Are record corporate profits here to stay?

Discussion in 'Political Opinions & Beliefs' started by Crafty, Feb 21, 2012.

  1. Crafty

    Crafty Well-Known Member

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    As the economy is a very complex machine, most things are not as black and white as they seem. I see stuff all the time about how companies have record profits, if this was true it generally means that the company would be reinvesting in itself and helping to grow the economy, but that doesn't seem to be the case. One possible solution is that these profits were not based on increased productivity? Reading the following helped shed some light

    They make a very logical explanation, monetary manipulation like this will unlikely have horrible consequences for us all.
     
  2. Daybreaker

    Daybreaker Well-Known Member

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    And it will be blamed on the working class being lazy.

    So do I understand that American companies aren't making a profit by selling to Americans? Or did I misunderstand that part?
     
  3. Crafty

    Crafty Well-Known Member

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    Are you talking about the decrease in corporate profits? If so, you are probably right about that when it comes to a few people. But those are the people who look at all these things in black and white and ignore much of reality.

    Its a rather large blanket statement, I would not say yes or no outright. But many of the big corporations with record profits are not making much if any profit here in the US. Look at GE and GM for example, they are expanding their businesses in China going there for profits.

    Another thing to think of, if the dollar strengthens against other currencies and a lot of these "profits" dry up, tax revenue will decline leading to larger then expected deficits, which isn't good when the Obama administration is looking at 1.3 trillion deficit this year. If this article is right and the dollar starts to strengthen the Fed is in a horrible situation, profits disappear, market starts to go down, tax revenue drys up. If they print more money to keep the strength down it puts us at a larger risk of severe inflation if that happens they would have to raise interest rates to take money out of the system, at the same time this would have dramatically horrible effects on the interest of our national debt causing it to grow even quicker, quite possibly eclipsing defense spending.

    This is what happens when people try to manipulate a currency, they end up having to play reactionary and eventually cause it to collapse.
     

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