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The only way we can stop America’s economy to stop crumbling apart, is to spend.

Lets say you work at a chip Factory. If people get want to save money, they will probably not buy any chips, since its unhealthy, and not a necessity.

But you work at a chip factory?! What now?
Well this is exactly what, every time you don’t buy a product, you pretty much lay off another person!

Now lets extend this!

Lets say you have a home for rent. And the renter is an employee of a chip factory.
But since people weren’t buying chips, they fired him since the chip store couldn’t pay him due to budget cuts.

So now the chip factory guy can’t pay you! You have no renter now, either you find a new renter, or you have no money to spend from the rent money!

Well now you have to cut your budget, you decide not to buy any more shoes, now you laid off a show factory guy! You decide not to buy any more DVD’s, well now you put a DVD store out of bussiness.

See how one guy can affect a whole bunch of people?

If you are a fortunate guy, and still have money, for the economy’s sake! USE IT, this is the key to standing back up!

The US economy has a BIG part in business, if you buy someones product, you support that business, and help an employee not get fired, and you also get your rent money to support more things.

Next time you leave your dollars buried in your pockets, think twice, don’t be selfish to Americans, and help them out, trust me, in the end it will help you not lose your job, because it WILL come back to you, it is a chain that cannot be broken if you don’t help it get back together.

I was wondering if you would be kind to add a link to our site http://www.positivenewspost.com on your site? We are trying to spread the word that positive news creates more positive news. Your site would be a perfect traffic source.

Thanks,
David

http://www.fwallstreet.com/blog/178.htm
http://www.fwallstreet.com/blog/179.htm

Ponzio kept a cool head during all of this and inspired me to buy stocks in March and April by clearly explaining why we were not “going down” like the mainstream media tried to make us believe. Best financial move I ever made. I think that every investor should read *at least* the first half of his book too. (Read the second half too if you are very serious about investing, but it was kind of over my head)

To me, a fundamental question is whether that is really the right thing to try to reproduce or get back to as a ‘norm’ (that is, roughly 70% of the economy in service-based/financial/consumption industries). I would like to see America productive and sending exports to others in need of our products again, rather than uneneding trade deficits and an economy that runs primarily on credit based consumption of ‘stuff’. I am not saying “buy American” or anything of the sort; rather I mean let us be competitive by allowing indviduals and small business owners the latitude to compete by allowing them the freedom to compete with as little interference as possible. America was built into the greatest industrial power without a single credit card – yes it was hard going, and yes there was a lot of difficulty for people/etc., but that is what it takes to enrich a society. Sacrifice and personal responsibility. Loans were based on very discriminating standards; if you were even remotely in doubt of being able to pay, you didn’t get credit.

As for the FED, what signal does it send when they set interest rates low? It tells businesses that there is ample savings to support future consumption, when in reality this is a falsehood; there is not ample savings to support future consumption of anything (at least here in America). The interest rate is a price that when manipulated to a low level shows a false sense of security to an entrepreneur; if it only costs 4% to get a loan to embark on a business venture, he or she will be far more likely to make the risk than if interest rates ar 8-10%; he does this assuming the savings of capital is there to buy his products when he gets them to market. This is where we get ‘clusters of errors’ in judgement. Many businesses invest/risk based on assumption of availability of capital for future consumption, but if the FED then decides it is time to discontinue open market operations (purchasing bonds/treasuries/mortgage backed securities) and allows rates to rise to a market level, suddenly there is not enough capital available to support all these ventures. This is why I can drive down a three mile stretch of road here in Tucson and see not less than 21 office/commercial spaces for sale or lease. This is a cluster of errors that came from the artificially low price of money. When it dried up, those ‘boom’ businesses scraped hard and many, many failed.

I am happy to see good news about the economy; we are all in it together (we are, afterall the economy, not some fancy men in suits who sit in Washington, D.C.). Keep up the good work!

Matt

Either way, thanks for stopping by. If you wan to elaborate on your thought process, please do. I’d be interested in hearing more about it…

Regards,

Consumption does not drive the economy; wealth producting activity does. I know it does not sound ‘PC’ or warm and fuzzy, but it is true.

I applaud you for posting the positive news about the interactions of business and people. Maybe you can get some of your readership to realize that sometimes less is more; producing real value in exchange for a dollar earned should be the backbone of an economy, not simply consumption.

Sincerely,

Matt Novak