just lucky.  It was luck in the first place that got them wealth and as such it is no surprise when their luck runs out. Besides failing to explain the cluster of errors, this common explanation (often advanced by supposedly non-simpleton academicians) doesn't stand up to scrutiny.

While not denying the role of luck in human affairs, I must question why entrepreneurial luck would not run 50/50 over a long enough time frame. Why is there more good luck than bad luck?  The market economy advances in the long run, indicating that capital is used to provide value more often that it is not.  Why wouldn't the long run trend be to half-effective capital and half-ineffecitve capital?  That would be more indicative of luck being behind the success of entrepreneurship.  I have to dismiss the idea that luck is the primary cause of economic success.  It is, at best, a secondary cause.

Defining the Downturn

There is even a problem with defining the downturn. There is no non-arbitrary way to empirically define a depression. A line in the sand is drawn. The word depression itself is a relatively new term. Previously, major downturns were known as panics. The very word panic indicated that the effect was temporary and normal economic activity would soon be restored.

And that brings us to an interesting historical point: what changed that panics became depressions?  We'll come back to this.

For now, we will accept the standard econometric definition of a recession (the NBER does not separately define recessions and depressions, even though it would be just another arbitrary line).

"We refer to the period between a peak and a trough as a contraction or a recession, and the period between the trough and the peak as an expansion. " - NBER (http://www.nber.org/cycles/recessions_faq.html)

Are there any problems with the way the NEBR defines peaks and troughs? That's something we will address later. It'll just sidetrack me.

ECONOMIST'S ANSWERS FOR THE MOST IMPORTANT QUESTION

Overproduction

When the housing bubble collapsed, it was plain for everyone to see that too many houses had been built. In a nutshell, this is why the theory of overproduction is so attractive.  The capitalist system produces too much in good times, outrunning consumer desires.

But this is a chicken-egg argument. Are capitalists producing too much because business is booming, or is business booming because of the tremendous amount of production?  I say, who cares, since there is a better way to look at this.

We know that the purpose of production is to increase the value of capital, by producing goods of higher value than the value of the goods used in production.  However, this could only lead to overproduction if the desires of consumers had been completely saturated.   That's not the case.  (Nor does it appear it ever will be.)  Instead, the case is one of a mismatch between production and demand.  There is still wants unfulfilled, but prospective buyers are not satisfied with this distribution of goods at this price.  

Understood in this manner- that we are not in the Garden of Eden where everyone is completely satisfied- now the problem is no longer overproduction but one of price. Either entrepreneurs will speculate on higher prices down the road, thereby sitting on inventory, or they will lower their prices.  

"Deflation! Run for the hills!" - says the mainstream economist.

We'll tackle deflation and depressions at another time. It's a phobia. Many economists have it - despite zero scientific evidence that deflations and depressions are linked. (Yes, yes, I know you were told there is, but there is none. Not even empirical evidence.)

The problem isn't overproduction. It's a pricing problem caused by a cluster of errors.  In other words, the theory of overproduction doesn't actually help us understand what causes major downturns at all.  It's a rationalization for what one sees after a downturn has occured, and an incorrect one at that.

Underconsumption

In kind of a Marxist twist on the theory of overproduction, the theory of underconsumption points to a mal-distribution of wealth that arises when capitalists get rich at other's expense until those "others" can no longer buy the goods produced by the capitalists.  It's a slack of consumer demand.  There is some of this idea in Keynes' General Theory as well.  

But this theory doesn't help us understand the cluster of errors either. Remember, we have accepted that entrepreneurs are in their position (and maintain and increase that position) because they successfully match production to consumer demand.  It's not all luck.  So why would they suddenly fail to produce goods that people cannot/will not consume all at once?  In other words, the theory of underconsumption simply rewords the question and doesn't answer it.

In a market economy, the value of producer goods is determined by the value of the goods created in production.  In other words, the demand for computers determines the value of all goods used to make computers (along with every other final stage and intermediate stage good used from those productive factors).  Value is imputed back from the consumer good to the higher order stage good.

So if the value of the consumer goods are falling because of a mal-distribution of wealth, then the capitalists employing factors of production will see a fall in their wealth as well. 

However, the role of the entrepreneur is to successfully forecast such shifts in consumer demand. That's how he/she got their in the first place!  So we still haven't explained why so many of them cannot forecast such a massive shift all at once.

You see, we are no closer to the answer.  An offshoot of the underconsumption theory is the acceleration principle, but it's so ridiculous and naive I will not waste your time with it.

Too few investment opportunities

This theory is popular with economists who fail to understand that investment opportunities are limited only by consumer desires.  And since, there is no limit to those, the theory falls apart rather quickly.  Some economists, more savvy than others, point out that in a competitive environment, the rate of profit will tend to decrease naturally.  Hence, at some point, they will reach zero. As they approach zero the lack of investment opportunities causes a general downturn.  Some blame it on population growth. Others play the Peak "insert natural resource here" Card.  

It's true that in a competitive economy the rate of profit tends to decline. And it would approach zero if the economy stayed exactly as it is without any innovation, changes in time preference, or new natural resources are are discovered.

Those are big IFs, particularly the first two.  The third has played an important role in the past (and to some extent, still does more than the casual observer thinks.)

I don't find this view very appealing. I can't imagine a time in the future when investors and entrepreneurs would run out of ideas for new opportunities all at once. It certainly has never happened in the past. The one truth of economic life is constant change. Change creates opportunity, even in the biggest booms.

Creative destruction

One of the most interesting, yet ultimately flawed theories is Schumpeter's Creative Destruction.  Schumpeter reworked this theory throughout his life so it's often misrepresented or only partially understood.  His main argument was that innovation was financed by credit expansion.  That's notable because he's one of the few economists who admits the link between the boom and credit.

However, Schumpeter failed to explain why credit financing would be focused so heavily on new innovation, rather than increasing known processes.  Schumpeter doesn't seem to understand the full scope of entrepreneurial activities. To him, they are simply inventing new ways of production. But that is only a small piece of the role.  And that's where this theory really falls short. We know that a very important aspect of preserving and increasing capital is the proper adjustment to supply and demand conditions.  Since Schumpeter ignores this part of the economic world, he doesn't have to answer the BIG QUESTION: why did owners of firms, both old and new, both innovative and conservative, make so many errors at once in their forecast of economic conditions?!

Instead, Schumpeter focuses on the technological innovation solely, leading him to believe that a cluster of innovations is the problem, rather than a cluster of errors.  

Even if we did accept at face value Schumpeter's reasoning, we would have to ask the next logical question: why did so many incorrectly forecast the success of their technological breakthroughs on their profit margin?

Again, we are no closer to the answer.

Qualitative Credit Doctrine

I kind of like this one, personally, and I think it has some value. According to this, it's the mismatch between maturity and quality of credit issued with that taken.  In other words, the banking sector expands in say, poor quality mortagage loans.  People who lay the blame for this recent housing bubble on the CRA, Fannie Mae, and Freddie Mac, often unknowingly are taking the qualitative credit doctrine that was proposed by the Banking School (now defunct).

The only real problem with this idea is that it doesn't address where the money comes from to make such loans and more imporantatly, how such practices can persist for so long without market forces reigning it in (via redemption, for example) to generate a boom.  Certainly under a Federal Reserve system with an unlimited money trough, qualitative distortions can persist for a long time, creating boom conditions. However, that means the primary culprit is not the lending institutions per say, but the institutions set up to prevent market forces from performing corrections as needed. 

So while this theory does find many adherents among the proponents of sound money and laissez faire, it is only a proxy issue when dealing with the big question and cannot be the primary cause.

Conclusion

The major theories surveyed here do not bring us closer to answer the big question. If we don't have an answer, how can we expect to implement policy that will fix the problem for which the cause is unknown.

I left some arguments off this list, so feel free to add them in the comments section below. 

Many of you know that I feel the Austrian School's Business Cycle Theory is the most explanatory, as it deals with the alteration of the structure of production, something other theories do not touch.  But I have covered that at length in other blogs so I won't rehash it here.  

If you do have a criticism of that theory, I would like to read it.  

David in Liberty

(in debt to Murray Rothbard for his fine coverage of business cycle theory in America's Great Depression)

24 Comments – Post Your Own

#1) On June 07, 2012 at 4:51 PM, Teacherman1 (55.68) wrote:

My short, admittedly simplistic answer to the basic question posed is:

Greed, followed by fear, followed by more greed, followed by more fear.

The above are compounded by "Governemnetal" attempts to "fix" the problem.

JMO and worth exactly what I am charging for it.

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#2) On June 07, 2012 at 4:59 PM, mtf00l (45.85) wrote:

No time to read your post right now.  I did want to ask where in the world has wheraminow been.  It's been too long regardless of your politics or oppinion.

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#3) On June 07, 2012 at 5:23 PM, geneticbiscuit (98.27) wrote:

My thoughts exactly, Teacherman.  Better to pose the question to philosophers and psychologists than economists.

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#4) On June 07, 2012 at 5:25 PM, whereaminow (20.23) wrote:

Teacherman1,

Thanks for your comment. I reject greed as an explanation because it does not explain the cluster of errors. Why would so many become so greedy at once? Why are they not always as greedy? Etc.

For the same reason I reject the theory that busts are a natural outgrowth of "unfettered free markets."

A big problem with the proponents of these theories in academic and government positions, is that these folks can't explain to me why markets ever work in the first place. In order to understand how markets go wrong, you need to know how they go right to begin with.  Greed and too much freedom do not tell me anything about a proper working market, so I do not find them explanatory.

mtf00l,

Thanks. I've had a lot of life changes over the last several months (all positive), and they have kept me very busy. I don't plan on writing a great deal for a while, but this one had been in my head for a while.

David in Liberty

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#5) On June 07, 2012 at 5:37 PM, whereaminow (20.23) wrote:

Another interesting theory on downturns is The Plucking Model proposed by Milton Friedman. However, I have addressed that one in its own blog post here. It's worth a look.

David in Liberty

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#6) On June 07, 2012 at 11:46 PM, gtbohrer (63.14) wrote:

 What it comes down to, really, is that economics of any scale is an equlibrium between the interests of every individual involved.  Equilibrium isn't a state, it's a process (otherwise we wouldn't have weather).  Solving economic downturns is like solving rain.

 (And yes, weather control is theoretically, and according to some, practically possible.  But like economic fixes, it is short term, extremely localized, and tends to lead to unexpected and usually negative effects elsewhere.)

 JM2C

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#7) On June 08, 2012 at 12:36 AM, HarryCarysGhost (99.68) wrote:

Hey David,

I agree with Teacherman-

Greed, followed by fear, followed by more greed, followed by more fear.

You answered-

A big problem with the proponents of these theories in academic and government positions, is that these folks can't explain to me why markets ever work in the first place. In order to understand how markets go wrong, you need to know how they go right to begin with.  Greed and too much freedom do not tell me anything about a proper working market, so I do not find them explanatory.

How is that a free market when politicions are at the helm?

You could go back as close as Bill Clinton Repealing the Glass Steagal act as the main contributor to the crash. That made his freinds- the big boys at Goldman Sach's mighty wealthy.(If you had'nt noticed were currently trying to be screwd by Al Gore and his buddies in the global warming field)

After that you had Bush II go into war to help out Cheney in his Haliburton stake.

Bottom line is- Government is out to make themselves very wealthy.

Individual investors are hard pressed to figure out the see-saw action of todays manipulated market.

Sorry if I went all tin-foil hat on you, but that's my two cents.

Cheers.

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#8) On June 08, 2012 at 12:39 AM, HarryCarysGhost (99.68) wrote:

Greed and too much freedom do not tell me anything about a proper working market

Honestly I don't remember a time in my life when we had a proper working market.

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#9) On June 08, 2012 at 9:56 AM, whereaminow (20.23) wrote:

HCG,

I won't deny that greed is a natural human condition, or even that greed increase during a boom (although I don't know how one could scientifically prove that.)

I'm only saying that it cannot be root cause of booms and busts.

Honestly I don't remember a time in my life when we had a proper working market.

I admit this is a more difficult issue to address. If we define a market as the sum of all voluntary (i.e. non-coerced) transactions at any given time, then a market doesn't "work" in the way we think of a car. The market is us and we are free to engage in activity where we are both means and ends.  Mises does a nice job of explaining this in Human Action but I'm not comfortable with my ability to summarize it in a couple sentences.

The point is that we do have a lot of coercion in the market place today, so it is hard to distinguish between the working market and the violent intervention.  Without an ability to do so, it's difficult to see the part that works.

David in Liberty

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#10) On June 08, 2012 at 10:00 AM, mtf00l (45.85) wrote:

Food for thought...

http://en.wikipedia.org/wiki/Stock_market#History

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#11) On June 08, 2012 at 11:05 AM, rfaramir (29.32) wrote:

"Bottom line is- Government is out to make themselves very wealthy...Sorry if I went all tin-foil hat on you, but that's my two cents."

Tin-foil hat? That's just common sense! It is no revelation that people are self-interested. It is just somehow a surprise to some that the persons running the State are, as well.

"Greed, followed by fear, followed by more greed, followed by more fear."

There is always self-interest present; there is always some fear. The question is why so much all at the same time.

The basic answer is manipulation of the money supply. How is that the answer? Easy: prices.

Prices coordinate production. When a businessman discovers that something is a hot seller (he's running out of stock quickly), he raises its price, causing either less consumption or more production (depending on how others respond to his increase). The new prices cause ripples of profit opportunities in the structure of production (and ripples of losses in competing uses for the same materials as their input prices rise with no rise in the price of the outputs).

This includes the price of money, i.e., the natural interest rate. (That part of interest that is not the risk associated with the venture or the character of the borrower or inflation expectations.) The interest rate reflects the general desire for present goods over future goods (purchasing over time). A higher rate means people in society are more present-oriented, lower means we are more future-oriented. Higher comes from less supply of money for investment (people are spending on consumer goods now and saving less so borrowing is expensive), lower comes from increased supply of loanable funds (more savings and less consumption so borrowing is cheaper). These prices coordinate the whole of the structure of production in a free market to best meet the needs of all consumers.

So messing with this rate means that consumers (all of us) will be worse served. Artificially lowering this rate (it used to be by "usury laws" disallowing high rates, now it's by increasing the money supply to drive it lower) causes the price system to LIE to entrepreneurs and consumers both. Consumers think it is safe and appropriate to borrow to spend now, while entrepreneurs are led to believe that it is time to invest now in capital goods so they can produce more consumer goods later. They can't both be right, so we get a false boom, followed by a big bust when the truth shows up.

Leave the interest rate alone! Let the market clear for all goods and services and money itself. Every intervention to prevent merket prices hurts us all in the end.

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#12) On June 08, 2012 at 11:09 AM, Teacherman1 (55.68) wrote:

whereaminow

You posed the question, " Why would so many become so greedy at once?".

My reply to that is Greed begets Greed.

In watching many of the "after the fact" specials where some of the key players in the "RE Bubble" were asked why they did it, even when they knew it could not turn out well, the standard reply was "Because everyone else was doing it.".

As for the fear part, which is still out there, the same "group think" applies.

When everything crashed, and it appeared that our "economic world" was coming to an end, the same herd mentality took over, and so called "investors", acted like a a bunch of gazelles worriedly munching on the savanah grass who spooked each time they sniffed the approach of a "pundificating lion" closing in on them.

They believe their only hope of survival is to move faster than the other potential meals.

IMO, markets work properly only for relatively brief periods of time when there is a semi-stable economic environment.

Just as RE appraisals tend, most of the time, to be either over stated or under stated, based on the most recent sales of comporable properties; and like the markets, once they start going in a particular direction, they tend to go too far in that direction until fear sets in again (in the case of inflated values), or greed sets in again (in the case of depressed values).

Of course, in the markets, there is a more diverse group of players, all with different agendas and multiple ways of pursuing those agendas, which tend to cause much greater and quicker movements.

I apologize for any misspelled words or typos, but being a one eyed, dyslexic, old man, that is to be expected.

I know none of this addresses the intention of your post in terms of economics, but it is my way of understanding it, and why I always have hope that over a long enough period of time, "things" will work themselves out and we will all somehow muddle through.

Good luck to all in your attempts not to be one of the "lion snacks".

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#13) On June 08, 2012 at 11:57 AM, whereaminow (20.23) wrote:

Teacherman1,

I'm thankful for you comments. Psychologically speaking (I guess), I agree with you about fear and greed, and how they affect market behavior. I remember reading Extraordinary Popular Delusions many years ago and I have studied how con artists use greed to manipulate weak minded people.

So as far as that goes, we are on point. I would like to see better economic explanations from the mainstream economist.

David in Liberty

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#14) On June 08, 2012 at 12:07 PM, mtf00l (45.85) wrote:

I assert Government is too general.  It comes down to persons.  Actors in the market.  The actors with the most resources have the wherewithall to move the market to their advantage and do.  Financial Institutions are vehicles for that motion.  Follow the money.  Derivitives give the opportunity to bet against success.  Or as I've read it oppined like buying fire insurance on your neighbors house.  The incentive is to then burn down your neighbors house to collect.  Now imagine there's no limit on how many policies you can buy on your neighbors house.  Now, apply leaverage to purchase the policies.  Lather, rinse, repeat.

Thoughts?

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#15) On June 08, 2012 at 12:48 PM, whereaminow (20.23) wrote:

 mtf00l,

The actors with the most resources have the wherewithall to move the market to their advantage and do.

In a narrow sense of the stock market, there is some truth in this, but that doesn't fit the larger economy as a whole.

In terms of "follow the money", you end up at the Fed. You know how I feel about that institution.  It is designed purposefully to prevent the market from making corrections. Those corrections would bankrupt thoe risky bet makers more quickly, and they certainly can't have that.

The incentive is to then burn down your neighbors house to collect.

In a free market anyone can make any bet they like, but to actually destroy or participate in the destruction of your neighbor's property is an act of aggression.  If it can be proven that those in the derivatives market actually destroyed property, they should be brought to justice (whatever that is in our unjust legal system).  However, if they merely made bets that won, then there is nothing wrong with their actions. 

Of course, in the latest situation, their bets actually lost, and lost big. They should have ended up like every other failed entrepreneur. Broke.  But the Fed stepped in.

David in Liberty

 

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#16) On June 08, 2012 at 9:12 PM, Valyooo (99.41) wrote:

The hardest part for me, is understanding it in terms of actual goods rather than money.

 

It is easy to see why bad loans lead to booms and busts.  Giving out crazy amount of loans = pushing up prices = building more houses, then when the loans cant be paid back the houses cant be sold and the prices plummet and there is mass confusion and lack of trust and nobody knows what to produce.

But then if you take money and credit out of the equation and look at just real stuff, it becomes murkier to me.  There are now more houses in existance than there previously were...how can this be a bad thing?  If there are just extra houses laying around give one to me, or a homeless guy.  If the price of things go down, so what?  If something goes from 5 to 10 back to 6, its even higher than before, so what if it is "volatile".  More stuff was produced in the boom, so how can we have less during the bust?

I think what it really comes down to is that when booms are created, an artificial shift goes towards one sector and too much is produced there, and then when the demand slows down for that sector and some of the loans go sour, people dont want to lend anymore because they dont know who to trust anymore, where the money will shift next, etc. and there are a lot of garbage loans to sort through.  So there is a temporary slow down because people have to figure out what is going on and sort it all out.  But this is ALWAYS TEMPORARY, because it is just confusion, not a lessening of desire.

 

I kind of confused even myself there.

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#17) On June 09, 2012 at 11:10 AM, whereaminow (20.23) wrote:

LOL good stuff Val.

Your first line of reasoning is similar to the fellow who says "yeah there are ups and downs with the Fed, but we're better off than we were in 1913!"

Well, of course we are. And over a long enough time frame of market activity, we're going to be better off. But that doesn't really tell us anything. 

Often times the very things that have hindered us over the years (uh, like government) are given as the reason we have moved forward.   It annoys me.  Anyway, I am getting sidetracked.

Your second paragraph sounds like you're trying to work out the concept and consequences of malinvestment.

I just picked up Hayek's Prices and Production and read the first few chapters on the plane yesterday (I'm in Chicago, if anyone wants to know).  His take on malinvestment, on why stabilization theories are flawed, etc. All excellently written. I need to read more Hayek.

David in Liberty

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#18) On June 09, 2012 at 6:23 PM, Valyooo (99.41) wrote:

Yes, that is precisely the problem I have been trying to work out in my head for the last few weeks.  Is that the best book you have read on the subject thus far or do you have something else you prefer?

Well, of course we are. And over a long enough time frame of market activity, we're going to be better off. But that doesn't really tell us anything. 

Trust me, I know the Fed is making things worse for society. I am just looking at it from a stock market point of view.  Even if society would be better off without the fed, they are a fact of life (for now at least) so the best way to combat them is to buy the right stocks based on their actions.

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#19) On June 10, 2012 at 11:32 AM, whereaminow (20.23) wrote:

Val,

All I can say I am really enjoying this book. Hayek writes with tremendous clarity.  Once I get from Chicago I'll try to finish it. 

David in Liberty

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#20) On June 10, 2012 at 11:40 AM, LevineWilliam (< 20) wrote:

like Harry explained I'm dazzled that a single mom able to get paid $6965 in one month on the computer. did you look at this link(Click on menu Home more information)  http://goo.gl/QJaja

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#21) On June 11, 2012 at 3:14 PM, mtf00l (45.85) wrote:

@whereaminow

I'm tempted to drop the $2.99 for the Kindle version of this book;

Prices and Production and Other Works On Money, the Business Cycle, and the Gold Standard

found here;

http://www.amazon.com/Prices-Production-Other-Business-Standard/dp/1933550228/ref=sr_1_3?s=books&ie=UTF8&qid=1339441841&sr=1-3&keywords=prices+%26+production

However, as you've pointed out before we are on the Keynesian program and government shows no signs of switching.  Is this really a good investment?

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#22) On June 11, 2012 at 3:48 PM, whereaminow (20.23) wrote:

mtf001,

No need for that. You can download the free version from the Mises Institute, then use Calibre to convert it to .mobi format so you can view it on your Kindle.

David in Liberty

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#23) On June 11, 2012 at 3:57 PM, mtf00l (45.85) wrote:

Excellent!

Thank you.

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#24) On July 06, 2012 at 2:48 AM, LongShortIndex (30.35) wrote:

Most people reading this, well....YOU are enabling economic hardships by holding deposits at the largest banks!

STOP IT NOW!

A bank can only be in business and be solvent as long as there are depositors money to support their assets. YOU, your friends, family, coworkers are providing a LIFELINE to these banks with your $50 here, and $50 there in bank accounts. 

SOLVE this now by moving the funds into a community bank or credit union (and support the economy of your area instead of supporting these fraudsters playing with OtherPeoplesMoney in asia, europe, wall street, & Wash DC economies).  This also effectively changes voting representation in the regional central bank offices. You should have $0 in deposits at Wells Fargo, JP Morgan Chase, BofA, Citi, Barclays, and HSBC!

Doing the above is simply more powerful than most people's votes. 

As for the political process, well...

Bush = Obama = Romney = Pelosi = Gingrich

they all want bigger government 

they all support central banking monopoly

they all push for keynesian policies

they all ensure mega corporate power with larger govt.

they all push for higher tax on middleclass (whether actual taxes or inflation tax)

they all support UN & wars

they all support the enabling of white collar crimes/loopholes (without real, pervasive penalties)

the policies set forth by these 'officials'/govt ppl are making the poor become poorer and destroying the middle class.

1) the solution is to recognize the corrupt two party system (and how the democrats and republicans have worked cohesively together in killing REAL debates in this country in over the past couple of decades)

2) after recognition of 1), you should identify the few in either party that has actually voted what they preach, & what they preach goes against the mainstream congress

3) support the few real representers of the american people in either side, and become involved yourself in the political races

4) educate others, talk to friends family, and engage strangers in public with identifying ppl who are wronging us (and also righting us) 

 

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