It's unfortunate that economics is otherwise known as "the dismal science", but it is true no less. It's not necessarily because it's boring, but rather, much of what has to happen to keep an economy in tact (or to bring it out of an economic crisis) turns out to be unfair to quite a few people. You never hear it called the dismal science on any news station, nor do you particularly hear anything about any actual economic substance. All you hear is divisiveness because, in the end, all politics does is serve to be divisive. What else does politics do for us? It gets people fired up, fallacies and rumors are created, everyone winds up lying and manipulating something to their own advantage, and in the end, there's no one you can really trust, ESPECIALLY not the average American voter.

For instance, the amount of people who cannot accurately define Capitalism and Socialism is absolutely astounding. Not only have politicians managed to fool those who don't know any better, some otherwise intelligent people cannot give an accurate definition of either, nor do they understand almost every successful economy in the world has elements of both, EVEN OURS. I almost wish I could do a film documentary, going around asking people what they think Capitalism and Socialism mean. But since I don't have money for a camera, you'll have to read this instead.

Socialism and Capitalism (the technical term being Free Enterprise) are both very broad terms to describe an economic theory (I emphasize the word theory because many economic beliefs turn out to be fallacy, or are utilized at the wrong time; how often do you hear politicians say "seemed like a good idea at the time"?). Socialism, in short, favors state ownership over private ownership as a means of production and distribution (which includes trade), Capitalism favors privatization. So when you hear the terms "big government" and "socialism" in the same sentence, in a way, it's true, but what they simply refuse to understand that without elements of American Socialism, they might as well have decided to leave the 35W bridge sitting in the river, the police and fire department shouldn't get funding from the government, road work should never be done on a road full of potholes, and all libraries should be shut down ('cause damn, those evil libraries, they're the biggest threat to America, bigger than al Qaeda!). As one journalist put it, "Socialism is apparently what is created when a president you do not like spends money on things of which you do not approve".

Yes, if a country constantly pushes more and more toward Socialism, it can move more toward fascism, and can segway into a dictatorship; for as greedy as the banking and oil industries are, politicians are power hungry. But even the most Socialistic countries, like China, have elements of capitalism as well. Ever seen that label "Made in China"? It's because China opened their trade boarders after being completely closed off for decades, and now they're one of the most rapidly growing countries in the world. Not to mention that when you hear about the U.S. being in debt, it's because we sell most of our T-Bonds to China, so we continue to spend money we technically don't have. That expansion of trade was an element of Capitalism. It's called a Mixed Economy, and today, nearly every economy around the world is Mixed. When China finally decided nationalize, their economy went through a much needed expansionary phase (we'll talk expansionary and contractionary phases in just a moment).

One of the biggest government takeover fear tactics that have been thrown around have been involving health care reform and the Public Option, which, yes, would technically be a form of socialism. I have some fears of the Public Option being a failure if introduced too soon because of the debt our predecessors have laid before us. No question that I think it's essential, but if we pump too much money into it too soon, what exactly will happen? I honestly don't have an answer. Should we jump on it right away? Or should we impose ultra-tight regulations of health insurance companies and hospitals so wasteful spending is cut down, and then segway into the Public Option? It would be awful for the 10% uninsured as I am part of that 10%, but can it be done with the debt we have? I'm not saying we can't, I'm seriously asking if it's possible. As it is, we're spending money we don't have, so if we spend more money we don't have, how will that work? Better yet, how does America even get money? What exactly does America produce these days that people around the world want to trade for? What are things that we produce here in America that no one gets anywhere else? (please no corny answers like pride and dedication, I would like substance please). If you have an answer for any of the questions I proposed, leave a comment below.

Now there are many who are outraged by our taxpayers money going toward "wasteful spending" and that somehow, the spending will lead to a dictatorship where wire tapping and the Patriot Act somehow didn't (which proves that both parties favor Socialism, just in different forms. Like I said, Socialism is a very broad term). They preach Reaganomics, shrinking government to the point where you could drown it in a bath tub, and no taxes. What they don't understand is A. In 1982, Reagan imposed the largest peacetime tax increase in history; B. Where do you think funding for recovery from national disasters comes from? Sure as hell ain't privately funded! And C. Elements of Reaganomics did not work because his ideas were based off of unfettered capitalism, which can only function if those in charge of the free market economy are fundamentally and ethically sound (which I think the banking and oil industries have both proven that greed takes over everything when there is no regulation). What worked about Reagan's policies was that he imposed a much needed contractionary phase for the economy.

Quick history lesson: in the 1970's, there was a lethal economic phenomenon occurring in the U.S. and the U.K. known as Stagflation, a combination of unemployment and inflation. This was a time when Keynesian economics set the standard, the clearest example being Nixon's "War on Prices." Nixon wanted to lower prices without waiting for the economy to sort itself out. So he thought that you could throw money at producers so that government spending could make up for companies lowering their prices (keep in mind, they're lowering prices not as a result of supply or demand, just lowering for the sake of lowering, sounds nice right?).

But what happens when you force prices to change like that (either forcing them to be higher or lower), because of price ceilings and price floors, you create massive surpluses or shortages that producers cannot keep up with. A forced price change does not all of the sudden make people buy things if unemployment rates are still soaring; it was fallacious logic and a failure in American Socialism because all factors weren't taken into account. So essentially, every president during the 70's was trying to spend their way out of an economic downturn caused by inflation, which is directly caused by too much spending. So it was like trying to bleed on someone else's wound and hoping your blood clots faster so they won't need stitches. When Reagan took office, he tightened the money supply, which caused a recession (a necessary one at that in order to get back on track, it's just that no politician wanted to put their chance of getting reelected on the line by putting us through a recession), which ended the inflation, which allowed companies to hire more people as it didn't cost as much to produce and sell goods, and gradually, unemployment numbers reduced as a result. This massive spending reduction and tightening of the money supply was what as known as a Contractionary phase of the economy.

What is happening nowadays I don't believe has a specific term, but it is a combination of Deflation and unemployment as opposed to Inflation and unemployment. So when you hear Republicans talk about what worked when Reagan was president, that's the key thing you gotta look at: When Reagan was President. These are two completely different economic crises, and one cannot use the same techniques as were used in the early 80's. We need an expansionary phase right now, which Obama has done by signing the stimulus package into law (which has worked to some extent but probably needed more oversight).

The point of a stimulus is to have broad spending. Sure you have some categorization as to where you're putting what money, oversight is very important in that respect, but you give money to industries and corporations as a whole, which is like the trickle-down theory, only instead of trickling down it's a full dousing with a fire hose, for all industries and all companies. Tax cuts help to some extent, but if you're talking about fixing markets within the U.S., tax cuts don't put enough money back in the consumer's pocket on their own as all around tax cuts don't have as big of influence on the market as the consumer itself. If the market is no different, the consumers will spend no different, and if a business is in debt, or on the verge of going into debt, a tax cut won't put as much money back in their pocket as a bunch of consumers would. Which is why the government needs to act as the consumer and spend instead of us right now. In other words, there is less demand for products, and the government needs to get demand up by spending where consumers cannot.

Tax cuts have to be a part of it once the economy's demand gets rolling so that the consumers can continue to spend as opposed to the government spending themselves out of existence. However, the government needs to do the spending first, and they need to spend all-around. I know it almost sounds irresponsible to just toss money at every industry there is, and in most cases that's true, but right now, everyone is suffering. Everyone needs some help. The economy needed a stimulus that involved spending everywhere, but what we also need to go along with that is to give the appropriate tax breaks to our citizens so that they can continue what the government jump-started. Consumers spend everywhere; they don't think about spending money in a way that could help create jobs. They spend money on everything; things that are of personal benefit, and right now, nobody can spend on what benefits them the same way. The key is pumping money into everything, and allowing our citizens to continue that spending as opposed to the government continuously spending over and over again.

When government puts forth large amounts of money toward something, prices goes up, and if used too much, results in inflation (or even hyperinflation, Germany once experienced inflation upwards of 10,000%). However, the analogy I always use is this: If someone needs an injection of epinephrine (the fight or flight hormone; adrenaline essentially) because their blood pressure or pulse is significantly low, you give it to them. If you give them too much, they die. If you don't give them enough (or if you don't give them any at all), that will kill them as well. John McCain proposed a spending freeze, which would be the equivalent of not giving the patient any epinephrine, and would have continued this deflationary downward spiral. So what we need right now is to expand the economy, and yes, that does involve government spending.

It is hard to figure out what to do exactly considering we have so much debt. Are we basically screwed no matter what? If we stop spending, we go into massive poverty quickly. If we continue to spend, we go further into debt, and then other countries refuse to buy our T-Bonds, which completely cuts off any ability for us to spend anything, and then sends us into poverty. Are we on the verge of becoming a 3rd world nation no matter what path we take?

Anywho, I hope the point you got out of this (if you actually read it all) is that the terms Capitalism and Socialism are thrown around like confetti on New Years, and that the two terms are both very broad. It's much deeper than too much socialism = government takeover, and too much capitalism = anarchy (hell if you really want the best example of unfettered capitalism, look at the illegal drug market and see if that works really well).

wow that was really long

thanks for the overly verbose monologue, although my anal-retentive nerd gene is forcing me to make some corrections:

socialism: a theory or system of social organization that advocates the vesting of the ownership and control of the means of production and distribution, of capital, land, etc., in the community as a whole.

capitalism: an economic system in which investment in and ownership of the means of production, distribution, and exchange of wealth is made and maintained chiefly by private individuals or corporations, esp. as contrasted to cooperatively or state-owned means of wealth.

these are what you call "professional definitions," because they were inscribed into our most holiest of texts (not the f-ing bible, that collection of lies!), the dictionary. "Popular definitions" are what occur after a professional definition has been hashed out, and then the media and the masses get on it, and twist it in their typical ignorant ways. So "capitalism" and "socialism" are not broad terms at all, they're very specific, but common understanding of them is very flawed. The Nazi party was technically socialist, and the Soviet Union was technically communist, but neither party lived up to the professional definitions of their trade.

In the world of communication, there are several stages of added distortion or skewing between sender and recipient. It is here that the "broadening" of definitions occur. Know that any person choosing to define themselves as one of the intelligensia of our society MUST never use popular definitions, here is where breakdown in communication innevitably occurs.

Now that i've laid down a couple caveats, i can move on.

Socialism does not lead to facism, and the United States of America is not a capitalist society. Fascism comes when the government body can systematically remove the civil liberties of it's citizens without a revolution. This is what is slowly occuring in the U.S. right now, right in front of the stunned faces of 300 million people. By utilizing tactics of fear and impoverishment, a government can break the will of the people and turn them into crying little babies reaching blindly for a teet to nourish them. The impoverishment comment leads nicely into my next point here.

Inflation is the relationship of liquid capital (dollar bills) to wealth (material stuff). The economic system of the U.S. is based on a flawed theory of infinite growth, it got there due to interest, specifically compound interest. If i loan you a dolloar, and you have to pay me back $1.15, you have to aquire that extra $.15 somewhere else, most likely from working, which when you look all the way up the line, you find that your boss borrowed money for the business, and your government borrowed money to implement it's policies. So what i'm failing to illuminate here is the fact that it's all borrowed money, and there is interest on all loaned money, meaning that the money owed to the bank will always be greater than the amount of money available! With the inception of compound interest the difference between "debt - (liquid + wealth)" is growing at an alarming rate.

Now for the control in the experiment: this is something that financial experts have known for about 80 years now. The paper bill that has fictional value, known as your currency, is throttled like any commodity reacting to supply and demand. A society's economic value is determined by the sum of it's assets + exports, minus it's debt load. At any time, this can be calculated by people who've never seen the genitalia of the opposite sex in person, but for now we'll just call that value "x."
So if a society has a value of x, represented by 20 billion in little dollar bills, what happens when they print more currency? It simply devalues existing dollar bills, because "x" hasn't changed, only the number of bills representing it. Private banks can throttle the production of currency with very predictable effects, and yet they consistently opt with the production of more dollar bills. This fact, in conjuction with the fact that banks are always owed more money than they loan out, makes inflation a guarantee in our world.

Ready for the real kick in the knackers? When someone borrows money from a bank, said bank has no obligation to reserve the loan amount out of it's liquid until the loan is paid back. What does this mean? It's fictional money! You've been duped!

Great, but if i would type this much, then i want a salary.

Please keep in mind that when I said "broad term", I mean that a lot of things can be classified as either socialist or capitalist. For instance, Medicare and The Patriot Act are both technically Socialist programs. I am also aware America is not Capitalist.

With that being said, Socialism, when it comes down to certain policies, can be taken advantage of by someone who is power hungry, and certain laws, when manipulated by such a power hungry person, can make it much easier for someone to impose Fascism.

Also keep in mind, there are different levels of liquidity, cash being the most liquid. Seems like we both were trying to make a similar point: we don't have money of our own.

Your last paragraph about value "x" was also in part what I was trying to get at with Nixon's policies, though we just worded it differently. If supply rises while demand remains the same, it results in the value greatly depreciating, and is the same with money.

Overall, I think you and I are on the same page.