Quote:
Originally Posted by Willy702
Iceland could disappear and it wont affect the world economy.
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If Iceland burned down, fell over and sank into the sea, I don't see the world skipping an heart-beat. What does Iceland do, other than take up space and consume resources?
Okay, so they fish and we all get to eat yummy herring (or whatever). Look back at the Fishing Wars between Iceland and Britain, and Iceland and Denmark. The only thing that would happen is they would expand their fleets to fish the areas Iceland used to fish.
Quote:
Originally Posted by Willy702
So if the US defaulted it would get no benefit because all its trading partners would crash down beside it making things far worse.
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Well, no, if the US defaulted, that would mean instant cuts to Social Security, Medicare and the Railroad Retirement Fund. It would also mean Millions of pensioners and future pensioners who worked in the private sector would see their pensions disappear. And pensioners and future pensioners who worked in the public sector -- teachers, firefighters, police, public servants etc --- would see their pensions disappear.
Your insurance system would collapse. States and cities would economically collapse. Philanthropic and charitable groups would cease operation.
Why?
Because all of them own treasury securities.
Foreign entities only hold $5 TRILLION of your debt. US States, counties, cities, corporations and other businesses, money markets, mutual funds, annuities groups and philanthropic groups hold the other $6 TRILLION and then $4 TRILLION is your 130+ Trust Funds.
Quote:
Originally Posted by jtur88
Let's see . . . that means 200 cable channels instead of 300, two cellphones per household instead of three, more VWs and fewer BMWs, dinner without wine several days a week . . . .
An overwhelming majority of Americans could easily absorb a 30% reduction in their discretionary spending, and live in a house with 2/3 the square footage and 2/3 the yard/garden/horsepasture size.
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That is all true.
Quote:
Originally Posted by pie_row
Short term only. But it will get us full employment. With full employment, and the income to tax, then we can grow our economy in a direction that will return us to long term economic health.
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No, you can't.
Look at your GDP growth....
2001-2010 1.68%
1991-2010 2.55%
1981-2010 2.79%
1971-2010 2.89%
1961-2010 3.16%
1961-1970 4.22%
1971-1980 3.21%
1981-1990 3.27%
1991-2000 3.41%
2001-2010. 1.68%
Average 2.89%
When a State first starts electromechanical industrialization, GDP increases. It is not unusual to see annual GDP growth of 8%-10%, or even 12%.
But once the process of electromechanical industrialization is finished, GDP no longer increases at such high rates.
Agriculture is the first sector to industrialize, yet always the very last to fully industrialize. Why? I have no idea....maybe it's the nature of technology. Anyway, the US did not complete 100% industrialization until the mid-1960s when agriculture finished.
What happened to GDP since then? It's declined and went flat for a few decades and then declined again.
Why? Global competition...initially from Southeast Asia --- Taiwan, Japan, Korea, Thailand, the Philippines, Malaysia and Indonesia, and then China and Vietnam.
And then in this first decade of the 21st Century, global competition from an economic bloc -- BRIC -- and then the States they have been developing.
Quote:
Originally Posted by pie_row
We have a minimum wage law. With that law and a printing press to supply demand for labor, we can earn the money to start buying back our nations debts and repay our personal debts.
We can say that if it isn't worth $30 an hour it isn't worth doing in the US.
And we can do enough domestic spending to get full employment the dead weight loss of that very high minimum wage not withstanding.
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It doesn't work that way. You cannot compete globally due to the tremendous differences in wages and other labor costs.
Increasing the minimum wage is suicide....it just means more workers in your economy can no longer compete globally, so they lose their jobs.
Quote:
Originally Posted by Pawporri
Excellent points and Iceland is definitely a microcosm of the US economy which gives it much more latitude to experiment.
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What Iceland did
might work on a township, village, town or city level, but not on a State level.
Cities are corporations and they can file bankruptcy under Chapter 9.
Quote:
Originally Posted by Pawporri
Few realize though,that everytime the debt limit is raised, the value of the dollar declines.
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No, it doesn't work that way. Real Inflation in the US is insignificant.
Since the US left the Gold Standard, Real Inflation has averaged 3% or less. That's outstanding and only 2 countries on Earth have performed better than the US --- Switzerland and some sultanate out in the South Pacific (I can never remember the name).
Cost Inflation? Yeah, lot of that going round, and depending on the commodity, it's approaching 90%, but the government has nothing to do with Cost Inflation --- that's all on you.
You cause Cost Inflation to happen. Really there is no such thing as Cost Inflation. That's just a special term I use here on C-D because the majority of people are too dumb to understand Inflation. Cost Inflation is a melding of Cost-push Inflation and Demand-pull Inflation.
Those have absolutely nothing to do with monetary systems and everything do with Supply & Demand issues.
Food prices and gasoline prices are rising due to Cost Inflation --- if you want it to stop, you have two choices: produce more or consume less.....like I said, that's on you, and what you need to produce more of is corn.
I suppose you could argue the government is partially responsible. EPA regulations bar new entrants to agriculture, and FDA regulations hamper small and family farmers, causing corn production to stagnate (or decline as they have the last several years) and then EPA fuel standards like Tier 3 reducing Sulfur from 30 ppm (under Tier 2) to 10 ppm drives up the price of gasoline.
But none of that has to do with the Federal Reserve.
Fiscally...
Mircea
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