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These decisions are greatly related to
the supply and demand of the market itself because this is what controls market rate. In the terms of
Layman, capitalism is free market trade, with no externalities. True capitalism can only exist where
there is no help from the government, and there is no bound from people. In this notion, one may find
that the market will constantly be in a stride to get back to equilibrium. Once the system is tampered
with, one may find that the market will simply tank and reset itself. The act of tanking is the markets
way of getting back to a place where Price = Quantity (P=Qs), that is also where Marginal Revenue =
Marginal Cost (MR=MC). We will call the act of tanking a depression, where the rising from the
ashes of a depression will be called a recession.
The Cookie Jar Theory of Economics
(Claude A. Barron Ph.D.)
in itself is an externality on the market, in
that it proceeds to tackle the diminishing quality of life for many of a government’s citizens. This
theory is in compliance with the national system of welfare to the general people. The cookie jar is
where you will find people looking for an answer, or a way out if you will to solve the financial
problems of the nation. This fictitious jar is where money will be distributed from, and given to the
public free of charge, including that one does not have to work to accomplish a sub par standard of
living. Within the cookie jar, people are willing to take from the jar, but rarely ever willing to put
something inside of it. (i.e.: money, time, and effort). I often times hear Dr. Barron say, “If all of these
people would take their hands out of the cookie jar, we would better off.” I will at a later time in this
seminar expand and combine the theories composed in this lecture.
The next theory, which is my own personal theory I call The Box Theory of Diminishing Budgeting.
If you will, imagine there are two different boxes, these boxes represent the perpetual system on
which we claim to operate on, that is Capitalism. With only two boxes in the picture, you will find
that they represent were all money within the United States is allocated with the absence of the current
welfare system. Now, we will introduce a small box with two bigger boxes to each side of the smaller
one. Imagine if the budget in America is only $1000.00 in a year, and this budget does not change
much from year to year. In order to create that smaller box, you must take money from the two bigger
boxes. So where we give money to welfare, we must now take money from things such as military
spending, or ‘god forbid’ the salaries of congress workers. The premise of this theory is that you do
this enough and eventually the two bigger boxes will become empty, and then you will be left with
only one box, this is the welfare box alone. Once you have this single box alone, you will no longer be
able to call our current system capitalism; instead it will now be considered socialism. What we know...