Economic Collapse Inevitable...how to protect ourselves??

[CLOONEY]

**** big government. The government should quit funding Iraq, quit funding welfare, quit funding Social Security, quit funding as much on education. Keep taxes the same. I hated Bill Clinton, but he put this country at its first balanced budget since 1962, I believe. That's the one thing Ronald Reagan couldn't accomplish.

Government debt and a countries debt are completely different matters.

Bill Clinton was also in office during a time of economic prosperity.

 

[CLOONEY]

Yes, if China and Japan demand payment on their bonds ("cash in"in the Trillions) we won't be able to pay them because we don't have the money -- there will be a war!!!!

Also - if they start selling their dollars en masse then there would be a collapse -- the only reason why they don't do this is because they are too deeply tied into our system and hey would suffer as well -- which was planned - to prevent them from doing such!

This has to do with bonds and not the interest to private individuals who print and control the money (European Bankers)!

Why would they start selling their dollars en masse? This would severely impact their own economy.

Not to mention, on the first point, ahyone trying to FORCE the US to pay their debt, would be gutted by trade restrictions. No war needed. No way this is ever happening.

 

[CLOONEY]

Just a question for all these guys who dont need an economics degree to be economists, what indicators are leading you to beleive the US is in for a major depression? (if its the blip in the housing market?, or how about lower than average consumer confidence?, is inflation out of control, or unemployment at record levels?).

Further, explain to me how automatic stabilisers will not come into effect, and how Government and Central bank policy will be ineffective at counteracting this economic collapse?

Also, explain how this Chinese and Indian boom will not help US growth and therefore recovery?

Before I will make any valueable, time consuming contributions, I want someone to put a legitimate arguement to why the us economy is in for this "COLLAPSE"!!!! All I hear are, there is too much debt!!!! If thats not the biggest joke Ive ever heard, I dont know what is!

If I take a loan and pay 7% interest on the loan, but make an average return of 12% per annum (as the average US company does), then how is that a bad thing? You dont think the US leading the world in GDP per capita is something that just came to be do you?

 

[Last Man Standing]

Why would they start selling their dollars en masse? This would severely impact their own economy.

Not to mention, on the first point, ahyone trying to FORCE the US to pay their debt, would be gutted by trade restrictions. No war needed. No way this is ever happening.

This is what I already stated - it will affect their economy thus the reason they hesitated,so far, to collect what is owed but they are slowly selling their dollar reserves for Euros and other currencies! No one is "FORCING" - the bonds are bonds and are a debt owed by contract!!!

Not sure if I get what you mean here Last Man? You are not talking about printing US bills to pay off your overseas loans are you? You know the ramifications of that Im sure........

We once had a politician in Australia named "Pauline Hanson" who once said something similar!

Simple – in our constitution it is our congress who is responsible to control the purse and if you control the purse why are we paying interest to private individuals i.e. international "banksters"??? We paid $409 billion in “interest” only in 2006!!!! Why? Just print the money ourselves at zero interest!!

Further, explain to me how automatic stabilisers will not come into effect, and how Government and Central bank policy will be ineffective at counteracting this economic collapse?

Central bank policy is controlled by individuals and these individuals have control over the world economic system and can create booms and busts through monetary policy – as they created the depression!!!!!

There are basic underlying economic principles but those who control monetary policy is the true factor to look at that determines our well-being or our demise – we are deeply tied to their system and control! This is the economic Matrix – that controls are political Matrix!!

The Chineese and Indian boom is good for them Not USA !! Half of our GDP growth is military!! Without military, shyt movies, and shyt music, junk food/soda and other non-durables our GDP is not impressive!!! Especially when you consider that these corpoeations are taking their money outside of the US – and their workforce!!!! Their corporate output gets counted as USA GDP but they are really global entities and have no loyalty to the USA – they get preferred tax breaks here – because they are the ones who control our politicians!

Those who control the money rule!! We do not live in a democracy – a relatively small elite rule!

The housing boom is a artificial construct - it absolutely produces nothing of value – just more false wealth due to low interest rates!! A contrived event to keep dollars flowing and consumer spending alive!!

We don’t manufacture things of value any more – real things – not shyt! We have become financial manipulators - hedge funds and derivatives which "derive value from something else" - HUH???? We are the wizard behind the curtain - the stock market is the biggest fallacy of wealth!

A depression is merely a severe recession measure by GDP output! But it doesn’t matter what the official definition is – a depression can be created tomorrow by those who control the money supply to fit their agenda of eventually narrowing it down to one currency and thus one government! It is all about control (THE MATRIX) – consolidation of wealth and power in fewer hands will bring about this final global control – the ultimate agenda!

And, of course, when the collapse happens we will blame so-called "terrorists" with beards who hide in caves and produce nothing, for the calamities that befall us!!!!

Read some books - but not "text" books!!!!!!

"Text' books are controlled books!!!!

 

[Throttle]

This is what I already stated - it will affect their economy thus the reason they hesitated,so far, to collect what is owed but they are slowly selling their dollar reserves for Euros and other currencies! No one is "FORCING" - the bonds are bonds and are a debt owed by contract!!!

it is a debt that must be serviced, we are currently getting very favorable interest rates, and the consequence Clooney alluded to earlier of just printing our way out of such debt is run-away inflation. that will benefit no one.

 

[Throttle]

Yes, if China and Japan demand payment on their bonds ("cash in"in the Trillions) we won't be able to pay them because we don't have the money -- there will be a war!!!!

there is no provision to "cash in" such bonds -- there is no call option. they have a maturity date, and only then are they due. if we are unable to roll that debt over, we'll see it coming from a mile away.

if either central bank wants cash for those bonds before the maturity date, they'll have to take their chances on the open market, just like anyone else.

Here's a principle I offer in my IPE classes:

If you owe someone a little bit of money, who has a problem? You do.

If you owe someone a lot of money, who has a problem? They do.

Our ability to either default on that Treasury debt or inflate our way out of it means that our bondholders have a bigger problem than we do.

 

[Throttle]

This is a very complex topic, but here's what I know so far:

1) We are $9 TRILL in debt! This is an unprecedented amount in our history - that has largely spiralled out-of-control post-WWII! Wake-up people! :nervous:

it is not unprecedented as a percentage of GNP/GDP. that percentage was much, much higher immediately after World War II. it is also not unprecedented if you correct for inflation. the US public debt on the way out of both the Revolutionary and Civil Wars was utterly preposterous, and only unprecedented economic growth after both saved the young republic's bacon.

http://en.wikipedia.org/wiki/U.S._public_debt

 

[backbreaker]

it is not unprecedented as a percentage of GNP/GDP. that percentage was much, much higher immediately after World War II. it is also not unprecedented if you correct for inflation. the US public debt on the way out of both the Revolutionary and Civil Wars was utterly preposterous, and only unprecedented economic growth after both saved the young republic's bacon.

http://en.wikipedia.org/wiki/U.S._public_debt

he actually has a point there, gotta hand it to him.

 

[A-Unit]

Re:

My thing would be...

Our nation survives on CONSUMPTION, i.e. the dependency for people to consume products at a rapid pace, saving NOTHING for themselves. The US doesn't possess NEAR the level of "natural resources" other continents do, yet we "control" them. Which is what war is for, sold under the flag of "being patriotic" and "protecting freedom." People here wouldn't understand hegemony, survival, controlling assets, and the fact that our capital and resources are an intelligent country run by big business. Many other countries are catching up and surpassing us in intellectual capital. India has 100's of thousands of degreed citizens in tax, accounting, and engineering.

I recently attended a tax seminar where the wave of the future is outsourcing very easy and moderately difficult tax returns to lower cost of living areas. Places where people are FAR more disciplined than American people, far more educated than American people, and can actual speak more languages than us. We've already seen what globalization has done...outsourcing. Those jobs, many we don't wany anyways, are gone and never coming back. You needn't have an economics degree to know that, and many great economics writers who've gone ignored yet written works worth adhereing to did not have extensive degrees. Besides the degree isn't a prognosticator of anything, it just makes those who need a "god" to listen rather than themselves feel good.

Are we in dire straights? I don't think we'll get to that point. The US of A is the greatest Corporation running today. Think about it. Every citizen is tagged with a Social Security number. Every person owned by that very number, tagged, and patterns designed since birth. Our country protects the assets...i.e big business which operate around the world to infuse the country with tax dollars, jobs, and wealth. These are nameless corporations, riddled with many managers, vying for the best interests of "shareholders'" who are then only comprised of nameless mutual funds and va companies, and shareholders who rarely partake, unless they own any piece of the company. WE're not talking about Buffets' company here who simple folk just attend to listen.

To me, the US of A operates AS a wealth producing machine. All our product, right down to society, is what makes other countries potentially wealthy. Media, service, businesses, our consumer base. We're a product. We're the most successful investment ever made by any country. I mean, weren't we given HUGE loans to fight our wars early on in return for what...massive paybacks...which were thumped on the citizens? And are currently thumped on us as the "best" way to do things, yet, we don't know the real whys? I would say, if you owned the business, as ALL of us own the country in a way, we're all shareholders due to our TAX LIABILITY (not going into it), yet we get VERY little disclosure of why. And if we do, the NEWS is nowhere NEAR impartial. It's never black and white facts...make up your own mind. Each TV station MUST have some side to be on, and then report it through THAT window. Left, right, liberal, conservative, republican, democrat. And we dislike the IDEA, NOT the person. The mind judges and see's the idea, so we dislike the person. Isn't that all conflict is...1 idea vs. another...and whoever has more weapons, or more power, wins out, and the winner is deemed right, and that's history. But doesn't the other side just have a RIGHT to exist, regardless of whether or not it goes along with us? Or Do we play God, and eliminate whoever and whatever doesn't go along with us?

No...I don't believe the US will meltdown and all officials and celebrities will move away to foreign countries. I believe it WILL stay this way. And the powers that be will see it such that "the citizens of the US made a great sacrifice in financing the war for freedom and other nations," all the while people get fat off the war, the new assets, the new contracts, the new jobs landed because some guy "went along". I believe we'll stay as we are, waffling between what appears to be near poverty and bankruptcy and extreme wealth, because if you examine the country, it fits that model to a T.

I do believe people have to care for themselves, because on this planet of 6 billion people, either we ALL come together as one, and realize we are all ONE, of the same kind, the same source, and going to the same place, or we DIE ALONE. Just because some accumulates enough loot in life to leave his family well off past his death doesn't mean crap. It doesn't mean diddly squat shyt. Is a person SO incomplete that he has to FILL that void with wealth? You want wealth, go for it. But is that LIFE. Or are you not PERFECT the minute you're born BECAUSE you're born? You are the SPerm cell that won, aren't you?

People hope for "that day." The day of reckoning, when all bills come due, or when Jesus returns, or when they get themselves on track. I don't belive that happens. I believe YOU GET YOURSELF together and the world comes together. That's it. People will wait, but I believe YOU make it happen. We have this delay mentality, of waiting. Patience is ok. I just don't see the US sinking like a rock. I figure people will plunder this country for all they can, BECAUSE they can, right out from under us, indebting us, sending us to war to kill OTHER human beings, making us NO WORSE than our enemies, hurting thousands of troops in the process, all so we have MORE oil reserves, Halliburton gets more contracts, and the people who make decisions keep their lofty positions and promises to keep the cycle going.

Some will disagree. I wrote very radically, so don't state the obvious.


A-Unit

 

[backbreaker]

very very good job A-Unit

 

[Last Man Standing]

Throttle - do not compare us to the times of the 18th and 19th century - yes, we paid our debts through growth but we are now in decline of that growth curve - many decades into it!

We will not come back from this fiscal debauchery - wages have been decreasing for the last 30 years and we produce little in comparison to our past - we are in decline, as all empires eventually do. Our military is our strongest asset to take what we can't get in the "free" market ! Our educational system is intellectually bankrupt - our future is bleak!

Other countries will collect on their bonds and quit financing us - they are moving away from dollar assets - the writing is on the wall and they have verbally stated this!

 

[TooColdUlrick]

First of all, YOU NEED a degree in economics, to be an economist (just as you need a degree in medicine, to be a doctor, or a law degree, to be a lawyer). Sure you could know a little of how it works by studying it yourself, but unless you dedicate years to studying the one subject area, you are obviously not going to understand it to the degree a person who has done 4 years at University studying it will.

actually you need a Phd in Economics to understand Economics. what you learned in undergraduate is chump change. a certain person who shall remain nameless (eh...hem) does have such a degree.

--this economy is not on the verge of collapse. there is absolutely nothing to indicate this, forward looking 20 years.

--our debt (stock) and deficit (flows) is nothing to be concerned about. excluding foreign held UST bonds, we are paying interest to ourselves...it's money out of one pocket and into the other. for foreign held debt, that is how we are financing our consumption > income. we are buying cheap chinese goods which allows us more income for other things. on the political front, i am very concerned that we are making a future enemy very rich in the process. that is another matter however.

--you cannot just print money to pay off our debt. that will cause inflation. that is what Russia does (did)...Brasil... Hungary, etc. if the Fed starts jacking up the printing presses to pay off debt (or for any other reason), in an amount that is not consistent with demand, bond prices will tumble, interest rates will skyrocket on the expectation that inflation will accelerate. besides, the Fed cannot do this without help from The Treasury. when those two get into bed with each other, it's lights out (e.g. Russia of 1998). it's called "monetizing debt".

concerns....

Social Security and Medicare. huge unfunded liability and something must be done about this. but nothing will since seniors have about a 80% voter turnout and they won't cut their own throats. it will be pushed forward to another generation...us.

Taxes. tax tax tax...cradle to grave taxes. 50% of tax filer's do not pay federal income tax. that means they are getting a free ride off the backs of those that do pay. what do they want? more free stuff. move to a flat tax of 15%-18% for EVERYONE--which is fair--and limited or no deductions, and a one page tax return...and watch this economy explode.


Terrorism. a huge wildcard. one can paint various scenarios of complete collapse of the economy. they almost pulled it off on 911. how easy would it be to pepper dollars (currency) with anthrax and distribute it throughout the economy...say from Vegas, which gets a boatload of tourists, and is a cash city? what would happen to the economy if this was done? thankfully, there is a cowboy in office that understands this.

i am very pessimistic of the future. not my own, but the future of this country. we are going the way of Europe and Canada, and may God help us all. every major problem we have today...social security, education, government intrusion, tax and spend, racial discord, rich vs poor, is the direct result of liberals going back to the 1930s and worse, the late 1960s (The Great Society). every single thing the government has gotten its grubby hands on, it's jacked up. more and more people seem to want the government to "fix" things, without realizing that the government created these problems in the first place. that's what government does...creates problems so society can rely on government more. it's almost like they planned it all.

 

[backbreaker]

you cannot just print money to pay off our debt. that will cause inflation. that is what Russia does (did)...Brasil... Hungary, etc. if the Fed starts jacking up the printing presses to pay off debt (or for any other reason), in an amount that is not consistent with demand, bond prices will tumble, interest rates will skyrocket on the expectation that inflation will accelerate.

correct me if I am wrong (seriously, not joking) but isn't that one of the main reasons for inflation now?

on the political front, i am very concerned that we are making a future enemy very rich in the process. that is another matter however.

I find this more interesting.. I assume you are reffering to China. What makes you think they will be a future enemy? I mean I can take an educated stab in the dark but I would be speculating

 

[Last Man Standing]

Mr Economic Phd - we are in a inflationary state already - they have doubled the money supply in the last decade and will double it again!! Tell me, why did they recently announce that they were going to stop publishing the money dollars in circulation - why the secrecy?

Blame it on some terrorist hiding in a cave???? HUH? Don't fall for that one!

 

[Throttle]

Throttle - do not compare us to the times of the 18th and 19th century - yes, we paid our debts through growth but we are now in decline of that growth curve - many decades into it!

nonsense. if I can't compare the US now to the US 50, 100, and 150 years ago, what comparison is valid? A decline of US economic growth has been predicted many times, including before, during & after the last (still unexplained) burst of productivity growth in the 1990s.

in my view, the only thing that could drive the US into true economic decline at this point would be to close our borders to BOTH trade & immigration at roughly the same time. it could happen, especially if certain fear-mongers have their way.

but some perspective here: is the US in relative decline to some countries? you bet. the law of uneven growth says that if a leading country isn't padding its lead, it's in decline (we're now treading treacherously close to my dissertation topic, so feel free to light off, it'll be more fuel for my fire). so it's all but given that the US is in decline with respect to more than a few countries.

but some bloody perspective here: if & when China & India assume a position in the world more in line with their population & territory, they will only be restoring a balance that was tipped towards obnoxious white people like me by the glories of the Industrial Revolution. we can only hope they find a touch more humility than we did as that day approaches.....

 

[CLOONEY]

actually you need a Phd in Economics to understand Economics. what you learned in undergraduate is chump change. a certain person who shall remain nameless (eh...hem) does have such a degree.

Still waiting to see the entire point of this thread? Where is an arguement stating economic "collapse" reasons?

The troubles for the US (and a lot of the world), is first and foremost, Global Warming. Secondly, the ageing population.

These are the only real threats I see, but most will be seen over the next decade or so, as opposed to the immediate future. And none are due to high levels of debt or conspiracy theories. They are simply due to the way society and markets work. Nothing more, nothing less.

 

[Last Man Standing]

Clooney, only time will give us the answer - we can only prolong it for so long by inflationary money and going to war -- just don't blame it on cavemen if/when it does happen - I'm sure there will be a sole "event" that we'll blame for the cause of the dollar collapse and not our policies and lack of production of valuable goods and the runaway federal reserve printing fiat dollars like there will be no tomorrow - maybe they know something we don't!

 

[TooColdUlrick]

Mr Economic Phd - we are in a inflationary state already - they have doubled the money supply in the last decade and will double it again!! Tell me, why did they recently announce that they were going to stop publishing the money dollars in circulation - why the secrecy?

Blame it on some terrorist hiding in a cave???? HUH? Don't fall for that one!

you don't know what you're talking about. it's the growth of the money supply (M1/M2), compared to the demand for money, compared to real GDP growth, compared to productivity. check the CPI, PPI, and Core inflation figures over the last 10 years, and please tell us how this is inflationary?

to cut through the technical bull****, as long as productivity matches or beats inflation numbers, it's a wash out. productivity has been rising at a rate greater than inflation (by any metric), so overall we are at zero or less inflation, desite the reported inflation figures. and as this economy gains an even greater proportion of tech, you will see productivity continue to outpace inflation, and therefore...inflation will continue to be washed out.

they are not going to stop publishing the "money dollars in circulation". they are going to do away with M3 money "supply" figures. the Monetary Base, M1 and M2 are what economists look at. M3 is losing value as a money metric.

*you can take my all-day seminar on Captial Markets and Fed Policy if you would like. it's $595.00, geared toward investment bankers and hedge fund dudes.

 

[CLOONEY]

to cut through the technical bull****, as long as productivity matches or beats inflation numbers, it's a wash out. productivity has been rising at a rate greater than inflation (by any metric), so overall we are at zero or less inflation, desite the reported inflation figures. and as this economy gains an even greater proportion of tech, you will see productivity continue to outpace inflation, and therefore...inflation will continue to be washed out.

*you can take my all-day seminar on Captial Markets and Fed Policy if you would like. it's $595.00, geared toward investment bankers and hedge fund dudes.

Who do you work for?

Do you mean nominal GDP growth rising at a rate greater than inflation as opposed to productivity?

 

[TooColdUlrick]

Who do you work for?

Do you mean nominal GDP growth rising at a rate greater than inflation as opposed to productivity?

there are links between nominal GDP, real GDP, inflation, and productivity. they all feed back into each other...as well into the stock market and bond markets.

with regards to inflation, or "real inflation" if you wish, it's really about productivity in relation to inflation itself. if inflation increases at the wholesale level (PPI) of 3%, with 0% productivity increase, businesses would have to raise prices at the consumer level (CPI) to maintain their margins (at a minimum, businesses need to maintain their margins to prevent their stock from falling). if on the other hand business productivity increases also by 3%, price competition in those markets that are competitive (the majority of them are) allows businesses to not raise their prices while maintaining their margins. or businesses can raise prices by 5%, and with a 3% productivity rate, this would translate to a 2% CPI increase. roughly that is the way it works.

the only way a country can maintain moderate growth with low inflation is to have high productivity (assuming responsible monetary policy). Alan Greenspan did an okay job, but he was a tremendous beneficiary of a productivity boom throughout the latter half of his tenure.

if any country is primed for a collapse, it is China. their banking system is in horrible shape. the communist government can keep that under wraps for only so long before it bursts.

i work for The Man. that man would be me. i have my own consulting firm and do work in private equity, hedge fund, investment banking stuff.