The Economy Thread

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  • sgreger1
    Member
    • Mar 2009
    • 9451

    #1

    The Economy Thread

    So, I am curious what fellow snuson members feel about this QE2 quantitive easing nonsense that is going on. It is a bigger deal than the news is making it and was wondering which train of though people here subscribe to:

    1) That creating 600 billion new dollars will stimulate the economy, and be equally as successfull as tarp, the stimulis, and that last round of QE.

    2) That the fed has nothing left in it's bag of tricks, and represents a last desperate attempt at kicking the can down the road for another couple of years to make the banks look solvent and make the illusion that things are okay.

    3) That this will all end in a hyperinflationary armaggeddon.



    The dollar is being debauched at the hands of the Fed, and the massive debt and future commitments we owe will never be paid off in “real” money. Boston University Economist Laurence Kotlikoff says the real amount America is on the hook for is $202 trillion. For perspective, just one trillion dollars is a stack of $100 bills nearly 68 miles high.


    Earlier in the year, the IMF effectively pronounced the U.S. bankrupt. Section 6 of the July 2010 Selected Issues Paper says: “The U.S. fiscal gap associated with today’s federal fiscal policy is huge for plausible discount rates.” It adds that “closing the fiscal gap requires a permanent annual fiscal adjustment equal to about 14 percent of U.S. GDP.”


    Based on the CBO’s data, the fiscal gap of $202 trillion, which is more than 15 times the official debt. This is a deficit that will never be paid off as it is mathematically impossible in our current system.

    The scale of what the Federal Reserve is doing is unparalleled in human history. No country has ever produced so much money and so much debt in such a short amount of time. And it leaves it open ended, leaving the possibility open that it will do yet another round next year.





    If this is the case, and our debt can never be repaid and a much larger collapse is bound to happen at some point, than what do you think will become of the United States.



    NOTE: Lets try not to make this the normal circle jerk Obama bashing thread, we all know he sucks but this is really above his head. When people talk about the puppet masters that "really" control things, the federal reserve and large banking intirests such as this are the ones they refer to. No president can stop this.
  • devilock76
    Member
    • Aug 2010
    • 1737

    #2
    Even if I was going to bash Obama on this I would be bashing him for the same thing I would bash Bush on. It has been a long time since we have seen a true fiscal conservative in office. The bottom line is the real problem of this in the last 30 years is more cultural in my mind. We have developed into a now society as in I want it now and the future be damned. My generation and younger seem to be the worse culprits. The problem is that all our economic indicators are based on consumption and constant growth. Eventually we will run out of resources to consume and then what. The hard core proponents of said model will say things like mining asteroids and other too far off to be practical plans.

    A real culture of conservation and saving has to occur. This is one way that the green movement, if it wasn't hijacked by corporate interests could be effective. A real fiscal conservative and a real green movement could make a lot happen for this.

    Ken

    Comment

    • lxskllr
      Member
      • Sep 2007
      • 13435

      #3
      Originally posted by devilock76 View Post
      Even if I was going to bash Obama on this I would be bashing him for the same thing I would bash Bush on. It has been a long time since we have seen a true fiscal conservative in office. The bottom line is the real problem of this in the last 30 years is more cultural in my mind. We have developed into a now society as in I want it now and the future be damned. My generation and younger seem to be the worse culprits. The problem is that all our economic indicators are based on consumption and constant growth. Eventually we will run out of resources to consume and then what. The hard core proponents of said model will say things like mining asteroids and other too far off to be practical plans.

      A real culture of conservation and saving has to occur. This is one way that the green movement, if it wasn't hijacked by corporate interests could be effective. A real fiscal conservative and a real green movement could make a lot happen for this.

      Ken
      That's how I see it. Capitalism as practiced by the west is fundamentally flawed. We're heading down the same path as Communism, but it'll just take a little bit longer.

      Comment

      • devilock76
        Member
        • Aug 2010
        • 1737

        #4
        Originally posted by lxskllr View Post
        That's how I see it. Capitalism as practiced by the west is fundamentally flawed. We're heading down the same path as Communism, but it'll just take a little bit longer.
        George Carlin once said that Germany may have lost WWII but Fascism won, and it didn't come to America in brown shirts and goose step boots but in Nikey swooshes and Igottabuydevice.

        Ken

        Comment

        • sgreger1
          Member
          • Mar 2009
          • 9451

          #5
          Originally posted by devilock76 View Post
          Even if I was going to bash Obama on this I would be bashing him for the same thing I would bash Bush on. It has been a long time since we have seen a true fiscal conservative in office. The bottom line is the real problem of this in the last 30 years is more cultural in my mind. We have developed into a now society as in I want it now and the future be damned. My generation and younger seem to be the worse culprits. The problem is that all our economic indicators are based on consumption and constant growth. Eventually we will run out of resources to consume and then what. The hard core proponents of said model will say things like mining asteroids and other too far off to be practical plans.

          A real culture of conservation and saving has to occur. This is one way that the green movement, if it wasn't hijacked by corporate interests could be effective. A real fiscal conservative and a real green movement could make a lot happen for this.

          Ken

          While this is completely true, the solution you propose will not work. The problem with a cultural change to fiscal conservatism is that the system is built on the opposite of it, and if fiscal conservatism begins on the street level, than the entire system collapses.


          Only 3% of money traded in the US economy is actual paper federal reserve notes, the rest is all IOU's and debt, aka fake money, which gets traded around as though it had value. When you spend $10k to get a 900k mortgage, the bank will take that 900k you owe them (in the future), and invest it (today) as though it was money they already had. That investment of their 900k IOU is now "new" money in the system and will find it's way back to the street at some point, creating inflation. They are trading something that does not exist yet as currency, just calling it US dollars when it is in fact nothing more than numbers on a computer. Then, the federal reserve will routinely monetize our national debt by creating more fake IOU money to buy up US treasuries (debt), at interest of course.


          This is the house of cards our system depends on, and why things must constantly grow in order for it to work. It is also why we can never pay it off. The Federal Reserve has lent us more money than we can mathematically pay off, and the devil is in the interest. The largest owner of US debt is China, the second largest is the Federal Reserve. In less than 8 years the Federal Reserve will be the largest owner of US debt, giving them absolute leverage to punk the government around with. This is essentially England retaking the united states, as many of the banks which comprise the federal reserve are foreign banks.


          Their biggest fear is deflation, the idea that people will be smart with their money, and they routinely send Obama and company out to lobby for Americans to go spend as frivolously as possible to keep the economy alive and their wallets nice and fat.


          The problem comes when families start paying down debt, saving, and not buying as much consumer crap. All that fake money dissapears and the nations most traded currency (debt) is no longer in circulation, which ****s the whole system. This is called deflation, where people are saving money, not financing things, and paying off debt. A general strengthening of the dollar. This is good for the average joe as strong dollar = good. However it is bad for the banks and for the politicians, which is why they always love inflation and urge everyone to go out and spend their money to "stimulate" the economy.




          Over the past few years, the gov mailed out 1 or 2 checks to everyone in America, and said "go blow this on crap, do not save it or pay off debt with it, this will help the economy". This is flawed, as it serves their purpose and not yours. You do not need more stuff, as you are still in debt to the creditors, but they could care less about you. They want you to go create more money for them to burn in the giant money pit.




          As Americans save money, pay down debt, and buy fewer big screen TV's, the whole system collapses but the dollar strengthens. This is what America needs, even if it temporarily crashes the system. What our government is doing is constantly maxing out their credit card and then going to the federal reserve to apply for a new one. This is stupid on many levels, and despite what Keith Olbermann tells you, is bad fiscal policy.

          But it serves the short term goals of politicians, which is why no one ever decreases the amount they spend, it raises every year no matter who is in power. They only get 4-8 years and after that it's not their problem anymore. After the last guy spends all the money and ruins us, the new guy can come in and say "look at what the last guy left me with! I need to immediately spend 3 trillion dollars to stimulate the economy and fix what he did!", which just further exacorbates the problem, and if the republicans win in 2012 they will do the same thing: "Look what Obama left us with because of all his damn spending, we need to start new programs and spend more to fix the mess he made!". It's a sad irony the theatre that is politics.


          But remember, it is in fact all just theatre. They do not want to fix our problems, because they have already carved out their piece of the pie and will be fine no matter what happens, and so will their children. The prolitariat be damned.

          JudgeFaust is becoming more right every day, and that saddens me as an American.

          Comment

          • devilock76
            Member
            • Aug 2010
            • 1737

            #6
            Sgreger, without quoting I think we are saying the same thing, just with varying levels of verbosity. That being said I still maintain my stipulation of the culture change. Because it may be short term disastrous for the system, it will be long term benefit for the average person.

            Ken

            Comment

            • sgreger1
              Member
              • Mar 2009
              • 9451

              #7
              Originally posted by devilock76 View Post
              Sgreger, without quoting I think we are saying the same thing, just with varying levels of verbosity. That being said I still maintain my stipulation of the culture change. Because it may be short term disastrous for the system, it will be long term benefit for the average person.

              Ken


              Agreed. I guess my point was that, like you said, it has to be done on the individual level to work. Government will never take this approach as it cannot, (since it will crash the system). So don't expect government to save the day and somehow fix our money problems, they are helpless and incapable of doing so for a variety of reasons. America needs to have a new moto: Reduce spending, Pay off debt, Save money. The entire economy will lie in shambles if everyone did this, but then we could start again with a strong dollar, and have lots of those strong dollars in our banks. It would be a transfer of wealth from the rich to the poor for once.

              Comment

              • devilock76
                Member
                • Aug 2010
                • 1737

                #8
                Originally posted by sgreger1 View Post
                Agreed. I guess my point was that, like you said, it has to be done on the individual level to work. Government will never take this approach as it cannot, (since it will crash the system). So don't expect government to save the day and somehow fix our money problems, they are helpless and incapable of doing so for a variety of reasons. America needs to have a new moto: Reduce spending, Pay off debt, Save money. The entire economy will lie in shambles if everyone did this, but then we could start again with a strong dollar, and have lots of those strong dollars in our banks. It would be a transfer of wealth from the rich to the poor for once.
                Exactly and why I said the problem is cultural. We elect these officials in our own image and then are shocked when they are all the worst facets of it that privilege and power can breed.

                Ken

                Comment

                • sgreger1
                  Member
                  • Mar 2009
                  • 9451

                  #9
                  This article says it well too:



                  The Fed is trying another round of QE, even though the first installment of $1.7 trillion did not work to actually repair the economy. We spent another $2 trillion in TARP and other stimulus that was, also, supposed to fix the economy. It’s a grand total of $3.7 trillion just in the last two years. (Some say it’s more than $12 trillion spent or committed.)

                  All this money printing did inflate stock prices. It also helped out the big banks. It worked so well they are paying a record $144 billion in bonuses this year. What did the man on the street get?–foreclosure fraud and higher unemployment (22.5% according to Shadowstamts.co). Now, the money is running out, and the Fed is back to printing to keep the economy from falling off a cliff–again. Nothing has been fixed; the day of reckoning has just been postponed, but this cannot go on forever. At some point, the U.S. dollar will take a severe plunge, and inflation will hit America with a vengeance.




                  These are the same people that fueled the internet and housing bubble and told us the sub-prime real estate crisis would be “contained.” Is anyone else starting to see a patern here?

                  Comment

                  • WickedKitchen
                    Member
                    • Nov 2009
                    • 2528

                    #10
                    Durable goods. I think that's the long-term answer. The problem is that we have a lifestyle now that's so large that we cannot pay wages high enough or make enough profits to cover taxes and benefits. We do live too much in the now and consumerism is at a disgusting level. The Chinese are going to come and take this country...well, maybe not but it is a relatively significant possibility. I don't think that we could stop them if they truly wanted to invade the US.

                    Inflation might not be that bad of a scenario though. I mean it will bolster consumer confidence to know that there is more money in the system all be it false money. That kinda makes sense to me being in the home improvement industry. Also I understand that it's absolutely not sustainable and I think that it will take at least another decade before things are really good again...if ever. Maybe if we (meaning us common folk) dial down our lifestyle a little it will go a long way. A big screen TV is fine, but do you really need more than one TV in your house? Actually, I got mine for free as a handmedown 'cos I was too cheap to buy one of my own but still only have one TV. We Americans have too much stuff.

                    What would happen if we stopped buying though? I think it might insight war in the US. Not among us, but with other countries. We certainly don't keep to ourselves in the global theater and we certainly piss a lot of people off. Now, if we piss off the people that we owe tons of money to...that could be bad. In a way I'm kinda glad we've got a front row seat.

                    I will say that consumer confidence sucks hard right now and my industry is on life support. We live within our means for the most part although I think that my house is a little more expensive than it should be. I hope to see this thread develop. I'm wicked curious as to what others think...

                    Comment

                    • sgreger1
                      Member
                      • Mar 2009
                      • 9451

                      #11
                      Originally posted by WickedKitchen View Post
                      Durable goods. I think that's the long-term answer. The problem is that we have a lifestyle now that's so large that we cannot pay wages high enough or make enough profits to cover taxes and benefits. We do live too much in the now and consumerism is at a disgusting level. The Chinese are going to come and take this country...well, maybe not but it is a relatively significant possibility. I don't think that we could stop them if they truly wanted to invade the US.

                      Inflation might not be that bad of a scenario though. I mean it will bolster consumer confidence to know that there is more money in the system all be it false money. That kinda makes sense to me being in the home improvement industry. Also I understand that it's absolutely not sustainable and I think that it will take at least another decade before things are really good again...if ever. Maybe if we (meaning us common folk) dial down our lifestyle a little it will go a long way. A big screen TV is fine, but do you really need more than one TV in your house? Actually, I got mine for free as a handmedown 'cos I was too cheap to buy one of my own but still only have one TV. We Americans have too much stuff.

                      What would happen if we stopped buying though? I think it might insight war in the US. Not among us, but with other countries. We certainly don't keep to ourselves in the global theater and we certainly piss a lot of people off. Now, if we piss off the people that we owe tons of money to...that could be bad. In a way I'm kinda glad we've got a front row seat.

                      I will say that consumer confidence sucks hard right now and my industry is on life support. We live within our means for the most part although I think that my house is a little more expensive than it should be. I hope to see this thread develop. I'm wicked curious as to what others think...



                      The issue is not even buying a TV, it's buying a TV on credit. Buying things you can afford is good for your family and good for the economy, assuming your finances are in order. It's the ability to finance a $300 TV over 5 years where the problem lies. Cheap credit inflates the price of everything:

                      Without cheap credit: WalMart sells a TV for $300, this is affordable and I can afford to save that up every few years to get a new TV.

                      With cheap credit: When everyone can finance any amount, than the TV's market value (what people will pay for it) goes up, since people who couldn't normally afford a $500 tv can now finance it. So what was a $300 tv now costs $500 on the market because people are willing to finance that amount.


                      This slowly inflates the price of everything until it is entirely unreasonable. I mean 3 bedroom houses start a $900k out here for God's sake.




                      If there were less credit, and people actually had to save for what they bought, prices of things would be much less. In turn, people wouldn't need to get paid more to afford a decent life and American labor may be a feasible concept.

                      This is why our labor is going overseas. Americans, to have a cell phone or internet or clothes, have to pay more at the store, therefore we ask that we earn more money at our jobs so that we can all have a liveable wage. But since prices are higher here, what constitutes a living wage is also higher. So our labor is more expensive, and it throws the whole thing into a gaggle**** where now we have other countries working at a lower wage than Americans and Americans paying WAY to much for shit that is marked up like 500%.


                      Tell me why slave laborers making an iphone get 30 cents an hour and yet it still costs me $600 ****ing dollars to buy an iphone? This is what happens, our way of doing business slowly ruins the whole world, because now the industry giants have realized they can pay nothing for labor in one country, then sell it for 10x it's value in America. It is not fair or sustainable for any parties involved except for those who profit from it.


                      This can all change, and the world can be made a better place, if Americans would change the way they think and do business. Forget financing a $60,000 car or paying $8 for a pill of asperin at the emergency room, if they couldn't sell shit at that price than they would be forced to lower it in order to make a profit. But as long as cheap credit exists, and as long as Americans continue to believe that we need a new car every 3 years, than Americans will continue financing these things. Things would be cheaper and americans wouldn't have to earn $100,000 a year to live a decent life. Our labor could then again be worth something.

                      Comment

                      • sgreger1
                        Member
                        • Mar 2009
                        • 9451

                        #12
                        All the houses here listed as $500k are not worth that much, but the government allows the banks to make their own rules. The banks are insolvent, brankrupt, but the government's actions allow them to merely look solvent so they can continue doing business. Did you know:

                        The government sanctions what amounts to be accounting fraud to help the banks look solvent when, in fact, they are in deep financial trouble. (In April of 2009, FASB changed accounting rules to allow banks to hold real estate and mortgage bonds at whatever value they want, even though some are only worth a fraction of their original value.)


                        Imagine if you owned a car, then suddenly some disaster happened to the company because the cars were all faulty (like toyota), imagine if the car was now only worth $1,000, but the government allowed you to claim it's price was whatever you wanted, say perhaps $40,000. That is what is happening with real estate prices. It's all worth nothing, so the gov changed the rules for their boys over at the banks, allowing them to continue pretending (and selling them as though) their property is worth money. The entire system is built on a lie, and requires that we maintain our collective belief in it's value. Just like our money. Without belief in it's value, it is only worth as much as a 5x2 inch piece of thin paper with scribbling on it.

                        Comment

                        • lxskllr
                          Member
                          • Sep 2007
                          • 13435

                          #13
                          Originally posted by sgreger1 View Post
                          The issue is not even buying a TV, it's buying a TV on credit. Buying things you can afford is good for your family and good for the economy, assuming your finances are in order. It's the ability to finance a $300 TV over 5 years where the problem lies. Cheap credit inflates the price of everything
                          I disagree. Buying more TVs than are really needed is wasteful, destructive to the environment, and is symptomatic of the greater capitalistic problem.

                          Comment

                          • truthwolf1
                            Member
                            • Oct 2008
                            • 2696

                            #14
                            That belief system however is very real for the Chinese, Saudis and everybody else buying up our infastructure.

                            http://www.bailoutmainstreetnow.com/...-paupers-.html


                            Every single month, the United States buys massive amounts of oil from the Middle East and massive amounts of cheap plastic crap from China. The rest of the world buys a bunch of stuff from us too, but not nearly as much as we buy from the rest of the world.

                            So every single month tens of billions of dollars that used to belong to the American people ends up in the hands of foreigners. Now some of that money is returning to this country and is being used to buy up our infrastructure.

                            Many of these highways and toll roads that are being sold off had already been completely paid for. Can you imagine the frustration of the taxpayers in many of these areas when they realize that a road that they have already completely paid for with their tax dollars has been sold out from underneath them?

                            Another place that all these U.S. dollars held by foreigners is going is into U.S. Treasuries. In fact, the federal government very much encourages this. After all, we have to finance our exploding debt somehow.

                            In essence, first we made some folks in the Middle East and in Asia incredibly wealthy, and now we are asking them to please lend that money back to us so that we can continue living far beyond our means.


                            Today, the national debt of the United States is rapidly approaching 14 trillion dollars. An increasing percentage of this debt is owned by foreigners.

                            The borrower is the servant of the lender, and we are rapidly becoming enslaved to the rest of the world.

                            This is national economic suicide, but our politicians have become so addicted to debt that there doesn’t seem to be much hope that things can be turned around any time soon.

                            Comment

                            • sgreger1
                              Member
                              • Mar 2009
                              • 9451

                              #15
                              Originally posted by lxskllr View Post
                              I disagree. Buying more TVs than are really needed is wasteful, destructive to the environment, and is symptomatic of the greater capitalistic problem.

                              Define "really needed"? Do you consume more calories than are "really needed" by eating 3 meals per day? Calories come from food, and farming is destructive to the environment, one of the largest sources of c02 pollution, and symptimatic of the larger capitalist problem. I mean food prices have increased 25% just in the past few years, and millions of people go hungry each year because americans are eating more than the minimum amount of calories they need to survive. The right thing to do would be to just eat rice and a few vegetables every now and then, right?

                              Bullshit. If I have a TV in my living room, I may also want one in my bedroom, because I like to watch TV as I go to sleep, or perhaps since there are three people in my family one can be used for games while the other family members can watch a movie?



                              Everything is distructive to the environment, there's only so far I am willing to go. I recycle, reuse plastic bottles, try not to take showers that are too long etc, but if I need a TV I am going to buy one. Mother earth has weathered heavier storms in her days.

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