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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: Elroy Jetson who wrote (104761)9/2/2009 3:49:34 PM
From: Hawkmoon2 Recommendations  Read Replies (1) of 110194
 
Since 1980 consumer and business debt has rapidly increased. This resulted in 29 years of false demand. The money was not spent on infrastructure or other wealth building assets.

Define "wealth building asset" please. I think it's important that we differentiate it from your impression of false demand.

I define it as anything that increases productivity, or provides added value to a previous good.

What is demand? Food, shelter, transportation, at the basic level of human needs, right? Everything else is discretionary and thereby, false demand, right?

So all we should produce are the basic necessities of life?

There exists plenty of demand for expensive items in people's minds. Everyone wants to own nice things. The only things making those demands "false" are their employment income and stability.

And even for those people who have lived on a "cash and carry" basis and have no debt (presuming they rent their home), if they lose their jobs they're going to suffer as well.

Therefore, IMO, if the government's going to spend money trying to save banks that don't want to lend anymore, then we should be equally gracious towards keeping people employed so that they can realize their most basic demands (which doesn't mean a second home, or 6 digit salary).

Now the question is what level of demand is not "false"..

Hawk
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