"US Day of Rage"

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Paladex
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"US Day of Rage"

I get what these guys are trying to do - and, in fact, I agree - but wouldn't it make more sense to occupy Wall Street with a tent city on a weekday? September 17 is a Saturday. Who's going to be there? 

http://www.usdayofrage.org/

Edited by admin on 11/08/2014 - 06:04

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lilbromarky1
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Henry Hazlitt would disagree

Henry Hazlitt would disagree with the quote in your signature.   Being rich or poor is not defined by the number of dollars you have but by the ease with which you can acquire the things you want and need.  If its 25% cheaper to buy at the walmart in the next town over than it is to buy at the local businesses, the local community is best served to buy from walmart because in the end they will get 25% more things they need than someone who only buys locally (assuming the products are the exact same for simplicity)

This same idea is why Tariffs are self destructive in the long run.  Higher consumer prices and protectionism doesnt work, and your signature is a small version of protectionism.  

Global market forces will eventually stop the flow of jobs and money overseas as the workers there command higher and higher wages over the years.  The big wage gap will close on it own due to free market forces.  No protectionism needed.  In fact, if it werent for government involvement in the USA and abroad there wouldnt be such a wide wage gap to begin with.  As soon as places like india and china allow their currencies to rise the gap will close.

Sorry to derail your thread though, I think any form of peaceful protest is a good start, regardless of the day of the week.  Probably trying to accomodate those who still have a mon-friday job.

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Henry Hazlitt lived in an era

Henry Hazlitt lived in an era when crony capitalism had yet to become standard operating procedure. However, that's neither here nor there. Your Wal-Mart illustration is a perfect example of why your argument doesn't pass the smell test. Just because (hypothetically speaking) people in community A can buy 25% more consumer goods at Wal-Mart in community B than in local stores TODAY doesn't mean they're better off. Why? Because 100% of those dollars have left economy A, which means that when the population of community A wants to buy something TOMORROW, they won't be able to. 

The same goes for offshoring. I am aware that Chinese workers have started demanding higher wages, but do you really think that wages in China and India are going to rise to American levels at any time in your or my lifetime, due to "free market forces"? If the wage gap closes, it will be become the American economy has collapsed, not because workers overseas will be $15/hour.

To wrap it all up with a bow, I would point out that the money spent at Wal-Mart or in China does not really go into the community economy anyway: it goes to line the pockets of the largest Wal-Mart shareholders and executives, and the Chinese bureaucrats, respectively. There's a reason the inequality of wealth in America is even higher now than it was in the era of the "robber barons" of Henry Hazlitt's day: the dollars you spend at Wal-Mart, or on Chinese goods are NOT coming back to you. 

I consider myself a libertarian, but the concentration of wealth in the top 1/10 of 1% of the population is not the cause or consequence of libertarian philosophy, it is the consequence of what John Perkins calls "corporatocracy," and the rest of us would refer to as good old fashioned cheating. 

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Paladex wrote: Henry Hazlitt

Paladex wrote:

Henry Hazlitt lived in an era when crony capitalism had yet to become standard operating procedure. However, that's neither here nor there. Your Wal-Mart illustration is a perfect example of why your argument doesn't pass the smell test. Just because (hypothetically speaking) people in community A can buy 25% more consumer goods at Wal-Mart in community B than in local stores TODAY doesn't mean they're better off. Why? Because 100% of those dollars have left economy A, which means that when the population of community A wants to buy something TOMORROW, they won't be able to. 

The same goes for offshoring. I am aware that Chinese workers have started demanding higher wages, but do you really think that wages in China and India are going to rise to American levels at any time in your or my lifetime, due to "free market forces"? If the wage gap closes, it will be become the American economy has collapsed, not because workers overseas will be $15/hour.

To wrap it all up with a bow, I would point out that the money spent at Wal-Mart or in China does not really go into the community economy anyway: it goes to line the pockets of the largest Wal-Mart shareholders and executives, and the Chinese bureaucrats, respectively. There's a reason the inequality of wealth in America is even higher now than it was in the era of the "robber barons" of Henry Hazlitt's day: the dollars you spend at Wal-Mart, or on Chinese goods are NOT coming back to you. 

I consider myself a libertarian, but the concentration of wealth in the top 1/10 of 1% of the population is not the cause or consequence of libertarian philosophy, it is the consequence of what John Perkins calls "corporatocracy," and the rest of us would refer to as good old fashioned cheating. 

Thank you for the informed response.  I need to reconsider the wal-mart example and then I'll get back to you once I've worked through it.  In my example, lets assume for simplicity that the product you're buying at walmart is 25% cheaper, but its the exact same product otherwise.  I dont want to bring quality into it. 

For example, local deli meats would be better than meats bought at a chain grocery store, so that quality might be worth paying more for.

In our debate here, I want to assume that we're faced with the choice of either buying a name brand widget from walmart for 10 dollars or we buy from local retailer for 12.50.  I'll get back to you with some arguments if i agree or some counterarguments- if I disagree :)

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These people are commies..

These people are commies.. plain and simple. They are the enemy.. well, at least they are MY enemy. I understand their attack on Wallstreet.. but it's mostly a symbolic attack on capitalism. I completely get that Wallstreet is broken and riddle with corrupt practices and companies, but they don't represent what capitalism is supposed to be. This "protest" is misguided at best. 

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Paladex wrote:Hello

Paladex wrote:

Hello Paladex.  In your example you said that when the person buys the widget from Wal-Mart, the dollars flow over to China.  So the flow would be, consumer gives dollar to walmart, walmart gives dollar to chinese exporter, dollar heads over to china.

Now lets look at the flow if the person buys the widget from Mom n Pop store instead.

Consumer gives dollar to mom n pop, mom n pop give dollar to chinese exporter, dollar heads over to china. 

The only difference I can see is the the consumer paid 25% more in order to deal with mom n pop.  Am I overlooking something?

If China is the cheapest place to get the widget, then Mom n Pop both have a strong incentive to buy from China.  If Mom and Pop try to buy the widget from an American seller, the american seller is more expensive, Mom n Pop lose their competive edge and Wal Mart puts them out of business.

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Different time

lilbromarky1 wrote:

Henry Hazlitt would disagree with the quote in your signature.   Being rich or poor is not defined by the number of dollars you have but by the ease with which you can acquire the things you want and need.  If its 25% cheaper to buy at the walmart in the next town over than it is to buy at the local businesses, the local community is best served to buy from walmart because in the end they will get 25% more things they need than someone who only buys locally (assuming the products are the exact same for simplicity)

This same idea is why Tariffs are self destructive in the long run.  Higher consumer prices and protectionism doesnt work, and your signature is a small version of protectionism.  

Global market forces will eventually stop the flow of jobs and money overseas as the workers there command higher and higher wages over the years.  The big wage gap will close on it own due to free market forces.  No protectionism needed.  In fact, if it werent for government involvement in the USA and abroad there wouldnt be such a wide wage gap to begin with.  As soon as places like india and china allow their currencies to rise the gap will close.

Sorry to derail your thread though, I think any form of peaceful protest is a good start, regardless of the day of the week.  Probably trying to accomodate those who still have a mon-friday job.

Interesting thoughts but I would point out that the part I've highlighted in your quote is actually a huge part of the issue.

We do not have Free Trade. We offer free trade to our competitors here but do not receive the same terms. Other countries do have a myriad of Protectionist laws in place which limit US companies from competing fairly. The flood of cheap imports has actually destroyed otherwise viable American business' that will not be coming back, ever. The crushing US debt as well as individual debt and lack of decent paying jobs has meant the individual has little choice but to always shop based on price which reinforces the downward spiral.

In a way the signature line you questioned needs to be updated to our current situation. Community should be updated to country. The game is rigged and we as a Nation have been sold out and forced into debt and financial slavery.

We are truly rearranging the chairs on the deck of The Titanic as she begins to list.

Maybe Barry's Job Speech next week will right the wrongs. {not}

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Wal-Mart example

Lilbromarky, 100% of the purchase price of the widget would not go to China. Normally, retail items are sold for 100% profit. Wal-Mart is a huge buyer, so they get volume discounts, which is why they can sell for less than Mom 'n Pop. So, even if - for the sake of this discussion - the same widget is being sold by both businesses, and both businesses are making 100% profit on the widget, let's look at what happens to the money.

1) Widget bought for $10 at Wal-Mart in Smallville. $5 goes to Chinese manufacturer, $1 goes to pay Smallville Wal-Mart employees, $4 goes to Wal-Mart corporate bottom line, and is ultimately distributed to shareholders and executives. Those shareholders and executives invest that money in financial instruments that in no way benefit the residents of Smallville, and further concentrate wealth in the top 1% of Americans. In this very generous example, only 10% of the purchase price would stay in the local economy. And, since Wal-Mart employees make so little money, that $1 would probably be spent at Wal-Mart on food or medicine.

2) Widget bought for $12.50 at Mom 'n Pop's in Smallville. $6.25 goes to Chinese manufacturer. $6.25 goes to Mom and Pop, who turn around and spend it at the Smallville farmer's market. OR, they deposit it in Smallville Bank, which turns around and lends it to some other local business owner. Either way, the money is circulating in the LOCAL economy, as opposed to the insular Wall Street economy. Here, 50% of the purchase price stays in the local economy. The longer it stays in the local economy (e.g. farmer's market or local bank), the more of a "stimulative" effect it has. 

I know that it's very trendy to defend the ultra-wealthy as the engines of economic prosperity, and pooh-pooh the wealth gap, deriding anyone who mentions it as a communist. But that is a grave mistake. Here's a collection of 15 charts from the very pro-capitalism BusinessInsider.com website that show just how bad it is. 

http://www.businessinsider.com/15-charts-about-wealth-and-inequality-in-america-2010-4#the-gap-between-the-top-1-and-everyone-else-hasnt-been-this-bad-since-the-roaring-twenties-1

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lilbromarky1
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Paladex wrote: Lilbromarky,

Paladex wrote:

Lilbromarky, 100% of the purchase price of the widget would not go to China. Normally, retail items are sold for 100% profit. Wal-Mart is a huge buyer, so they get volume discounts, which is why they can sell for less than Mom 'n Pop. So, even if - for the sake of this discussion - the same widget is being sold by both businesses, and both businesses are making 100% profit on the widget, let's look at what happens to the money.

1) Widget bought for $10 at Wal-Mart in Smallville. $5 goes to Chinese manufacturer, $1 goes to pay Smallville Wal-Mart employees, $4 goes to Wal-Mart corporate bottom line, and is ultimately distributed to shareholders and executives. Those shareholders and executives invest that money in financial instruments that in no way benefit the residents of Smallville, and further concentrate wealth in the top 1% of Americans. In this very generous example, only 10% of the purchase price would stay in the local economy. And, since Wal-Mart employees make so little money, that $1 would probably be spent at Wal-Mart on food or medicine.

2) Widget bought for $12.50 at Mom 'n Pop's in Smallville. $6.25 goes to Chinese manufacturer. $6.25 goes to Mom and Pop, who turn around and spend it at the Smallville farmer's market. OR, they deposit it in Smallville Bank, which turns around and lends it to some other local business owner. Either way, the money is circulating in the LOCAL economy, as opposed to the insular Wall Street economy. Here, 50% of the purchase price stays in the local economy. The longer it stays in the local economy (e.g. farmer's market or local bank), the more of a "stimulative" effect it has. 

I know that it's very trendy to defend the ultra-wealthy as the engines of economic prosperity, and pooh-pooh the wealth gap, deriding anyone who mentions it as a communist. But that is a grave mistake. Here's a collection of 15 charts from the very pro-capitalism BusinessInsider.com website that show just how bad it is. 

http://www.businessinsider.com/15-charts-about-wealth-and-inequality-in-america-2010-4#the-gap-between-the-top-1-and-everyone-else-hasnt-been-this-bad-since-the-roaring-twenties-1

Hello Paladex, thank you for the response.  I want to clarify that I'm not affiliated in any way with republicans, democrats, the tea party, or independents.  So my hazlitt argument is based solely in theoretical economics.  I just want you to undertstand that I'm interested in learning and walking through scenarios.   I'm not interested in following a trend or attempting to influence other people's votes :)

I think I understand where you're coming from now.  It looks like the issue is, Hazlitt's ideas work in a purely theoretical environment, but the reason that your signature might actually be true is because the table is titled so to speak, so that when money flows to Walmart, it ends up circulating in the upper ranks of the social order and not ever making its way back into circulation in smallville.

Is this a fair take on what you said?  I really enjoy working through these ideas because I think it helps everyone learn and be better prepared for debates in the real world.  I certainly learned from you and I appreciate you taking the time to reply

--Mark

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Likewise

Mark, thank you for the gracious note. I think you've hit the nail on the head. Money in the local economy is being used to pay for goods and services. This has a "multiplier effect," as it circulates. Money in the investment accounts of CEOs and bankers is primarily used to manipulate financial instruments that are significantly removed from the actual production of goods and services. 

In theoretical economics, all money is created equal. In reality, that's not the case. 

In Keynesian economics, it doesn't matter whether money is spent on bombs or baby carriages: as long as it's being spent, it's creating jobs and stimulating the economy. But every dollar spent on something we don't need means a dollar less for something we do need, or - worse yet - a dollar of debt that will quickly become two dollars of debt.

We are now living with the results of that philosophy.

WHAT money is being spent on, and WHERE it is accumulating are very important, and hitherto largely overlooked, factors in economic health. 

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@UGrev

@UGrev, I would hardly characterize them as "commies." Their position is nothing more than campaign finance reform. They propose that campaign donations be made only by private citizens, and for no more than $1.

The idea is that by removing the incentive for politicians to pander exclusively to the special interests and corporations that currently make massive campaign donations, our elected officials might actually have a reason to care what their constituents think.

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"Days of Rage" came from the

"Days of Rage" came from the radical left protests in the 60's and if I'm correct, this "organization" is being run by the US communist party. This shit is straight out of the Weather Underground. 

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hey lilbromarkey and paladex

I could be entirely wrong, but you guys are talking about "money" as dollars. Wouldn't this entire discussion become irrelevant if goods and services were exchanged with gold? Dollar is just a currency. Gold is money. This is making my head hurt just thinking about it as I kick start my labor day weekend with a few pints. Carry on!

One thing that the organization in the first post reminded me of when Rage Against the Machine did a video on the steps of the NYSE. It shut down the market for a partial day I think.

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Paladex wrote: Mark, thank

Paladex wrote:

Mark, thank you for the gracious note. I think you've hit the nail on the head. Money in the local economy is being used to pay for goods and services. This has a "multiplier effect," as it circulates. Money in the investment accounts of CEOs and bankers is primarily used to manipulate financial instruments that are significantly removed from the actual production of goods and services. 

In theoretical economics, all money is created equal. In reality, that's not the case. 

In Keynesian economics, it doesn't matter whether money is spent on bombs or baby carriages: as long as it's being spent, it's creating jobs and stimulating the economy. But every dollar spent on something we don't need means a dollar less for something we do need, or - worse yet - a dollar of debt that will quickly become two dollars of debt.

We are now living with the results of that philosophy.

WHAT money is being spent on, and WHERE it is accumulating are very important, and hitherto largely overlooked, factors in economic health. 

Howdy Paladex,

Just a couple of things.

The "multiplier effect" is a keynesian concept and it doesn't work.

You said "But every dollar spent on something we don't need means a dollar less for something we do need" So if you spent 25% more at a local retailer (25% extra that we don't need to spend) you have 25% less to spend on things you need

In another post you stated that " Normally, retail items are sold for 100% profit. " that simply is incorrect. 

http://ycharts.com/companies/WMT/profit_margin#comp=gross_profit_margin

that should take you to a chart of walmart Profit Margin and Gross Profit Margin just as an example.

Spending money in your community for the sake of keeping it in the community doesn't work. People must be productive and earn your business. If they don't then the capital should flow elsewhere. Now this doesn't mean that Price = Price. Maybe the local retailer offers extra value for that dollar you spend such as knowing your name, setting aside things you like, layaway, delivery, etc etc.... I would gladly shop at a local market where I get a lot of those intangibles but pay a premium. But if I am just paying more.... Screw it.

An additional point with your suggestion of what happens to the money given the $10 and $12.50 price target. Say all you said was accurate, i'm not, but let's just say, well in that case, I would buy at walmart and keep $2.50 profit myself and make my own investment to increase my own wealth. 

I don't disagree with communities, however human nature makes your ideal nearly impossible without something similar to a religious-like adherence to certain beliefs. This line of thought could get long so I will just leave it at that.

Peace

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Gold vs. money

I'm going to defer this question to Martin Armstrong. He explains it with far more authority than I ever could.

Armstrong Economics: Gold vs Money

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@rassillon

@Rassillon, thanks for the thoughtful response. To your points:

1) Even if you don't like the term "multiplier effect," I think it's pretty obvious that if I go into your store and spend $10, and you go into another store and spend that $10, my $10 purchase had twice as much of an impact on the local economy as it would if you had sent it my $10 to the main office in Arkansas. 

2) I'm not advocating paying a 25% local markup, I was responding to the example that Lilbromarky presented. IF someone paid $12.50 at a local store for a product, it would have more of a stimulative effect on the local economy than if they spent $10 at a non-local store and saved the $2.50. 

3) You are correct. My 100% markup generalization was inaccurate.

In general, you're confusing my explanation with advocacy. I'm not saying that people SHOULD spend all their money locally, I'm just defending Malcolm X's observation that when you don't spend your money locally, you are enriching someone else's community, at the expense of your own. 

According to theoretical economics, we're all part of one big economy. What's good for one part of the economy (e.g. Wal-Mart) is good for the rest of us. Well, the empirical evidence pretty clearly contradicts that theory. When the rich are getting richer, the middle class are becoming the poor, and the poor are getting poorer, it's time to throw supply-side economics out with the trash. Pointing that out doesn't make me a communist, it makes me a realist.

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@Paladex

Paladex wrote:

@Rassillon, thanks for the thoughtful response. To your points:

1) Even if you don't like the term "multiplier effect," I think it's pretty obvious that if I go into your store and spend $10, and you go into another store and spend that $10, my $10 purchase had twice as much of an impact on the local economy as it would if you had sent it my $10 to the main office in Arkansas. 

2) I'm not advocating paying a 25% local markup, I was responding to the example that Lilbromarky presented. IF someone paid $12.50 at a local store for a product, it would have more of a stimulative effect on the local economy than if they spent $10 at a non-local store and saved the $2.50. 

3) You are correct. My 100% markup generalization was inaccurate.

In general, you're confusing my explanation with advocacy. I'm not saying that people SHOULD spend all their money locally, I'm just defending Malcolm X's observation that when you don't spend your money locally, you are enriching someone else's community, at the expense of your own. 

According to theoretical economics, we're all part of one big economy. What's good for one part of the economy (e.g. Wal-Mart) is good for the rest of us. Well, the empirical evidence pretty clearly contradicts that theory. When the rich are getting richer, the middle class are becoming the poor, and the poor are getting poorer, it's time to throw supply-side economics out with the trash. Pointing that out doesn't make me a communist, it makes me a realist.

Paladex, you are great person to converse with. I thank you for that.

Re: 1) I can't agree with your comment about it being "obvious".  Mainly because it is not as simple as a $10 bill changing hands. The equation doesn't take into effect cost/profit ratio, taxes (ugh talk about a cluster), etc. The concept you have here is a community where money never escapes. I just don't know how that would be sustainable. If money never escapes goods never come in. If only money comes in and not goods, eventually you are left with a lot of money and no goods.

Re: 2) I disagree and I agree. I am going to try and walk a fine line here, but I think it is valid. If all things are equal and it is $1 here or $1 there then I can see some sort of a case being made for $1 here, on that same note that $1 being saved and not spent is better for the individual but then that is where the individual has to go without (delayed consumption) until I can buy in bulk for a discount or what have you. If there is a price difference in favor of outside the community then the individual benefits by having both more goods & more money. It really is about production. Why should I foolishly buy locally when I know I am not getting a better value? Like I said, a local entity can "add value" to make themselves more competitive and deserving of the premium.

Re: 3) Score! lol

I agree that there "can" be a condition where MX's comment makes sense however it cannot stand by itself as a truism.

Theoretical economics are stupid. We must look at things from a real world (not the TV show) point of view. In nature animal economies ebb and flow because that is how things are kept in balance. A lot of grass makes the deer population explode which makes the wolf population explode and makes the grass population decrease, which makes deer weak and sick, which makes them easier to be caught by the wolves, which decreases the population, which allows the grass to recover and which makes the wolves skinny and sick, which decreases population, which allows the deer population to explode. The cycle continues. This is what happens in economies (human ones) too. People just don't perceive it the same. Especially since humans have an uncanny ability to kick population reduction down the road. We used to have awesome wars which were really just competition over resources that would reduce population and re-balance things. Even then we "the virus" continue to find ways to consume more and more. We humans are the "rich" of the planet, why do you expect different behaviour from our own rich?

Ok I am starting to become preachy. Ebb and flow.... I know you don't like supply side econ, and really, neither do I but I face the reality that if no one produces there is nothing to consume, if everyone only consumes, shortages happen. The solution is WAY more people should be producing more and consuming less and until we get off of the drug of cheap energy that just won't happen. Communities were formed out of necessity, but communities are really a misnomer these days. 

I think you have a pretty good handle on things. I would ask you to take a step back and get an even higher perspective and take into consideration how many calories it takes to keep a person alive and how much energy needs to be expended to acquire those calories.

Nice talking to you again.

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Some great replies in this

Some great replies in this thread representing both sides.

To be honest, I'm hung up on one item which I presented right from the git-go.  The person buying at wal-mart has an extra 2.50 in his pocket after buying the widget.  He has 25% more money at the end of the month to spend elsewhere in the economy, or he could save this 25% in whatever form he chose. 

Regardless of where the money goes (either stays local, or goes to a fatcat's investment portfolio), the person in our example has 25% more spending power because walmart is a more efficient operation than is mom n pop shop.

Since mom and pop are less efficient, supporting them is the equivalent of a bailout.  Its supporting an enterprise who's time has come and gone.  If they can't compete they go out of business.  Survival of the fittest.

I personally dont have a problem with big corporations.  They employ people.  I do however have a problem with government building laws and regulations to make it so that mom and pop have no chance of competing.   When the government is controlled or influenced by corporations we have facism. 

I think there's 2 sides to this argument with equal merit.  If we were to assume anarchy, I dont think mom and pop would have to charge 25% more in the first place.  The price difference might only be 3% in which case the shopping experience at mom n pop might outweigh the 3% percent savings that you get while shopping at a giant metal box with air conditioning.  

Big business isnt the reason that america is tanking.  Jobs going overseas isnt the reason america is tanking.  America is tanking because its currency is overvalued.  By extension the currencies of the nations that our jobs get outsourced to are undervalued.  A devaluation of the dollar would do more to bring jobs back to america than all the tariffs and laws you could ever dream up.  

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Walmart actually helped local businesses here

I enjoyed that book Freakonomics. It really turned conventional wisdom on its head. Well, here in my neck of the woods, the new Walmart actually helped small businesses. Prior to the new Walmart, the area was dying. Now, local businesses next to the new Walmart have seen a 35% increase since Walmart opened:

http://www.kvue.com/news/Northcross-Walmart-breathing-new-life-into-a-dying-property-114022119.html

BTW I shop at that Walmart, but I also have a "Buy Local" card and frequent and support local businesses in the neighborhood. Including my favorite local taco place that sits next to the Walmart. And I am going to go eat there tonight, if they are open on Labor Day. :-)

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Awesome dialogue...

I just wanted to say that I am blown away by the thoughtfulness and graciousness to differing ideas that this thread demonstrates.  It makes the different points of view a pleasure to read and ponder.  Thanks to all the contributors!

Paladex
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lilbromarky1

lilbromarky1 wrote:

A devaluation of the dollar would do more to bring jobs back to america than all the tariffs and laws you could ever dream up.  

That's a fascinating idea! Since oil, gold, et al. are priced in dollars, I suspect there might be a rather unpleasant snowball effect, but I would be very interested to learn more about the strategy of devaluation. 

Martin Armstrong just released an essay commenting on the Swiss franc devaluation, in which he referred to the "devaluation wars" of a generation ago. Sounds like a history lesson is in order ... Armstrong Economics: The Swiss Devalue the Franc

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