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I'm curious to hear everyone's thoughts. I've been hearing the "D" word mentioned more and more. Do you think the U.S. economy is going to collapse, or do you think that we will just head into a deep recession?
I'm curious to hear everyone's thoughts. I've been hearing the "D" word mentioned more and more. Do you think the U.S. economy is going to collapse, or do you think that we will just head into a deep recession?
I believe so. The parallels between our economy over the past ten to twelve years (whenever the internet bubble really got going) and the pre-29 economy are pretty amazing.
Some differences. Instead of erratic stock-market speculation, we have the 401k incomes from regular people in there driving up values. Instead of the California land speculation, we have the housing bubble. They're categorically the same situations. Like then, the savings rate is incredibly low. In fact, the level of debt makes it even more interesting.
I don't think you could really tell anything in '01. The internet bubble bursting was expected. Only a fool couldn't see it coming. But, in '03 or '04, you could see the shadow of something developing. By '05, it was clear that we were lurching.
I think the best we can hope for is 1)Dems don't take office. That 20 extra percent income tax for healthcare will be hard to bear during what's coming. 2)The dollar collapses so severely and revenues so low that Social Security is annihilated and the system is done away with immediately which would eliminate the 15% tax for that. (That's more of a fantasy of mine. I don't know if it'd work like that.)
The government isn't going to be able to borrow money forever. At some point, there's just not going to be any value to borrow and/or the cost of borrowing is going to be so high, the benefit will be a near-immediate wash. (Like Fed cutting rates but nothing really happening.)
This is actually a really wonderful thing about to happen for America. As a society, we moved really far from our core beliefs that made the country successful. Bush just let us run our leash far enough so we could snap the choker on ourselves.
BTW: As a matter of principle, I'm not spending the rebate. I think the $h!t talking rights to say that I wasn't part of the enormous debt will mean something.
well, it's possible but who knows. There are a lot of imbalances in the markets right now. A lot more writeoffs are due in the next few months. Couple that with the ongoing severe contraction in credit and spending and it doesn't look good. My number 1 concern is inflation.
What the fed is doing with interest rates is pretty disastrous because commodities are going through the roof. The general cost of living will skyrocket and the consumer is going to be even more strapped than they are already. That will really send the economy to the ground. We need a strategy similar to what Paul Volcker did in the 70s but that may not happen with the current administration.
The only hope is that another Volcker comes in and jacks up interest rates to 20% to save us from the hyperinflationary abyss.
The only thing worse than a depression is a hyperinflationary depression. The latter usually ushers in dramatic changes in government and brings infamous figures like Hilter, Mugabe, Pinochet.
Outright Marxism usually becomes popular due to the blame capitalism receives for the starvation and lack of control. There is some evidence that Marxist agents orchestrated the worst hyperinflation situation in Hungary's during 1945 in order to wipe out the middle and upper income class and get the people to really believe in the communist way.
All of us savers sitting with cash in the bank making 2.5% can finally rejoice.
You've got it.
I'd rather cash be king. I don't relish the idea of hoarding gold and having to use it on the black market in the event the US makes it illegal to own for "the common good of the currency". The government forces us to use it without allowing competing currencies. Why not enforce a strict monetary policy?
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