All about Capitalism

So you already know about the bailout of the banking and auto industries. They are receiving billions of dollars practically every day. Our stock market has nearly been cut in half in terms of points. What does this mean, and why are we going through a recession? The answer is what our world runs on today: Capitalism. Capitalism is "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." In other words, Capitalism is when the primary means of producing money and goods in an economy is through individuals who own the means to produce the good. The system works in a sort of "circle". The factory hires people to make a product, the people receive money from the factory in the form of pay, and in turn they buy the product, or a population buys the product. Last the Government taxes the sale of the product from the factory to the people, and taxes the factory as a business. In the end, The person who owns the factory makes more money than the people, and benefits the most from everyone's labor. The workers in the factory are being paid less than the factory owner, but do not have the funds to start their own factory, and have families that they need to take care of. The government makes less money on the factory's existence than the factory owner, but also taxes the people to get revenue thus making schooling and the like possible.

When a business owner who has three factories wants to continue expansion (at a fast rate) He often needs a loan. He figures that a bank loan would be a nice as a one time investment into his factory business, but he is really looking to grow fast. He wants a stream of income that will allow him to grow even faster. He decides that the people he sells to could give him those loans. And the stock market is born. The people don't have a large sum of money to give at one time, so they buy pieces of the business from the owner a little bit at a time, but with enough people buying parts, the business man receives large amounts of cash to immediately grow his business and in the future, the people can sell their piece of the company for more money than they bought it because the growth of the business made the business as a whole worth more and thus, pieces of it worth more.

Now, all of this sounds like a great idea where everyone in the society is served and everyone in the society benefits from the economic growth of their companies. But there is a huge problem. Right now in order for this to go on, the business needs to get exponentially bigger. It needs to continue growth to continue benefiting the people. But in the real world no business can do that. And when corporations reach their maximum limit of growth, they either need to keep introducing new products, expand the number of people they are selling to, or they need to artificially create more growth and get out with as much money as they can. The problem with Capitalism is that markets like the housing market or the technology market are already at maximum growth, and don't cave much to work with in terms of making money besides the turnover rate (the destruction or inferiority destruction of a product). When the businessmen want even MORE revenue than their market naturally makes, they create something called a "bubble"
A "bubble" is artificial growth by means of hype. Growth through excitement of the product or tricking of the buyer (often both). Every "bubble" leads to a crash. It is inevitable. During a crash, The people who trusted the company(s) doing the manipulation are the ones who are hurt the most. Leading up to our current crash and now recession, there was massive trickery, and manipulation of the people in terms of housing. The banks led everyone to believe that they could have and afford a house that was above their means of paying for. People, trusting the bank, took out a loan and went to buy a house. They could not afford the house, and the bank knew they couldn't afford it, but they gave it to them anyway.
You may now be thinking, "how could our government let the banks do that to us?" and the answer is because they didn't have our best interest in mind. There used to be laws in which the banks were regulated by the government and none of this could happen. However, about a decade ago there was lobbying for deregulation of the market. Our government, being very willing to listen to lobbyists with deep pockets, decided to vote on whether or not to get rid of much of the regulation. Not surprisingly, they voted to deregulate the market, and corporations being greedy and desiring more money went to work manipulating us and building a bubble. Today we are seeing the fallout of or governments failure to protect us from greed and the corporations in America manipulation the populace and getting rich. Now because one collapse of one market infects the whole system, our economy is on the rocks. On top of that, for some reason, our Government thinks it is a good idea to give massive amounts of money to the corporations that manipulated us and came up with this failing business plan. Think. Will the corporations do that to us again? Is our government going to re-assert regulation? or is this all just part of the circle of capitalism?