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Old 09-04-2013, 11:32 PM
 
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Quote:
Originally Posted by shaker281 View Post
... For all we currently know, the worst may already be over.
That would be nice if it was so.

But, We have been blowing a 30 year long debt bubble. The prime is at zero, well 0.25% and has been there for a very long time. Upping the rates will increase the cost of servicing the national debt. Oh well. It would be nice if the worst was behind us. But look at Greece, they can't print their own money and they are hurting bad.
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Old 09-05-2013, 12:18 AM
 
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Quote:
Originally Posted by pie_row View Post
That would be nice if it was so.

But, We have been blowing a 30 year long debt bubble. The prime is at zero, well 0.25% and has been there for a very long time. Upping the rates will increase the cost of servicing the national debt. Oh well. It would be nice if the worst was behind us. But look at Greece, they can't print their own money and they are hurting bad.
With the interest rate on the Greek 10 year bond at over 30%, I am not sure that is an apt comparison.
Interest rates, which reflect risk of default, are what matters, not total debt. In fact, you make a good argument in favor of central banking.

Then there is the myriad of other problems the Greek economy is facing. Mass tax evasion, egregious regulation, unsustainably high wages, low retirement age, generous social benefits. Let's not ignore all of that.

The fact that this debate is still raging 5 years after the US credit/housing crisis erupted is significant as well. Shouldn't we be worse off five years later, rather than better off, if US economic policy was so flawed? How long is the shelf life of the "any day the other shoe will drop" theory? If not five years... ten, twenty?
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Old 09-05-2013, 11:33 AM
 
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Quote:
Originally Posted by shaker281 View Post
With the interest rate on the Greek 10 year bond at over 30%, I am not sure that is an apt comparison.
Interest rates, which reflect risk of default, are what matters, not total debt. In fact, you make a good argument in favor of central banking.

Then there is the myriad of other problems the Greek economy is facing. Mass tax evasion, egregious regulation, unsustainably high wages, low retirement age, generous social benefits. Let's not ignore all of that.

The Euro, effectively a foreign currency to Greece, is a problem, but it certainly isn't the only problem. Seems like modern governments are the worst of everything, mostly oligarchy and class warfare redistribution for the little that is left. That is to say the middle class is the one asked to "share".


Quote:
The fact that this debate is still raging 5 years after the US credit/housing crisis erupted is significant as well. Shouldn't we be worse off five years later, rather than better off, if US economic policy was so flawed? How long is the shelf life of the "any day the other shoe will drop" theory? If not five years... ten, twenty?
All that "phony wealth" talk is great and all but we still need a credit system. Deflation effectively removes it. Sure it might stop some leeches and 75% might go to waste, but some of it winds up in the hands of people who do real work. Starving out everyone fixes nothing. Its like weight loss by disease, not diet and exercise.

And if it is not implicit enough in my replies, I agree with you.
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Old 09-05-2013, 02:06 PM
 
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Originally Posted by shaker281 View Post
The fact that this debate is still raging 5 years after the US credit/housing crisis erupted is significant as well. Shouldn't we be worse off five years later, rather than better off, if US economic policy was so flawed? How long is the shelf life of the "any day the other shoe will drop" theory? If not five years... ten, twenty?
I'm not sure we're truly better off. The means that were used to get us to this point were so great, that things are only setup to fail worse IMO. Imagine going out to get a short-term loan to pay your rent this week. You'll owe that amount back at the end of the month plus 20%, plus next month's rent. Sure, you can pay your bills this week, but it would be foolish of you to state that a good choice was made, because things are better now. Your financials are only going to be in worse shape.

I'm not stating that the end of the world is coming, or that there will be a major collapse on August 21, 2014. However, that doesn't dismiss the concern that activities such as QE are repeating historical mistakes (debasing currency and extreme deficit spending) that have proven to lead to major issues. Does it?
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Old 09-05-2013, 04:41 PM
 
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Quote:
Originally Posted by shaker281 View Post
With the interest rate on the Greek 10 year bond at over 30%, I am not sure that is an apt comparison.
Interest rates, which reflect risk of default, are what matters, not total debt.
OK the rates on ten year bonds have stopped dropping and started climbing. There is zero risk of you not getting your money out of a T-bill. That is because the dollar bill in your pocked is simply a marker for a T-bill held by the Fed. So a default on our national debt simply looks like this. Just printing what is it now $16 trillion dollars and putting it into circulation. That is the default mode. Hyper inflation.
Quote:
Originally Posted by shaker281 View Post
In fact, you make a good argument in favor of central banking.

Then there is the myriad of other problems the Greek economy is facing. Mass tax evasion, egregious regulation, unsustainably high wages, low retirement age, generous social benefits. Let's not ignore all of that.
We are facing outsourcing as our wages are claimed to be to high. The same as Greece. We don't have tax evasion we just have low taxes. The regulatory environment in the US is getting bad. It may not compare to what they have there but it is as bad as ever here. Our social benefits are unfunded as well. So let us really honestly compare the US with Greece. The difference between here and there is simple we can and are printing our own money and they can't.
Quote:
Originally Posted by shaker281 View Post

The fact that this debate is still raging 5 years after the US credit/housing crisis erupted is significant as well. Shouldn't we be worse off five years later, rather than better off, if US economic policy was so flawed? How long is the shelf life of the "any day the other shoe will drop" theory? If not five years... ten, twenty?
It could be very well 50 years later that the other shoe finally does drop. But we have had 5 years of very high unemployment. And there is evidence of fraud in the unemployment numbers. The top end is doing OK but the bottom end is struggling. Get more education, OK we did that and where are the jobs? OH ya you can't declare bankruptcy on student loans.
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Old 09-05-2013, 05:19 PM
 
20,376 posts, read 18,415,999 times
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Originally Posted by pie_row View Post
OK the rates on ten year bonds have stopped dropping and started climbing. There is zero risk of you not getting your money out of a T-bill. That is because the dollar bill in your pocked is simply a marker for a T-bill held by the Fed. So a default on our national debt simply looks like this. Just printing what is it now $16 trillion dollars and putting it into circulation. That is the default mode. Hyper inflation.
You are assuming that people will not also hoard dollars at zero interest for any reason. If everything is declining in value the real rate is positive. Gold pays no interest either. Taxes can end inflation in a big hurry.



Quote:
We are facing outsourcing as our wages are claimed to be to high. The same as Greece. We don't have tax evasion we just have low taxes. The regulatory environment in the US is getting bad. It may not compare to what they have there but it is as bad as ever here. Our social benefits are unfunded as well. So let us really honestly compare the US with Greece. The difference between here and there is simple we can and are printing our own money and they can't.
Again that is one of their problems. It is a big problem to be sure.


Quote:
It could be very well 50 years later that the other shoe finally does drop. But we have had 5 years of very high unemployment. And there is evidence of fraud in the unemployment numbers. The top end is doing OK but the bottom end is struggling. Get more education, OK we did that and where are the jobs? OH ya you can't declare bankruptcy on student loans.
If we jam poor people into dense urban ghettos and sell the country side to Chinese immigrant we will do just fine getting back our repatriated dollars.

Chinese buyers bring big money to U.S. housing market - Jul. 8, 2013

Some of their children will have the same rapacious rentier problems we do that price us out of the market, but they are likely as clueless about what the 19th century progressives were trying to tell us as we are.
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Old 09-05-2013, 05:58 PM
 
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Quote:
Originally Posted by gwynedd1 View Post
You are assuming that people will not also hoard dollars at zero interest for any reason.
If we are in a position of printing down our national debt then people aren't going to be hoarding cash.
Quote:
Originally Posted by gwynedd1 View Post
If everything is declining in value the real rate is positive. Gold pays no interest either. Taxes can end inflation in a big hurry.
And you can go from deflation to hyper inflation without first going through normal inflation.
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Old 09-06-2013, 12:56 PM
 
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Quote:
Originally Posted by pie_row View Post
If we are in a position of printing down our national debt then people aren't going to be hoarding cash.
Nor with high marginal rates that would tax in the surplus cash.


Quote:
And you can go from deflation to hyper inflation without first going through normal inflation.

Not with the power to tax and North America behind it. .
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Old 09-06-2013, 03:14 PM
 
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Quote:
Originally Posted by gwynedd1 View Post
Nor with high marginal rates that would tax in the surplus cash.
Do we have the political will to do that?

Quote:
Originally Posted by gwynedd1 View Post
Not with the power to tax and North America behind it. .
Again you have to use the power to tax and what will put us in the position of printing down the national debt is the abdication of using that power. North America isn't behind taking responsibility for the commitments we've made. We may find that we simple have run out of time. The money that is sitting in T-bills can be turned into cash quickly. Printing money indiscriminately leads to hyper inflation. Normally you don't see this unless you have really bad things happening in a country.


But we are the world's reserve currency. The British Pound use to be that one. If the change from US being it to not happens in an orderly fashion then all is good. If it happens in a disorderly fashion then we could see things that haven't happened before.
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Old 09-06-2013, 03:57 PM
 
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Quote:
Originally Posted by pie_row View Post
Do we have the political will to do that?
That's the right ball park. As I keep saying, it has nothing to do with "markets".


Quote:
Again you have to use the power to tax and what will put us in the position of printing down the national debt is the abdication of using that power. North America isn't behind taking responsibility for the commitments we've made. We may find that we simple have run out of time. The money that is sitting in T-bills can be turned into cash quickly. Printing money indiscriminately leads to hyper inflation. Normally you don't see this unless you have really bad things happening in a country.
I just can't think of a single instance where a central bank created inflation. Government debt is, by all my observation, already entirely fungible and used just like money regardless of the interest rate. The Fed swaps 2-3% from dollars to 10 year. Big deal.


And if we had "lots of inflation", that means income will rise. That means more taxes without even moving the the tax rate. All they have to do is "run a surplus" with all the huge tax receipts from inflation and the money will get sucked out of the economy


War, foreign debts and political dissolution is what kills a currency. In the latter case when Ukraine created their own script there was no reason to hold on to Rubles so they left the local economy and left for the Russian Federation. Other former SSRs just created massive amounts of state bank credit. It would be like North Dakota lending to itself and buying its own assets to create yet more reserves. In other words a broken money monopoly.


Quote:
But we are the world's reserve currency. The British Pound use to be that one. If the change from US being it to not happens in an orderly fashion then all is good. If it happens in a disorderly fashion then we could see things that haven't happened before.

Assets not denominated in dollars will be what they always were. The US dollar as a reserve currency does the average American little good.



US trade deficit : $735.7 billion
-U.S. Census Bureau 2012


That is with 10s of billions of the US military budget.


-In calendar year 2012, military spending declined from $711 billion to $668 billion.
CFR



Its practically a wash for the privilege of being the world police.


Not much of a coincidence if you ask me.
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