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...People would take their life's savings to book passage on a ship to the USA and that is where they luxury, mystique, and marketing of riding on the biggest and fastest triumphs of technology came from. This is why such luxury was also built into these people carriers, it helped to sell tickets...
And folks thought the more funnels, the faster the ship. So, Titanic had four, even though the aft one was fake....well, sort of, the galley stoves were vented up the fourth stack...
Once the debt crisis is allowed to correct itself (i.e. we have a huge recession/depression) then the future of the US will look bright. As we sit right now, nothing looks bright. Our trade deficit is a ticking time bomb, and we continue to print money like no tomorrow. All you have to do is READ and NOT LISTEN. Ben Bernanke has come out and warned about a debt crisis if we don't rain in our deficit soon. Warren Buffet has preached since the early 2000's that the trade deficit is a huge worry and more worrisome than the individual debt accumulation or the US gov't debt accumulation.
Look at the history or Warren Buffets investing strategy. Up until the last 10+ yrs, he invested almost completely in American companies. He has stated he is looking abroad, and he has even bought some precious metals in the last few years because he is "bearish on all currencies." This is obviously due to the debt. Because no gov't (especially ours with our entitlement mentality) is going to reign in the debt with fiscal responsibility. They are just going to print money. And if you look at the numbers, with the amount of debt we have/the amount of bonds that can be cashed in at any time, we have a huge inflation worry in our country. This doesn't even mention that nearly 80% of our long-term debt is in medicare, medicaid, and social security (ALL THREE are tied to inflation). So we can't even print our way out in order to pay off our debt, because as inflation increases, so do the payments on these three programs. There is going to be some major short-term pains.
Having said that, after we allow the economy to correct itself and we come out a producer nation (instead of the consumer nation we currently are) and we come out a saving nation (instead of a borrowing nation), then AND ONLY THEN the sky will be the limit for the US. But as we sit now, I don't see how anybody can be bullish on the US economy. I personally still continue to invest because 20+ years from now we will be a more advanced, better nation than we are today. But I have no idea how bad the pains will be over the next 5+ years.
I just know that things can't get much better until they get a lot worse to correct our imbalances in the economy. Or, the worst case scenario, the gov't will continue to try and "stimulate" the economy (which is basically just trying to re-inflate a bubble that isn't supposed to be there) and under this situation we will be like Japan, a recession lasting well over a decade with no end in site (until the gov't can no longer borrow money to "stimulate" and at that point the economy will have to contract to get rid of the imbalances that were produced. If the free market were allowed to function, things would currently be a lot worse than they are now, but we would have already rid ourselves of the bad investments/businesses/spending practices that got us into this situation. So there would already be an end in site. But now, thanks to gov't interventions, all of these bad companies still exist, wasting capital that could be used to help build a solid economy, and people continue to borrow like never before. The root causes of this recession haven't been fixed, and until they are, things can't get better. It's basic common sense. The fact that the gov't can't see it scares the hell out of me. They think what "caused" the recession was banks quit lending. That's not a cause, that's a symptom. The cause was that their lending practices became too lax, and they realized, "hey how can anybody possibly repay a loan when they can't afford to put anything down and can only pay the interest?" So they tightened their lending standards. The problem was that lending standards were too loose in the first place. The second thing they think was a "cause" is that people may quit spending (see Bush's stimulus check a couple years ago). That's a symptom, not the problem. The problem is that we were spending borrowed money that we couldn't pay back. THAT'S THE PROBLEM. The symptom is that we quit spending to pay off our debts. How can paying off your debts possibly be a problem? Or how can banks unwillingness to lend to borrowers that have no business borrowing in the first place be a problem? The gov'ts idea of what's wrong is so...wrong.
Of course, the gov't doesn't want these things to happen because it will result in a short-term recession (worse than we are in now). And we all know, no president wants to be the guy that had one of the worst recessions/depressions in US history while they were in office. So they do everything they can to keep the game going. Well, the problem with that is, it just compounds the problem so when the correction actually occurs, it will just be a worse correction. You HAVE to let the free markets rid the economy of bad companies/investments. Then we can use that extra money in circulation to produce companies that are actually meaningful and export goods that the rest of the world needs to bring more money into the US.
Here's an article I was just reading this morning from CNNmoney. These are predictions on what IS GOING to happen if we don't change (based on trends that are unsustainable, not a random shot in the dark prediction). And where do these predictions come from? From some of our nations top economists:
Forget the grandkids, U.S. debt could hurt you - Yahoo! Finance (http://finance.yahoo.com/news/Forget-the-grandkids-US-debt-cnnm-3865272422.html;_ylt=AmHoBCvnc1jjOqpwv7GXJHO7YWsA; _ylu=X3oDMTE1NzUzbTA0BHBvcwM2BHNlYwN0b3BTdG9yaWVzB HNsawNob3d1c2RlYnRjYW4-?x=0&sec=topStories&pos=4&asset=&ccode= - broken link)
Great post! Totally agree. We all know that the government, especially this administration, is more focused on their political capital than what will need to happen. I guarantee you that they will ignore this problem until they simply can't anymore and then we will be in a much bigger mess than ever before.
Great post! Totally agree. We all know that the government, especially this administration, is more focused on their political capital than what will need to happen. I guarantee you that they will ignore this problem until they simply can't anymore and then we will be in a much bigger mess than ever before.
Exactly, the biggest problem with what the gov't is doing is they are creating a bigger problem. In the 1930's/40's (during the Great Depression) we at least had a solvent government. Our economy was going through a correction thanks to the lax spending (and lack of saving) of the 1920's. We would have/will go through a similar depression/recession this time around. The difference is, we have an insolvent gov't that is completely dependent on foreign gov'ts for capital. Imagine 1-3 yrs from now...our recession is sputtering along (gov't continually going farther into debt with borrowed money while they try to get people to spend more, instead of letting us pay off our debts) and one day our financiers wake up and say, we won't buy your bonds anymore until we have extremely higher interest rates. Even at a 10% long-term interest rate we would have nearly $1trillion in INTEREST payments as a gov't. Currently our gov't finances nearly all of our debt on short-term bonds, meaning "nearly all of our debt" will be coming due in the next 1-3 years with substantially higher interest rates. So how do we pay the interest? Print money.
During the depression we actually had falling consumer goods prices (as deflation is ACTUALLY A GOOD THING). Imagine if consumer prices rose during the Great Depression? That's what we're going to be faced with this time around, a population that is in as bad a shape as we were in during the 30's only rising consumer prices due to the inflation caused by the federal reserve. And if you actually look at the housing numbers, our housing boom was 1.5x BIGGER than the housing boom in the 1920's. The housing prices outpaced inflation at a 1.5x higher rate than during the 20's. If you look at historical numbers (the past 150 yrs or so) housing prices have only kept pace with inflation, and during the 3 decades they didn't prices came crashing down to correct themselves (1863-1873 resulting in the bank panic of 1873 which turned into a depression, the 1920's which resulted in the depression, and this decade the 2000's).
Also looking at the data you can see why the gov't tried doing what they did/are doing. They saw not only a depression but one substantially worse than the Great Depression, so of course they were going to try to do whatever it took to prevent it. But you can't change the forces of the economy, just like you can't rewrite the laws of math or physics. Eventually you have to let things play out without compounding the matter with increased debt.
Exactly, the biggest problem with what the gov't is doing is they are creating a bigger problem. In the 1930's/40's (during the Great Depression) we at least had a solvent government. Our economy was going through a correction thanks to the lax spending (and lack of saving) of the 1920's. We would have/will go through a similar depression/recession this time around. The difference is, we have an insolvent gov't that is completely dependent on foreign gov'ts for capital. Imagine 1-3 yrs from now...our recession is sputtering along (gov't continually going farther into debt with borrowed money while they try to get people to spend more, instead of letting us pay off our debts) and one day our financiers wake up and say, we won't buy your bonds anymore until we have extremely higher interest rates. Even at a 10% long-term interest rate we would have nearly $1trillion in INTEREST payments as a gov't. Currently our gov't finances nearly all of our debt on short-term bonds, meaning "nearly all of our debt" will be coming due in the next 1-3 years with substantially higher interest rates. So how do we pay the interest? Print money.
During the depression we actually had falling consumer goods prices (as deflation is ACTUALLY A GOOD THING). Imagine if consumer prices rose during the Great Depression? That's what we're going to be faced with this time around, a population that is in as bad a shape as we were in during the 30's only rising consumer prices due to the inflation caused by the federal reserve. And if you actually look at the housing numbers, our housing boom was 1.5x BIGGER than the housing boom in the 1920's. The housing prices outpaced inflation at a 1.5x higher rate than during the 20's. If you look at historical numbers (the past 150 yrs or so) housing prices have only kept pace with inflation, and during the 3 decades they didn't prices came crashing down to correct themselves (1863-1873 resulting in the bank panic of 1873 which turned into a depression, the 1920's which resulted in the depression, and this decade the 2000's).
Also looking at the data you can see why the gov't tried doing what they did/are doing. They saw not only a depression but one substantially worse than the Great Depression, so of course they were going to try to do whatever it took to prevent it. But you can't change the forces of the economy, just like you can't rewrite the laws of math or physics. Eventually you have to let things play out without compounding the matter with increased debt.
Deflation is never a good thing when you owe money.Right now,our alleged "safe haven" bond market is allowing us to run huge deficits without too large a backlash, i.e.servicing that debt.Except for gold there is very little else that gives investors the illusion of security.Both have the potential to crater if the economic rebound does take hold.Which will happen when home prices finally stabilize,and real jobs are created,not census taking temps.
Deflation is never a good thing when you owe money.Right now,our alleged "safe haven" bond market is allowing us to run huge deficits without too large a backlash, i.e.servicing that debt.Except for gold there is very little else that gives investors the illusion of security.Both have the potential to crater if the economic rebound does take hold.Which will happen when home prices finally stabilize,and real jobs are created,not census taking temps.
Exactly, deflation keeps those people that overleveraged themselves in check. Those that took out too much debt fail (individual bankruptcy or the company fails). Of course if this were the case, then the gov't would actually have to live within their means to make sure they don't overleverage themselves (as the US gov't has already done). So now they are going to inflate their way out of their debt, at the expense of US citizens savings accounts/money market accounts/and US bondholders. So because the gov't is too ignorant to live within their means they are willing to devalue Americans hard earned money at the expense of their reckless spending. I don't see how that's a good thing, in any way. All it does is make people more dependent on these social programs, and result in less economic freedom.
So how is the collapse coming? Just want to revisit because it's been three years and everyone is still here...
There isn't a collapse coming. Most companies are very lean and are making money at the moment. The general public has spent the last 5 years paying off debt and getting their personal financial situation in order.
The current poor economy could very well linger for a while, but there is not the potential for a "collapse".
There isn't a collapse coming. Most companies are very lean and are making money at the moment. The general public has spent the last 5 years paying off debt and getting their personal financial situation in order.
The current poor economy could very well linger for a while, but there is not the potential for a "collapse".
The point was to bring up the years of claims the OP has made the economic collapse is right around the corner.
While I don't think being proven wrong will have one iota of effect on the OP. What I am hoping is that people that are new, or just happen on this, will take a look that driving oneself obsessively with panic and anxiety with fear of some economic apocalypse is not only wrong...it's completely insane.
Yep. The fear mongers are always trying to sell you survival stuff or gold. Bunch of snake oil salesmen, they convince you you have a disease, then conveniently sell you the cure. They prey on the gullible and take their money.
It is a MASSIVE industry. Every few weeks someone posts that year-old Money News advertorial about billionaires dumping stocks and they think it's a real news story. Honestly, it makes me want to get in on the racket, but for now I'll just stick with taking the panic sellers' money in the stock market.
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Honestly, it makes me want to get in on the racket, but for now I'll just stick with taking the panic sellers' money in the stock market.
