G20 summit- $1 trillion rescue

What exactly does this 1 trillion dollar rescue plan mean? Where will the money go and how will it help? Just interested is all

I think the real issue here is that they are taking all our country's money. Britain will end up footing a lot of the bill and sending ship loads of pound notes (more than it would cost now as the massive inflation coming will mean that the pound falls even further against the dollar) to people abroad while our economy is failing.

What exactly does this 1 trillion dollar rescue plan mean? Where will the money go and how will it help? Just interested is all

Sigh, they did this to improve our economy, not to make it worse. They are not cretins.

Do you think it'll work? Is it like pretty much guaranteed that it'll do good, or is there loads of negatives?

Btw in case you haven't already guessed, I suck at economics and this kinda stuff so I'm asking to learn lol

You need to look at it another way: if nothing is done, this economic crisis will end up rivalling the Great Depression of 1929. There's nothing to say that this package is big enough to reverse the decline in economic activity across the world, but it's the first co-ordinated international attempt to do so, and it will definitely make a positive impact.

You need to look at it another way: if nothing is done, this economic crisis will end up rivalling the Great Depression of 1929. There's nothing to say that this package is big enough to reverse the decline in economic activity across the world, but it's the first co-ordinated international attempt to do so, and it will definitely make a positive impact.

Aaargh, this frustrates me beyond words. Here're the main mistakes that were made in the Great Depression, according to Murray Rothbard (see http://mises.org/rothbard/agd.pdf). See if you can count how many are happening right now:

(1) Prevent or delay liquidation. Lend money to shaky businesses, call on banks to lend further, etc.

(2) Inflate further. Further inflation blocks the necessary fall in prices, thus delaying adjustment and prolonging depression. Further credit expansion creates more malinvestments, which, in their turn, will have to be liquidated in some later depression. A government “easy money” policy prevents the market’s return to the necessary higher interest rates.

(3) Keep wage rates up. Artificial maintenance of wage rates in a depression insures permanent mass unemployment. Furthermore, in a deflation, when prices are falling, keeping the same rate of money wages means that real wage rates have been pushed higher. In the face of falling business demand, this greatly aggravates the unemployment problem.

(4) Keep prices up. Keeping prices above their free-market levels will create unsalable surpluses, and prevent a return to prosperity.

(5) Stimulate consumption and discourage saving. We have seen that more saving and less consumption would speed recovery; more consumption and less saving aggravate the shortage of saved capital even further. Government can encourage consumption by “food stamp plans” and relief payments. It can discourage savings and investment by higher taxes, particularly on the wealthy and on corporations and estates. As a matter of fact, any increase of taxes and government spending will discourage saving and investment and stimulate consumption, since government spending is all consumption. Some of the private funds would have been saved and invested; all of the government funds are consumed. Any increase in the relative size of government in the economy, therefore, shifts the societal consumption–investment ratio in favor of consumption, and prolongs the depression.

(6) Subsidize unemployment. Any subsidization of unemployment (via unemployment “insurance,” relief, etc.) will prolong unemployment indefinitely, and delay the shift of workers to the fields where jobs are available.

It's going to get a hell of a lot worse before it gets better.

Aaargh, this frustrates me beyond words. Here're the main mistakes that were made in the Great Depression, according to Murray Rothbard (see http://mises.org/rothbard/agd.pdf). See if you can count how many are happening right now:

(1) Prevent or delay liquidation. Lend money to shaky businesses, call on banks to lend further, etc.

(2) Inflate further. Further inflation blocks the necessary fall in prices, thus delaying adjustment and prolonging depression. Further credit expansion creates more malinvestments, which, in their turn, will have to be liquidated in some later depression. A government “easy money” policy prevents the market’s return to the necessary higher interest rates.

(3) Keep wage rates up. Artificial maintenance of wage rates in a depression insures permanent mass unemployment. Furthermore, in a deflation, when prices are falling, keeping the same rate of money wages means that real wage rates have been pushed higher. In the face of falling business demand, this greatly aggravates the unemployment problem.

(4) Keep prices up. Keeping prices above their free-market levels will create unsalable surpluses, and prevent a return to prosperity.

(5) Stimulate consumption and discourage saving. We have seen that more saving and less consumption would speed recovery; more consumption and less saving aggravate the shortage of saved capital even further. Government can encourage consumption by “food stamp plans” and relief payments. It can discourage savings and investment by higher taxes, particularly on the wealthy and on corporations and estates. As a matter of fact, any increase of taxes and government spending will discourage saving and investment and stimulate consumption, since government spending is all consumption. Some of the private funds would have been saved and invested; all of the government funds are consumed. Any increase in the relative size of government in the economy, therefore, shifts the societal consumption–investment ratio in favor of consumption, and prolongs the depression.

(6) Subsidize unemployment. Any subsidization of unemployment (via unemployment “insurance,” relief, etc.) will prolong unemployment indefinitely, and delay the shift of workers to the fields where jobs are available.

It's going to get a hell of a lot worse before it gets better.

The top economists would not agree with the policy recommendations of the father of anarcho-capitalism, especially regarding the need for fiscal stimulus.

I'm curious. What would you do instead? Literally nothing??

Something more like this: http://mises.org/story/3316

The extreme end of the Austrian school...

It all sounds flawless on paper, but in the real world, the classical assumptions simply do not hold, and to deny that market failure does not naturally exist (imperfections, missing markets) is nothing short of ignorance, in my opinion. Furthermore, such "extremist" policies are not politically or economically viable, and in the real world, it is simply not possible to separate politics from economic policy. You would have to be so far removed from reality to think you can maintain stability in a country with no income taxation or redistribution of wealth whatsoever.

I thought that's what you'd say. You're actually insane... No wonder nobody listens to 'Austrians'.