Transcript Prosperity
A look at the disadvantages of possessing money Monetary Value “Behind the talk is the notion that monetary spending makes the economic world go round. It does not. Increasing money supply does not magically increase the quantity of land, labor, or capital goods available for production. Creating money out of thin air does not produce more consumer goods, and there is the rub. We cannot eat money. We cannot wear money. We cannot live in money.” - Quote from WMIcentral Investors + Industries “The trouble is that such inflationfueled spending does not result in true economic prosperity in the form of more goods to satisfy our ends. It might encourage more spending, but not investment that reflects the wishes of society. Investors are encouraged to invest in industries that are too capital intensive relative to the wishes of savers in society.” -Quote from WMIcentral Imported Oil “With gas prices up from $2.75 a gallon since last September, higher prices translate into a 5% cut in discretionary income, and Americans will be eating fewer restaurant meals, wearing fewer new clothes, curtailing summer vacation plans, and postponing furniture purchases and home improvements. As most money paid for higher priced gasoline leaves the country to pay for more expensive imported oil and doesn't return to buy U.S. exports, this shift in consumer spending reduces demand for what Americans make and slows economic recovery.” -Quote from thestreet.com Business News Taxed Businesses “According to the Center on Budget and Policy Priorities, nearly two thirds of the cuts proposed by Ryan would come from programs that support lower income Americans. The Center analyzed the plan and discovered that of the over $4.3 trillion of actual proposed cuts, $2.9 trillion of those cuts would come from Medicaid, Medicare, Social Security, Pell Grants, food stamps, low income worker trainings, and housing subsidies.” -Quote from care2.com Stocks “Additionally, high stock indices are not necessarily signs of a healthy economy. On October 9, 2007, the Dow Jones Industrial Average closed at 14,164 and the S&P 500 closed at 1,565. These were the highest they have ever been. Were they a sign the economy was strong? No.” -Quote from WMIcentral Monetary Spending “Real GDP, likewise, hit an all-time high in October 2007 and then proceeded to contract 4.1 percent during the Great Recession. Similarly, nominal GDP was at an all-time high in July 2008 and then decreased 3.1 percent in less than a year. That monetary spending is up does not necessarily mean the economy has healed. It is just as likely that remaining economic problems have merely covered over with a monetary Band-Aid” -Quote from WMIcentral Economic Strength “Regarding current macroeconomic statistics, no one is disputing the facts, but the happy interpretation leaves much to be desired. In the first place, while official unemployment has fallen a little over 1 percent from its height of 10.1 percent during the Great Recession, if the Fed's expansive monetary policy is really that wise, one might think the unemployment rate should be much lower. In fact, much of the drop in the unemployment rate is related to a drop in the civilian labor force relative to its December 2007 level. A low official unemployment rate is not per se an indication of a flourishing economy. In May 2007, the unemployment rate was 4.4 percent. Was the economy strong? No.” -Quote from WMIcentral Opinions Many people don’t have control over the amount they pay on utilities, food, rising gas prices, mortgage payments, and education. With bigger privileges comes bigger responsibilities, and more complications. Prosperity opens more opportunities, but leaves more room for error and negative effects. The more money you have, the harder it is to carry, leaving people to rethink prosperity in their lives. Links Used: •http://business-news.thestreet.com/morning-sun/story/higher-gas-pricesdig-into-american-prosperity-opinion/11079175 •http://www.wmicentral.com/opinion/editorials/money-can-t-buy-youeconomic-prosperity/article_5edd7fb2-6540-11e0-b410001cc4c002e0.html •http://www.care2.com/causes/politics/blog/the-path-to-prosperity-backselderly-poor/