Re: Re: KFC, Taco Bell and Pizza Hut file for bankruptcy i...

[Guest guest]

Fast food is a kind of luxury item for the average person in that it is something they don't have to have but they like to get now and then because they like it and it saves them from having to cook. However, as financial belts tighten, this luxury is something that will be cut. Looks like that is happening.

This time around when the economy tanks and inflation kicks up, people won't have nearly the safety net they did last time. People are already spending what little savings they may have had. Once inflation kicks in, the savings won't be worth much anyway and will have to be spent right away while the money still has value. This will provide a little boost to the economy, but it won't last since once the savings are gone people will have only their wages and debt. Debt will be less attractive but probably still used because of the increasing prices and stagnant wages, but interest rates will rise and that will be a killer. I think the banks will increase credit card rates to match inflation so they can keep making a profit off of the debt which should be easier to pay off with inflated dollars.

Maynard Keynes and Fisher also supported the use of inflation to force people to spend money. They thought that by deliberately causing high inflation they would force people to get the money out of their matresses and savings accounts and spend it. This spending was supposed to boost demand and then supply and thus boost industry as it geared up to meet demand. However, as I noted above, this is only temporary and proves they were terrible economists. Once the savings are gone, demand dries up. With demand dried up and no capital saved in the banks for the banks to lend for business to operate, businesses shut down. People get laid off and have no money at all which depresses demand again and the cycle repeats. The result of Keynes and Fisher's plans were a deeper depression that lasted nearly a decade where previous downturns lasted a year or two at most.

The Federal Reserve and government also shame some blame easy money from the Fed and the relaxing of margins, bank withholding deposits, and other things led to an overheated economy with too much funny money flying around in the financial sector and it all fell down. Sounds familiar doesn't it? It should because that is pretty much exactly what happened again and it happened because the Fed let too much money flow and government undid laws passed after the Great Depression to prevent another on from happening again AND congress refused to act on the clear danger of the mortgage instruments that broke the bank.

In a message dated 4/2/2011 12:01:47 A.M. Eastern Daylight Time, no_reply writes:

But...but...I thought the economy was IMPROVING! How could it be IMPROVING when three of Canada's biggest fast food chains are filing for bankruptcy protection. I thought Canada's economy was STRONGER that the US's. Maybe if we keep pretending the economy is okay, it will be.Yeah, that's the ticket. Administrator