Germany offers free college tuition to U.S. and international students

All German universities are now free to Americans and all other international students. The last German state to charge tuition at its universities struck down the fees this week.

The ramifications...

• Germany is about to be flooded with student visa applications.
• The cost of rent in Germany will skyrocket.
• The Germany economy is about to boom to far greater than that of the U.S. on a per-capita basis.
• German is about to become the hottest course in U.S. schools.
• U.S. student enrollment is about to plummet causing a short-term spike in tuition in a futile attempt to make up the difference. After a year or two, the U.S. will be forced to follow Germany's lead.
• A great many U.S. students that get into Germany will do their best to stay after graduation as European governments and societies share the beliefs and ideals of young people far better than the U.S.

Maybe there is hope...

Economics 101: Something from nothing

I've learned that my post back in January 2014 (below) was greatly inaccurate though the result is still essentially the same. -- docsalvage, June 2014

See the Wikipedia article...

Money Supply - Fractional Reserve Banking - example

On Income Inequality ...

re:
On Income Inequality: A French Economist Vs. An American Capitalist
by MARILYN GEEWAX, May 11, 2014 5:40 AM ET

Strangely enough, I think they're both right... In the same way each of the proverbial blind-men is right in their description of the elephant they only know by touch.

The healthiest possible economy occurs when 100% of the population feels maximum incentive to risk innovation in the pursuit of happiness (i.e. success).

Because the motivaters of the 1% are mostly in opposition to those of the 99%, maximum prosperity can only be achieved at some point of equilibrium between them. We've been WAY out of equilibrium for about 10-20 years.

Economics 101: Creating Money

Banks create money. That's their main purpose. When a bank loans you $100,000 to buy a house, they don't actually have $100,000 sitting in a vault somewhere. In fact, at most, they have about $10,000 because the "liquidity ratio" in the U.S. is between 0 and 10% [[http://en.wikipedia.org/wiki/Reserve_requirement#United_States]]. (Watch Bailey try to explain this next Christmas while you're watching It's A Wonderful Life for umpteenth time) The other $90,000 is, effectively, a kind of credit... a promise to pay in the future. Yes, they will cut a check for $100,000 but they're only allowed by the government to do that as long as they have deposited no more than 10% of that amount with the Federal Reserve. Every dollar the government prints, is either in the bank or a promise to pay in the future... a bank or someone holding government bonds (i.e. Treasury bills, Savings Bonds, etc.). Thus, about 90% of the "wealth" in the U.S. is in these promises-to-pay. The more common name is "credit."

2014-01-24

This paper effectively refutes the accepted explanation of "fractional reserved banking" the "money multiplier"
http://www.thefreelibrary.com/Money,+credit+and+bank+behaviour%3A+need+for+a+new+approach.-a0250677146 and makes the case that it was this reversal of cause and effect that caused the actions taken in response to the 2008 financial crisis to be largely ineffective.

Too Big to Fail

Capitalism depends on competition.

Competition depends on the risk of failure. A business "too big to fail", by definition, is immune from the risk of failure and so is immune from competition. Therefore, a business "too big to fail" is not a capitalist business.

Institutions too big to fail, like governments, are held accountable by the governed through elected representatives.

Any business "too big to fail" is beyond the market's influence. Owner self-interest reigns unchecked. Public regulation is then required in its place in order to mitigate the natural drive to predation of competitors and exploitation of customers.

Without significant competition or government control, a company that is "too big to fail" cannot help but economically prey upon the all in its single-minded pursuit of profits.

Firing People Raises Morale ?

In response to Carlton Vogt's post in Enterprise Ethics Weblog about the HP layoff of thousands of employees, this came to mind...

The Gift That Keeps On Giving

What's the incentive for mass firings?

(1) Large short-term reduction in costs which usually increases stock price which attracts more investors and increases net worth of stock holders and makes personal profits if liquidated.

(2) Any negative repercussions of the firings is usually short-lived. Morale plummets initially causing reduction in individual productivity (which is not perceived by management since the massive numerical increase in productivity caused solely by fewer people now responsible for doing more work dwarfs it). However, without more layoffs, the remaining workers lose their fear of "being next" after a few weeks. That's when a trickle of new hiring begins which is hyped extensively, internally and externally, to show the company's new found "strength". Over a year or so, monthly figures are released showing "new job creation". In short, the one-time massive layoff was largely to allow the company to show months of "growth".

(3) Undesirables can be purged without following disciplinary procedures.

(4) The company can call itself "lean and mean" which somehow is considered good nowadays despite the fact that, in nature, "lean and mean" would usually describe an animal that is starving and desperately attacking anything and everything they encounter.

Hmmm...