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/sci/ - Science & Math

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3174295 No.3174295 [Reply] [Original]

Economics, how does it work?

As far as I can tell the only thing the US exports is currency and China manufactures some ridiculous amount of the world's goods, like 99% or some shit.

How does this work exactly? Just how long before everything falls to shit? If I want to survive some future economic apocalypse how do I do it? Move to Russia or something?

>> No.3174359

>As far as I can tell the only thing the US exports is currency
LOLno.
http://en.wikipedia.org/wiki/Economy_of_the_United_States
>agricultural products (soybeans, fruit, corn) 9.2%, industrial supplies (organic chemicals) 26.8%, capital goods (transistors, aircraft, motor vehicle parts, computers, telecommunications equipment) 49.0%, consumer goods (automobiles, medicines) 15.0% (2009)

>> No.3174656

>>3174359
Holy fuck. I watch the wrong shows on TV.

Why all the fear about the US economy on news programs?

>> No.3174762

It's called debt and having a currency that is worth nothing.

>> No.3174775

>>3174656
>Why all the fear about the US economy on news programs?
Anyone selling you fear is trying to control you.

>> No.3174801

>>3174295

China has much smaller barriers of entry when compared to the United States and can thereby produce things made by manual dime a dozen labor much easier. The united states is a service based economy (like all of the richest nations).

>> No.3174810

>>3174762
The currency is worth what people believe it is worth. So, fear mongering over the value of the dollar reduces the value of the dollar.

As for the debt, the US debt is not really all that out of balance with the rest of the world. It is bigger than most, but the US GDP is bigger than most and if we use the comparison of % of GDP, the US is not awful, even in comparison to some of the new "economic powerhouses" like India and China.

>> No.3174814

China does final assembly of consumer goods. People snap things or glue things or screw things together, or tend some simple foreign-designed machine they only halfway understand.

The USA manufactures the high-tech precision equipment that people use to tool up advanced highly-automated factories.

The problem today between the USA and China is that, although the smart Chinese are moving to the USA, we're not shipping the dumb Americans to someplace like China where they belong and can earn the wage they deserve.

>> No.3174868

>>3174810
The thing is that modern economies are so derailed that one can not really point to one nation being better than another. In the case of the dollar, it does reduce it's value to just print it in volumes large as the presses allow and enable banks to just create dollars out of thin air.

The state involvement in the US and many other countries economies is waaay to big and that led to the real estate bubble and in it's extension the financial crisis that still haunt much of the world.

>> No.3174906

>>3174868

what state involvement, specifically, caused this?

and i dont like to argue just for the sake of arguing; i just want the truth ya know? this isnt /b/ so what do you think of sub prime mortgage loans...


subprime mortgage loans are where banks pay for someones house and the person is supposed to pay the bank back but cant. THIS is actually the lack of state involvement and this is what caused the housing bubble

>> No.3174915

the fact that all these people were being lent money from banks to buy houses made it seem like everyone could buy these houses and in tern caused the houses to go up in value... when we found out a huge percentage of people were defaulting on their loan, people stopped buying houses and it POPPED

=]

as far as trade goes with china... trade benefits both parties otherwise why would the other party trade? trade makes the world go round my friend>>3174295

>> No.3174944

anyone can tell me what state involvement??

genuine question here... ive been lurking /b/ all day so please dont say the roodypoo

>> No.3174968

>>3174906
The most obvious problem caused by the state is that they set rules about what criteria the lender has to match in order to get a mortgage and also bailing losers out.

When they forced banks to lend to people that would not normally be worthy of credit they created a monster. They forced the banks to give high-risk loans and when it turned out that a person without a proper income can not pay their mortgages and that real estate prices can not keep rising forever, it all fell apart.

And what's the last thing you should do when it all falls apart, when a big bank fails or a motor company no longer can sell their cars? Bail them out. You should never ever spend tax payer's money to keep companies that have performed poorly enough to be bankrupt alive, especially not the banks because in that case you introduce a very dangerous moral hazard. If you were a banker and you knew that if you made a high risk investment and it went down the drain, the state would be there to pay for it and if it succeeded you would be filthy rich, would you ever not take the high risk?

Without government involvment, we would not have seen the financial crisis of 2008.

>> No.3175091

>>3174968
I agree to a certain extent and see what you are saying... but now it becomes a problem because:

the gov does not regulate the banks and we have a free market where things live and die
the gov can not regulate the banks, this however could lead to monopolies and massive market failures that could sink all of america
vs.
the gov gets regulate and tries to keep things balanced
the gov gets to regulatory and kinks the system somehow with too much regulation causing it to fail

it comes down to should we have laws, how much control is too much control, capitalism etc.

so u think theres to much control

and I.... idk o_0

>> No.3175111

just stock up on canned food and bottle water op. but buy shit you eat alot so you can rotate your stock and it does not spoil.

it's good to have a food stock in case any thing bad happends. also you might want a gun and some ammo

>> No.3175115

i meant to say capitalism vs socialism too before etc.

but also, i have to say moderation is the key and i completely agree the bailout was wrong... was it a necessary evil though? is it worth avoiding a great depression? or is this another scare tactic??

shits getting confusing... better move to mexico for a while

>> No.3175137

hahaha agreed with the gun and food
when shit looks like it might hit the fan
duck and hide
>>3175111

>> No.3175171

>>3174968
>When they forced banks to lend to people that would not normally be worthy of credit
Nope. Im not sure where this myth comes from, but I hear it in just about every thread about the subprime crisis.

>> No.3175174

one more thing-

gov has to much control to let a real revolution happen --- military, blah blah blah

just think... they can print money... they have unlimited resources... to buy... ANYTHING

the control... they have it.

but if they lose it.

apocolypse

pray you live in the middle of no where

>> No.3175192

>>3175171

banks were the fools who were doing it... individual decisions that with regulations could not have been made

>> No.3175222

>>3175192
Are you saying minimum borrowing fitness regulations set up by the government would have prevented the problems? I'd agree. But it sounded like you were saying the government forced the banks to lend to crappy borrowers, which simply isn't true

>> No.3175244

>>3175171

They were all threatened if they did not maintain certain levels of minority approved loans.

>> No.3175251

>>3175244
Threatened? By who? With what? Link?

>> No.3175264

>>3175251

Gubbmint. Lawsuits, pulling of business licences, etc.

>> No.3175273

>>3175091
If all actors on the market are free to do what they please, no bank would make too high risk investments because the risk/reward would not be good enough - it would not be profitable. Damaging ones own company is never profitable if there is no government there to pay you to do it.

>>3175171
Well then I guess that my economic history professor disagrees with you Look up the Clinton and later Bush policy on house ownership and of course the Fannie Mae, Freddie Mac etc.

>> No.3175283

>>3175273
Fannie Mae and Freddie Mac, from what I understood, guaranteed mortgages, not forced banks to give loans. But if what this guy >>3175264 said is true, it would be a different story. Still, a minority borrower is not necessarily a subprime borrower. The most you could say is the government forced the banks to loan to minorities.

>> No.3175290

>>3175283

They forced them to loan to people (minority or not) that would normally be turned down, or that have been turned down before.

>> No.3175298

>>3175283
Minority loans are indeed a part of it and I believe that in the same act people who were included were also people that where just not credit worthy, not depending on ethnicity. I guess it was more minority centred under Clinton and came to include low income segments in general under Bush's american dream-bullshit.

>> No.3175309

>>3175290
You keep saying forced, but Im just not seeing any evidence or links.

>> No.3175320

Fucksake, sure is ultracapitalism in here.

Subprime loans existed for a number of reasons

-1 the larger banks could count on a bailout

-2 the regulation preventing them engaging in such risky behaviour was removed by Alan Greenspan and co because HURRDURR SOCIALISM

These two factors together constitute something known as moral hazard, where the market encourages destructive behaviour.

And there is a third factor:

-3 to avoid the risk of creating such crappy products, banks packaged the loans into securities, sowing the dud loans in with the good, and used their own credit rating agencies to conceal the risk (rating them AAA).

This meant that the risk passed to other people, investors who didn't know what they were getting into. They made a living shovelling horseshit into the mouths of many states and their peoples' individual investments, such as superannuation investments.

And after such a catastrophic failure brought on by cartoon-villainish greed and deregulation, you have the guts to say that was because the state interfered with things? It was because a corrupt state turned a blind eye and stopped giving a shit.

>> No.3175340

>>3175320
There we go. All this, and I'd add that Greenspan thought it wouldn't be a problem because a company would act rationally and avoid risk, though the decisions were made by individuals who had their own interests at heart rather than the health of the corporation. Also the financial instrument that let people offload risk acquired from an iffy mortgage backed security, I think that was a credit default swap but Im not sure.

I mainly blame the ratings agencies. The not knowing how much your investment was really worth is what caused people to freeze up, IMO

>> No.3175370

>>3175320
Just lost faith in education.
Alan Greenspan was a foremost proponent of laissez Faire (free market) capitalism - not socialism.

and your point one is a socialist move, point 2 is a capitalist one. even your final sentence contradicts itself "you have the guts to say that was because the state interfered with things? It was because a CORRUPT STATE turned a blind eye and stopped giving a shit." So was it a corrupt state not getting involved enough or not?

>> No.3175373

>>3175174
If they lose it, an apocalypse won't happen. The only way it will happen is if another country decides to attack during the second civil war, and all that will do is unite Americans and better prepare them for the third world war, which America will come out on top. They are very adept at fighting wars.

>> No.3175398

>>3175370
Im glad you scrutinized his post more than I did. But the mechanisms he points out are right

>> No.3175402

>>3175309

> on 4chan
> person wants source
> most likely a statist

I don't care what you want.

>>3175320


The state is the problem, I agree.

>> No.3175419

>>3175398
Yeah i agree he has most of the more convoluted parts right, i guess he took good notes that day - it just demonstrates he doesn't truly understand any of it

>> No.3175422
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3175422

>>3175370

> greenspan
> supported the idea that business should be left alone

>> No.3175428

>>3175370
>>3175370
Uh, you do realize he said he took the regulation off BECAUSE of his free market principles, right?

I direct your initial statement concerning education right back at ya, did you pass English comprehension?

>> No.3175448

>>3175320
>the larger banks could count on a bailout
>moral hazard, where the market encourages destructive behaviour

>bailout
>due to market

>> No.3175455

>>3174295
To op. economics is the study of value, and truly after you take it all apart it all boils down to a complex gambling scheme of funding company's, projects, and loaning money to people....its all finance

The US still has the largest economy in the world and the fear is the same xenophobic fear mongering (used to harness political power) you can see throughout history- see the "Ally's" opinion of Germany prior to WWI

finally, just to stress the US dollar is not worthless, it is still the world's standard currency because of its STABILITY - foreign countries actually pay an interest to the US to let the US take in their currency to give it credibility - all that said it is on a decline and inflation has been getting out of hand, but unlike some poster said banks can't print money and the gov. carefully regulates the money it prints

>> No.3175458
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3175458

Damn son, you been watching mainstream media again?

WILL KILLER BEES INVADE YOUR HOMETOWN?

NEW VIRUS IS GONNA KILL Y'ALL! THIS TIME FOR REAL!

IS YOUR TOASTER REALLY SAFE?

HOW YOUR CAR COULD SPONTANEOUSLY EXPLODE!

HAVE YOUR E-MAILS BEEN STOLEN?

HOW YOUR CAMP-CHAIR COULD TURN INTO A DEADLY TRAP!

COULD HACKERS STEAL YOUR ACCOUNT DATA?

WILD BEARS COULD DESTROY YOUR GARDEN AND RIP YOUR CHILDREN'S HEADS OFF!

THE 2012 APOCALYPSE IS NEAR! PREPARE YOURSELF NOW!

ANONYMOUS BLACK MALE KILLS SOMEBODY! YOU COULD BE THE NEXT!

CAN VIDEO GAMES TURN YOUR CHILD INTO A SERIAL KILLER?

COULD YOU HAVE A DEADLY DISEASE?, WILL NORTH KOREA NUKE ALL COUNTRIES ON EARTH SIMULTANEOUSLY?

WILL THE US ECONOMY COLLAPSE AND DESTROY THE WORLD ORDER?

HOW YOU CAN PREPARE FOR A NUCLEAR ACCIDENT NEAR YOU!

COULD THE SKY FALL ON YOUR HEAD?

And now back to some REALLY important news (because the 500.000 children bombed by U.S. bombers in Afghanistan financed by 80.000 dollars per second and 0.3 kids dying of starvation per second aren't worth mentioning):

ALTHOUGH OUR ENTIRE COUNTRY IS FOUNDED ON THE NOTION OF FINALLY BEING RID OF MONARCHY: HERE ARE TWO PEOPLE GETTING MARRIED WHILE WEARING FANCY CLOTHES FINANCED BY TAXPAYER MONEY! THEY TOTALLY DESERVE AS MUCH SCREEN-TIME ON ONE DAY AS 9/11 DID!

>> No.3175469

>>3175320

Mortgage backed securities were great until the government forced companies to give loans to people based upon emotion. In no way were mortgage backed securities a new thing just before the bailout.

>> No.3175476

>>3175455
Well, we also tend to blow people up when they try to challenge the dollar. Like Saddam starting to take Euros for his oil. Or Gaddafi setting up a euro-based oil exchange. One other one where they wanted to switch to something non USD for their reserve currency and got smacked down. I forget. Not saying its a global conspiracy or anything, but im sure there are some efforts to artificially maintain dollar hegemony

>> No.3175478

>>3175469
>forced
Theres that word again.

>> No.3175480

>>3175478

It will not go away. That is the problem with a truth.

>> No.3175483

>>3175428
Its possible i misread, maybe if he typed in actual english i would comprehend his message. In the end my criticism was an attempt to force him to clarify his stance.

after the tenth read through, am i correct in assuming he supports increased regulation of the financial sector (by the 'corrupt' state officials?) but not socialism (since he preceded it with "HURRDURR).
Meanwhile he doesn't believe in the bailout because it made banks wanton?

>> No.3175493

>>3175476
USA!
only the gadaffi thing - hes being attacked mainly by europe not us....but im all for global U.S economic strong-arming

>> No.3176031

>the US dollar is not worthless, it is still the world's standard currency because of its STABILITY

the value of the us dollar is tied to oil, 'market forces,' and the us' military might; under the threat of war, opec is forced to sell its oil in us dollars, which generates demand for us dollars, which keeps the value of such dollars high. in 2001, saddam hussein threatened to begin selling his oil in euros, and for that his country was put into chaos (which he assembled using our weapons, and men trained by us... he was intended to be our puppet) and he was executed.

if the world stops using oil -specifically, oil bought from opec-, or if the banks so choose for whatever reason, the value of the dollar will plummet.