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Discussion in 'The Breakroom' started by jda, Aug 15, 2011.
Keynes economics and fiat money = economic collapse.
Actually the US gov would have been in technical default had the ceiling not been raised.
$327k isnt particularly expensive for property even in America.
Maybe you wouldnt loan the US Gov money, but the market strongly disagrees with you.
You may get laughed out. But you seemingly didnt read my post. People and governments do not act the same way with money for various functional reasons such as the US Gov doesnt retire, or get hit by a bus, or have some kind of injury that forces them to stop working. If they pull off immortality and we get robot bodies like in that Bruce Willis film you could get huge loans that would take 25-50 years to repay too.
Coming soon to a country you live in.
For another attempt to show the magnitude of what has been thrust upon our kids, google "The Doorbell" on youtube by thepowerlineblog.
"$327k isn't particularly expensive for property, even in America."
That point certainly depends on where one lives.
I disagree. It would have forced the Gov't to reevaluate it's spending on crappy and programs, studies, etc. Default is when one can't pay. There's plenty of money to service the Gov't debts when they stop with frivolous spending.
$327K is extremely expensive with you consider the median household income in America is about $55K. At that income level, you would not get approved. If you did, you're an imbecile for doing so and the lending institutions are even bigger fools for doing so. Perhaps in some areas, it's not that expensive. However, look at the incomes in those areas.
The market is just as foolhardy and money hungry as the Gov't is for recklessly spending money. The market knows that the Gov't can't declare bankruptcy and must service it's debts.
I certainly did read your post and I think you are completely wrong. Sure, the Gov't won't retire or die (unless the people revolt like before). However, recklessly spending money like the Gov't, and individuals, have been is no different. Each year there must be a balanced budget and the end of the fiscal year should end even. Or, more preferably, in the black. Not trillions of dollars in the red like they have been for countless years.
The Gov't gives businesses three years to file losses. After which point the company can no longer claim those losses. The market punishes companies that fail to operate with a sound budget. Families that continue to spend money they don't have continue to go broke.
Please explain to me how it's beneficial for gov't to continue to operate in the red.
Technical default is slightly different to a default to the actual debt payments. Basically it couldnt pay what it promised to pay, such as social security payments, soldier salaries and so on, thus that is a technical default.
Sure, but you can basically say the same about Greece. Or to use a less extreme example, France. There should be a link between credit rating and market response, so when one organisation (S&P) is out of step with hundreds if not thousands of other organisations (buyers of treasuries, often pension funds and hedge funds) Occam's Razor means its probably S&P that is wrong.
Basically you can reconcile the idea its bad to lend the US Gov money (your own words) with the idea that the markets are money hungry (again, your own words).
Because operating with debt is sometimes beneficial AND they will pay it back. In real terms the current US debt is huge, but in relative terms id be surprised if it is setting records. It took the UK gov nearly 60 years to pay back its WW2 debts.
One of the reasons this is good is if the government didnt step in the market correction would have sent the US into a second great depression. So yeah, that is a lot of debt and its going to take a couple decades to get back under control, but the alternative is people camping in Central Park and 30%+ unemployment rates.
Jim Rogers said this in mid June. The debt is unsustainable. Yeah, they may pay it off, by printing more money, which equals more inflation. Meanwhile...gold is trading at over $1800 ounce--will probably have a correction or two, but really no where to go but up. Consumer inflation is up higher than predicted, and central banks around the world quadrupled their demand for gold in the second quarter. Hmm, what do they know or expect is coming.... As for the government stepping in and "helping," they just kicked the can down the road. It will be worse. They want to call it a double-dip recession (there was no recovery), but many are calling it a depression already. During the first depression, we were a creditor nation. We're now the biggest debtor nation. Unemployment as it used to be calculated (underemployed and no longer looking included) is over 20%. CPI as it used to be calculated, including the costs of food and fuel, is closer to 8% (Shadowstats.com). Forty years this past Monday, we all became Keynesians. Fail. And Mr. Casey paints a pretty rosy picture. Not.
Again, cut the frivolous spending and there would be enough to service those things. However, they do need to be addressed because social programs have exploded since they were introduced.
The other ratings agencies were warning the US Gov't that if it doesn't change it's course, they would seriously consider dropping it's rating as well. To me, S&P did the right thing, just later than I would have. So, perhaps there's truth to the downgrading?
As to the market, it will go with wherever the quick and stable money is. For the longest time, there was little or no investment in savings bonds due to the debt level and confidence in the gov't. When the market tanked, there was a temporary switch to bonds.
It is setting records all over the place. We ARE in a depression, and not a recession. The market has not recovered and the numbers are falsified in regards to unemployment, real debt, etc. Yes, the Gov't can pay it's debt off by having more money printed. However, that causes significantly higher inflation and it devalues the dollar significantly more.
Since the inception of the the Fed Reserve and our current monetary system, has the value of the dollar gone up or down? The failures since then has proven that our current economic policies are faulty.
The forced cuts to "frivolous spending" IS a technical default. That is the entire point.
Also the frivolous spending as you seem to use the term is a complete myth.
Giving "aid" money to countries and then having them use that money against us because they hate us. Gving grant money for testing the psychological effects of a gay man's size of his "unit". Or, gay prostitute studies in South America. Those seem pretty frivolous.
Anyway, we won't agree on this and I have better things to do than to constantly debate this Enjoy,
All foreign aid is about 1% of spending. Grants are rarely given to frivolous studies, but even if they are its a few million a year.
So again, if this is what you mean by frivolous spending it is a myth in that its a really really really tiny portion of the budget. To the point it would be considered a rounding error in the dept of defense.
I am just wondering: if countries are in debt, banks are in debt, businesses are in debt and people are in debt, where has all the money gone to?
Professional athletes and Rappers.
Money is created by debt ( loans). Too much default.
It is sitting in the banks.
Hmm Professional athletes and rappers live large, they buy expensive **** and spend a lot, most of them anyway. This generates revenues to businesses and work places. They help out the economy.
Sitting in the banks. But if it is sitting in the banks then the banks aren't in debt, which is not entirely true. Apparently some, if not most of them, are or they claim they are.
Central banks. Big banks. Waiting to be lent. But no one wants to invest right now. And those who might have been able to acquire loans previously, cannot now. And once that money is released...inflation. Scylla and Charybdis. Big time. Many banks are in trouble due to the mortgage debacle.
There's a formula, that I forget now. Been a long time since my college economics and I've fallen on my head hard since then. Anyway, a bank can lend more money than it has on deposit. So as an example, if the bank has 100,000 and can lend a million on that, in a way they have created 900,000 dollars out of thin air. It works okay as long as most is repaid. If everyone defaults, then you've got a problem. That happens with pyramid schemes.
It's called fractional reserve banking, a process described by Murray Rothbard as inflationary and counterfeiting.
I'm surprised no one has brought up the fact that the government can (and should) increase it's income. Maybe not now, but at some point revenues will have to be increased by way of taxes. A family usually can't just decide to increase it's income without an initial investment, be it time or money.
The gov't already collects enough revenue.