Why the recession is not gonna be over anytime soon

[TheRealMafoo]

@Khuutra

To use an analogy I once used in another thread.

If we consider a bank hostage as the country we live in today. There is one man with a gun, with 6 bullets in it, and 30 people held at gunpoint in the bank. The amount of time held hostage represents the length of the recession, the amount of damage the man with the gun inflicts would represent how deep the recession is.

The argument I have, the man is going to kill 6 people. If you rush him, he will kill 6 people, and if you give him 6 hours in the bank, he will kill 6 people. This is how I see the recession. We need a correction (in this case, to remove debt), and the only way to get out of it, is to remove the debt).

Let's put two scenarios in front of you. First one: 10 minutes into the hostage situation, 27 people are standing in front of a man who just killed 3 people, and still has 3 bullets. What do you think those 27 people will do? They will do nothing. They know three people are going to die, and none of them want to be in that group. All 27 are held in suspense (reducing GDP), because they don't want to be one of the three. If he does not kill another person for 6 hours, they will all sit there for 6 hours.

This is where we are today. No one is safe from losing there jobs, so no one is doing anything that would require keeping it. People are not buying cars, houses, going on vacation, etc...

Now, let's say 10 minutes into the hostage situation, there are 24 people standing in front of a man with just killed 6 people, and had zero bullets left. What do you think those 24 people will do? They will take down the man. It will be over instantly.

This is what we want. If we are going to lose 12 million jobs, we want to lose them as close to instantly as we can. If it takes 3 years to lose them, everyone in the country will be held hostage until it's over. If in one month we lost all these jobs, but every business left started making money again, and every company was secure in there future, the people who still had jobs would still spend money. That's where we need to be.

Now people like Akuma think that what we are doing is going to reduce the number of jobs lost (like talking down the guy with the gun), but the problem is it's can't.

When we spent to get out of debt in the 1930's, while I disagree with it, it worked because we had the money. We used money other people earned (through raising taxes), to redistribute and soften the blow. While ideologically I don't like this idea, it works. Today, we have no way of getting that money, so we borrow it. We are borrowing money to solve a problem where we borrowed to much money.

What this means, is it will be 0% effective (and I feel worse then if we didn't, because we are just digging a bigger hole). We need to remove the debt. And as painful as it is to default on billions of dollars, not doing it now just holds the country hostage, with the same outcome anyway.