Quote from oldtime:
ok Ed, I'll re read it. How'd that place on the Jersey Shore make out? I can't believe a kid like me from Indiana suddenly knows about the Jersey Shore and Staten Island.
The thing I was thinking about, sure, you can't make money by breaking windows, but that's a lot of money, they say at least 7 billion that was sitting in conservative investments in the insurance companies that are now going to be paid to homeowners that are in turn going to pay it to construction workers to rebuild.
That's a lot of money moving around that wouldn't have been otherwise. It's not like they are taking it from anybody. It has been paid in premiums for years. One of the few examples of American savings now all getting unleashed.
ok Morgan. I know most of the crap companies I am invested in can't think of anything better to do with their money other than give it back to me in dividends so I can pay taxes on it.Quote from morganist:
The money sitting in insurance funds gets invested in funds that enable production. Unless it is invested in Treasury products, in which case it is being invested in Obamacare. Either way it is doing something. Money never does nothing. It just moves faster slower or leaves the country or comes in from abroad.
Quote from oldtime:
ok Morgan. I know most of the crap companies I am invested in can't think of anything better to do with their money other than give it back to me in dividends so I can pay taxes on it.
And most of these insurance companies I am talking about do nothing with their money other than loan it to the government.
And who the hell knows what the government does with it?
Now the markers get called, and everybody has to pay up.
Bonds get sold, stocks get sold, bonds get re buyed, homeowners get paid, on property that was just sitting there, Unemployed get hired to clean up and re build, they pay off bills, their loan sharks reinvest. And it's all paid for, not by taxes, but by premiums that were sitting there all the time.
So yes, it's not anything new, but it's just a lot of money moving around, and everybody gets a small cut each time it changes hands. It's wealth redistribution in the truest sense. And it doesn't really cost anybody anything except the insurance company, who could have made more if the peace has lasted longer. But they were already hedged and will make it back up with new higher premiums now that people know how risky life is.
So there is no such thing as a perpetual motion machine, but selling risk is about as close as you will come. All you need is some food, a decent animal, and a fan (once the power supply for the fan goes out, you are in business.)
well it's about damn time I was finally right about something. I'll enjoy it until Ed comes along and tells me how much I am wrong about everything.Quote from morganist:
There will be some benefit to this. The money will be directed to construction firms and create employment it will also bring in money that the insurance firms invested abroad that would not benefit the US before. That is the main benefit. So I guess you're right.
Quote from Ed Breen:
Sorry, old time, "It is an ill wind that blows nobody good;" it is well established that there is no societal benefit. You should read Bastiat; "Ce qu'on voit et ce qu'on ne voit pas."
The condition of a shortage of investment making return on investment by insurance companies low is not changed by a Hurricane. The condition of the excess labor of construction workers that exists before the hurricane is not long changed by the hurricane...and there are costs in the sector shift of resources used to rebuild.
One of the main Keynesian confusions is to assume that all spending is the same, that all transactions are the same, that the health, the wealth, of an economy is measured by the nominal cost of transactions, as if they are all the same value with regard to creating wealth.
In the disaster of a destroyed above ground wire electric grid and the distruciton of primary and secondary homes, the fact that the damage is substantially, but in truth only partially, insured, does not mean that the work created to rebuild will create any wealth. It should be pointed out that much wealth invested in these homes had been lost before the hurricane. There should be some thought about whether, where and how to rebuild these homes. The electric grid is simply being put back up as vulnerable wires among the trees again; the same way it was put back up last year. The IBEW is very busy again but are they creating wealth? To create real wealth you might rebuild the grid in a way that the next storm (perhaps coming next week) is not so likely to knock out the grid asset again...but I suppose this not the concern of the IBEW; I suppose they favor working on projects whose destruction again is forseeable; the broken window fallaciy is really not that different from 'planned obscellesence.
Wealth creation is not make work. Giving up your liesure to stand in line to fill gas cans to power your generator; taking time off from your productive job to cut trees and putt them off your roof is not creating wealth for you or for society in general. Employment is only sustainable if it is used to create and maintain assets on a continuing basis. Simply repairing the damage of a disaster does not create any wealth; it simply restores the status quo, and it is never fully insured. It shifts resources between sectors for a time and creates other sector market distortions and other unseen effects. The society is poorer in that resources have been directed to replace rather than to produce something new; the aggegate asset base does not grow. In the end when the repair is done and the resources have been spent in the repair, there will have been less investment elsewhere in the economy and the repair will have been made to depreciating assets without changing the pre-existing context of why these assets were depreciating in the first place.
Maybe the French will take up your reasoning and burn down Paris to save thier economy.
Quote from McFadden5252:
No piezone unfortunately most of what I said was true. There were few instances of mild inflation however mild deflation spanned a nice 150.