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And that is because the United States FED prints the world reserve currency, but this will not continue forever and in fact might be ending sooner than we think. What does this mean for the US and it's people? Everything.
I don't think it's ending anytime soon, but it would be awesome for at least 99% of the population if it did.
Yeah that's true but one cannot forget that the United States, thus far and for a long time now has played by not just a different set of rules but it's entirely own set of rules that even other large countries thus far have not been able to play by. And that is because the United States FED prints the world reserve currency, but this will not continue forever and in fact might be ending sooner than we think. What does this mean for the US and it's people? Everything.
Did we start *inheriting* debt when I wasn't looking?
Our economy has been screwed, but it isn't the old taking from the young. It's the mega rich taking everything. Consumer capitalism is not sustainable when that happens, which is why we've need to accumulate debt.
Rruff, the Fed gave away trillions of dollars to the world's rich. The FED perverted this 2001-PRESENT deflation cycle or non-growth cycle by forcing interest rates down, down, down....which adds to the wealth of the VERY RICH individuals and corporations who always have the collateral to qualify for low- (or no-) interest loans. The Fed also gave away American taxpayer money to foreign banks and bankers. This was all done to delay the Great Depression that is still waiting for us. The world's elite have never been so happy --or mega rich.
Back in 2001 we supposed to start diminishing the gap between the rich and the poor. We did not do this. Instead of higher interest rates and lower prices American citizens got lower interest rates, low wages and higher prices. Wall Street Crooks love this.
This latest so called economic recovery or growth is nothing but illusion - based on the FED 'borrowing' (or stealing) trillions from future tax payers and giving it to the world's richest players, telling them to KEEP SPENDING. The GAP between rich and poor became a chasm. Many people think that we avoided a Great Depression - but the verdict is still out as to whether we AVOIDED it or just POSTPONED it. I think we just postponed it. The Great Depression reconvenes every certain number of years, and instead of a capitalistic fight for life to see which corporations can survive Economic Winter the FED jacks down interest rates so that all corporations can survive -- survive on the cheap debt -- which, in another word, is surviving on free money from the taxpayer. The great corporations will survive -- and the weak corporations are not meant to survive. We should never use tax receipts to SAVE the rich and corporations!!! The Fed rewarded the failure, failed corporations and failed individuals.
Rruff, only real medicine (higher interest rates + deflation + depression) can fix our economy, can make our economy grow organically again, nothing else. High debt KILLS the economy. Our economy has been dead since 2001 and the only thing we managed to grow since 2001 was debt. Wall Street chose lower salaries, higher debt, and higher prices. Corporations have to pay for higher salaries - workers have to pay for higher debt.
Low interest rates are the cause of debt. But low interest rates avoid revolution. So we avoided (delayed) a Great Depression, and a revolution -- but our TOTAL DEBT TO GDP today (370%) is still much higher than what it was in 1929 (301%), when it took a Great Depression and a World War to get us back to 150% Total Debt/GDP which is (roughly) ground zero for economic growth. We can't start growing our economy normally and organically again unless we go thru deflation and depression first. This is very important to understand. Housing costs and medical costs along with education costs are sucking up all the people's money leaving little room and smaller houses to buy and consume.
The job of economic deflation and depression is to get us back to Ground Zero in Debt so we can grow again. Obama (through the FED) chose to preserve debt and encourage more debt - and have a second term - so we still need a depression to get us where we need to be in terms of debt.
We preserved our standard of living by taking money from our grandchildren, who get to pay off our debt for us. Only cowards do this, leaving our children and grandchildren with unprecedented amount of debt, with dead and socialist managed zombie economy.
You have it backwards. A decade of double digit inflation would wipe out over 90% of our debt. Mortgage payments would become trivial. Student debt would become a minor household expense. Vast amounts of dollar denominated weath would vanish.
Historically, the way empires have bailed themselves out of debt was inflation. Rome did it. We can too.
Yes, but the FED cannot afford to fail now. There are a lot of people who have painted a BULLSEYE on the FED's forehead. Remember, the central banks now see it as their responsibility to PREVENT sell-offs, the preserve order. This started in the US in 1987, and has been with us every sense. Are they ALWAYS successful? No. But they are getting much better at manipulating markets UP.
It was sort of SPORT for the Fed until 2008-9 -- now it has become life and death. Fingernails on blackboards.
You have it backwards. A decade of double digit inflation would wipe out over 90% of our debt. Mortgage payments would become trivial. Student debt would become a minor household expense. Vast amounts of dollar denominated weath would vanish.
Historically, the way empires have bailed themselves out of debt was inflation. Rome did it. We can too.
No, you have it backwards. Only higher interest rates +strong US Dollar + deflation and depression can wipe out bad debt and prepare us for new and organic economic growth. What you wrote above is nothing more then an illusion. We have bad debts that need to be destroyed; like a hidden wound, these debts need to be exposed to the air, cleaned and treated. Some limbs have to be removed. There is no easy, painless way to do all this; but it must be done.
Destruction of our debts through bankruptcy and default -- using the mechanism that was designed for this action, higher interest rates, and more expensive money -- is the ONLY answer to our current problems.
We enjoyed the party; now we have to pay for the party. What you suggest is cheating and manipulation, you want to cheat on creditors and pay them back in devaluated dollars. America needs healthy Capitalistic System, the same old system that made this country great and prosperous. Japan tried what you are suggesting and they are dying a very slow death because of it -- still dying a very slow death, which began in 1989, heading on 3 decades now. If it doesn't work - then it doesn't work. Bad debt needs to be destroyed. And the inflation of prices that happened from 1983-2001 needs to be reduced and balanced. Deflation is supposed to moderate both price gains and the wealth-gap that happened in the preceding inflation -- and the Fed is spending retiree's and savers money to try to make sure this does not happen.
There will be no real and organic growth in our economy again until we have MANY bankruptcies and defaults -- until we can live with mark-to-market banking accounting again. Are our banks healthy? Return to mark-to-market accounting as see how healthy they really are.
QE has been done before, but NOWHERE NEAR this magnitude. The QE since 2008 is UNPRECEDENTED.
That means no one knows what the consequences could be. Not Yellen, or anyone else.
We mostly do and it's a yawner.
QE helped lower interest rates. Fine for borrowing and business. But because of weak general economic demands the vast majority of the excess reserves created were never lent out in any great enough numbers to matter much more than a twit. There's $4T sitting in there waiting to be unwound or not.
Then why is "the rich taking all the economic gains" a new phenomena?
If you want to see who the "big boys" are look at income and wealth. Don't create some bogus metric that defines owning at least one share of stock as a "big boy".
Of course the rich have gained significantly since the crash. Rich money can be more easily used to earn more money without lifting a finger, as opposed to taking the time, effort, thinking and risks with creating new or expanding old business. These are passive gains built up on top of a pile of rich. Easy peasy!
Which is fine by and for me since it has made me rich.
But this is of little help for the middle class, because there has not been any palpable trickle down!
Repatriation about more of the same.
We need to focus on boosting the middle class.
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