Your Questions About Debt Busting

Paul asks…

What happens when consumers stop borrowing?

Consumer borrowing in the US has plunged, as well as a record drop in borrowing on credit cards. What happens to the economy?

John answers:

Credit/borrowing is only used for spending or investing. Rampant borrowing and spending creates an artificial price, or value, in retail, stock, commodities, housing, and all other markets buying increases in. Ultimately, the free market will correct, and find the true value of everything. That’s why we have recessions/depressions.

If credit/borrowing/spending slows, in the short term, it will hurt as it will allow the free market to correct faster, there will be recession until the markets correct.

If credit/spending investing returns in a big way, after the correction, an economic boom, like seen in the 90’s, mid 2000’s will occur, until the market corrects and returns to recession. If spending.borrowing does not return, people save, pay off debt, the economy will grow but at a slow, steady pace, and economic downturns and recessions will be rare. The GNP will continuously grow at a lesser rate, but will remain steady. Wealth is created in the private sector. A slower steady growing economy will over the long term create more wealth than constant booms and busts as we see now. Periods of inflation and dreaded deflation, will be very minimal over long extended periods

Susan asks…

What happens after you report welfare fraud?

They just gave me a case number ,im curious as to how they investigate it and what happens or how likely are they to catch the perpetrator?

John answers:

It all depends on how backed up they are (there are A LOT of welfare fraud cases out there… Many people are lazy and just taking advantage of a system meant to help people who really need it), how much cause they have to look into the specific case– what evidence or suspicious activity is present– and the people they assign the case to (some are more proactive than others).

I grew up in an area filled with lower middle class, working class and just below poverty-level families. Even in the 90s and early 2000s, when the economy was better, there were a lot of people on welfare, and you could always tell who was just being lazy and abusing the system. One of my friends even got mad at her mom once, because her mom made her quit a good part-time job just because she was afraid the government would take away their welfare. Sadly, I don’t remember anyone actually getting busted by the government, though I really wished some people were. Now as an adult who has worked hard for everything I have and is still struggling to pay off severe college debt amid car lease payments and rent, the people who who abuse the welfare system make me furious.

Betty asks…

What did Keynes say about economic booms?

What did john Maynard Keynes say about booms in the economy, or periods of economic growth, and what the government should do during these periods? I’ve been trying to look into what he thought about them, but I haven’t been able to find anything about them in The General Theory. If anyone can point out the chapter or another work of his in which he talks about them, i would be appreciative.

John answers:

You can’t have looked very carefully.

He said that booms end.
Also check out chapter 18, The General Theory of Employment Re-Stated
The general understanding is that governments should be making hay while the sun shines, reducing the public debt and accumulating reserves when times are good (i.e. During booms), so as to be prepared to stimulate the economy when times are bad and the reserves are needed. Running deficits during boom times just causes inflation:
This is covered in chapter 21. The Theory of Prices

You might also want to look at chapter 16. Sundry Observations on the Nature of Capital
on how a boom can create its own bust.

Maria asks…

What makes the UK and the USA governments global policemen ?

Are the governments of the UK and the USA supreme in morals ? What about those of Holland, Belgium, France, Norway, Sweden, South Africa and virtually every other nation on earth ? Both nations have funded terrorism. Both have had (or have) an empire. The governments of the USA and the UK are in violation of treaty after treaty, internationally. Is it any wonder that they are described as the true terrorist states of our times ?
And when, oh when, will foreign troops get out of Iraq ? The excuses are wearing very thin. The official line is that they are overseeing democracy. Fine. If an army invaded the USA and stayed for years to bring democracy would you allow it year after year ? Time to go home boys and for politicians to start listening to the citizens of this world.
Nobody asked the USA to invade/occupy Iraq. Nobody. And instead of being greeted by flowers you were greeted by a hail of bullets. That is a fact. Nobody asked the USA to invade/occupy Iraq. It was roundly condemned by the global community. It is still is, years later. And still the death toll rises.

As far as the US president listening to other countries is concerned, yes, he can and must listen or else, surely, one day, he will be responsible on the day when what he has sown is reaped in his own country. If the USA administration does not listen to the international community then its people should at least unplug their corporate televisions stations and throw them in the bin. Go home Yanks – you are simply screwing up nation after nation. As millions of Americans and millions of British people said from the beginning. You invented WMD and still you will not listen to what the people say.

John answers:

Both are representative leaders of the White, english speaking west. But more to the point

It’s about the preservation of the dollar as the currency of world reserve. America and UK stand or fall on it.

Its not about oil at all. IT’s about protecting the fact that all the worlds oil is traded in dollars. If any country need to buy oil which they all do, they have to buy dollars. If leading oil producers switched to euro then the american economy would implode as america is actually bankrupt but because the central banks of the world have to keep billoins of dollars in reserve than the problem never comes home. In simple terms its as if america has trillions of uncashed cheques out there that will never come home to be cashed as long as oil remains traded in dollars.

The last major oil producer to change to euro was…. Guess who… Iraq (in 2002) hmmm then WMD then War and the first job of the invading force was to take control of the finance ministry and advise the UN food for oil programme of the change back to dollar. Phew. There is one other major oil producing nation planning to sell its oil on ist own exchange(due to open in Oct 06) for euro…. Wanna guess….. Yep its Iran… Suddenly at the first mention…their an axis of evil power… Any country suggesting a trade in anything other than dollar is in trouble (Venesuela)….

IT not a war over oil , there s plenty of it.. The CIA keep african warlords and wars going to inhibit exploration despite the fact that there is proven reserves in africa to keep oil prices high…American Corps control the oil supply not producing nations…

But most of all it must be traded in dollar or suddenly every central bank around the world will need to ditch dollars and buy euro.. Any fool can work out what happens then. The dollars need to be cashed in by the FED.. The dollar will fall (a lot) in value, etc etc.. Govt debt will double as they owe yen and pound and the economy will implode… Goodbye america..

If I had this problem, 5% of the world population and 55% of world spending on military, i would sure use my army to make sure all these little oil rich nations kept the greenback afloat..

Its a giant scam to get an unlimited line of credit from the world to buy more arms and crush every threat to the dollar.

Watch the sham between Israel and LEb.. Its just a cover to invade IRan by proxy…cos they intend to sell oil in euro.. No other reason..

Wake up America.. Your busted, youre just not broke yet cos you dont have to honor the cheques…. YET!

Sandra asks…

What are some classic novels related to business?

I need classic novels related to any aspect of business (ie management, economics, etc..). I was thinking novels before the 1990s?

John answers:

The poet’s wedding (Jan 1955)
By: Skármeta, Antonio
The beautiful island of Gema in the Adriatic Sea is wracked by cycles of boom and bust over forty years punctuated by the efforts of a wealthy bohemian businessman to reopen a once-famous local department store

The lodger (Oct 1983)
By: Simenon, Georges, 1903-1989
After his shady business deal in Brussels fails and his gorgeous companion Sylvie Baron leaves him for an Antwerp shipowner nicknamed Van der Boomp, Turkish businessman Elias Nagear, stricken ill and consumed with jealousy, kills Van der Boomp.

The stoic (Jun 1947)
By: Dreiser, Theodore, 1871-1945
Frank Cowperwood, a ruthless American businessman, moves to London where he hopes to build and control the city’s new subway

Cataclysm (Jul 1985)
By: Clark, William, 1916-
A fictional yet plausible portrait of a conflict between the wealthy nations of the northern hemisphere and the poorer nations of the south, touched off by financial crisis when the south reneges on its debts

Green Monday (May 1981)
By: Thomas, Michael M.
A financial wizard and a deeply cultured Arab minister manipulate world oil prices to the point where the market has a 100,000,000-share day and international economics and politics are faced with fundamental change

Rabbit is rich (Sep 1981)
By: Updike, John
Harry Angstrom, now middle-aged and the chief sales representative of a Toyota dealership, attempts to cope with such problems as inflation, governmental ineffectiveness, the return of his prodigal son, and a chance encounter with an old girlfriend

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