Free to Choose - vol 01, 1980

Did you put that thumbdown on me? If so, much obliged. I believe I blamed banks and the fractional reserve system with which bankers became debtors faster than creditors, making all that credit worthless ie inflationary, thus everything built on such credit was vapid. Maybe it was the 'nonsequitur' thing that annoyed you? It is a non-sequitur because economy is not based on consumption but on profit. If people need to consume they will. Spendthriftiness of the people=business cycle? NO!

Nintendomanwill, it absolutely is not a non-sequitur. In a consumption-based economy and society, the population has to keep spending at ALL COSTS in order to make sure the economy doesn't collapse.

As neoliberal policies allowed for the rich to accumulate ever more wealth (increased income inequality), the people who were not rich NEEDED to keep spending just to keep the economy going. The problem is that they didn't have the money to spend so they had to borrow on credit.

eksortso, financial liberalization is a powerful weapon against democracy. Free capital movement creates what some have called a "virtual parliament" of investors and lenders, who closely monitor government programs and "vote" against them if they are considered irrational. They are irrational if they're for the benefit of people, rather than concentrated private power.

The problem I allude is not so much credit as the reason why it was deemed necessary for credit to become cheap: consumerism

Iam not madd at u but would you Please Return my PENCIL .Thank you

eksortso, the idea that the free market promotes harmony & peace is inherently a false notion. When Friedman said, "these people might hate each other if they ever met," he actually admitted the flaw of this idea.

The truth is that, since they didn't meet to begin with, there is no peace & harmony inherent in markets across cultures. The pencil is a deceptively nice anecdote, but it does not represent the full ramifications of the free-market, particularly the more devastating consequences.

@DaviidHill, judging by your channel comments, you're no fan of Friedman, or of free markets, even if you really knew what free markets entail.

I was talking about harmony of interests. With free-moving prices and freedom to act, we can take action to better our lives. We tolerate our differences to reach those ends, so we don't have to take bread from each other's mouths.

The real problem you allude to is CREDIT. Borrowing became too easy for too long, which screwed up the pricing system.

Alright, for all you free-market fundamentalists who think there's nothing wrong with ever-increasing income inequality, please think in terms of common sense rather than in terms of defending your ideology.

In a consumption-based economy, such that of the United States, groups of individuals who outnumber the rich are going to need to have capital with which to comsume in order to make that economy function. It follows that as income inequality increases, the risk of economic ruin increases.

'it follows that the risk of economic ruin increases'

Actually that is the biggest non-sequitur ever. The rich did not bring on the credit crunch. Banks who created money not based on economic growth, through clever accounting hiding the infaltion that was devaluing their ever increasingly insolvent, disastrous balance books, brought it on. In 1929 the recession occured because the Fed didn't release gold to reflect general falls in demand. They allowed deflation by not doing their job.

parrotsnest, I've been taking economics since high school. I used to believe in free market fundamentalism. I know precisely what I'm talking about!

FDR's Fed Chairman, Mariner S. Eccles, said, "As in a poker game where the chips are concentrated in fewer and fewer hands, the other fellows could stay in the game only by borrowing. When their credit ran out, the game stopped." Perfect description of the Great Depression!

Income inequality is especially bad for a consumption-based economy!

Also DaviidHill, it's perfectly fine and natural if there is "economic inequality" due to the natural differences between individuals. But, it's not fine and natural if wealth is concentrated in the hands of a tiny elite because they unlawfully seized control of our government in 1913 via The Federal Reserve System, and have been fleecing the American public thru inflation and debt ever since.

It's the same thing as burglars creating "economic inequality" between themselves and their victims.