the economy

[Copperclad]

We would be just fine if everyone that owes us money would just pay us!

 

[Mr.Sparkle]

So we can pay China.

 

[hardworkingstiff]

Through history, productive capacity is always indelibly increasing, uptrending.

This IMO is something that will have to change and move to a stagnet capacity instead of an increasing one.

The gov debt is bought by banks. The banks borrow from the federal reserve at the lower short term bill rate to buy this debt, and are paid interest by the treasury at the higher longer term note or bond rate. This passive unearned income is called "bank rebuilding of their balance sheet". The banks make the spread between the short and long term rate, the positive slope of the yield curve.

Here, let me lend you some money. Oh, can I borrow that money I just gave you? I'll pay you interest, even more than you pay me to borrow it.

Great work if you can get it.

 

[petersonra]

I think the answer is that there is no easy solution. Government at all levels has expanded itself to the point where it is unsustainable except through massive borrowing, that will just make the thing worse long term.

people should have realized that when a couple making $100,000 thought a $500,000 house was a bargain, and somehow managed to get a mortgage for it that something was really off.

if you want a long painful solution, look to the public sector initiatives taken during the Depression that just drew out the Depression and made it worse. so far that is the tactic that is being tried. it does not bode well for us.

OTOH, no voter will vote for pain for themselves. They want the pain to be for someone else.

basically we have borrowed to the point where there is nothing backing the loans anymore. the only thing holding it together at all is that there is nowhere for the holders of the debt to go that is any better.

 

[satcom]

I think the answer is that there is no easy solution. Government at all levels has expanded itself to the point where it is unsustainable except through massive borrowing, that will just make the thing worse long term.

people should have realized that when a couple making $100,000 thought a $500,000 house was a bargain, and somehow managed to get a mortgage for it that something was really off.

if you want a long painful solution, look to the public sector initiatives taken during the Depression that just drew out the Depression and made it worse. so far that is the tactic that is being tried. it does not bode well for us.

OTOH, no voter will vote for pain for themselves. They want the pain to be for someone else.

basically we have borrowed to the point where there is nothing backing the loans anymore. the only thing holding it together at all is that there is nowhere for the holders of the debt to go that is any better.

Bob, many times I am on the opposite view you have, but I do agree with your view of things, on the issue.

 

[StephenSDH]

OTOH, no voter will vote for pain for themselves. They want the pain to be for someone else.

I will gladly vote for pain, but usually none of the politicians on the ticket offer it. They only want to make it painful for the top 10% of Americans that are successful at providing services and jobs.

 

[__dan]

Perkins, Hudson

Perkins, Hudson

If you read Michael Hudson or John Perkins, their jobs as economists for many years was to estimate the total national income and the debt that income would support. Using that number, the institutionalized system would load up that country with debt to the limit of its national ability to service that debt.

What is happening has been intricately planned, calculated at the highest level, professionally. The machine performs by design. I could predict it but not time it. I tried.

If you read Quigley, this has been this way since the earliest recorded history, ancient Babylon.

The calculation for how much debt the national income can support does not include costs for social services. The additional debt is relatively noninflationary if the subject population is hungry and needs to work to eat. Inflation is only a concern for the 'Greenspan' types when it is coincident with labor market tightness. Then they crank up interest rates.

Surplus labor in the market, and the banking system must manufacture moderate inflation (slightly rising prices) which drives demand for additional borrowing. They must "inflate or die". Deflation is untenable because the deflationary mechanism feeds on itself, lower demand results in lower prices which results in excess productive capacity being forced off the market. The job losses from capacity reductions results in less wages, less demand which results in lower prices (liquidating firesale prices) which results in additional job losses and capacity being taken off the market > less jobs>less demand>lower prices>less productive capacity>less jobs.

Their are four stages to brainwashing. The first two are physical and mental deprivation. If you are tired, exhausted, hungry, or undereducated (overeducated with useless complicated crap) you are being brainwashed. The process and direction is institutionalized, studied as a science for many years. 9950 men in 10,000 only need the slightest cue to carry out the orders that make their check clear.

 

[cschmid]

oh my we are being assimilated but into what? waring machines..

 

[jim dungar]

Time to start tightening up this discussion, before we get out of economics and into "politics".

 

[GUNNING]

Its better than the crud we hear on Fox.

I had someone tell me a couple of years ago when all this was a big red out of control truck coming down the mountain road that Keynesian economics was crud and that everything should be based on cash. When the banks thought credit card debt was equivalent to a mortgage. BANKS! The people that know how cash and credit work. Not to mix metaphors but, this train wreck has been looming and festering for years. Why is everyone so surprised by the big logo emblazoned backward on our chests from getting run over? Why isn't the government saying the obvious? That this policy was a mistake driven by politics and backed by ?????
Thats the $64,000 question. Personally I'm in favor of show trials.
In the mean time Ive heard that one third of the layoffs are from construction. That is a dead sector of the economy that isn't going anywhere. How do they keep people from rioting in the streets and steeling copper from abandoned buildings? (put that in so post would not get shut down) We need more bread and circuses. We need a goal. The moon, speed rail, a giant super colider, something that will keep us busy, promote jobs and skills, give people pride in themselves.

 

[satcom]

Its better than the crud we hear on Fox.

I had someone tell me a couple of years ago when all this was a big red out of control truck coming down the mountain road that Keynesian economics was crud and that everything should be based on cash. When the banks thought credit card debt was equivalent to a mortgage. BANKS! The people that know how cash and credit work. Not to mix metaphors but, this train wreck has been looming and festering for years. Why is everyone so surprised by the big logo emblazoned backward on our chests from getting run over? Why isn't the government saying the obvious? That this policy was a mistake driven by politics and backed by ?????
Thats the $64,000 question. Personally I'm in favor of show trials.
In the mean time Ive heard that one third of the layoffs are from construction. That is a dead sector of the economy that isn't going anywhere. How do they keep people from rioting in the streets and steeling copper from abandoned buildings? (put that in so post would not get shut down) We need more bread and circuses. We need a goal. The moon, speed rail, a giant super colider, something that will keep us busy, promote jobs and skills, give people pride in themselves.

The moon race created jobs for many years, so the question is would an Energy race to become independent, and allow us to grow new industries and jobs

 

[petersonra]

The moon race created jobs for many years, so the question is would an Energy race to become independent, and allow us to grow new industries and jobs

There is no problem becoming energy independent. Nukes, coal, and more drilling in the US can do it in a few decades.

Instead we get solar and wind which may actually make the situation worse once it reaches a certain percentage of capacity.

 

[wawireguy]

I don't think we can pull out of the current economic down spiral without bringing back manufacturing jobs and keeping them here. I feel that this is the cornerstone of any healthy economy. Free trade and trickle down don't achieve a sustainable manufacturing base that makes enough money to buy houses and cars. House weather proofing and asking banks to loan more money will do nothing for the economy.

I don't believe solar and wind power can be economical or reliable enough to solve the coming energy shortages. I firmly believe we should look into expanding hydroelectric at the expense of some fish.

 

[GUNNING]

I think the most sustainable would be hydrogen energy production. Turning it into electricity would be a bonus for us.

 

[petersonra]

I don't believe solar and wind power can be economical or reliable enough to solve the coming energy shortages.

+1.

I firmly believe we should look into expanding hydroelectric at the expense of some fish.

Most of the hydro power that can be economically used is already in use. There are a few rivers that could be dammed here and there, but the problem is that when you damn a river up, it backs up where people live. That makes it extremely expensive to do because you have to buy that property.

And despite what the greenies think, micro and mini hydro power is not a good option except for individuals who have few other options.

 

[chris1971]

It will get better someday. When? No one knows?Until then, keep moving forward.

 

[knoppdude]

If you have the leisure time and 50 bucks to spend, this is where you want to spend it. I spent a lot of time looking for the answers to my questions. it took a long time but the answers were in a history book:

http://www.amazon.com/Tragedy-Hope-...=sr_1_1?ie=UTF8&s=books&qid=1260821842&sr=8-1

Inflation and deflation:

In times of surplus, the excess productive capacity negatively impacts pricing power of the producers. Prices fall to the liquidating (firesale) level. Weaker, less efficient or heavily indebted, competitors have their productive capacity forced from the market until the balance between demand and output of goods offered for sale is reestablished.

In times of shortage, pricing power shifts to the producer and prices are set to yield a profit. In extreme shortage or market imbalance, producers name their prices and the demand waits in line to receive and pay.

It's counterintuitive. Good times (times of plenty) suck for the producer because the excess productive capacity relative to demand negatively impacts pricing power and profitability.

Bad times (times of shortage, rationing) are great for the producer. Name your price, obscenely if necessary.

Through history, productive capacity is always indelibly increasing, uptrending. This is due to a larger workforce, per unit improvements labor productivity, better tools and methods, replacement of labor with capital equipment, better flow of information and resource assignment, larger more efficient productive capacity, advances in technology.

In order for goods to be bought there has to be money in circulation to buy. If the quantity of goods offered for sale is always increasing, the quantity of money in circulation must also increase.

This is why, historically, sea shells, dung chips, beads, have been used for money. Money is a basic essential need for human transaction to take place. This need will be met, one way or the other.

This knowledge has been known for thousands of years. This is why all major religions prohibit and punish usury in their bibles. Charging of interest on money forces productive human capacity off the market and forces involuntarily, by coercion, transfer of indebted productive capacity from the producer to the lender.

If you understand the phrase "bank rebuilding of their balance sheet" you would understand the above intuitively. There's an earth sized difference between printing money with the theories of say Stephen Zarlenga or Michael Hudson, and the current system where money is created by the act of borrowing.

When private sector borrowing is insufficient in strength, to grow the money supply at a rate that keeps pace with the increasing quantity, the government acts as "borrower of last resort". Government deficit spending is used to grow indebtedness, which grows the money supply, which grows demand for the output of goods offered for sale.

The gov debt is bought by banks. The banks borrow from the federal reserve at the lower short term bill rate to buy this debt, and are paid interest by the treasury at the higher longer term note or bond rate. This passive unearned income is called "bank rebuilding of their balance sheet". The banks make the spread between the short and long term rate, the positive slope of the yield curve.

War is predictable for the economic reasons. I'm sure my opinion on this is unpopular.

What would happen then if China decided to spend their dollar foreign exchange hord? The money is denominated in dollars, and would eventually find its way back into the US economy. Would this mean that demand would increase for US produced goods and services at some time? Otherwise the Chinese hang onto those trillions, and we get all their wonderful high quality products. I guess this means the dollars they hold are worth the value of the goods we have purchased from them. A trillion dollars isn't worth what it used to be. Perhaps the old economic saying "you get what you pay for", is still valid. No more does this hold true than for the price of an electrician.

 

[hardworkingstiff]

Thats the $64,000 question.

That's so ...... 50's, it's now the $64 trillion question. :grin:

 

[hardworkingstiff]

I think the most sustainable would be hydrogen energy production.

It would help in the sense we would need a new infrastructure for the transportation and storage of hydrogen. On the production side, where would you get the hydrogen? Nat gas? Why not just burn the Nat gas?

 

[sparky=t]

alot of people taking tests in nebraska today from nevada, missouri, texas, iowa, ect looking for recipical states, times are getting hard!