As for the current crisis, my understanding that follows is mostly a collection between what I know of macro economics from academic studies, and from NPR, which provided a rather solid outlining of what may have occurred.

Citizens deposit their cash into banks, which then loan out most of it. These loans may be mortgages. On a bank's balance sheet, the mortgage is qualified as an asset, since it presumable is going to generate them some income. However, banks do have a limit to the risk they are comfortable with. They will attempt to sell mortgages to other firms and rid themselves of the risk at the expense of a higher payout. These firms, sometimes other banks, sometimes governments, sometimes those "investment bankers" that every one hates on, use a very few amount of credit agencies that make their business by analyzing the risk of certain loans, including mortgages. In the past few decades, banks have packaged assets(outstanding mortgages) with higher risk with ones with lower risk, making it easier to get rid of the higher risk assets.

Incredibly recently, the credit rating agencies, may have messed up their opinion of some of these packages. Some packages that were higher risk, were actually given the lowest possible risk rating. The banks continued giving out high risk mortgages, because they were still being bought, because those buying thought them to be actually low risk. The high risk mortgages started failing in the current crisis, and this caused contractions within the investment marketplace as firms lowered their limit to risk. Less loans were made, and with lower investment Real GDP falls. Lower GDP means lower employment.

This whole failure is compounded by banks being incentives since the 1990s to make increasingly high risk loans. Congress has wanted to expand housing, and they increased incentives over the decades for banks to make more housing loans. This would mean to make more high risk loans.

To reiterate: The banks were being pressured to make more high risk loans. These did so, and accelerated the process since they could sell the high risk loans. The loans could only be sold since they were labeled as low risk, by certain credit agencies. So if these agencies hadn't messed up, the banks wouldn't have been able to sell the high risk loans, and may not have made them, despite government incentives. So, to my perception, it was some small glitches in how packages of mortgages were being analyzed by certain consultants.

Excuse me if this isn't concise, a bit off hand, and I may be assuming that everyone has the same background in economics.

[QUOTE="pecanin"]

[QUOTE="br0kenrabbit"]

Most wealth in the U.S. is in private accounts, not invested or spent.

HomicidalCherry

That is what i'm getting at

if it was invested into new jobs and technologies US would look much better

money in bank is doing no good to anybody(except bank shareholders )

As for US debt,well much of it could be repaid if only treasury chases all the money taken to off shore accounts

billions per year doesn't sound much but year after year it adds up to a lot

This mentality is a big reason why we are stuck in this recession. Saving and being smart with your money should be encouraged, but instead, because it leads to short term economic benefits, we are constantly being influenced and encouraged to spend more and more money. Look what this mentality has gotten us though. Partially because of this environment that discourages saving and being responsible with your money, we are now in one of the worst recessions since the Great Depression. Because people would rather buy houses they clearly can't afford and pay for them with mortgages they will probably never pay, we almost had finanncial armaggedon. Money in the bank doesn't just help shareholders, it helps the person who is actually saving the money too.

When one puts money into a bank, that bank will want to lend it out as quickly as possible. Only if these loans are successful, does the bank or its shareholders earn anything. If the loan is successful, it means the business that took it out was profitable. This would infer that it was successful, and has created more jobs, and is offering a better product to consumers than what is available.

[QUOTE="aveman1"]

[QUOTE="br0kenrabbit"]

The biggest economic problem facing the U.S. isn't even our national debt, it's income inequality. I'm okay with CEO's and management making more than workers, but when they make 500x much as workers, that's a problem. The workers are as much responsible for the success of the company as management is. When they have to cut worker pay and benefits to make concessions, why is it they still find the money for multi-tens-of-millions in bonuses?

When 1% of the population controls 90% of the wealth of the country, it's not healthy for anyone.

br0kenrabbit

If I may be so bold as to provoke a debate: How is income equality beneficial for the economy as a whole, or our standard of living? I don't mean to sound cliche, but the microeconomic effects of pay irrelevant of performance has been recorded as greatly reducing the productivity of a work force.

Irrelevant of performance? I suppose you aren't aware that the american worker is much more productive than in the past, yet makes less in 'real wages' than their parents did. So why are they getting paid less for MORE productivity?

As for how it's beneficial for the economy, MOST people recieving food stamps and government help are working full-time.

If someone is willing to work full-time, they shouldn't have to worry about meeting basic needs.

I was speaking of productivity in the Soviet Union, but I was trying to avoid sounding like every other fiscally conservative person on this Internet. Your charts show an increase in productivity with a slight rise in pay. I say rise in pay while looking at the compensation line, since I consider the increased attention in work benefits, including that of work-managed-insurance, to be a better metric of payment for work, rather than actual cash. The slight decrease around 2002 could be explained by the recession of that time. If I may present this chart of wages that has a bit more data, from everyone's friend at the Bureau of Labor Statistics: (Retrieved from http://data.bls.gov/cgi-bin/surveymost?ce, by selecting "Total Private Average Hourly Earnings of Production Workers", and then selected the appropriate years and graph)

It would appear wages have increased nearly 6 times, if we start at 3 and end at 18 over this 24 year period. Speaking macroeconomically, I consider a person's value to the economy as a function of their work productivity and their skills, which are usually acquired through education. I agree with your prior graph that shows an increase in productivity. I dare say by my evidence that wages have increased in the long term. So, despite our income inbalances, it appears the work force at the large scale is being paid in direct correlation with their productivity, and we have a rise in the standard of living.

Are not people of seperate value to our economy? The marketplace has declared through supply and demand that the work of one man is not as valuable as anothers. This could be reflecting the values of consumers in our economy, which may be unfair, but I'm still unclear on why we must have equality of results. The investment banker has a real product in his capital product, which allows for industries to develop, and therefore provide more opportunities for employment. If 100 bankers financed the development of an entire industry, which employes 10,000 people, and raises the standard of living, what's your beef?

The biggest economic problem facing the U.S. isn't even our national debt, it's income inequality. I'm okay with CEO's and management making more than workers, but when they make 500x much as workers, that's a problem. The workers are as much responsible for the success of the company as management is. When they have to cut worker pay and benefits to make concessions, why is it they still find the money for multi-tens-of-millions in bonuses?

When 1% of the population controls 90% of the wealth of the country, it's not healthy for anyone.

br0kenrabbit

If I may be so bold as to provoke a debate: How is income equality beneficial for the economy as a whole, or our standard of living? I don't mean to sound cliche, but the microeconomic effects of pay irrelevant of performance has been recorded as greatly reducing the productivity of a work force.

Don't forget; The goal is grow and work. Work will compliment your growth, which will enable further work capacities that you can employ to your own end later in life. Full speed. Also, beware of burnout.

hamstergeddon

Excuse me if I am spotlighting you inappropriately, but do you have a methodology that you can explain that you used in this journey? Did it begin with something instinctive that then built upon itself? I've been down such a road before, and there exists arguments against the logical integrity of the resulting mindset.

And please excuse me if I sound like some Elven facist. I've been typing some work, and I find it easier to write with complications, for the graders don't bother reading it in such a state.

I choose my stance on the issues on a case by case basis. I don't identify and consequently subject myself to the blind ideals of a particular party or ideal, and neither should any of you. hamstergeddon

May I ask if you maintain a philosophy that you employ? Could such a thinking be the same as a political party, in that it inhibits consideration of alternate ideas?

Responding to the OP. I was also pretty bad, as in 258 around that age. Not to say that I know what I'm talking about, or that what I did was safe or healthy, but over the past 6 months, I moved from around 238, where I was standing at for a year or two, to 181-ish. All I did was stop eating outside of dedicated meals, and observed how I would get full during a meal. I used to eat just like crazy, whenever I was bored, or if there was food in front of me. I now stop immediately when I feel full, and I rarely ever let myself get bloated for whatnot. It was just understanding when I was overeating, and controlling my habits. In my first month, I dropped 10 pounds, then 15 the next map, and the loss kept going. After the first week or two, my old habits stopped showing up, and it became ridiculously easier to stop eating, and the pounds just started falling apart. I also dropped soda and snacking, and used water and tea instead.

Another thing, just keep active. I mean this not specifically by exercising, but by being occupied. Study, actively hang out, keep your daily life occupied with things to do. I myself have a lot of academic work and I stay in school afterward every day, just participating in the community. Perhaps such a schedule has prevented me from getting bored, and therefore less likely to randomly start eating.

Hopefully my little personal experience will help. Your going to feel fantastic once you get the ball rolling.

I have a slight, perhaps catastrophic problem. Ever since the weather turned cold this year, I've been feeling the cold as unbearable. I'm uncomfortable at anything under 74 degrees, and that requirement just won't suit my life style. I did lose a bit of weight over the summer, and that wouldn't be the most outrageous explination, but the problem stands two fold. First, the weather will only get colder. Second, I've applied early decision to a college in a cold climate. Besides bundling myself in ridiculous layers, does anyone know a way to decrease one's raw susceptibility to the cold? It is particularly bad in my hands when their exposed, like right now when I'm typing. This may seem ridiculous, but this is a sincere problem. Anyone else have problems with ambient temperatures?

I've identified what appears to be a crutch between working and being lazy among people. Not scary, but it's intellectually creepy to me. I've also observed that work that is fullfilling and challenging brakes this crutch. Furthermore, I've found that fullfilling work is something that innate interacts with an aspect of your fundamental personality. Reading this over, all this seems very obvious given old social sayings, but it nevertheless surprised me when I originally phrased it.