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The American Empire Is Bankrupt (pg. 3)
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| Groundhog Boy |
| quote: | Originally posted by DOOMBOT
You opened up an entire can of worms. I was discussing a specific issue that Krypton brought up. I didn't delve into other things that they do. They were, though, an influence on peoples decision to invest in subprime mortgages. Just like an agency would with investing into the bond market. Looks like the AAA rating of our country's bonds really don't seem to matter to countries much lately though, given this...
And the well known fact that countries are discussing another world currency, away from the dollar. |
Sadly, I'm still up, but please knock that chart back to a longer-term chart in order to elicit a real response. Maybe a 10 or 20 year, not the last 1 year of economic hell.
Similarly, please include the past 4 months of "economic bliss." Regardless of how silly it is to me, since I haven't been in agreement upward in over a month, you can't deny things have increased in price and China hasn't been buying more commodities lately. |
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| DOOMBOT |
| quote: | Originally posted by Groundhog Boy
Sadly, I'm still up, but please knock that chart back to a longer-term chart in order to elicit a real response. Maybe a 10 or 20 year, not the last 1 year of economic hell. |
I'm sure you could find one yourself. That obviously isn't my point though. As I clearly stated in that response, "Looks like the AAA rating of our country's bonds really don't seem to matter to countries much lately though, given this..." So clearly, I am talking about what we are facing today in that post and not what we faced 10 or 20 years ago.
But you can go ahead and bring up 10 and 20 years ago, while I talk about the issues we are facing today and maybe, just maybe, you'll be able to prove me wrong with your chart of amount of treasuries sold to the Chinese from the 1990's. |
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| pkcRAISTLIN |
| quote: | Originally posted by DOOMBOT
I'm trying to understand your example there. Why and how am I earning 25% more? Did I get a raise or something? |
if you look at that graph posted by conspiracy theorists all the time, that shows the devaluing of the currency since the turn of the century, it makes it abundantly clear that a dollar in 1930 could buy you a lot more than it can buy you today. but if you compare that to wages between 1930 and 2009 you will see people are earning much more and can afford far more.
| quote: | Originally posted by DOOMBOT
Was there ever a time when the purchasing power dropped so badly and people simply made more money to cover the loss of the purchasing power? |
well of course it happens, look at what went on in zimbabwe. but the US isn't zimbabwe. FYI, preventing such drastic volatility in currency is one of the many roles of the central bank ;)
| quote: | Originally posted by DOOMBOT
I would imagine what needs to happen is more money would be printed to even be able to give to the people, which means more inflation was created, which also translates to weaker purchasing power. |
but this isn't happening in the US at the moment, any more than it always has.
| quote: | Originally posted by DOOMBOT
Prop up a false demand. Obviously there is no demand if the businesses and consumers are pulling back. That is what a free market does. When a government steps in and takes dollars from the consumer to prop up a sector of the economy in which it thinks SHOULD be in demand, government has essentially stolen capital from those who need it and will eventually need it to stimulate the economy again at some point! |
we're not talking about a government subsidising art-house regional film makers because its a "good" thing to be doing. we are talking about governments and central banks preventing catastrophic economic collapses, around the globe; market externalities going silly so that everyone is getting fvcked by everyone else. that isn't a natural economic cycle, and the rhetoric of the right that you've paraphrased here doesn't come close to adequately representing the realities of the financial crisis. it sounds nice, and often it might even be true, but this time its way off base. |
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| Groundhog Boy |
| quote: | Originally posted by DOOMBOT
I'm sure you could find one yourself. That obviously isn't my point though. As I clearly stated in that response, "Looks like the AAA rating of our country's bonds really don't seem to matter to countries much lately though, given this..." So clearly, I am talking about what we are facing today in that post and not what we faced 10 or 20 years ago. |
The main thing I wanted to see was a chart through this month, since you showed a chart up to February, right before the market rallied.
Also, do you know what I do with financial products that I don't have faith in - I sell them, not buy less. China apparently is not doing that, because any chart you can show does not show a negative (=sell).
I also hate to say it, because I can't fathom why, but there has been $ pressure upward lately.
I don't really understand why this is so complex. I wasn't profitably scooping up things in December when prices of everything were falling. Why would China have been? |
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| pkcRAISTLIN |
| quote: | Originally posted by DOOMBOT
Read it and you will understand why. |
and that's my point. he says something you agree with, so you hold it up as shining wisdom. but there you are in the other thread, trash-talking the central bankers and the institution of central banking as if they don't know what they're doing. Richard Fisher even says in your article
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I am one of the 17 people who participate in Federal Open Market Committee (FOMC) deliberations and provide Ben Bernanke with “conflicting counsel” as the committee cobbles together a monetary policy that seeks to promote America’s economic prosperity... |
so, which is it? are central bankers incompetent fools who know nothing about economics, or are they people worth listening to and reproducing here for us to read? |
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| Krypton |
| quote: | Originally posted by DOOMBOT
And you know how much I am against the government being a big part of the demand equation, so I don't feel like I need to get into that again. |
What you are for or against is irrelevant. Economics is a science. Not an ideology. Economists use certain measures of the economy in order to come up with an interpretation of something. Entire industries revolve around government expenditures. The millions who work for the government, or receive some income from the government, cannot be discounted from any aggregate demand equation, simply based on faulty ideological grounds....unless you want data completely devoid of reality...
You are confusing ideological stances with simple scientific economic concepts.
| quote: | | When the government bails out Business A it needs to get the money to do that from somewhere. That somewhere is the pockets of its citizens, on top of the exorbitant amount of borrowing it does from other countries. That borrowing is going to have to get repaid somehow, which we all know it never will. But how do you think that is going to happen? You think they are going to come knocking on our doors asking for money to pay them back? No, they are going to tax the living out of us and they aren't going to ask for your permission to do so. |
Protecting the payment system from systemic collapse is far more better than simply allowing the financial system to collapse. Paying the national debt is an entirely different issue. The consequences of not doing anything were far more dire. |
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| Lebezniatnikov |
| quote: | Originally posted by pkcRAISTLIN
so, which is it? are central bankers incompetent fools who know nothing about economics, or are they people worth listening to and reproducing here for us to read? |
Well, it depends on whose argument they help, of course! |
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| culorut |
| quote: | Originally posted by Zharen
We'll see what happens. My only hope that if a huge economic meltdown is triggered and the country is plunged in anarchy, strife and internal wars, that Bush, Cheney and Rumsfeld get theirs as well. |
Unfortunately Bush and CO will be smoking fat cigars and drinking cognac watching the country they helped destroy plunge into anarchy.
Unless the sheeple actually start to wake up to what the American Dream really is and was meant to be. |
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| DOOMBOT |
| quote: | Originally posted by Lebezniatnikov
Well, it depends on whose argument they help, of course! |
When their actions don't match up with what they are telling you they supposedly do, on their web site, I don't find anything wrong with pointing something like that out. When the Inspector General appears to be completely oblivious to things that she is being questioned on and should know the answers to, I and many others find that a little unnerving. The web site can say whatever it wants at that point.
Either way, I obviously don't agree with many of the Federal Reserve's actions or policies and as an example, the fact that they lowered interest rates in attempt to help stimulate the economy. But this doesn't mean that I can't agree with someone on one issue or topic simply because I don't agree with them on another. Not to mention, at the bottom of the page it states, "The views expressed by the author do not necessarily reflect official positions of the Federal Reserve System."
But anyway, did you read the link that I posted yet or not? It is very well worth the time, in my opinion.
http://dallasfed.org/news/speeches/...08/fs080528.cfm |
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| pkcRAISTLIN |
| quote: | Originally posted by DOOMBOT
When their actions don't match up with what they are telling you they supposedly do, on their web site, I don't find anything wrong with pointing something like that out. When the Inspector General appears to be completely oblivious to things that she is being questioned on and should know the answers to, I and many others find that a little unnerving. The web site can say whatever it wants at that point.
Either way, I obviously don't agree with many of the Federal Reserve's actions or policies and as an example, the fact that they lowered interest rates in attempt to help stimulate the economy. But this doesn't mean that I can't agree with someone on one issue or topic simply because I don't agree with them on another. Not to mention, at the bottom of the page it states, "The views expressed by the author do not necessarily reflect official positions of the Federal Reserve System."
But anyway, did you read the link that I posted yet or not? It is very well worth the time, in my opinion.
http://dallasfed.org/news/speeches/...08/fs080528.cfm |
yes, i read it. and it contained nothing particularly newsworthy or unique in regards to the current financial situation. the fed obviously already know all about the concerns, so um, im not sure what else there is to talk about. |
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| atbell |
| quote: | Originally posted by Krypton
Cut the arrogant sarcastic bull plz...:rolleyes:
The reason US government bonds are AAA is because the US government is able to raise unlimited amounts of dollars to pay off its debts. Hence, they are "risk-free" assets. The credit ratings of mortgage backed securities grossly underestimated the risk of such assets. Again, two different issues. |
They, US debts, are not risk free assets, they are perceived to be risk free.
The US is not able to raise unlimited amounts of dollars, there is a breaking point at which the damages to the economy based on the continued printing of money will be assesed to be higher than the damages to the economy of defaulting on debt. At that point there will be a default on US treasury bills.
I must remind you that US treasury secretary Tim Geithner was laughed at by a room full of Chinese students, in the same way Iran's president was laughed at by US students, when he told them that investments in the US were safe.
A tragic part of this story is that the US media is in such rough shape that few in the US realize the dire situation they are in. The note above is an excelent example. The Washington Post article on the meeting omits the fact that Tim was laughed at, where as the Reuters version has the following lines:
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His answer drew loud laughter from his student audience, reflecting scepticism in China about the wisdom of a developing country accumulating a vast stockpile of foreign reserves instead of spending the money to raise living standards at home.
http://www.reuters.com/article/comp...K14475620090601
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http://www.washingtonpost.com/wp-dy...9060101784.html
What I'm not sure was mentioned earlier in the thread was that the US has a AAA rating only because it's financial system has evolved to a point where standard measures of federal financial accounting do not cover the actual debt of the country. For the most part the debt to GDP ratio is an important indicator for the ratings agencies. The US has used what I've called debt decentralization to spread the debt around the economy. In this way the actual debt of the country is not on the books of the government, it is a collection of the debt held by all levels of government, all citizens, and all corporations.
By this measure the US has been in crisis levels since before 1975 when the consolidated debt to GDP ratio stood at around 150% (100% is seen as crisis levels by most agencies). I have not found data before 1975 so I'm not sure when this started. It is interesting because it implies that all of the 'sucess' since '75 has been fake, a ponzzi scheme based on perpetually increasing debt. It is also a rather clear point against the reforms carried out by Reagan in the '80s.
Currently the consolidated debt to GDP ratio stands at near 300%. That can be calculated by using the data from the federal reserves Z1 reports, one of which has just been released.
A possible modification to the calculation of consolidated debt would be to assume that the US does not stand behind 100% of the debetors in the country. In this case an estimate of the % of debtors who would be back stoped by the US Feds can be used to reduce the amount of debt held by the US government. |
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