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Thread summary:

Seeking advice and comments on state of economy, another great depression, theories on economic crisis, is economy doomed, the end of prosperity

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Old 10-10-2008, 01:24 PM
 
19,195 posts, read 16,780,075 times
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Quote:
Originally Posted by colleeng47 View Post
I think the answer to that is simply no one knows. We're hearing contradictory info from all the "experts", politicians, and talking heads. No one seems to know where we're going from here. In fact, it seems no one even knows what to say.
Hello colleeng47,

The answer is they cause both deliberately. They know exactly what is going on.

Do not listen to me, listen to Thomas Jefferson.
"If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them (around the banks), will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered." Thomas Jefferson, Letter 1802 to Secretary of the Treasury, Albert Gallatin
repeat after me, "first by inflation then by deflation"

Private banks control the issue of our currency.
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Old 10-10-2008, 01:54 PM
 
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I live in California and we have big earthquakes here. They happen regularly. Sometimes 20 years will pass between two big ones, sometimes 50 will-- but it's a given that once in a few decades they cause mass destruction.

I think it's like that with economies as well. Any given economy will falter or fall once in a while, they can't keep on ticking forever. Great Depression ended about 70 years ago. There's absolutely nothing special about us that would make us immune to another economic event of that magnitude-- some generation of Americans will likely experience an ecomonic collapse, why not us?

Nothing is certain, humans are very bad at predictions. No one will tell you what's going to happen. Yes, this thing could be another Great Depression, or it may be "only a recession", like there was in the early 80's. Don't bet on any outcome, though-- anything can happen and only time will tell.
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Old 10-10-2008, 06:08 PM
Rei Rei started this thread
 
Location: Los Angeles
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I think we are going tangent off the original topic, and no one has really answered the question.... ^^
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Old 10-10-2008, 06:14 PM
 
Location: Chino, CA
1,458 posts, read 3,043,526 times
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Quote:
Originally Posted by Rei View Post
I think we are going tangent off the original topic, and no one has really answered the question.... ^^
I'll make it simple... it's not possible because money is not on a "gold" standard, the world banks are cooperating, and central banks can print our way out of this. Exchanging credit/debt with currency devaluation filling the deflating credit bubble.

Previously, our currency was backed by gold, world economies were not as tied together or cooperative with one another, and governments were more hesitant or more fiscally conservative.

-chuck22b
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Old 10-10-2008, 06:23 PM
 
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When the crisis eases and we can really reflect on where we are it will be sobering. People have been warning of the middle class declining for years. The middle class has kept a facade of prosperity by heavy borrowing and negative savings. Borrowing or leveraging can maintain a facade of prosperity for a period of time but eventually reality will catch up as asset inflation cannot continue indefinitely.
We, as a country have enormous structural problems with debts and liabilities owed to 77 million baby boomer age americans that are all coming due. We have not had any courage in leadership to even begin to address these issues. The reality is people will not be able to retire at 62 or even 65. Medicare will not be able to continue. Structurally bankrupt firm like GM and Ford will not be able to make good on all their liabilities to employees and debt holders.
The government will need to raise revenues to support all the programs we need to fund. The infrastructure of the country needs vast upgrades and will require tremendous funding. Raising taxes won't help because it will discourage investment, both domestic and foreign. These are all facts, not politically based. All parties have been negligent, I fear Nancy Pelosi as much as George Bush, Barack Obama as much as I fear John McCain.
I personally don't see any way that we don't have a long extended period of decline in America. We have been warned and we have seen it coming for decades but we never faced it. We never had real leadership in Washington and our statehouses. I am deeply saddened to see all the socialist activities that we now espouse in our government agencies. America has truly lost it's way.
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Old 10-10-2008, 08:18 PM
 
1,566 posts, read 2,886,788 times
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Quote:
Originally Posted by chuck22b View Post
I don't think we'll hit Great Depression II. It may sound cool and all, but I don't think the central banks, and our government are going to let a total collapse of our current financial markets and main street.

More than likely, as they are already doing, they are going to pump/inject cash so the economy can stay afloat.

Ideally, they will follow a similar system as what Roubini outlined in his triage... systematically injecting cash into banks, taking equity stakes, letting some banks fail, and injecting cash into the household sector to reduce debt.
Prof Roubini prescribes first aid for America’s economy « Fabius Maximus

In a sense, the central governments will be taking from the rich, and giving it to the poor/in debited by devaluing the currencies. After all, it was the top 95% percentile that benefited the most out of the credit expansion and made it possible, and therefore, it'll be the top 95% percentile that should be punished the most.

I know this is not the popular opinion on the board. But, I feel that this is the most likely scenario.

-chuck22b
except all there feeding the economy artificial bull**** wont last
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Old 10-10-2008, 08:20 PM
 
1,566 posts, read 2,886,788 times
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Quote:
Originally Posted by chuck22b View Post
I'll make it simple... it's not possible because money is not on a "gold" standard, the world banks are cooperating, and central banks can print our way out of this. Exchanging credit/debt with currency devaluation filling the deflating credit bubble.

Previously, our currency was backed by gold, world economies were not as tied together or cooperative with one another, and governments were more hesitant or more fiscally conservative.

-chuck22b

hahah the reason we are in this mess is because we are off the gold standard and the federal reserve is a giant scam
you cant print your way out of this one
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Old 10-10-2008, 09:07 PM
 
Location: San Diego California
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I don't think we'll hit Great Depression II. It may sound cool and all, but I don't think the central banks, and our government are going to let a total collapse of our current financial markets and main street.

The problem with this assumption is that the Fed and the Government CAUSED this problem. They have no interest in solving it because it was caused for a reason.

In a sense, the central governments will be taking from the rich, and giving it to the poor/in debited by devaluing the currencies. After all, it was the top 95% percentile that benefited the most out of the credit expansion and made it possible, and therefore, it'll be the top 95% percentile that should be punished the most.

The logic of this paragraph is really hard to follow. The Government is not taking from the rich and giving to the poor, it is taking from the people and giving to the banks, like Robin Hood in reverse.

It seems as if there is a basic misunderstanding about how the banking system works. Banking systems depend on deposits, from which they make loans. Without deposits banks have no real tangible assets. Derivatives and CDO's do not have any intrinsic value because they are instruments of debt. At some point banks began to make loans using derivatives as reserves in place of deposits. This allowed them to multiply their lending ability. This practice spread from here to Europe and Asia, and soon worldwide. The reason the whole system is collapsing is because there is not enough real money to offset debts and assets. While some would like to believe that the Governments can just print more money and give it to the banks to solve the problem, it will not work. Printing mass sums of money without an expansion of goods and services just debases the value of the money causing hyper-inflation. The only way to solve the problem is to allow deflation to correct the markets and equalize the balance between money and assets. The market needs to set values of real estate and equities based on the amount of money the people really have and what they can afford to pay, not some unrealistic figure of what they think they will have in a decade or more. The more the Government interferes with this basic process the longer and deeper the depression will be.
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Old 10-10-2008, 09:14 PM
 
1,566 posts, read 2,886,788 times
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Quote:
Originally Posted by jimhcom View Post
I don't think we'll hit Great Depression II. It may sound cool and all, but I don't think the central banks, and our government are going to let a total collapse of our current financial markets and main street.

The problem with this assumption is that the Fed and the Government CAUSED this problem. They have no interest in solving it because it was caused for a reason.

In a sense, the central governments will be taking from the rich, and giving it to the poor/in debited by devaluing the currencies. After all, it was the top 95% percentile that benefited the most out of the credit expansion and made it possible, and therefore, it'll be the top 95% percentile that should be punished the most.

The logic of this paragraph is really hard to follow. The Government is not taking from the rich and giving to the poor, it is taking from the people and giving to the banks, like Robin Hood in reverse.

It seems as if there is a basic misunderstanding about how the banking system works. Banking systems depend on deposits, from which they make loans. Without deposits banks have no real tangible assets. Derivatives and CDO's do not have any intrinsic value because they are instruments of debt. At some point banks began to make loans using derivatives as reserves in place of deposits. This allowed them to multiply their lending ability. This practice spread from here to Europe and Asia, and soon worldwide. The reason the whole system is collapsing is because there is not enough real money to offset debts and assets. While some would like to believe that the Governments can just print more money and give it to the banks to solve the problem, it will not work. Printing mass sums of money without an expansion of goods and services just debases the value of the money causing hyper-inflation. The only way to solve the problem is to allow deflation to correct the markets and equalize the balance between money and assets. The market needs to set values of real estate and equities based on the amount of money the people really have and what they can afford to pay, not some unrealistic figure of what they think they will have in a decade or more. The more the Government interferes with this basic process the longer and deeper the depression will be.
very well said
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Old 10-10-2008, 09:44 PM
 
Location: Ohio
22,467 posts, read 15,709,854 times
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Quote:
Originally Posted by Rei View Post
Do you guys have any theory on why it's not possible for us to fall into another great depression? Or are we pretty much doomed???
You're doomed and there's nothing you can do about it, unless you want to start killing people.

The smart move is to leave troops in Iraq until an opportune time lends itself to invade Iran, then move into Central Asia and from there, dismember Russia exactly the way you dismembered Yugoslavia, and take over the resource rich eastern Russian republics like so many Kosovos.

You're other option is to go to war against Pakistan by supporting the independence of the Baluchs. That's risky because Pakistan has a number of small yield nukes (in the 0.1 kt to 1.0 kt range) which they'd probably use. However, that would be more satisfactory since the US would take over the Chinese oil and natural gas pipelines in Baluchistan and can kick the Chinese navy out of their base in Baluchistan.

From there, the US can move into Central Asia and dismember Russia.

If you fail to do that, you have no future. It's just that simple. Understand I'm not talking about next week, or next month or next year, but 10, 15, 20 years down the road.

Central Asia is full of light sweet crude oil, which the US absolutely must have to support its consumer economy, but then there's 1 Billion Indians, 1 Billion Africans and South Americans, and 2 Billion Asians who need it too, in order to raise their standard of living and quality of life.

From whom is my greatest profit potential? 300 Million measly Americans, or 4 Billion others? Actually throw in Russia and Eastern Europe plus Central Asia and that's 5 Billion others.

If Russia or China controls the resources in Central Asia, they can restrict access to the US and limit its supply. In other words, the other economies will be growing at the expense of the US economy.

Worse than that, Russia and/or China can sell the oil, natural gas and minerals in Rubles, Euros, Yuan or basket currencies, which will drive down the value of the US Dollar and make your life miserable.

At $1 = 1 Euro, a $100 barrel of oil is $100 or 100 Euros, but at $1 = 0.64 Euros, a barrel of oil that sells for 100 Euros sells for $156.

And at $1 = 0.42 Euros, a barrel of oil at 100 Euros is $238/barrel.

And not just oil, all commodities like gold, silver, precious metals, ores, timber, wheat, rice, corn, coffee, chocolate, sugar, soy beans, anything sold on the world market you'll be paying through the nose and eyeballs to get, while everyone else on the planet is enjoying those resources and commodities at low prices.

Their economies will be growing at 4% to 12% per year.

Your economy will drop 35% and never recover. Not ever.

The 57% of American households that have two wage earners will be reduced to 3%-5% of households, and millions of jobs permanently disappear and are never replaced.

Your vocabulary will include phrases like "house-husband" and "house-wife" because your spouse will never work due to the fact that your resource use has been cut from 29% of the world's non-oil resources to maybe 11%-12%.

Without those resources, there's nothing to manufacture, and no services to provide, and no one with money to consume them.

You'll teeter in and out of mild recessions for the next two years before you go into a major recession that leads to an economic depression, around 2016 or so, which will last forever, although after about 8-9 years people will just learn to accept the new reality.

The US will be a lot like Finland. It will control prices and wages for some jobs and some goods and will be heavily providing social services. Your children will be able to go to college, but only at government discretion as there won't be the same level of funding for grants and student loans. I mean there's no point in wasting money to educate people for jobs that will never exist. It will be extremely competitive, requiring wanna be students to pass a whole battery of tests and demonstrate aptitude as well as test scores to be able to choose their majors, which will be largely determined by projected future need.

That's what you have to look forward to.
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