Comments on: Quick thoughts on the bailout http://www.americanmadness.com/2008/10/05/quick-thoughts-on-the-bailout/ Intelligent Criticism in the Service of a Better Nation Mon, 31 Oct 2011 18:43:41 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Joel Friedlander http://www.americanmadness.com/2008/10/05/quick-thoughts-on-the-bailout/comment-page-1/#comment-156906 Joel Friedlander Tue, 07 Oct 2008 04:09:57 +0000 http://www.americanmadness.com/?p=2044#comment-156906 If a company has to access a credit line to meet payroll its cash flow is insufficient to keep the business running. It is one thing to occasionally borrow to meet payroll, such as when a major capital expenditure has arisen and taken more of the available cash than usual, but to do it on a regular basis indicates a company that is on the skids. When the "Experts" began talking about this practice as a necessity on the various television and radio shows I almost threw up. They were so intent on creating fear of the possibilities if the government didn't pass a rescue plan that they were lying about ordinary business practices. If you can't pay your people you have too many employees or you don't have enough revenue, simple as that. If a company has to access a credit line to meet payroll its cash flow is insufficient to keep the business running. It is one thing to occasionally borrow to meet payroll, such as when a major capital expenditure has arisen and taken more of the available cash than usual, but to do it on a regular basis indicates a company that is on the skids. When the “Experts” began talking about this practice as a necessity on the various television and radio shows I almost threw up. They were so intent on creating fear of the possibilities if the government didn’t pass a rescue plan that they were lying about ordinary business practices. If you can’t pay your people you have too many employees or you don’t have enough revenue, simple as that.

]]> By: Josh Friedlander http://www.americanmadness.com/2008/10/05/quick-thoughts-on-the-bailout/comment-page-1/#comment-156764 Josh Friedlander Mon, 06 Oct 2008 15:37:19 +0000 http://www.americanmadness.com/?p=2044#comment-156764 There isn't a paper dollar equivalent for every dollar of debt, but it would be massively inefficient if there were. The problem is that the fiat money loonies are now coming out of the woodwork claiming that the whole banking system is a sham when it's not. I could write more, but they'd find me... There isn’t a paper dollar equivalent for every dollar of debt, but it would be massively inefficient if there were. The problem is that the fiat money loonies are now coming out of the woodwork claiming that the whole banking system is a sham when it’s not. I could write more, but they’d find me…

]]> By: Jason Ihle http://www.americanmadness.com/2008/10/05/quick-thoughts-on-the-bailout/comment-page-1/#comment-156711 Jason Ihle Mon, 06 Oct 2008 10:53:27 +0000 http://www.americanmadness.com/?p=2044#comment-156711 I think this ties into some basic economic questions Sandra was asking me yesterday. Now with my very limited knowledge of economics I was only capable of providing the most cursory of responses. The questions centered on the existence of currency governments producing more of it and banks not being able to support the loans they've made. Basically all the problems that exist now. The interesting truth of the world we live in is that there isn't actually enough currency in existence to support all the virtual money in existence. That is to say if every individual and business wanted to cash out their savings today they couldn't do it. There simply isn't enough cash to go around. If I'm not mistaken wasn't that one of the major causes of The Great Depression? Didn't everybody, in fear of losing their bank savings, start pulling their money out of the banks thus causing the banks to crash? Beyond the absence of currency to support all our virtual savings and investments, there isn't even anything supporting the currency - like gold, for example. So this is the world we live in. And as long as banks and business and governments are responsible, frugal, wise and regulatory there shouldn't be any major catastrophes. But apparently we can't trust these people to do the right thing. I think this ties into some basic economic questions Sandra was asking me yesterday. Now with my very limited knowledge of economics I was only capable of providing the most cursory of responses.

The questions centered on the existence of currency governments producing more of it and banks not being able to support the loans they’ve made. Basically all the problems that exist now.

The interesting truth of the world we live in is that there isn’t actually enough currency in existence to support all the virtual money in existence. That is to say if every individual and business wanted to cash out their savings today they couldn’t do it. There simply isn’t enough cash to go around. If I’m not mistaken wasn’t that one of the major causes of The Great Depression? Didn’t everybody, in fear of losing their bank savings, start pulling their money out of the banks thus causing the banks to crash?

Beyond the absence of currency to support all our virtual savings and investments, there isn’t even anything supporting the currency – like gold, for example.

So this is the world we live in. And as long as banks and business and governments are responsible, frugal, wise and regulatory there shouldn’t be any major catastrophes. But apparently we can’t trust these people to do the right thing.

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