How GM can avoid bankruptcy

Enron investment? Global crossing investment? Adelphia investment? Worldcom investment? Dot Com investment?

The last item should show you that this is a failed strategy to say the least. Obviously it takes a combination of spending venues. That is precisely what I am talking about. Investment in a stock for a dividend....you forget exactly what i said was being forgotten. Someone has to actually DO something for that stock to produce a dividend. If they don't what is false is its value. That is the lesson learned from the dot com saga.

Incestment is a form of spending. So are savings accounts. So is equity in a mortgage. Cycling is the key to growth. This is why keeping the government out of the cycle is productive. This is why tax cuts work. The cycle needs balance. Today it is out of balance.

One could argue that closing the wage gap is investing in the company its stability and even productivity. Happy workers are more productive.

I would offer that every person should play Sid Meyers game 'civilization'. It can be a great teacher of things along these lines.

Enron investment? Global crossing investment? Adelphia investment? Worldcom investment? Dot Com investment?

These are hardly failures, most succumbed to corruption. The government prosecutors made careers out of going after the suits involved mostly to pretend to be "doing something" after the dot-com crash. The dot-com boom and crash was itself a huge government failure (monetary policy: mostly too loose). The overinvestment in these few cases does not in any way negate the importance of the vast majority of investment. Investment not a form of spending, it is a form of saving. Unfortunately all forms of saving are penalized by government policy.

There is a world of difference between saving and spending. Saving has been so heavily penalized for so long that people no longer understand its value. Saving is the future, spending is the present. Saving and investment increase productivity, employment and wages. Spending only sustains the current levels until the money runs out, then we borrow more and dig a deep hole.

When a person puts ten thousand down on a mortgage they spend that money. They indeed spend that money to buy a loan. That money is saved as equity in the home.

Dot coms was a prime example where labor was dismissed. Its value was not based on labor creating a product or service, values at that time were based on who wanted it more. Who thought they could get in low and get out high. When enough people decided to take note that there was no rational behind the value other than that, they got out, and what was left? NOTHING. That is why it crashed. No labor to support it. Dot com was not a government failure, indeed it was an investment failure. Investing in a false value rather than investing in labor.

When you put five thousand dollars in a bank account you get a book with some numbers in it. You bought a book of numbers that you TRUST represents your money. The bank can take that money and loan out ten times that much. Its called fractional lending. The money you deposited is used to make more money. That is, they spend it too. All this spending is the cycle.

The only difference between spending money on a savings account book, and buying a candy bar is that you consume the candy bar and it is gone. While the bank account remains. Now on the other hand, you can spend that money on a car. You can turn around and sell that car at a profit or a loss depending on if you consume it in any way and what the price you paid was. Maybe you even bought it unders its common value.

Do not fool yourself on the term spending, it is far more broad than you give it credit for.

Saving isn't penalized. Profiting from it is though.

You say borrowing only digs a hole deeper. But see what you miss is how you spend that borrowed money. By your comment, a small business loan is just digging a hole deeper. I would argue that you are off base there. I borrow fifty grand to start a business, I have a payment of a grand a month. The business creates a product or service that draws a gross profit of two thousand. I make my payment and I have an addition grand to spend. Wether I spend that on a savings account or on a car or on the business it is addition to the cycle....growth. So long as I make the payment, all is good and growth occurs with labor as its base. National debt is the same thing on a larger scale.
So long as the money spent is not directly consumed but instead used to create more labor and thus more money.

Spending is what makes us grow my friend. Labor creates a product or service. Labor creates more wealth.(again that is the failure that is dot coms). This is exactly why the amount of dollars destroyed and the amount of new dollars made is SECRET and why we operate on a fractional lending platform. Growth with labor as its base and spending as the vehicle to it.

So long as the money spent is not directly consumed but instead used to create more labor and thus more money. Spending is what makes us grow my friend.

Spending for consumption sustains the current level of production but doesn't add new capability. To do that we need investment. I'm not knocking spending, it's a big part of our economy and many industries and services have been built to support the retail industry such as delivery, accounting, and loads of online services and support. But spending can be too big a part of an economy as ours is now. We should be producing more exportable goods as a share of the economy rather than going into debt to support consumption.

Saving and investing on the other hand is deferred consumption. Instead of taking some goods in trade for my services, I take money which I save or invest so I can buy the goods later. Investment (such as buying new production machinery) is also the primary way to improve productivity. That allows more people to be hired and higher wages to be paid. Workers who are motivate to work harder will also produce more as you point out. But the productivity increases produced by investment vastly outpace any gains by working harder. The machinery and automation brought by information technology had produced amazing increases in productivity which has lead to greater wealth overall. I admit sometimes the wealth takes a while to trickle down especially when old manufacturing methods are being phased out and workers need to be retrained. But holding back those improvement to protect jobs will result in lost jobs overall as the wealth and productivity of the economy is reduced.

Spending for consumption sustains the current level of production but doesn't add new capability.

That which is consumed must be replenished when demand is present. This spending on a consumable creates more labor. When the consumable(gasoline) is sold it creates a gross profit. A portion of these gross profits must be spent creating more consumables(gasoline). What portion is spent on raw materials and the labor to create it, not to mention infrastructure, to facilitate its making is determined by the demand. Reinvesting profits in the business, including increasing capability, is facilitated by the spending done on the consumable. Without spending on the consumable, there would be no profits to reinvest.

It seems you are saying that without outside investment, capability could not be added. This is untrue. Lots of companies grow without outside investment. Proper allocation of gross profits make it happen.

Outside investment can make capability grow faster, that much is true. When someone invests they spend. If the company goes under, that money is gone one could even say 'consumed'.

We should be producing more exportable goods as a share of the economy rather than going into debt to support consumption.

We should be exporting more services rather than goods. Services require far less finite resources than the production of goods.

Machinery is a good thing for production until it doesn't work. CNC burning tables increase production in a sheet metal shop BUT when the table is not functioning production stops. There is also a danger that ability to do things by hand is lost when too there is too much reliance on technology.

But the productivity increases produced by investment vastly outpace any gains by working harder.

One does not always have to work harder to be more productive. Wealth that doesn't trickle down because it is taken out of the cycle to fast (ie subverting labor's portion or over taxation) is part of the problem I point out. To many advancements leading to jobs being phased out derails the whole cycle as there is less people with less money to buy the product or even service being produced. Holding back the advancements , sometimes, is the only way to insure a company can even survive.

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