Where did the money go?

[m_ridgeway]

Not so much "banks" as it is speculators. They speculate supply vs demand and that is what drives up the cost.
There is some reasoning for the high prices of fuel cost now. (Not totallyy but some.) I work in the energy field. We are booming building new supply lines all over us. Work hasn't been this good since the boom in the 80s and its funded by the companies profits. So they are turning their money back into infrastructure but not totally. And its capitalism that let's them turn such large profits.

If we didn't need it we wouldn't pay it. Is it ethical or moral. I don't talk about those things because everyone has even more of an opinion on that vs real factual data.

Maybe one day energy can go back down to a degree but never will return fully. If It makes you feel any better we pay 1.30 for a bottle of filtered water. That we could get or filter ourselves for pennies.
Posted via Mobile Device

 

[F=MA]

We have contraction in nearly every segment of the U.S. economy now as of late 2008. Politicians are now finally forced into admitting there's a problem.

Businesses don't have the same volume of sales they had previously budgeted and hired based on...that pesky velocity thing again. Layoffs are necessary, inventory is slashed to the minimum. Vendors and manufacturers have orders cancelled, forcing more layoffs. The wheels of commerce have ground nearly to a halt.

Nonessential businesses really feel the pinch first. Restaurants close because they can't cover their expenses on a 5000 square foot facility when they have ten diners per hour. Sales tax revenues decrease for the state. Property taxes go unpaid. Municipalities start cutting police and fire service expenses.

Motorcycle dealerships start closing. Motorcycles are a luxury item that aren't a necessity. The used market is flooded with bikes owned by those of us unfortunate enough to get caught up in the worst of the recession's impact.

Don't even get me started about what happens to the airline industry...

 

[m_ridgeway]

To end the thead. The money is still here they're printing more than ever before. LoL.
Posted via Mobile Device

 

[CaBusaGirl]

There's a lot of stuff posted here that I would like to respond to, but I don't have time for that right now.

We can tell this is just killing you!

 

[F=MA]

As velocity decreases, deflation sets in. This is the main reason we're not paying $4.00/gallon for gasoline, and why gasoline was selling for around $2.00/gallon during the worst of the recession.

The government steps in and works to stabilize banks through a plethora of programs that must be hastily constructed to prevent a total collapse of the banking system. We can recite the mantra about survival of the fittest, but in reality, very few banks are capitalized well enough to carry the load. Allowing mass failures in the banking system is going to lead to a repeat of lines of people trying to get money from their banks that the banks just don't have, and panic will set in among those who don't have sufficient assets or enough education to understand they're protected.

The programs are hugely unpopular, and too complicated for any of us to understand. Someone in the media uses the word "bailout", and anger begins to simmer among the masses. Never mind that the government purchased assets with the money...Americans don't really like owning anything anyway.

Regardless, mass bank failures are averted. "Where did the money go?" In most cases it went to shore up damaged balance sheets, because banks are still reluctant to lend at the levels they were prior to getting caught with their hand in the cookie jar.

When you hear fearmongers rant about rampant inflation...as they have been for over a year now despite it not occurring...remember our discussion of velocity, and the wealth destruction Americans have suffered during this recession. The government has stepped in to inject a lot of liquidity into the financial markets and economy at large. Why haven't we seen rampant inflation? Because this money is not circulating rapidly through the economy...its velocity is still relatively low.

That doesn't mean there's not the potential for inflation to occur at some point. This in large part will be determined by how successful the powers that be are at retracting the stimulus at a pace that won't hinder economic growth...yet won't cause inflation to spike.

Just because there is the possibility something might occur doesn't mean it will...and it is irresponsible to definitively state it most certainly will occur.

....

 

[F=MA]

Now for the equity markets....

"Where did the money go?" If I didn't know better, I'd have been asking myself that as I viewed our 401(k) account statements, IRA's, and brokerage accounts.

The stock market is a tremendous generator of wealth. By allowing us to invest in companies that have good growth potential, or good earnings potential, wealth creation is democratized here like in very few other countries. Any one of us has the opportunity to be a part owner in General Electric, Apple, Microsoft, or any of thousands of other companies.

The investments we make in stock provides capital for companies to grow organically or through acquisition of other companies (it also allows for huge executive compensation packages as we investors like to reward our employees for a job well done...though there has been a lot of abuse in the recent past). As more people get an idea that a particular stock offers an opportunity to profit, the amount of money people will pay for that stock increases.

This increase in price increases wealth because those who own the stock see a rise in their net worth as the price is bid up by new buyers. New buyers see no change in their wealth until someone else bids the price up, but they see no reduction in wealth so long as the price of the stock does not fall below what they paid for it.

Now we have deflationary pressures in the economy that are impacting corporate earnings. Since corporations aren't earning as much, and may well be posting losses, the value of their shares decreases. The real estate owned and other assets also are suffering under the pressure of the deflationary economy. "Where did the wealth go?"

Those of us who own equities in retirement accounts and regular brokerage accounts see our account values fall. Many of us, instead of looking at this as a buying opportunity (everything 35% off!), fear additional losses and sell into the market downturn...another closed-circuit loop begins. In reality, a 1/1,000,000,000th share of General Electric may be no different than that $300k house that we're desperate to sell for $200k.

As the overall market declines in value due to poor earnings outlooks, due in large part to deflationary pressures in the general economy, wealth evaporates. "Where did the money go?"

I don't know if this offers any insight into "where did the money go?", but I hope it does. As I wrote earlier, this is probably not written as well as it could have been had I had more time. I'm surprised, frankly, that I haven't gotten yelled at yet.

 

[F=MA]

We can tell this is just killing you!

Is it that obvious?

 

[Darth Z]

F=MA wife- Come on, this is good stuff here, can he stay just a bit longer?

You coulda just given him the regular excuse..."I have a headache." Woulda saved us the headache, he seems to know a lot about economics, and this is a lot to take in....gives us a headache!

We can tell this is just killing you!

Good thing he doesn' t have "enough time for it", isn' t it??

May I ask what you do for a living F=MA? Economic strategist?

 

[F=MA]

You coulda just given him the regular excuse..."I have a headache." Woulda saved us the headache, he seems to know a lot about economics, and this is a lot to take in....gives us a headache!



Good thing he doesn' t have "enough time for it", isn' t it??

May I ask what you do for a living F=MA? Economic strategist?

Sometimes I wonder what I don't do for a living. Your question would require a manifesto of its own.

We're all economic strategists to some degree. We all decide how to allocate capital available to us.

Investing is something I take pretty seriously. A rudimentary understanding of economics helps me make better decisions about how to allocate the capital earned through work and previous investments.

Again, wish I had more time for this at present...there's a plane to catch though.

Best wishes all. Rev. I hope this was helpful.

 

[Darth Z]

Well man, you definitely seem to know your ! The only thing I need to know about money, is that I can' t get enough of it!

 

[F=MA]

Hmmm, what happened to the OP?

Might make one second guess why one spent time and effort putting together a response.

Perhaps the question was just meant to :stirpot:

Rev.

 

[GMbusa]

If the countries that owe us actually paid us then we wouldn't have a debt for a short time.

 

[Haya01B]

A lot also had to do with risky investments that were allowed by Clinton in either 1997 or 98 (have to pull up some old docs to get you exact dates). Banks were allowed to purchase into "items" we'll call them, that they normally were not allowed to. Huge risk, high gains, even higher losses when it came full circle. A lot of people lost money they never really had - see NASDAQ or DJIA gains and losses over the past 15 years. The smart ones got out and still have their money but that's a small portion compared to those who lost their ars! Think of how much you have tied up in your retirement portfolio. If the market dropped to say 5000 points overnight how much would you really have? Kind of the same effect - the money wasn't necessarily something that was ever there for a lot of people. Not "liquid" I should say. Then of course on top of that we get these creative lenders making mortgages they had no business doing, people getting "no doc" loans requiring zero documentation or proof of even a pot to piss in. Now you've got sky high foreclosure rates, the banks are dried up of money and will come looking elsewhere to get it (that's where the remaining employed people come in with higher fees and lower investment return rates). The housing market is in full collapse, home sales are down, which affects new construction in turn collapsing a whole other part of the market (supplies and labor). Ugh...the list goes on and on.

Typical Answer! But not so true.


There was not a whole lot of money here in the first place. When credit took the place of money earned, that's when the money went! Greed took the money.

 

[skydivr]

Well I was talking with my mother this afternoon and seems SS or VA isn't giving out a cost of living increase this year? Seem there wasn't an increase of living on such thigs as food,electric,basic necessities need to live to justify one. Anyone else know about this?

SS got a 4% COLA 2 years ago, and the cost of living actually dropped in 2009, so no COLA.