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We haven't paid off a dime of the National Debt since before WWII.
(Well, I lied, there were a few years in the mid 1950s when the Natl Debt went down, from $274 billion to $270 billion, we paid off a whopping 1-1/2% of it before it shot back up the following year and has never come down again)
People thought $270 billion was huge, back then. Now it's $17 *trillion*.
So how come we aren't fiscally dead and buried by now? Easy. We made each dollar, worth a lot less. So the VALUE we now owe, is a lot less than it would have been. Neat trick, eh?
If you're wondering whose pocket all the VALUE vanished from to "pay off" the Natl Debt, consider the guy who saved up $15,000 in 1950. That was enough to buy ten pretty good, brand new cars then. If he saved it until now, it would be barely enough to buy one new car, and a cheap one at that.
That's the guy who paid off the National Debt. Him and his friends. And he probably didn't even realize he was doing it. And he's probably wondering why he can only buy one new car now instead of ten. Where did the other nine cars go?
If you're wondering if we are going to see inflation or deflation soon, the answer is: If we see any deflation at all, it won't last long. We've got a TON more debt to pay off. So we'll see almost entirely INflation, as far as the eye can see, from now on. It's the only way to pay it off.
And if you were wise enough to follow your grandfather's advice and save your money... YOU ar the one who will pay. Kiss most of your savings good-bye. Sucker.
Have you ever wondered why the government has never put a tax on savings and wealth?
Ha ha, fooled you. They HAVE put a tax on wealth, and it's been going for decades. It's called Inflation. And YOU have been paying it. That's why you're not rich now. Sucker.
The interest rate being low isnt due to QE, its due to other fiscal policies, trying to encourage borrowing by the consumer.
Your response would hold merit if we were indeed inflating the debt away but we arent.
QE is 'other monetary policy', QE is an attempt to reflate and encourage borrowing. And QE does indeed help the Fed in keeping interest rates down. But not so good with reflation and borrowing.
Yes the government indeed competes for returns. Do you really think if Canada starts to pay 8% a year, that the US will continue to be able to issue debt at 1%? or less?
Of course not, thats why 30 year rates are extremely high while 3 month terms are paying crap.
Canada would not suddenly decide to jack up their sovereign rates without good reason. This is not like an all 4 corners gas war. Canada would be more heavily burdened at such rates.
If Canada has to raise rates, it is because they are experiencing low demand on their debt for some very serious reason. National instability or other currency risk. Like Greece or Ukraine.
There are two main effects of the constant inflation we have seen since WWII.
1.) When the government borrows enough to suport the entire population for a year, it only has to pay back enough to support the population for a month, if they wait long enough.
2.) If you work hard and save your money, and keep it up long enough to save enough to buy a new car, then if you wait long enough after that you'll find you've only got enough to buy a fairly good bicycle... despite the fact that you worked long and hard enough to buy a new car.
If someone had lifted that much money (or value) out of your account overnight, you'd scream your head off and demand that the thieves be put in jail, as well as wanting your money repaid.
But since the thieves spread it over many years, the same loss is no big deal. As for wanting your money repaid by the govt that benefitted so much from the same inflation...... (snicker)
no they cant because interest rates arent only based upon a US standard, again, its a world wide competition for money that we have to compete with.
Why else do you think they climbed over 10% in the 70's...
It is now a world std. The USA essentially forced this upon the world in 1971.
In the '70's we experienced onerous inflation, and one way to combat that is through high rates.
Again, the Fed basically sets rates.
The "trillions of dollars" (try 85 billion per month and since declining) are in bank vaults.
Much or most, but not all. There has been some leakage, and I do believe that banks are again getting a bit hyper-creative again with that money. Either directly or indirectly as collateral for more esoteric and wild investments. Or via more arcane and elusive banking/accounting shenanigans. I'm trying to work and find more on this.
How much of the difference is because the government is subsidizing the rents and are those with the government subsidized rents actually any better off than those in 1960? Especially considering in 1960 there were no cable, internet, cell phone etc, bills.
Depends on the Market in question.
In those Markets were there is high demand pressure already, subsidies will drive up the price of rents.
Quote:
Originally Posted by pknopp
My reply was to the statement that we need to end no down payment loans. No, we do not. We need to restrict who might get one. All the same, my first house was bought with no down payment. FHA.
There needs to be a minimum 10% down for any government-backed loan.
If someone lacks the discipline to set aside 10%, then they are not worthy of a home, and most certainly not worthy of having tax-payers foot the bill.
Quote:
Originally Posted by pknopp
Hiring isn't up, production is not up, wages are not up. How do commodities shoot up and the markets hit record prices?
Commodities are global.
Quote:
Originally Posted by pknopp
On the other hand......I was shopping with the wife the other day. We went into a shoe store and I see plastic shoes selling for $50. (made in China) No one will ever convince me that we can not profitably make plastic shoes here for $50 paying even a decent wage.
That is due to the fact that you do not understand the meaning of "global."
When you realize that the US is not the only country on this Earth, you will see how fatally flawed your thinking really is.
Quote:
Originally Posted by pknopp
Covered already. It most certainly has. Go back a few pages and there are many links showing that the price of nearly everything is up. The only reason it's not strangling is because wages and hiring is stagnant.
Congratulations......you just debunked your own argument.
Twice.
"...the price of nearly everything is up..."
By your own admission, there is no Real Inflation -- therefore your claim that Federal Reserve is to blame fails.
Real Inflation affects everything. Real Inflation causes the prices of everything to rise.
Everything means every thing, as in every single stinking thing.
Which part of "everything" do you not understand?
Some things is not "everything."
Most things is not "everything."
Many things is not "everything."
Nearly everything is not "everything."
"Everything" means "everything."
And then you said...
"....wages and hiring is stagnant."
If wages are not rising, then that is prima facie evidence that Real Inflation does not exist.
Yes, wages are included in "everything."
Quote:
Originally Posted by pknopp
Once upon a time this was known as stagflation.
No.
"Stagflation" is a euphemism created by the Nixon Administration to deflect from the real issues.
You still pushing the B.S. numbers the government provides is very dismissive of the problems facing the middle class and the poor. Why you are so dismissive of the tough financial position the rising cost of things like food, fuel and utilities is causing is a head scratcher.
Maybe your next argument can consist of how the poor and middle class isn't paying enough in taxes?
That post wasn't directed at me, but it clearly shows you have no understanding of what "Inflation" is.
You aren't capable of making the distinction between Real Inflation, Wage Inflation, Cost-push Inflation, Interest Inflation or Demand-pull Inflation.
The rising costs of things is not caused by Real Inflation, and therefore the Federal Reserve bears no responsibility and deserves no blame.
Cost-push Inflation through government regulation is a small factor in rising prices. Policies by the Bush and Obama Administrations, such as the E85 Standard, EPA Tier 3, Obamacare, and such are pushing up prices.
Demand-pull Inflation is responsible for the largest part of the price increases.
That harkens back to "global" which you have proven you do not understand.
When you finally become sufficiently educated to understand that you are not the only person on this Earth, then you will come to realize that there are 6.6 Billion non-Americans consuming resources.
There are 1+ Billion people who are only just now starting to enjoy the resources that you have taken for granted for your entire life since the moment of birth. There are another 1+ Billion people waiting in the wings to have a chance to enjoy those things that you take for granted, like running water, natural gas, electricity, sewage, sanitation, education, roads, etc etc etc.
As they consume resources, they tax the Supply, causing prices to rise.
I am dismissive.
I've been telling everyone since 2007 they'll have to alter their Standard of Living and life-style to adjust to the changes taking place globally....and still people just don't get it.
You have two choices: STOP CONSUMING! or increase production to match Demand.
To increase production, you'll need Capital....which is unfortunate since some Big Brains decided to dump Capital into fracking and tar sands.
Well, that was really smart.
Quote:
Originally Posted by pknopp
Housing is still down. That only double downs the middle class problems. But you keep on pimping for welfare for the rich.
Housing isn't down enough.
Government policies flooding the Market with cash/credit, plus artificially depressed interest rates have created Interest Inflation which artificially drove up the price of housing.
The price of housing will continue to be over-inflated so long as government continues to meddle in housing.
Do I need to continue or are you going to continue to dismiss the harm the governments monetary policy is doing to the low and middle classes? When are you going to quit trying to defend the welfare for the upper classes?
The government's monetary policy has nothing to do there.
Those are all Supply & Demand issues and/or government regulations such as Obamacare, E85 Standard, EPA Tier 3 and new regulations on CO2 emission for power-plants forcing prices higher.
Quote:
Originally Posted by pknopp
Increasing money supply should feed inflation and it is feeding real inflation. You said it wasn't.
It is not.
Like I said several years ago.....
08-05-2012, 12:39 PM
Quote:
Originally Posted by Mircea
That would be true for Australia or New Zealand, but then their currencies are not the de facto international banking reserve currencies and not the de facto international currencies of trade.
For countries whose currencies are internationally traded, meaning BIS (Bank of International Settlements) accepts it or recognizes it, we use a Co-efficient of Absorption to determine how much currency a system can handle. For countries whose currency is not traded, it's a simple matter of GDP vs Money Supply. For all other counties, the system is the country itself -- but not the US whose currency is international -- so the "system" is global.
I suppose it would be easier for me to say that for the US, GDP vs Money Supply isn't relevant, rather what is relevant is GDP vs Money Supply factoring in Global Demand for US Dollars.
I did that about a 2 yeas ago, and the global system can handle about $9 TRILLION to $13 TRILLION US Dollars, but after that, those dollars would be excess and start causing Real Inflation in the US (and also to a lesser extent in those countries tied or pegged to the US Dollar -- like the Argentine Dollar which I think is still pegged to the US Dollar).
You should invest money and time in Economics courses, instead of hysterical internet blogs.
I didn't say QE raises the interest rates. I said the Fed sets them.
Quote:
Originally Posted by Opin_Yunated
There is no such thing as "artificial" interest rate, thanks for proving my point.
Quote:
Originally Posted by Opin_Yunated
Interest rates can and will be "artificially" held down. There is no artificial interest rate; the Fed controls it to regulate currency supply.
Troll much?
The Market determines the interest rates. The Federal Reserve artificially sets the interest rates irrespective of the Market.
Student Loan interest rates are also artificially set.
Any interest rate that is not determined by Supply & Demand is artificial.
Quote:
Originally Posted by Opin_Yunated
Declaring yourself correct for every sentence doesn't make anything you say true.
And yet you couldn't refute anything I said.
Quote:
Originally Posted by Opin_Yunated
When you base your argument on conspiracy theories about the government you lose credibility.
When you deny that the government eliminated housing prices and replaced them with "owner equivalent rent" in 1983, you lose credibility.
When you deny that Hedonics is a statistically computed price and not the actual price, then you lose credibility.
When you deny that the government changed the way it calculated unemployment in 1994, you lose credibility.
When you deny that the government changed the way it calculates GDP July 2013 to a method that is highly subjective and which over-states GDP, you lose credibility.
Quote:
Originally Posted by Opin_Yunated
Yes, our economy will "suck" for twenty or more years. If you reread my post, it won't actually "suck." Like I said, the U.S. experienced booms in the 20th century that were unprecedented in human history. It never was sustainable. With an aging population base, we will deal with "meager" growth (comparatively) for quite some time.
You only know that from reading my posts.
Quote:
Originally Posted by Opin_Yunated
Yes, money creation can and will go on forever.
Not without negative consequences.
Quote:
Originally Posted by Opin_Yunated
Any comparison between a government balance sheet and personal finances is irrelevant. Government finances are double-entry bookkeeping.
It's not irrelevant, unless you're claiming that governments are exempt from the Laws of Economics.
And it is not "double-entry bookkeeping."
Quote:
Originally Posted by Opin_Yunated
Like I said, the fundamentals are what they are. Deflation is bad. Stop advocating it.
You don't even understand the fundamentals.
Real Deflation existed during the Great Depression, but it was not the cause of the Great Depression.
Real Deflation existed during the 1980s and early 1990s.
Quote:
Originally Posted by Opin_Yunated
Greece cannot be compared to the United States. Greece is a currency user, not a currency issuer like the United States.
95 "currency issuers" have collapsed...some more than once.
The US isn't one of them....at least not yet.
And you'll see Real Deflation just as soon as the period of Real Inflation ends, and the period of Real Inflation will start in about 10 years.
Artificially....
In those Markets were there is high demand pressure already, subsidies will drive up the price of rents.
NOT for the person who has subsidized rent. The government figures this on your income. If rent is $450 and your income says you can afford $75 you still are paying $75 even if rent is $550. The question was percentage of income that rent covered.
Quote:
There needs to be a minimum 10% down for any government-backed loan.
If someone lacks the discipline to set aside 10%, then they are not worthy of a home, and most certainly not worthy of having tax-payers foot the bill.
Opinion noted.
Quote:
Commodities are global.
If QE stops tomorrow, commodities fall. My opinion is pretty damn far.
Quote:
That is due to the fact that you do not understand the meaning of "global."
When you realize that the US is not the only country on this Earth, you will see how fatally flawed your thinking really is.
Not that it seems you are able to explain it so I'll dismiss it.
Quote:
Congratulations......you just debunked your own argument.
Twice.
"...the price of nearly everything is up..."
By your own admission, there is no Real Inflation -- therefore your claim that Federal Reserve is to blame fails.
I think the overwhelming vast majority of people understood we were discussing items not jobs. It's not good to jump into a middle of a discussion.
Quote:
Real Inflation affects everything. Real Inflation causes the prices of everything to rise.
Everything means every thing, as in every single stinking thing.
Which part of "everything" do you not understand?
No it doesn't.
Quote:
Some things is not "everything."
Most things is not "everything."
Many things is not "everything."
Nearly everything is not "everything."
"Everything" means "everything."
Sorry, you are being simple minded here. I only have to pick one thing to show you are wrong and I'm going to pick the low hanging fruit here. I can come up with other examples.
When the price of gas goes up the price of gas guzzlers goes down. There is no absolute everything goes up or down ever.
Quote:
And then you said...
"....wages and hiring is stagnant."
If wages are not rising, then that is prima facie evidence that Real Inflation does not exist.
Yes, wages are included in "everything."
Again, we were discussing items not wages or jobs. Don't jump into the middle of a discussion.
No.
Quote:
[/font][/color]Your claim that wages were stagnant in the 1970s is total pure unadulterated Bull-****.[/font][/color]
I never said that. Nowhere did I ever say that. The 1970's was a decade that saw things differently in 1972 than it did in 1979.
Quote:
Source: Social Security Administration National Average Wage Index
An "average" is also misleading. If the top few percent see's a large increase while the rest see little to none out averages will go up but that's part of the problem today. The top couple percent can only buy so much.
Quote:
That post wasn't directed at me, but it clearly shows you have no understanding of what "Inflation" is.
You aren't capable of making the distinction between Real Inflation, Wage Inflation, Cost-push Inflation, Interest Inflation or Demand-pull Inflation.
The rising costs of things is not caused by Real Inflation, and therefore the Federal Reserve bears no responsibility and deserves no blame.
Being that I've provided more than enough outside sources to show why they do I'm going to dismiss the rest of this argument also.
Quote:
Housing isn't down enough.
Government policies flooding the Market with cash/credit, plus artificially depressed interest rates have created Interest Inflation which artificially drove up the price of housing.
The price of housing will continue to be over-inflated so long as government continues to meddle in housing.
With this I agree and was the basis for getting involved in this discussion to begin with. Allowing the housing market to deflate would have been the very thing we needed.
Quote:
The government's monetary policy has nothing to do there.
Those are all Supply & Demand issues and/or government regulations such as Obamacare, E85 Standard, EPA Tier 3 and new regulations on CO2 emission for power-plants forcing prices higher.
Some of those things do contribute, no doubt but the governments monetary policy most certainly does ALSO. I've provided the links.
Nobody should believe what you or I say alone which is why I've provided verifications all through this thread to back up my positions.
Quote:
You should invest money and time in Economics courses, instead of hysterical internet blogs.
Down-grading from "C" to "D"....
Mircea
For a good while you seemed to think better than to jump into my posts. I think you should consider doing that again.
The populatin base aging wont cause the economy to suck..
Well, no, but they'll put a noticeable dent in it.
Quote:
Originally Posted by pghquest
Interest rates are set by the Feder in RESPONSE to economic variables. Are you suggesting our economy will be ****ting for 20 years?
At least.
Aren't you a fan of cycles?
If there's anything to KondriateffWaves, you'll know, because you'll see it soon. In about 6-10 years, and it will last for 30-40 years....maybe longer.
Quote:
Originally Posted by pghquest
Yes the government indeed competes for returns. Do you really think if Canada starts to pay 8% a year, that the US will continue to be able to issue debt at 1%? or less?
That's right.
It might not be a big issue now, but it will be in the future, and it has to be taken into consideration.
Quote:
Originally Posted by pghquest
Yeah, imagine what happens to the national deficit when the interest rates begin to climb and the cost to the federal government becomes $2T a year, in interest alone just to maintain the current debt.
That will be very destructive in many ways.
Quote:
Originally Posted by pollyrobin
Is it really? Or is it really a form of correction...
"Good deflation stems from a positive supply shock, e.g., a string of major innovations that combine to push down costs and prices while opening up new markets and opportunities."
Quote:
Originally Posted by whogo
Exactly, deflation is bad when it is caused by lower demand and good when it is a result of increased productivity. As the link stated the US had robust growth and deflation between 1870 and 1900.
No Deflation is coming.
You will have "this"....until about 2024-2025 when Real Inflation sets in...somewhere around 35%-45% annually for 12-16 years, followed by a period of Real Deflation.
Quote:
Originally Posted by Loveshiscountry
Does deflation mean ones wages decrease also?
For Real Deflation, yes.
If an alternative is not found for Social Security, these periods of Real Inflation and Real Deflation will be the nail in the coffin on the Social Security program.
Quote:
Originally Posted by michiganmoon
Interest rates can't be held down this low artificially for too long.
That's right, and when artificially depressed, they have a tendency to balloon.
Cycling...
Mircea
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