Steel bolts & nuts weigh more than money to buy them
George Orwell
"money" weighs more than the product.
Buy a container of cottage cheese and low denomination coinage weighs more
than the dairy product.
Since 1969, car prices have multiplied at least EIGHT times. Car prices is
a fair test of true inflation of a currency since cars incorporate
materials, labor and are built in high tech, efficient factories. Since
1954, car prices have increased at least 10 times, making the dollar worth
10 cents compared to 50 years ago. The inflation is accelerating now and
as in prewar Germany, overnight your dollars can become toilet paper.
Foreigners beware of runaway inflation taking place in the United States.
Dump dollars for Euros or Gold. The whole U.S. economy is in danger of
collapse, taking all your monetary assets down with it. The dollar is on
borrowed time.
Marcello
"George Orwell" <nob...@mixmaster.it> wrote in message
news:a358cd40b67b723a...@mixmaster.it...
concerned about. To multiply by a factor of 10 over a 50 year span you need
a 4.7% interest rate...so unless you are keeping your money under your
mattress the historical rate of inflation is hardly a concern. Simple
concepts, you just gotta do the math. The sky is hardly falling.
hard times
In article <PWIOh.68839$JN6....@newsfe17.phx>, Marcello
<Marc...@nospam.com> wrote:
> As long as US GDP keeps outpacing US inflation, there is nothing to be
> concerned about. To multiply by a factor of 10 over a 50 year span you need
> a 4.7% interest rate...so unless you are keeping your money under your
> mattress the historical rate of inflation is hardly a concern. Simple
> concepts, you just gotta do the math. The sky is hardly falling.
Perhaps where you live. But where I live (and I doubt any other place
in the US is much different) inflation hurts certain classes of people,
particularly older people for whom fixed or low-mobility income factors
mean much more than increases in GDP. Inflation causes them to have to
choose between food and medications, wiping out any discretionary
income they have and making them vulnerable to increased expenses like
rent increases or trips to the emergency room.
Inflation is an unfair tax on wealth. Everyone seems to want to whip
the wealthy, but three or four generations of inheritance usually
dissipates that wealth, with inflation taking its toll as well.
There are only two ways to generate wealth -- take something from the
ground like crops or minerals, and adding value to something in a
manufacturing process. Everything else is bean shuffling, with
inflation helping to obscure what is really The Great Drain of capital
from this country.
Think about this -- when you buy a product that's manufactured o'seas,
you're basically buying junk. What is junk? Something that will wind
up in a landfill, sewer or a scrap yard in 5-10-15 years (cars, lawn
mowers, food, etc.). What are we trading for junk? Capital! Capital
lasts forever, and it earns interest to boot. The US with its
destructive (to itself) trade policies and fleeing manufacturing, aided
and abetted by the US consumer and big box stores, are making the worst
bargain in the history of mankind -- trading capital for junk.
Not only that, but the capital, seeking a return, comes back to the US
and debt is issued for it. There are no sinking funds for this debt.
The government issues the debt, but the dollars go into the general
fund and is seen by Congress and the Administration as revenue. Hence
deficit spending, wars, low interest rates creating bubbles and
inflation, and $250 Billion in interest (capital rental) expenditures
weighing down the budget.
Take a look at what's going on in the economy, the markets, in politics
and the military, the attack on the middle class (downward mobility),
inflation, debts ($50 trillion in all sectors) and deficits, and what
you are seeing right now is a slow-motion train wreck. End of empire
behavior. And now the talk is about trade war, while Hillary runs for
the presidency by saying she'll raise taxes on the rich (but it will
really be on the middle class) by repealing tax cuts of recent years.
The sky is hardly falling, you say???
Marcello
"hard times" <semi...@semitdrah.com> wrote in message
news:070820071139547731%semi...@semitdrah.com...
>
> In article <PWIOh.68839$JN6....@newsfe17.phx>, Marcello
> <Marc...@nospam.com> wrote:
>
>> As long as US GDP keeps outpacing US inflation, there is nothing to be
>> concerned about. To multiply by a factor of 10 over a 50 year span you
>> need
>> a 4.7% interest rate...so unless you are keeping your money under your
>> mattress the historical rate of inflation is hardly a concern. Simple
>> concepts, you just gotta do the math. The sky is hardly falling.
>
> Perhaps where you live. But where I live (and I doubt any other place
> in the US is much different) inflation hurts certain classes of people,
> particularly older people for whom fixed or low-mobility income factors
> mean much more than increases in GDP. Inflation causes them to have to
> choose between food and medications, wiping out any discretionary
> income they have and making them vulnerable to increased expenses like
> rent increases or trips to the emergency room.
And those who have prepared for retirement poorly should be saved at my
expense why???
>
> Inflation is an unfair tax on wealth. Everyone seems to want to whip
> the wealthy, but three or four generations of inheritance usually
> dissipates that wealth, with inflation taking its toll as well.
I don't agree. Inflation is unfair to those who hold money, but more than
fair to those who hold inflation proof assets. Ignorance of this is no
excuse.
>
> There are only two ways to generate wealth -- take something from the
> ground like crops or minerals, and adding value to something in a
> manufacturing process. Everything else is bean shuffling, with
> inflation helping to obscure what is really The Great Drain of capital
> from this country.
I think this is a limited view - why would adding value be limited to only
the manufacturing process? I think Bill Gates and his billions would
disagree for he created wealth by providing a system that added immense
efficiency (well in excess of the billions he is worth) to the world with
software. Adding value that increases the quality of life in any process
creates wealth. This is precisely why the US economy has far out distanced
inflation.
>
> Think about this -- when you buy a product that's manufactured o'seas,
> you're basically buying junk. What is junk? Something that will wind
> up in a landfill, sewer or a scrap yard in 5-10-15 years (cars, lawn
> mowers, food, etc.). What are we trading for junk? Capital! Capital
> lasts forever, and it earns interest to boot. The US with its
> destructive (to itself) trade policies and fleeing manufacturing, aided
> and abetted by the US consumer and big box stores, are making the worst
> bargain in the history of mankind -- trading capital for junk.
You seem to be contradicting yourself. Now you are saying, "capital last
forever". Also, this seems rather circular as you say suggest capital
should be earning interest. Then I ask, what if it is that interest that is
used to buy the lawn mower, does that justify it? What good is capital ifs
its only purpose is to earn more capital. What about the fact that capital
is stored value and some may value cars immensely because it takes them to
work and visit family, even though it will be in a landfill in 15 years?
>
> Not only that, but the capital, seeking a return, comes back to the US
> and debt is issued for it. There are no sinking funds for this debt.
> The government issues the debt, but the dollars go into the general
> fund and is seen by Congress and the Administration as revenue. Hence
> deficit spending, wars, low interest rates creating bubbles and
> inflation, and $250 Billion in interest (capital rental) expenditures
> weighing down the budget.
While I am no advocate of major deficit spending, you cannot overlook the
very fact that inflation itself makes the interest on that debt gradually
less and less costly. Think about how difficult a $500 home loan payment
seemed in 1982 but how effortless that payment is made today - the same can
be said for Federal deficits at the time when $50 billion was concerning and
today seems like all but insignificant in the view of massive GDP. The same
will be said about today's deficits 25 years from now and as long as we are
not growing proportionally (debt versus GDP) than we are not in any
significant economic problem areas...certainly nothing that would threaten
any default.
>
> Take a look at what's going on in the economy, the markets, in politics
> and the military, the attack on the middle class (downward mobility),
> inflation, debts ($50 trillion in all sectors) and deficits, and what
> you are seeing right now is a slow-motion train wreck. End of empire
> behavior. And now the talk is about trade war, while Hillary runs for
> the presidency by saying she'll raise taxes on the rich (but it will
> really be on the middle class) by repealing tax cuts of recent years.
>
> The sky is hardly falling, you say???
No, your glass is just half empty, like all chicken littles.
There are a lot of things that are not great about the economy, but when
haven't there been? But what about the consistently low unemployment rates,
the near record low interest rates, the record breaking DOW and S&P? Sorry,
but those are some very positive things, and yes, they are somewhat
countered by inflation, weakened US dollar, high gas prices, etc, but one
doesn't need to be a rocket scientist to see where the positives are in the
economy and get those working for you.
hard times
Marcello wrote:
> >> As long as US GDP keeps outpacing US inflation, there is nothing to be
> >> concerned about. To multiply by a factor of 10 over a 50 year span you
> >> need
> >> a 4.7% interest rate...so unless you are keeping your money under your
> >> mattress the historical rate of inflation is hardly a concern. Simple
> >> concepts, you just gotta do the math. The sky is hardly falling.
> > "hard times" wrote:
> > Perhaps where you live. But where I live (and I doubt any other place
> > in the US is much different) inflation hurts certain classes of people,
> > particularly older people for whom fixed or low-mobility income factors
> > mean much more than increases in GDP. Inflation causes them to have to
> > choose between food and medications, wiping out any discretionary
> > income they have and making them vulnerable to increased expenses like
> > rent increases or trips to the emergency room.
> Marcello wrote:
> And those who have prepared for retirement poorly should be saved at my
> expense why???
Theoretically, none. If it's a video game you're playing, you can
bloody up the bunch of them. But there's a real world out here and 1)
there is a functional level of unprepared just as there is a functional
level of unemployed and functional levels of other factors, and 2)
incremental levels of unprepared expand when retirement savings (if
there are any) are dipped into for college educations that have
skyrocketed, housing costs and other inflationary factors squeeze even
those who have planned for retirement based on a model that was viable
maybe 30 or 40 years ago. And I haven't mentioned those whose
employers flubbed or stole retirement plans. It isn't hard to find
retirement funds wiped out by medical expenses after one loses a
medical plan.
Listen, the people I'm talking about built America. They have no time
left for compounding. How can you, as the compassionate person you
are, seriously say that "...those who have prepared for retirement
poorly should be saved at my expense why???" I'm reminded of the
landlord who was sentenced to live in his own (decrepit) building in
order to appreciate the real world where people have blood not cash
flowing in their veins. Where is your humanity?
BTW, appreciation of capital is going to be negative over 50 years at
4.7% in present circumstances where the true inflation rate (with
excluded factors like food and fuel added back) is considered, and the
money supply is expanding at a 13% annual rate. And a factor of 10 in
50 years has meant treading water. When I came back from Vietnam, I
bought a new Ford for $2800. That same brand and model costs 10 times
that now. And that's only 40 years ago. I remember when I was a kid
in the 1950's we had no refrigerator (just an ice box), no television
(just a radio), and no car (just the bus). Then my dad got a job
making $200/wk and we suddenly had all of those things. Now, for the
same family of 5, you need to have one government job or both spouses
working in the private sector making roughly 10 times what my dad made
in order to live the same lifestyle and have good prospects of not
having inflation eat you up so you have to dip into your retirement
savings or home equity in order to send kids to college.
I don't understand why you like inflation so much, unless you are in
debt up to here --> (-: and expect, no, need inflationary times to pay
it off. Well, you're not the only one if that's the case because lots
of people have this as their M.O.
> > "hard times" wrote:
> > Inflation is an unfair tax on wealth. Everyone seems to want to whip
> > the wealthy, but three or four generations of inheritance usually
> > dissipates that wealth, with inflation taking its toll as well.
> Marcello wrote:
> I don't agree. Inflation is unfair to those who hold money, but more than
> fair to those who hold inflation proof assets. Ignorance of this is no
> excuse.
What these days is inflation proof? Even gold in inflation adjusted
terms is way behind. About a quarter century ago gold was $2400 if
inflation is taken into account based on today's price. Are you
talking about tech stocks? Remember, "intellectual property" was sold
as an asset, something tangible to build a future on, and it turned out
to be as worthless then (1999) as it is now. Are you talking about
homes? Oil? Then you're talking about speculation. Most people have
no idea about investing, much less speculating. The pros will nail
them every time. Ignorance is not always not an excuse. Ignorance is
no excuse for the law is a legal term.
Given the state of secondary education in this country I'd say that
ignorance of just about anything (except for inducing guilt for not
voting, for not getting a job, and for not rushing out to spend the
paycheck and more on consumer goods) is excusable. I ask young people
all the time about compounding, and even after an explanation they
still say they had no idea about it. In the real world, where johnny
paycheck relies on their pension plan and social security for their old
age, ignorance of the realities of retirement income can and should be
expected. A crisis of unimaginable proportions is about to reveal
itself in the form of hordes of destitute baby boomers. Think real
world, not theoretically based on what people should have done.
> > "hard times" wrote:
> > There are only two ways to generate wealth -- take something from the
> > ground like crops or minerals, and adding value to something in a
> > manufacturing process. Everything else is bean shuffling, with
> > inflation helping to obscure what is really The Great Drain of capital
> > from this country.
> Marcello wrote:
> I think this is a limited view - why would adding value be limited to only
> the manufacturing process? I think Bill Gates and his billions would
> disagree for he created wealth by providing a system that added immense
> efficiency (well in excess of the billions he is worth) to the world with
> software.
Microsoft is a manufacturer.
> Marcello wrote:
> Adding value that increases the quality of life in any process
> creates wealth. This is precisely why the US economy has far out distanced
> inflation.
Other than the two ways I have specified above (take it out of the
ground, add value in a manufacturing process), there is no other way to
create new wealth in order to increase the size and velocity of the
capital cycle. Everything else just shuffles the existing wealth from
one place to another. Bean shuffling. We have managed to have a bogus
kind of growth based on roughly $50 trillion of debt (including
government, corporate, and individual debt). These chickens are coming
home to roost right now, and we will be mighty lucky to weather what
appears to be a slow-motion train wreck. I will remind you that all
debts will be paid - either by the debtor or by the creditor. At some
point the chickens will be replaced by vultures.
The American economy was built through the justifiably selfish and
clever use of the factors of production, along with trade barriers.
"Free trade" is the death knell for America.
> > "hard times" wrote:
> > Think about this -- when you buy a product that's manufactured o'seas,
> > you're basically buying junk. What is junk? Something that will wind
> > up in a landfill, sewer or a scrap yard in 5-10-15 years (cars, lawn
> > mowers, food, etc.). What are we trading for junk? Capital! Capital
> > lasts forever, and it earns interest to boot. The US with its
> > destructive (to itself) trade policies and fleeing manufacturing, aided
> > and abetted by the US consumer and big box stores, are making the worst
> > bargain in the history of mankind -- trading capital for junk.
> Marcello wrote:
> You seem to be contradicting yourself. Now you are saying, "capital last
> forever". Also, this seems rather circular as you say suggest capital
> should be earning interest.
Yes. Capital, properly taken care of, not only lasts forever, but it
compounds through the interest it earns. The only circular thing is
capital earns interest, and when you add that interest to principal, it
earns even more interest, etc., compounding.
> Marcello wrote:
> Then I ask, what if it is that interest that is
> used to buy the lawn mower, does that justify it?
Who's making that interest? If he's Chinese (Chinese in China, that
is), he's perfectly justified in buying any Chinese-made good.
Looking at it from the standpoint of the person who holds capital (or
wealth, the same thing), compounding that wealth and capital
preservation are the first priorities. If one preserves capital by
adding back what it has lost through inflation, then the excess can be
used however one likes. But it is just as much of a sin as it is for
johnny paycheck to run out and spend one's discretionary income (much
less run up debt) for goods where value has been added elsewhere,
unless the economic unit one is participating in has balanced trade
(then it's a wash).
In America right now it's a sin to buy a Chinese made anything.
Punctuation, period! We have no comparative advantage with China.
Instead, they have the advantages of low cost of LABOR and high CAPITAL
accumulation (the latter we provide for them). Note that those are
factors of production. And the quid pro quo has been our repatriation
of the capital they've accumulated, the issuance of debt for it, then
an equivalent amount of deficit spending by our government. It's the
worst of all worlds in the long run. In this environment, it's a sin
for an American, wealthy or not, through interest income or by debt, to
buy the lawn mower you refer to, unless it is made in America or by a
country we have a favorable trade balance with.
> Marcello wrote:
> What good is capital ifs
> its only purpose is to earn more capital.
Because that's what Capitalism is all about.
> Marcello wrote:
> What about the fact that capital
> is stored value and some may value cars immensely because it takes them to
> work and visit family, even though it will be in a landfill in 15 years?
That really isn't a good example of a productive use of capital -- in
anything but the short term. It makes a little more sense if the car
is made where it is consumed. But, ultimately, a car that's bought for
and used for anything but the generation of new wealth is a losing
proposition because 15 years is a very short time. The matter of
opportunity cost comes into play (an expenditure on a car may have been
better expended on a machine that actually adds value, like a farm
tractor or a stamping machine).
> > "hard times" wrote:
> > Not only that, but the capital, seeking a return, comes back to the US
> > and debt is issued for it. There are no sinking funds for this debt.
> > The government issues the debt, but the dollars go into the general
> > fund and is seen by Congress and the Administration as revenue. Hence
> > deficit spending, wars, low interest rates creating bubbles and
> > inflation, and $250 Billion in interest (capital rental) expenditures
> > weighing down the budget.
> Marcello wrote:
> While I am no advocate of major deficit spending, you cannot overlook the
> very fact that inflation itself makes the interest on that debt gradually
> less and less costly. Think about how difficult a $500 home loan payment
> seemed in 1982 but how effortless that payment is made today - the same can
> be said for Federal deficits at the time when $50 billion was concerning and
> today seems like all but insignificant in the view of massive GDP. The same
> will be said about today's deficits 25 years from now and as long as we are
> not growing proportionally (debt versus GDP) than we are not in any
> significant economic problem areas...certainly nothing that would threaten
> any default.
You neglect to take into account the ideas that in order to maintain
the same lifestyle (government, corporation or individual) one has to
borrow larger and larger amounts in inflationary times, in addition to
rolling over the existing debt, which will require a greater "rental"
sacrifice when it becomes apparent to debt holders and new debt
purchasers that repayment of debt is questionable. And, despite
inflationary times, the debt and the interest on it are at astronomical
levels. The perception of "good times" has a way of masking adverse
factors, but the acquisition of so much debt and having to pay the
interest and roll it over because it cannot be paid means there will
not likely be any "muddling through" times, that there will only be
bogus good times, or hard times (with the slipping into hard times
being a very painful process and outcome).
> > "hard times" wrote:
> > Take a look at what's going on in the economy, the markets, in politics
> > and the military, the attack on the middle class (downward mobility),
> > inflation, debts ($50 trillion in all sectors) and deficits, and what
> > you are seeing right now is a slow-motion train wreck. End of empire
> > behavior. And now the talk is about trade war, while Hillary runs for
> > the presidency by saying she'll raise taxes on the rich (but it will
> > really be on the middle class) by repealing tax cuts of recent years.
> >
> > The sky is hardly falling, you say???
> Marcello wrote:
> No, your glass is just half empty, like all chicken littles.
Okay, you didn't need to say "chicken littles." My glass is actually
quite full because I'm prepared for what's to come, good times or hard
times. When things get tough, I'll check back here with you to see how
your optimism paid off. But I suspect that you will have a crisis in
confidence like a lot of people will. The things I'm saying are not
new. My influences were people who lived during the 20's and 30's and
remember how unbounded optimism, backed by debt and speculation,
eventually got wrung out. Another time when the axiom came into play:
All debts will be paid, by the debtor or by the creditor.
> Marcello wrote:
> There are a lot of things that are not great about the economy, but when
> haven't there been? But what about the consistently low unemployment rates,
...at declining wages and declining mobility (except, of course, by
corporate management and public employees), not to mention
underemployment. The term employment needs several asterisks because
it doesn't mean family wage anymore.
> Marcello wrote:
> the near record low interest rates,
...made possible by the decapitalization of America, causing a flood of
dollars to return to the country. When the flood slackens, or if
foreigners lose confidence in America, then the consequences will be
severe. I don't have a crystal ball, but it may very well be that the
cracks in the carry trade and the sub-prime lending and repackaging and
hedge fund markets may be signaling a collapse in the larger debt house
of cards.
> the record breaking DOW and S&P?
Well, not the S&P, which has not kept pace with the Dow. And,
remember, the Dow stocks are supposed to be the where the quality is,
and there's been a flight to quality recently, which will bid it up.
Analysts, even the most rational and successful among them, like
Richard Russell, have been talking about a third speculative leg to
come in the Dow. But many other stocks are not participating, and the
matter of a third leg seems to be in doubt due to all of the
liquidation. You may not realize it, but the bond market, which is a
debt market, is the big kahuna. It's 10-times bigger than the stock
market. If the credit crunch expands to include other classes of debt,
then a stock market crash will be peanuts in comparison with a bond
market crash. Like I said, the chickens seem to be coming home to
roost, and they look a lot like vultures.
> Marcello wrote:
> Sorry,
> but those are some very positive things, and yes, they are somewhat
> countered by inflation, weakened US dollar, high gas prices, etc, but one
> doesn't need to be a rocket scientist to see where the positives are in the
> economy and get those working for you.
The economy can only be pushed or manipulated for so long. You must
realize that we are a collection of markets. When confidence in
financial and consumer markets wanes, especially when they are so
unstable due to so much debt, then things start to happen that people
have little understanding about because they have only ever known
prosperity and expansion. I detect a lot of current opinion in your
statements, but I think you will be telling your grandchildren quite a
different story.
Best wishes.
Marcello
How can you judge my humanity on the basis of helping those that planned
poorly? What a shallow observation.
I prefer my charity to go to those who I feel are most deserving, those who
truly were not granted equality of opportunity, whether if be by society or
the way they were born. Those who chose to put their eggs in the wrong
basket for retirement instead of taking responsibility for their own
retirement (yes, responsibly includes planning for levels of inflation) are
not in that category. Those who have lost their medical and/or retirement
due to fraudulent activity and have not been properly compensated by law are
another story, and you only made mention of that in your last post.
However, we were talking about the possible adverse affects of inflation,
not criminal activity, so introducing that into this at this point is
somewhat strawman, or at the very least a distraction to the actual
discussion.
But MI must know, who do you think you are be telling me how I should
distribute my charity???
>
> BTW, appreciation of capital is going to be negative over 50 years at
> 4.7% in present circumstances where the true inflation rate (with
> excluded factors like food and fuel added back) is considered, and the
> money supply is expanding at a 13% annual rate. And a factor of 10 in
> 50 years has meant treading water. When I came back from Vietnam, I
> bought a new Ford for $2800. That same brand and model costs 10 times
> that now. And that's only 40 years ago. I remember when I was a kid
> in the 1950's we had no refrigerator (just an ice box), no television
> (just a radio), and no car (just the bus). Then my dad got a job
> making $200/wk and we suddenly had all of those things. Now, for the
> same family of 5, you need to have one government job or both spouses
> working in the private sector making roughly 10 times what my dad made
> in order to live the same lifestyle and have good prospects of not
> having inflation eat you up so you have to dip into your retirement
> savings or home equity in order to send kids to college.
Not everyone is going to be better off, just as not every single item is
going to go in cost at the same rate of inflation. Might I remind you that
inflation is an average. Merely taking out a single object and pointing out
that is has risen faster than the rate of inflation proves what exactly? I
will tell you what it proves, it proves that many other items have increased
in price at far less than the rate of inflation, just as countless people
have prospered during the same time period you mentioned Overall, a
pointless addition to your argument.
>
> I don't understand why you like inflation so much, unless you are in
> debt up to here --> (-: and expect, no, need inflationary times to pay
> it off. Well, you're not the only one if that's the case because lots
> of people have this as their M.O.
You have drawn another baseless assumption here. I only ever implied that
the sky is not falling as many suggest. Personally, I do not have any
preference to inflation as it merely dictates my strategy. A perfect
example. There is an old adage that says something along lines of during
inflationary times, its better to own "things" than cash. I have a
portfolio with a mix or real estate and equities which has easily hedged
against any inflation during my lifetime, and yes, often inflation makes
using leverage very attractive over the long term. Does that make having a
solid investment strategy that uses leverage a bad idea? Hardly.
I don't purport to be some genious, but I certainly take responsibility for
my own future and have planned accordingly and am not adversely affected by
inflation. Everything I have done throughout my life is equally available
to anyone else willing to put money aside for retirement.
>
>> > "hard times" wrote:
>> > Inflation is an unfair tax on wealth. Everyone seems to want to whip
>> > the wealthy, but three or four generations of inheritance usually
>> > dissipates that wealth, with inflation taking its toll as well.
>
>> Marcello wrote:
>> I don't agree. Inflation is unfair to those who hold money, but more
>> than
>> fair to those who hold inflation proof assets. Ignorance of this is no
>> excuse.
>
> What these days is inflation proof? Even gold in inflation adjusted
> terms is way behind. About a quarter century ago gold was $2400 if
> inflation is taken into account based on today's price. Are you
> talking about tech stocks? Remember, "intellectual property" was sold
> as an asset, something tangible to build a future on, and it turned out
> to be as worthless then (1999) as it is now. Are you talking about
> homes? Oil? Then you're talking about speculation. Most people have
> no idea about investing, much less speculating. The pros will nail
> them every time. Ignorance is not always not an excuse. Ignorance is
> no excuse for the law is a legal term.
I am talking about a wide spread of investment, not just securities. There
are plenty of good books available on having a portfolio that will hedge
inflation.
Fair enouh, perhpaps my deifntion of manufacuting is a little limite. I see
more in line what you meant and to that extenst I agree/concede this point;
however,I do not wholly agree with your definition.. You do in fact leave
out wealth that is dirclty related to my quality of life. For instance, I
may make home improvents that significanlty inprove my life, and to that
extent I have created additional welath for myself. I am not talkin about
wealth in terms of the value of my home (as that would be included in "bean
shuffling" as you say), but if my quality of life is improving, then I am
becomin more wealthy.
I will also grant that a precise definition of wealth would be requred to
give a full debate on the issue.
>
>> Marcello wrote:
>> Adding value that increases the quality of life in any process
>> creates wealth. This is precisely why the US economy has far out
>> distanced
>> inflation.
>
> Other than the two ways I have specified above (take it out of the
> ground, add value in a manufacturing process), there is no other way to
> create new wealth in order to increase the size and velocity of the
> capital cycle. Everything else just shuffles the existing wealth from
> one place to another. Bean shuffling. We have managed to have a bogus
> kind of growth based on roughly $50 trillion of debt (including
> government, corporate, and individual debt). These chickens are coming
> home to roost right now, and we will be mighty lucky to weather what
> appears to be a slow-motion train wreck. I will remind you that all
> debts will be paid - either by the debtor or by the creditor. At some
> point the chickens will be replaced by vultures.
This is the same thought process that many have had for generations. Its
only now, during the internet age that so many can collectively cry chicken
little together. Please do not be misconstrued, I am in no way suggesting a
blind faith in government fiscal policy and/or economic information, but we
are hardly seeing issues that warrant the sky is falling claims of many.
>
> The American economy was built through the justifiably selfish and
> clever use of the factors of production, along with trade barriers.
> "Free trade" is the death knell for America.
Let's not forget about ideas, which were the basis for the factors you have
outlined as well as many entities that created win/win situations for both
workers and stakeholders. Free trade would only be the death knell of
America if future generations refuse to take heed of the equaling level of
competition worldwide. I do not believe that anyone is better than anyone
else for merely being born in a certain sector of the world, so naturally as
the rest of the world takes to our superior system the playing field will
level worldwide. If this is perceived as the death of America then so be
it, but could anything be more just worldwide...to have everyone with the
same basic level of economic opportunity? I am not so sure this is a world
I would find overly concerning as many war might not exist within such a
world. This is a discussion for another thread perhaps.
>> Marcello wrote:
>> Then I ask, what if it is that interest that is
>> used to buy the lawn mower, does that justify it?
>
> Who's making that interest? If he's Chinese (Chinese in China, that
> is), he's perfectly justified in buying any Chinese-made good.
>
> Looking at it from the standpoint of the person who holds capital (or
> wealth, the same thing), compounding that wealth and capital
> preservation are the first priorities. If one preserves capital by
> adding back what it has lost through inflation, then the excess can be
> used however one likes. But it is just as much of a sin as it is for
> johnny paycheck to run out and spend one's discretionary income (much
> less run up debt) for goods where value has been added elsewhere,
> unless the economic unit one is participating in has balanced trade
> (then it's a wash).
Preciseley, its an issue of self control and spending habits.
>
> In America right now it's a sin to buy a Chinese made anything.
> Punctuation, period! We have no comparative advantage with China.
> Instead, they have the advantages of low cost of LABOR and high CAPITAL
> accumulation (the latter we provide for them). Note that those are
> factors of production. And the quid pro quo has been our repatriation
> of the capital they've accumulated, the issuance of debt for it, then
> an equivalent amount of deficit spending by our government. It's the
> worst of all worlds in the long run. In this environment, it's a sin
> for an American, wealthy or not, through interest income or by debt, to
> buy the lawn mower you refer to, unless it is made in America or by a
> country we have a favorable trade balance with.
You are forgetting however that this debt is being held at very low rates,
rates that if you include both the growth of our economy and inflation are
actually negative. Time is our friend in this regard.
>
>> Marcello wrote:
>> What good is capital ifs
>> its only purpose is to earn more capital.
>
> Because that's what Capitalism is all about.
Really, so you are suggesting that consumerism is not a major part of
capitalism?
>
>> Marcello wrote:
>> What about the fact that capital
>> is stored value and some may value cars immensely because it takes them
>> to
>> work and visit family, even though it will be in a landfill in 15 years?
>
> That really isn't a good example of a productive use of capital -- in
whoa! Productive use of capital? If that car results in an increased
earning capacity is certainly is a perfect example of a productive use of
capital.
If I can earn twice the pay in a job that requires me to travel 50 miles,
and the only way I can do that is to buy a car, than I have made a VERY
productive use of capital in the purchase of the car. I am sorry, but you
are totally wrong in this regard.
> anything but the short term. It makes a little more sense if the car
> is made where it is consumed. But, ultimately, a car that's bought for
> and used for anything but the generation of new wealth is a losing
> proposition because 15 years is a very short time. The matter of
> opportunity cost comes into play (an expenditure on a car may have been
> better expended on a machine that actually adds value, like a farm
> tractor or a stamping machine).
Ok, so you see my point above and we agree. But considering how much of the
population travels to work by car (which assumes distances that are not
feasible otherwise), then you have to agree that in the majority of cases a
car is a productive use of capital. Certainly some overspend, and that is
their prerogative, but that is an individual decision and any burden as a
result of overspending on a vehicle is the fault of the individual making
that choice.
Again, your glass is half empty. Throughout every generation since the
existence of federal debt, people have prospered. Some have made bad
decisions, some have invested poorly, and some have gone flat broke, but we
all have the same opportunity to invest. Again, I would recommend reading
more along the lines of having a portfolio that hedges against inflation,
and it doesn't alwasy requie debt.
>
>> > "hard times" wrote:
>> > Take a look at what's going on in the economy, the markets, in politics
>> > and the military, the attack on the middle class (downward mobility),
>> > inflation, debts ($50 trillion in all sectors) and deficits, and what
>> > you are seeing right now is a slow-motion train wreck. End of empire
>> > behavior. And now the talk is about trade war, while Hillary runs for
>> > the presidency by saying she'll raise taxes on the rich (but it will
>> > really be on the middle class) by repealing tax cuts of recent years.
>> >
>> > The sky is hardly falling, you say???
>
>> Marcello wrote:
>> No, your glass is just half empty, like all chicken littles.
>
> Okay, you didn't need to say "chicken littles." My glass is actually
> quite full because I'm prepared for what's to come, good times or hard
> times. When things get tough, I'll check back here with you to see how
> your optimism paid off. But I suspect that you will have a crisis in
> confidence like a lot of people will. The things I'm saying are not
> new. My influences were people who lived during the 20's and 30's and
> remember how unbounded optimism, backed by debt and speculation,
> eventually got wrung out. Another time when the axiom came into play:
> All debts will be paid, by the debtor or by the creditor.
haha - you draw some interesting (yet baseless) assumptions about me. I
have never implied unbridles optimism. Conversely, if you in fact are
prepared and doing well, bravo; but this is the same discussion I have had
with many people claming the same things for over 25 years.
Again, assumptions about my age are from where??? I am not a grandparent
but I have been around and investing and doing fine for quite a long time
thank you.
I believe it all amounts to a line of perception - for your statement about
the economy says it all. If you believe the economy can only be pushed or
manipulated (by who, government???) than we disagree to a greater degree
than I originally thought. This economy was and is based on the
entrepreneurial spirit and hard working people. It has never been perfect,
not even close, but it is certainly not pushed (not to get too far into
semantics), its is driven along and will continue to be so until government
manipulation one day becomes too burdensome and revolt becomes the most
viable option (not a prediction, merely a possible outcome).
I appreciate your good wished and of course I wish the same for you. I do
believe that you are slightly in denial regarding your pessimism, perhaps
(only a guess) sheltered by a perception that you are a realist. In all
your analization of all the data, I must know - when you consider how
quickly the debt could be paid down with a mere 10% reduction in federal
spending combined with a cap of spending growth tied to that of the GDP, do
you really think the concern should be on the US economy as a whole of the
political process of out of control spending by both major parties?
Additionally, why do those who jump to the size of the national debt never
take into consideration the stored wealth of the US in its holdings across
the country. A perfect example is the land covered by the military base in
coastal Southern California (Camp Pendleton). This land, if sold in to the
private sector, is estimated to have value in excess of $900 billion. I am
not suggesting a fire sale, but if one single asset among thousands of
freely owned assets accounts for almost 10% of the current debt, how can
anyone sincerely be concerned about the meditate (next 150 years) future of
this country? If there should be any concern, its should be on that which
politicians push on us all.
hard times
>> "hard times" wrote:
>> Where is your humanity?
> Marcello wrote:
> How can you judge my humanity on the basis of helping those that planned
> poorly? What a shallow observation.
It's just a rhetorical statement -- a platitude of the type used to
spice up one's writing. You need not take offense. My writing is not
cruel or insulting if I can help it. What I'm talking about may or may
not be what you think, which is likely due to matters of semantics and
differing perspectives. Please bear in mind the idea that it's a
discussion, and a lengthy one, so it's inevitable that a platitude or
two, a shallow observation or two, maybe even a baseless observation or
two will creep in. You don't have to point these things out, just
correct them in order to give the right impression.
> Marcello wrote:
> However, we were talking about the possible adverse affects of inflation,
The matter of inflation and how some people can't or won't deal with
and so suffer at some point when it's too late to recover is a subject
within the main topic. As far as I'm concerned, I'm speaking of what I
think will develop into a depression much like the Great Depression.
Many people believe the government when the word comes down that
inflation is low and under control, when it is really high and out of
control, mainly for those who are older or who haven't gained a firm
foothold in the system(s) and who never will. No matter how they got
there, even if it's by miscalculation, they're there, it's painful, and
we can't turn our backs on them.
People as a whole are generally ignorant about investments and really
can't be blamed if they fall through the cracks. It's a growing
phenomenon that will become glaringly apparent as baby boomers retire,
or try to. People who thought that real estate was a sure thing now
see that at some point it becomes hard to find a greater fool to buy
their flipper. Some have become victims of fraudulent practices by
brokers who "churn" and "pump" for commissions and kickbacks. You
can't wish that these people suffer due to their ignorance when
ignorance is planned (starting in the schools) in this society like
planned obsolescence.
> Marcello wrote:
> But MI must know, who do you think you are be telling me how I should
> distribute my charity???
It's out of your hands and mine. The present policy is to bail out
corporations and financial institution while leaving people to twist in
the wind. But Congress may have another idea when times worsen (not
that it will do any good except that it might alleviate some
suffering). I'm sure we'll both be watching with interest (no pun
intended).
> Marcello wrote:
> Not everyone is going to be better off, just as not every single item is
> going to go in cost at the same rate of inflation. Might I remind you that
> inflation is an average. Merely taking out a single object and pointing out
> that is has risen faster than the rate of inflation proves what exactly?
What they do is take out items like food and energy _because_ they have
risen faster, and what it proves is a very big lie about inflation can
be told and sold year after year, when, for the vast majority of people
in this country who are in a group with shrinking discretionary income,
inflation is closer to 10% than the claimed 3% or whatever lie is being
promoted this month.
> Marcello wrote:
> I
> will tell you what it proves, it proves that many other items have increased
> in price at far less than the rate of inflation, just as countless people
> have prospered during the same time period you mentioned Overall, a
> pointless addition to your argument.
I don't know that it's pointless. People with discretionary income see
the times as deflationary because they buy a lot of consumer goods at
cheap prices, and their rising incomes mask inflation at the grocery
store or at the gas pump because people who have median incomes, or two
median incomes if the spouse works, don't see themselves as being worse
off. But those who spend most of their income on food, housing and
meds find that they are making choices like cutting pills in half so
they have the money to pay for rent, or visiting the food bank.
So, some people do well in inflationary times. Most public employees
are doing well, as are pensioners (mostly ex-public employees) who have
COLAs. But many pension systems are Ponzi schemes, including social
security, so hard times will cause problems because tax revenues
slacken when times get bad. Most people have managed their affairs as
they were taught (little) in good faith, relying on the system for
stability and continued prosperity. Will you be happy that you planned
for inflation when people about you are suffering? Or will you look
the other way like most people do when they step over or around a
homeless drunk on the sidewalk who's sleeping off last night's bottle
of wine.
> Marcello wrote:
> I only ever implied that
> the sky is not falling as many suggest. Personally, I do not have any
> preference to inflation as it merely dictates my strategy. A perfect
> example. There is an old adage that says something along lines of during
> inflationary times, its better to own "things" than cash. I have a
> portfolio with a mix or real estate and equities which has easily hedged
> against any inflation during my lifetime, and yes, often inflation makes
> using leverage very attractive over the long term. Does that make having a
> solid investment strategy that uses leverage a bad idea? Hardly.
Your strategy relies on stability. Inflation proof, to me, means gold
bullion coins. Everything else is paper, and the era of paper is
coming to a close, IMO.
> Marcello wrote:
> I don't purport to be some genious, but I certainly take responsibility for
> my own future and have planned accordingly and am not adversely affected by
> inflation. Everything I have done throughout my life is equally available
> to anyone else willing to put money aside for retirement.
But so many others are either not so well prepared or else have
suffered a setback or two beyond their control. It's one thing to make
a mistake when one is 30, but the same mistake at age 50 or 60 usually
means the golden years will not be so golden. Most baby boomers have
no savings, now have ebbing equity in their homes, have spent
retirement funds on college for their kids, and face working the rest
of their lives because they refinanced the home and spent the money on
consumer goods. Hard times will scuttle many of these folks, and it's
a big crowd that votes. They may demand inflationary policies. My
take on it is we may yet see Upton Sinclair's EPIC program come into
being.
> Marcello wrote:
> I am talking about a wide spread of investment, not just securities. There
> are plenty of good books available on having a portfolio that will hedge
> inflation.
Of course, you know that 50% of the population is functionally
illiterate, right? And many of the rest roll their eyeballs back in
their heads if anything financial or economic is being discussed or
read. Even the so-called experts (I will refer you to CNBC) disagree
on strategies. Their crystal balls are just as hazy as mine, except I
have lived longer than most of them and had a father who had me buying
stocks by age 10, who talked incessantly about economic matters. Most
ordinary citizens are terminally confused about investing. How can
they be blamed for this when they not only get conflicting advice, but
they haven't been trained in their families or schools to be economic
beings beyond cashing their paychecks and buying cars and TV's?
>> Marcello wrote:
> You do in fact leave
> out wealth that is dirclty related to my quality of life. For instance, I
> may make home improvents that significanlty inprove my life, and to that
> extent I have created additional welath for myself. I am not talkin about
> wealth in terms of the value of my home (as that would be included in "bean
> shuffling" as you say), but if my quality of life is improving, then I am
> becomin more wealthy.
Keep in mind that that utility and wealth are different things even
though you may feel in a given situation that they are the same. You
don't actually have wealth until you sell the house, unlike cash which
is wealth in stable times, or gold anytime because gold is true wealth
and it will never go bankrupt.
>> Marcello wrote:
> I will also grant that a precise definition of wealth would be requred to
> give a full debate on the issue.
It would be an interesting discussion, but my thrust in relation to
good vs. hard times has to do with wealth creation, and we have
dissipated our strengths in terms of taking something out of the ground
(crops or minerals, oil) or adding value in a manufacturing process.
We are increasingly unable to sustain our capital cycle except by large
measures of debt accumulation, deficit spending, and low interest rates
while consumers fuel the whole process by buying shiploads of foreign
products without regard to the consequences of it. It's an inflate or
die policy. But the FED is caught now, after many years of unwise
policy, between a rock and a hard place. Should they cut rates and
abandon the dollar in order to stimulate the economy? or should they
raise rates to defend the dollar (and the confidence of debt holders
that they will be paid back with something other than worthless paper)?
What are your thoughts on this?
>> "hard times" wrote:
> > Other than the two ways I have specified above (take it out of the
> > ground, add value in a manufacturing process), there is no other way to
> > create new wealth in order to increase the size and velocity of the
> > capital cycle. Everything else just shuffles the existing wealth from
> > one place to another. Bean shuffling. We have managed to have a bogus
> > kind of growth based on roughly $50 trillion of debt (including
> > government, corporate, and individual debt). These chickens are coming
> > home to roost right now, and we will be mighty lucky to weather what
> > appears to be a slow-motion train wreck. I will remind you that all
> > debts will be paid - either by the debtor or by the creditor. At some
> > point the chickens will be replaced by vultures.
>> Marcello wrote:
> This is the same thought process that many have had for generations.
Which part of the above do you refer to? The creation of wealth I
mention is not something I've made up. You will get it in any
college-level course in economics. If you are referring to the
consequences of debt accumulation, then this is not theory, either.
The markets always do _what_ they're supposed to, just never _when_.
The slow-motion train wreck continues to gain momentum. I may be an
early pessimist, but at some point everyone's a pessimist. And at some
point people will finally realize that the American Empire is
declining. I suspect that the day of reckoning will come when the
Dollar loses its status as the world's reserve currency
>> Marcello wrote:
> Its
> only now, during the internet age that so many can collectively cry chicken
> little together. Please do not be misconstrued, I am in no way suggesting a
> blind faith in government fiscal policy and/or economic information, but we
> are hardly seeing issues that warrant the sky is falling claims of many.
To say that (some people say) the sky is falling is not a good choice
of words because it promotes an image of a children's story. Other
children's stories that are called to mind include the three little
pigs (and the brick house) and maybe even the one about the finger that
plugged the dike. But, really, there are patterns and themes in
history that play out over and over again. In 1928 they proclaimed a
new age, a panic-proof age, with blue skies all around. But there are
no new ages when it comes to human nature. Human nature will never be
repealed, controlled, and crises of confidence eliminated. At some
point, the "bubbles" you hear about in housing, credit, stocks and
other investments, currencies (the carry trade comes to mind) will
deflate. It's a characteristic in times of panic for the slide into
the valley of despair to be directly proportional to the heights of the
mountain of speculation and debt. It's happened with great regularity,
and it will happen again at some point.
>> "hard times" wrote:
> > The American economy was built through the justifiably selfish and
> > clever use of the factors of production, along with trade barriers.
> > "Free trade" is the death knell for America.
>> Marcello wrote:
> Let's not forget about ideas, which were the basis for the factors you have
> outlined as well as many entities that created win/win situations for both
> workers and stakeholders.
Those days are gone. The tech bust proved that intellectual property
is worth little but for a brief moment.
> Free trade would only be the death knell of
> America if future generations refuse to take heed of the equaling level of
> competition worldwide.
What future generations will experience are the consequences of free
trade on the world's biggest and most prosperous economy that
dissipated it's capital and wealth creation in a free-trade feeding
frenzy. Other's boats will rise, but future generations will not be
happy with the level to which our boat has sunk.
It's a world-wide economy, so any depression will be a worldwide
phenomenon. Since our capital and wealth creation abilities have been
diminished, we will have no reserve capacity to rescue ourselves.
> >> Marcello wrote:
> I do not believe that anyone is better than anyone
> else for merely being born in a certain sector of the world, so naturally as
> the rest of the world takes to our superior system the playing field will
> level worldwide. If this is perceived as the death of America then so be
> it, but could anything be more just worldwide...to have everyone with the
> same basic level of economic opportunity? I am not so sure this is a world
> I would find overly concerning as many war might not exist within such a
> world. This is a discussion for another thread perhaps.
What you are saying is a fantasy. Democracy is just. Capitalism is
not. If you try to level the playing field with capitalism, then you
will be very disappointed. Capitalism thrives on haves and have-nots
and on investment by those who can exploiting the factors of
production. That goes for countries as well as people. We are not
faring well in this regard.
> >> Marcello wrote:
> >> Then I ask, what if it is that interest that is
> >> used to buy the lawn mower, does that justify it?
> >
> > Who's making that interest? If he's Chinese (Chinese in China, that
> > is), he's perfectly justified in buying any Chinese-made good.
> > Looking at it from the standpoint of the person who holds capital (or
> > wealth, the same thing), compounding that wealth and capital
> > preservation are the first priorities. If one preserves capital by
> > adding back what it has lost through inflation, then the excess can be
> > used however one likes. But it is just as much of a sin as it is for
> > johnny paycheck to run out and spend one's discretionary income (much
> > less run up debt) for goods where value has been added elsewhere,
> > unless the economic unit one is participating in has balanced trade
> > (then it's a wash).
>
> Preciseley, its an issue of self control and spending habits.
More likely one of comparative advantage and trade policy.
>> "hard times" wrote:
> > In America right now it's a sin to buy a Chinese made anything.
> > Punctuation, period! We have no comparative advantage with China.
> > Instead, they have the advantages of low cost of LABOR and high CAPITAL
> > accumulation (the latter we provide for them). Note that those are
> > factors of production. And the quid pro quo has been our repatriation
> > of the capital they've accumulated, the issuance of debt for it, then
> > an equivalent amount of deficit spending by our government. It's the
> > worst of all worlds in the long run. In this environment, it's a sin
> > for an American, wealthy or not, through interest income or by debt, to
> > buy the lawn mower you refer to, unless it is made in America or by a
> > country we have a favorable trade balance with.
> >> Marcello wrote:
> You are forgetting however that this debt is being held at very low rates,
> rates that if you include both the growth of our economy and inflation are
> actually negative. Time is our friend in this regard.
Time is not our friend in this regard. Do you think that it goes
unnoticed where foreigners hold our dollars in the form of treasuries
that negative returns prevail?
Just as capital compounds over time, so does debt. If we took the
returned capital and invested it in infrastructure or established
wealth creation activities with it, then you can talk about low rates.
But the dollars that are being returned (and there are so many of them)
have treasuries issued for them and the proceeds are deposited in the
general fund. The Administration and Congress see these as revenue,
not as debt. So they spend the capital for wars, social programs,
pensions, etc., and it winds up as non-productive deficit spending to
the tune of almost 10 trillion dollars accumulated debt, all of which
needs to be rolled over periodically and constitutes a huge interest
expense. Your silver cloud has a dark lining.
> >> Marcello wrote:
> >> What good is capital ifs
> >> its only purpose is to earn more capital.
>> "hard times" wrote:
> > Because that's what Capitalism is all about.
> >> Marcello wrote:
> Really, so you are suggesting that consumerism is not a major part of
> capitalism?
It's part of the capital cycle. It's a positive when people buy
products made by their neighbors, a negative when foreign goods are
purchased in an unbalanced trade situation and the dollars come
flooding back to the treasury in exchange for debt, with those dollars
looking like revenue to the Administration and Congress.
> >> Marcello wrote:
> >> What about the fact that capital
> >> is stored value and some may value cars immensely because it takes them
> >> to
> >> work and visit family, even though it will be in a landfill in 15 years?
>> "hard times" wrote:
> > That really isn't a good example of a productive use of capital -- in
> >> Marcello wrote:
> whoa! Productive use of capital? If that car results in an increased
> earning capacity is certainly is a perfect example of a productive use of
> capital.
The use of the car for anything other than wealth (capital) creation is
not a productive use. It's utility, but it's not productive when used
for anything else. But what we're getting at here is the idea that
we're trading something that lasts forever (capital) for junk (the
car). Its a policy that can't be carried to extremes like it has been.
It's the worst bargain in history we're making with these trade
deficits.
> >> Marcello wrote:
> If I can earn twice the pay in a job that requires me to travel 50 miles,
> and the only way I can do that is to buy a car, than I have made a VERY
> productive use of capital in the purchase of the car. I am sorry, but you
> are totally wrong in this regard.
Not productive for the economy, though. The employer could have hired
someone who could walk to work. The car depreciates and uses up
resources. It doesn't produce anything. Production can take place car
or no car.
>> "hard times" wrote:
> > anything but the short term. It makes a little more sense if the car
> > is made where it is consumed. But, ultimately, a car that's bought for
> > and used for anything but the generation of new wealth is a losing
> > proposition because 15 years is a very short time frame. The matter of
> > opportunity cost comes into play (an expenditure on a car may have been
> > better expended on a machine that actually adds value, like a farm
> > tractor or a stamping machine).
> >> Marcello wrote:
> Ok, so you see my point above and we agree.
I really don't think we do. We're not seeing eye to eye, and we're not
talking about the same things if the difference between personal
utility and productive use is misunderstood. The manufacture of the
car is productive if it's made in this country, but the use to which
it's put is another matter.
> >> Marcello wrote:
> But considering how much of the
> population travels to work by car (which assumes distances that are not
> feasible otherwise), then you have to agree that in the majority of cases a
> car is a productive use of capital. Certainly some overspend, and that is
> their prerogative, but that is an individual decision and any burden as a
> result of overspending on a vehicle is the fault of the individual making
> that choice.
We're not on the same wavelength. Our perspectives seem to be very
different and aren't closing.
> >> > "hard times" wrote:
> > You neglect to take into account the ideas that in order to maintain
> > the same lifestyle (government, corporation or individual) one has to
> > borrow larger and larger amounts in inflationary times, in addition to
> > rolling over the existing debt, which will require a greater "rental"
> > sacrifice when it becomes apparent to debt holders and new debt
> > purchasers that repayment of debt is questionable. And, despite
> > inflationary times, the debt and the interest on it are at astronomical
> > levels. The perception of "good times" has a way of masking adverse
> > factors, but the acquisition of so much debt and having to pay the
> > interest and roll it over because it cannot be paid means there will
> > not likely be any "muddling through" times, that there will only be
> > bogus good times, or hard times (with the slipping into hard times
> > being a very painful process and outcome).
>
> >> Marcello wrote:
> Again, your glass is half empty. Throughout every generation since the
> existence of federal debt, people have prospered.
Let me put it this way. You work hard all your life and build a
personal empire for yourself. Then you find that your expenses are
higher than your income. So you go to the bank and repeatedly borrow
more and more over a long period of time until you owe so much that you
will never pay it off. But you have had repeated and increasing
infusions of cash so you can maintain your lifestyle and "the illusion"
of prosperity, at least until something happens that causes the bank to
refuse to loan you more. That's where the US is now. Living a
fantasy, "the illusion" of prosperity, based on $50 trillion in debt at
all levels. Is that really prosperity? Looks like prosperity, quacks
like prosperity, but it's a false prosperity because it's based on
debt. $50 trillion of debt.
> >> Marcello wrote:
> >> your glass is just half empty
> >> > "hard times" wrote:
> > My glass is actually
> > quite full because I'm prepared for what's to come, good times or hard
> > times. When things get tough, I'll check back here with you to see how
> > your optimism paid off. But I suspect that you will have a crisis in
> > confidence like a lot of people will. The things I'm saying are not
> > new. My influences were people who lived during the 20's and 30's and
> > remember how unbounded optimism, backed by debt and speculation,
> > eventually got wrung out. Another time when the axiom came into play:
> > All debts will be paid, by the debtor or by the creditor.
> >> Marcello wrote:
> haha - you draw some interesting (yet baseless) assumptions about me. I
> have never implied unbridles optimism.
I only made the one - that you will have a crisis of confidence like a
lot of people will. I base that on your comments.
> >> Marcello wrote:
> Conversely, if you in fact are
> prepared and doing well, bravo; but this is the same discussion I have had
> with many people claming the same things for over 25 years.
If you've had this discussion for 25 years with many others, then what
have you picked up? 25 years is not a long time. The topping out of a
debt-laden empire with troops scattered about the planet and with bad
free-trade policies takes a long time. I wonder what the people you
have been discussing this with actually advocated? Do you turn them
into optimists? Get them to compromise on the effects of history and
current affairs?
> >> Marcello wrote:
> >> There are a lot of things that are not great about the economy, but when
> >> haven't there been? But what about the consistently low unemployment
> >> rates,
> >> > "hard times" wrote:
> > ...at declining wages and declining mobility (except, of course, by
> > corporate management and public employees), not to mention
> > underemployment. The term employment needs several asterisks because
> > it doesn't mean family wage anymore.
> >
> >> Marcello wrote:
> >> the near record low interest rates,
> >> > "hard times" wrote:
> > ...made possible by the decapitalization of America, causing a flood of
> > dollars to return to the country. When the flood slackens, or if
> > foreigners lose confidence in America, then the consequences will be
> > severe. I don't have a crystal ball, but it may very well be that the
> > cracks in the carry trade and the sub-prime lending and repackaging and
> > hedge fund markets may be signaling a collapse in the larger debt house
> > of cards.
> >> Marcello wrote:
> >> the record breaking DOW and S&P?
> >> > "hard times" wrote:
> > Well, not the S&P, which has not kept pace with the Dow. And,
> > remember, the Dow stocks are supposed to be the where the quality is,
> > and there's been a flight to quality recently, which will bid it up.
> > Analysts, even the most rational and successful among them, like
> > Richard Russell, have been talking about a third speculative leg to
> > come in the Dow. But many other stocks are not participating, and the
> > matter of a third leg seems to be in doubt due to all of the
> > liquidation. You may not realize it, but the bond market, which is a
> > debt market, is the big kahuna. It's 10-times bigger than the stock
> > market. If the credit crunch expands to include other classes of debt,
> > then a stock market crash will be peanuts in comparison with a bond
> > market crash. Like I said, the chickens seem to be coming home to
> > roost, and they look a lot like vultures.
> >
> >> Marcello wrote:
> >> Sorry,
> >> but those are some very positive things, and yes, they are somewhat
> >> countered by inflation, weakened US dollar, high gas prices, etc, but one
> >> doesn't need to be a rocket scientist to see where the positives are in
> >> the
> >> economy and get those working for you.
> >> > "hard times" wrote:
> > The economy can only be pushed or manipulated for so long. You must
> > realize that we are a collection of markets. When confidence in
> > financial and consumer markets wanes, especially when they are so
> > unstable due to so much debt, then things start to happen that people
> > have little understanding about because they have only ever known
> > prosperity and expansion. I detect a lot of current opinion in your
> > statements, but I think you will be telling your grandchildren quite a
> > different story.
> >
> >> Marcello wrote:
> Again, assumptions about my age are from where??? I am not a grandparent
> but I have been around and investing and doing fine for quite a long time
> thank you.
I haven't made any assumptions about your age. Although I assume that
you will be a grandparent at some point and have to explain what's
going on to young and curious minds (who might very well blame you for
what happens if it's bad enough).
> >> > "hard times" wrote:
> I believe it all amounts to a line of perception - for your statement about
> the economy says it all. If you believe the economy can only be pushed or
> manipulated (by who, government???) than we disagree to a greater degree
> than I originally thought.
I didn't say that the "economy can only be pushed or manipulated," I
said it _has been so_ "for quite a long time." The FED, the
administration, Congress, various departments of government, lobbyists,
corporations, special interests, foreign countries friendly or not, all
try to push and manipulate the economy.
> >> Marcello wrote:
> This economy was and is based on the
> entrepreneurial spirit and hard working people. It has never been perfect,
> not even close, but it is certainly not pushed (not to get too far into
> semantics), its is driven along and will continue to be so until government
> manipulation one day becomes too burdensome and revolt becomes the most
> viable option (not a prediction, merely a possible outcome).
No revolt can take place. If the government declared martial law
tomorrow then everyone would roll over for it. Any pockets of
resistence would be met with in a most violent way. Just a quick buzz
with a Gat from a C-130 would turn a house into kindling. There is no
civilian equivalent for the Army's firepower, not to mention their
newly acquired expertise in house-to-house combat.
Whether the economy is pushed, manipulated, or driven is a matter of
semantics. What is not a matter of semantics is the cold hard fact
that $10 trillion in government debt and another roughly $40 trillion
in local gov't, personal and corporate debt is hanging over us like a
Sword of Damocles, and it threatens us in ways that will shock people
when the crunch comes.
> >> Marcello wrote:
> I appreciate your good wished and of course I wish the same for you. I do
> believe that you are slightly in denial regarding your pessimism,
Hey, I put my pessimism right out where everyone can see it. No denial
there. It's a tough job, but someone has to do it.
> >> Marcello wrote:
> perhaps
> (only a guess) sheltered by a perception that you are a realist. In all
> your analization of all the data, I must know - when you consider how
> quickly the debt could be paid down with a mere 10% reduction in federal
> spending combined with a cap of spending growth tied to that of the GDP, do
> you really think the concern should be on the US economy as a whole of the
> political process of out of control spending by both major parties?
Where do those figures come from? No debt can be paid down until the
deficits are licked. Do you see the federal government trimming the
budget by half a billion dollars (or higher, which some people
believe), _then_ taking 10% of true revenues to apply to the debt? The
day those measures were announced, not implemented but merely
announced, we'd have the beginning of a huge depression.
> >> Marcello wrote:
> Additionally, why do those who jump to the size of the national debt never
> take into consideration the stored wealth of the US in its holdings across
> the country. A perfect example is the land covered by the military base in
> coastal Southern California (Camp Pendleton). This land, if sold in to the
> private sector, is estimated to have value in excess of $900 billion. I am
> not suggesting a fire sale, but if one single asset among thousands of
> freely owned assets accounts for almost 10% of the current debt, how can
> anyone sincerely be concerned about the meditate (next 150 years) future of
> this country? If there should be any concern, its should be on that which
> politicians push on us all.
So you're saying we should accumulate as much debt as we want because
we have Camp Pendleton and maybe Yosemite to sell? To China, I
suppose? Even if that made any sense, the revenues would go into the
general fund and would not likely to be used to reduce debt. And you
should remember that any surplus federal properties go through a
process whereby other governmental entities in a well-established
pecking order can lay claim to them or to parts of them.
I don't think we're on the same wavelength at all. Sure, I'm a
pessimist, but for good reason. History is on my side. Empires are
born and they die. Bubbles blow up and deflate. Human nature will
never be repealed, so the occasional panic is to be expected and the
severity of it is directly proportional to the boom that precedes it.
Since the beginning of the Industrial age and the proliferation of
capitalism, there have been regular booms and busts. I happen to think
that we're staring the latter in the face. Your mileage may vary.
Marcello
>
> The matter of inflation and how some people can't or won't deal with
> and so suffer at some point when it's too late to recover is a subject
> within the main topic. As far as I'm concerned, I'm speaking of what I
> think will develop into a depression much like the Great Depression.
>
> Many people believe the government when the word comes down that
> inflation is low and under control, when it is really high and out of
> control, mainly for those who are older or who haven't gained a firm
> foothold in the system(s) and who never will. No matter how they got
> there, even if it's by miscalculation, they're there, it's painful, and
> we can't turn our backs on them.
Fair enough, I agree here. I don't understand how anyone can just take the
word coming form media and government without considering the extreme bias
that is included. But I agree, people do. While its saddening, I feel no
more sorry for those soak up this information as factual than I do for the
auto buyer who buys a lemon due to lack of research. We all have access to
the same facts more or less' what we do with them is our own responsibility.
>
> People as a whole are generally ignorant about investments and really
> can't be blamed if they fall through the cracks. It's a growing
They can't be blamed for their own ignorance? I disagree. There is enough
information in publicly funded libraries to more than equip anyone with
enough information to at least permit them to invest intelligently.
It seems we have a vast difference in opinion in individual responsibility.
> phenomenon that will become glaringly apparent as baby boomers retire,
> or try to. People who thought that real estate was a sure thing now
> see that at some point it becomes hard to find a greater fool to buy
> their flipper. Some have become victims of fraudulent practices by
> brokers who "churn" and "pump" for commissions and kickbacks. You
> can't wish that these people suffer due to their ignorance when
> ignorance is planned (starting in the schools) in this society like
> planned obsolescence.
Of course I do not wish it, but I also do not feel it is my responsibility
to pay for someone else's mistakes or lack of preparedness. That is the
basis of personal responsibility.
>
>> Marcello wrote:
>> But MI must know, who do you think you are be telling me how I should
>> distribute my charity???
>
> It's out of your hands and mine. The present policy is to bail out
> corporations and financial institution while leaving people to twist in
> the wind. But Congress may have another idea when times worsen (not
> that it will do any good except that it might alleviate some
> suffering). I'm sure we'll both be watching with interest (no pun
> intended).
Nice pun : ) This is my point. I do not agree that government should be
involved in my charity at all. I choose to give to charities of which I
believe in their mission and see their results. Government gives us no
choice by taking our money and then sloppily continues to use it for policy
that has continuality failed. Its possible to believe in welfare but
totally disagree with government sponsored welfare, something that I believe
most people who look down on those (like me) who completely oppose having
tax dollars used for welfare. Does this mean I want to help any less just
because I believe it can and is done much more effectively without
government intervention?...Yet this view is often considered unsympathetic!
>
>> Marcello wrote:
>> Not everyone is going to be better off, just as not every single item is
>> going to go in cost at the same rate of inflation. Might I remind you
>> that
>> inflation is an average. Merely taking out a single object and pointing
>> out
>> that is has risen faster than the rate of inflation proves what exactly?
>
> What they do is take out items like food and energy _because_ they have
> risen faster, and what it proves is a very big lie about inflation can
> be told and sold year after year, when, for the vast majority of people
> in this country who are in a group with shrinking discretionary income,
> inflation is closer to 10% than the claimed 3% or whatever lie is being
> promoted this month.
Let's assume that 10% is accurate, and people like you and I are obviously
aware of the trend. So what? Only people who put invest their fortunes
with research based on mere government information are hurt. I doubt you
and I hare the only one's that have looked at the facts and realized
this...I have invested on this basis my whole life, just as anyone else
could have. Where is the problem?
> So, some people do well in inflationary times. Most public employees
> are doing well, as are pensioners (mostly ex-public employees) who have
> COLAs. But many pension systems are Ponzi schemes, including social
> security, so hard times will cause problems because tax revenues
Relying on the schemes is an awful retirement plan, always has been. Still,
people do, and they pay in inflationary times. That's their decision.
> slacken when times get bad. Most people have managed their affairs as
> they were taught (little) in good faith, relying on the system for
> stability and continued prosperity. Will you be happy that you planned
> for inflation when people about you are suffering? Or will you look
Again, why is it assumed that I take pleasure in the misery of others? That
is an awful leap from me suggesting I have no responsibility in their
misplanning. There is a big difference between taking pleasure in one's
misery versus not having any responsibility. If I see someone hit by a car
who is rushed of by ambulance to the hospital, do I have any responsibility
to pay for their ambulance and hospital bills? Of course, not, but does
that mean I am happy they got hit? That would be a near absurd statement,
yet the leap of logic is the same.
> the other way like most people do when they step over or around a
> homeless drunk on the sidewalk who's sleeping off last night's bottle
> of wine.
Blah. Its this saddening line of thinking that hurts an intelligent
conversation.
>> Marcello wrote:
>> I am talking about a wide spread of investment, not just securities.
>> There
>> are plenty of good books available on having a portfolio that will hedge
>> inflation.
>
> Of course, you know that 50% of the population is functionally
> illiterate, right? And many of the rest roll their eyeballs back in
Which population are you referring to. I do not know world illiteracy rates
other than the fact that more than half of the worlds nations have literacy
rates well over 50% and thus likely more than half the population is far
over that. Maybe a citation would help. But even so, we are talking about
US policy, and US illiteracy is well into the high 90s last I saw. If you
want to discuss those nations with rates below 50% and their policies, that
is a totally different story and discussion. I believe you are veering well
of course bring up this stat that does not apply...and might not be
accurate. If by functionally illiterate you mean that they do not read and
write well enough to hold a job, well in the US again you would be well
off - as the mere basis that 95% of the working population is employed
provides evidence of the opposite.
> It would be an interesting discussion, but my thrust in relation to
> good vs. hard times has to do with wealth creation, and we have
> dissipated our strengths in terms of taking something out of the ground
> (crops or minerals, oil) or adding value in a manufacturing process.
> We are increasingly unable to sustain our capital cycle except by large
> measures of debt accumulation, deficit spending, and low interest rates
> while consumers fuel the whole process by buying shiploads of foreign
> products without regard to the consequences of it. It's an inflate or
> die policy. But the FED is caught now, after many years of unwise
> policy, between a rock and a hard place. Should they cut rates and
> abandon the dollar in order to stimulate the economy? or should they
> raise rates to defend the dollar (and the confidence of debt holders
> that they will be paid back with something other than worthless paper)?
> What are your thoughts on this?
There is ample room to raise rates which of done gradually (which seems to
be the current strategy, but I mean over 10+ year span) will ease the
slowdown. I think its wise to recall that the confidence of debt holders is
also accomplished by a growing GDP, even if backed by large debt. I believe
a control on federal spending will need to be enacted at some point or much
of what you see will be inevitable; however where we disagree wholeheartedly
is on when the economic fire alarm needs to be pulled. You seem to be
desiring to pull it today, when I am saying that some proper attention and
"actual" fiscal reposbliitbuty (not the farce that is purported by our
politicinans in all parties) will keep the nation growing economy over
time - with time being on our side relative to our debt.
> The slow-motion train wreck continues to gain momentum. I may be an
> early pessimist, but at some point everyone's a pessimist. And at some
> point people will finally realize that the American Empire is
> declining. I suspect that the day of reckoning will come when the
> Dollar loses its status as the world's reserve currency
I clipped some as this is getting intensely long and I fear I will
eventually not have the time (or desire to spend the time) to continue a
discussion that requires 30 minutes of typing to continue (hopefully you
understand). Anyhow, I wanted to keep the last few lines as perhaps this
best explains our difference of opinion. You may be an early pessimist, or
as I said earlier, you might want to push the economic fire alarm now. I
agree on a lot of what you see that is negative, however I disagree that it
is as big an emergency and that with proper care things will be guided out
of trouble.
>
> To say that (some people say) the sky is falling is not a good choice
> of words because it promotes an image of a children's story. Other
> children's stories that are called to mind include the three little
> pigs (and the brick house) and maybe even the one about the finger that
> plugged the dike. But, really, there are patterns and themes in
> history that play out over and over again. In 1928 they proclaimed a
> new age, a panic-proof age, with blue skies all around. But there are
> no new ages when it comes to human nature. Human nature will never be
> repealed, controlled, and crises of confidence eliminated. At some
> point, the "bubbles" you hear about in housing, credit, stocks and
> other investments, currencies (the carry trade comes to mind) will
> deflate. It's a characteristic in times of panic for the slide into
> the valley of despair to be directly proportional to the heights of the
> mountain of speculation and debt. It's happened with great regularity,
> and it will happen again at some point.
But as soon as you imply? I disagree. We have a lot of triggers within our
securities alone to eliminate a lot of the dangers that have occurred form
the past. We learn form the past. Are we bullet proof? hardly, there will
be ups and downs and its plausible to have the economy run right into the
ground. Are the signs we are seeing now an indication this is near? No : )
>
> What future generations will experience are the consequences of free
> trade on the world's biggest and most prosperous economy that
> dissipated it's capital and wealth creation in a free-trade feeding
> frenzy. Other's boats will rise, but future generations will not be
> happy with the level to which our boat has sunk.
...or, future generations will experience the consequence of a free trade on
the world's biggest and most prosperous economy that was partially built up
by military might as oppose to market superiority. As bad as I feel having
to admit this, I do believe that a part of our economy's strength is the
result of military action that is unparallel to free market trade. How much
of it is the question.
>> I do not believe that anyone is better than anyone
>> else for merely being born in a certain sector of the world, so naturally
>> as
>> the rest of the world takes to our superior system the playing field will
>> level worldwide. If this is perceived as the death of America then so be
>> it, but could anything be more just worldwide...to have everyone with the
>> same basic level of economic opportunity? I am not so sure this is a
>> world
>> I would find overly concerning as many war might not exist within such a
>> world. This is a discussion for another thread perhaps.
>
> What you are saying is a fantasy. Democracy is just. Capitalism is
> not. If you try to level the playing field with capitalism, then you
> will be very disappointed. Capitalism thrives on haves and have-nots
> and on investment by those who can exploiting the factors of
> production. That goes for countries as well as people. We are not
> faring well in this regard.
I am not sure what I said is in total disagreement with what you just stated
other than your case of exploitation. In a true free market economic where
laws are upheld exploitation of production is a mere cause for less inclined
as oppose to an actuality. Find me someone who has a gun held to their head
to work and you have a case for exploitation.
>> You are forgetting however that this debt is being held at very low
>> rates,
>> rates that if you include both the growth of our economy and inflation
>> are
>> actually negative. Time is our friend in this regard.
>
> Time is not our friend in this regard. Do you think that it goes
> unnoticed where foreigners hold our dollars in the form of treasuries
> that negative returns prevail?
Of course not, but compared to Chinese investments offering 2% returns it
goes noticed and accepted.
>
> Just as capital compounds over time, so does debt. If we took the
> returned capital and invested it in infrastructure or established
> wealth creation activities with it, then you can talk about low rates.
> But the dollars that are being returned (and there are so many of them)
> have treasuries issued for them and the proceeds are deposited in the
> general fund. The Administration and Congress see these as revenue,
> not as debt. So they spend the capital for wars, social programs,
> pensions, etc., and it winds up as non-productive deficit spending to
> the tune of almost 10 trillion dollars accumulated debt, all of which
> needs to be rolled over periodically and constitutes a huge interest
> expense. Your silver cloud has a dark lining.
>
Hmmm, on this we agree wholeheartedly. I have stated from the beginning
that government spending is the number one economic issue.
>> Again, your glass is half empty. Throughout every generation since the
>> existence of federal debt, people have prospered.
>
> Let me put it this way. You work hard all your life and build a
> personal empire for yourself. Then you find that your expenses are
> higher than your income. So you go to the bank and repeatedly borrow
> more and more over a long period of time until you owe so much that you
> will never pay it off. But you have had repeated and increasing
> infusions of cash so you can maintain your lifestyle and "the illusion"
> of prosperity, at least until something happens that causes the bank to
> refuse to loan you more. That's where the US is now. Living a
There is a hole in your analogy, and that is that the US economy does not
retire, and not only continually brings in tax revenue and will for the life
of it (unless major change of philosophy takes hold - see Austrian school of
thought), and while expenses are larger than incomes, the problem can be
corrected by controlling expenses. Do you agree or disagree that if there
was a cap on federal expenditures that caused for a surplus in at least the
majority of the time, that our debt would be controllable and far less a
concern? Currently the debt is less than 5 times federal revenues...we
support this debt and interest with strong tax revenues and could reduce the
debt with some control on federal spending. This was the very point I made
with my first post to this group - that the "sky is not falling" meaning
that things are not great with regard to how the economy is managed...but
some good management will quickly turns things around.
>> >> Marcello wrote:
>> perhaps
>> (only a guess) sheltered by a perception that you are a realist. In all
>> your analization of all the data, I must know - when you consider how
>> quickly the debt could be paid down with a mere 10% reduction in federal
>> spending combined with a cap of spending growth tied to that of the GDP,
>> do
>> you really think the concern should be on the US economy as a whole of
>> the
>> political process of out of control spending by both major parties?
>
> Where do those figures come from? No debt can be paid down until the
> deficits are licked. Do you see the federal government trimming the
> budget by half a billion dollars (or higher, which some people
> believe), _then_ taking 10% of true revenues to apply to the debt? The
> day those measures were announced, not implemented but merely
> announced, we'd have the beginning of a huge depression.
First, the figures were for use an as example and admittedly are not from
any source. But let me restate what I implied. As you hopefully are aware
by now I see the large federal expenses as our biggest economic issue and
threat to our long-term economic health. A 10% reduction, or any major
reduction that permits a surplus for a long period of time represents a
reduction in debt. As to how quickly - well, we currently have federal
expenditures in the arena of $3 trillion - 10% representing $300 billion.
30 years x $300B (a $300 year surplus for 30 years) = $9 trillion. I would
say that 30 years is about a generation, and for the basis of example then a
10% reduction in federal spending combined with a cap tied to GDP growth
(meaning the surplus stays in tact) results of paying off the debt (yes,
this discounts P&I calculations, but it also excludes tax policies and a
number of other factors that make this sample far from a straight line
reduction, but the point is clear).
Now, is that realistic? Hardly. Its not realistic at all to consider that
we could have a 10% reduction in a single year. But, $300B today that
represents 10% will in all likelihood represent 1% or even smaller 20 years
from now (or whenever you predict the GDP to be twice its current value)
meaning that as time progresses, that a $300B surplus is not only manageable
but totally realistic. I don't need to spend considerable time explaining
debt reduction as I am sure you are well qualified to understand what I am
getting at, but when you consider that some basic smart fiscal policy over
(implemented slowly to avert massive economic downturns) its easy to see
that our debt is manageable. Even if we did not pay it down at all and only
maintained it, 20 or 30 years from now, the size of the debt relative to out
GDP will massively decreases - which is why time is on our side.
All of this is flushed down the toiled when spending is left unchecked.
>
>> >> Marcello wrote:
>> Additionally, why do those who jump to the size of the national debt
>> never
>> take into consideration the stored wealth of the US in its holdings
>> across
>> the country. A perfect example is the land covered by the military base
>> in
>> coastal Southern California (Camp Pendleton). This land, if sold in to
>> the
>> private sector, is estimated to have value in excess of $900 billion. I
>> am
>> not suggesting a fire sale, but if one single asset among thousands of
>> freely owned assets accounts for almost 10% of the current debt, how can
>> anyone sincerely be concerned about the meditate (next 150 years) future
>> of
>> this country? If there should be any concern, its should be on that
>> which
>> politicians push on us all.
>
> So you're saying we should accumulate as much debt as we want because
> we have Camp Pendleton and maybe Yosemite to sell? To China, I
Not at all, I am saying that the US is far richer than its ability to merely
tax its people...so rich in fact that the debt pail in comparison. And for
the record, I am not oppose to the US selling Pendleton and moving its
activities to cheap land in the desert - it would seem we are going to be in
the desert for the next long while fighting wars anyway.
> suppose? Even if that made any sense, the revenues would go into the
> general fund and would not likely to be used to reduce debt. And you
> should remember that any surplus federal properties go through a
> process whereby other governmental entities in a well-established
> pecking order can lay claim to them or to parts of them.
Yes I agree, its not realistic currently as changes to processes would be
required. That hardly eliminates a portion of this plan from being
reasonable at some point.
>
> I don't think we're on the same wavelength at all. Sure, I'm a
> pessimist, but for good reason. History is on my side. Empires are
> born and they die. Bubbles blow up and deflate. Human nature will
> never be repealed, so the occasional panic is to be expected and the
> severity of it is directly proportional to the boom that precedes it.
> Since the beginning of the Industrial age and the proliferation of
> capitalism, there have been regular booms and busts. I happen to think
> that we're staring the latter in the face. Your mileage may vary.
I guess there is where optimism pays off then. I see boom and bust as
opportunity.
hard times
> "hard times" wrote:
> > Many people believe the government when the word comes down that
> > inflation is low and under control, when it is really high and out of
> > control, mainly for those who are older or who haven't gained a firm
> > foothold in the system(s) and who never will. No matter how they got
> > there, even if it's by miscalculation, they're there, it's painful, and
> > we can't turn our backs on them.
> Marcello wrote:
> Fair enough, I agree here. I don't understand how anyone can just take the
> word coming form media and government without considering the extreme bias
> that is included. But I agree, people do. While its saddening, I feel no
> more sorry for those soak up this information as factual than I do for the
> auto buyer who buys a lemon due to lack of research. We all have access to
> the same facts more or less' what we do with them is our own responsibility.
Theoretically, each person is responsible for the charting of his/her
own course through life, making favorable decisions for themselves with
the right information and education. In reality, the vast majority of
people are ignorant of matters economic, so they avoid it. Throw in
the truly meager efforts of high schools and colleges to make economic
individuals out of students, the great bias in our economy to forego
savings in favor of spending on consumer goods, the high debt levels of
gov't, individuals and corporations, along with the myriad of
statistics that are fudged for by the gov't, and you're going to have a
very large group of functionally incompetent people as far as personal
finance is concerned. Add to this the people who make mistakes and
those who are taken advantage of and you're going to have quite a few
who fall through the cracks. This is not and should not be a laissez
faire situation. The only question is how many will be kept from
falling into the pit of helplessness and hopelessness by the safety
net.
> "hard times" wrote:
> > People as a whole are generally ignorant about investments and really
> > can't be blamed if they fall through the cracks. It's a growing
> Marcello wrote:
> They can't be blamed for their own ignorance? I disagree. There is enough
> information in publicly funded libraries to more than equip anyone with
> enough information to at least permit them to invest intelligently.
> It seems we have a vast difference in opinion in individual responsibility.
Please explain what you think the safety net is. Are there some
particular programs you would do away with? And you seem to equate it
with charity, is that right?
> "hard times" wrote:
> > You
> > can't wish that these people suffer due to their ignorance when
> > ignorance is planned (starting in the schools) in this society like
> > planned obsolescence.
Marcello wrote:
> Of course I do not wish it, but I also do not feel it is my responsibility
> to pay for someone else's mistakes or lack of preparedness. That is the
> basis of personal responsibility.
Yes it is, for those who who perform due diligence, who can be
reasonably expected to take responsibility for their economic actions,
have been trained to make those decisions, and who do not have a bad
break along life's perilous road. But the fact is people are not as
prepared as you'd like. If they suffer because of it, should they get
a helping hand or not?
> >> Marcello wrote:
> >> But MI must know, who do you think you are be telling me how I should
> >> distribute my charity???
> "hard times" wrote:
> > It's out of your hands and mine. The present policy is to bail out
> > corporations and financial institution while leaving people to twist in
> > the wind. But Congress may have another idea when times worsen (not
> > that it will do any good except that it might alleviate some
> > suffering). I'm sure we'll both be watching with interest (no pun
> > intended).
> >> Marcello wrote:
> Nice pun : ) This is my point. I do not agree that government should be
> involved in my charity at all. I choose to give to charities of which I
> believe in their mission and see their results. Government gives us no
> choice by taking our money and then sloppily continues to use it for policy
> that has continuality failed.
I don't understand how you can think this? Sure, there are people who
receive checks from the gov't who don't deserve them, but we get back
to functional levels. There's always going to be fraud. There's fraud
in everything. But we don't say that we should get rid of welfare
because of fraud. We say that there is a greater good involved here
and then accept the fraud... dealing with it when it appears. I happen
to feel the same way about many things. I don't believe that the
government should hunt illegals (although I think we have a right to
build a fence to keep them out). Illegals should be dealt with as they
are discovered in the normal course of events, not hunted. Wars on
social phenomena usually fail because of something I mentioned
before... there are no long term political or social solutions to
economic problems, but there are long term economic solutions to social
and political problems.
So, if you want to be charitable, then you should find one that meets
your criteria and give, give, give. But the safety net will always be
there and we're all going to contribute, while our political
representatives vote our preferences. I will have another opinion on
this when each citizen is presented with a form that allows him/her to
make budget choices when taxes are paid. Otherwise I'm happy with the
safety net, and unhappy that it includes corporations in industries
like oil and corporate farming.
> >> Marcello wrote:
> Its possible to believe in welfare but
> totally disagree with government sponsored welfare, something that I believe
> most people who look down on those (like me) who completely oppose having
> tax dollars used for welfare. Does this mean I want to help any less just
> because I believe it can and is done much more effectively without
> government intervention?...Yet this view is often considered unsympathetic!
In the small town I lived in, everyone knew who was not making it and
they were dealt with individually. In the town meetings where
everything the town did was voted on, someone would bring up Mrs.
So-and-so who has not been doing well since her husband died. People
would step forward and volunteer to make sure she was eating right, had
a roof over her head, and her lawn got mowed. Then a vote would be
taken and a certain amount of money would be set aside to make sure
that these things were funded. But the town meeting controlled roads,
the school, paid the part time sheriff, and so on. But these things
are not possible today because our agrarian economy, extended families,
and values have been replaced by something else less conducive to such
goings on.
We rarely hear the success stories of modern-day programs. But there
are plenty of people in this country who grew up in welfare situations
who benefited greatly from it. If all you see is abuse, then you
aren't looking in the right places. How about unemployment insurance?
The funding of research projects and programs with far horizons, like
the Moon program (welfare for engineers)? wildlife or cancer research?
Welfare does not include just an inner city mom with six children
(because we care about the children, we support the mom). It's also
about helping people with illnesses (like someone who broke his neck in
an accident). And it's about helping people who have lost jobs, and
corporate farms who get paid to _not_ plant stuff. I can't justify all
of it, like the corporate welfare, but quite frankly I would feel
better about having more social programs (for instance, a national
healthcare system alongside of the private system) than fewer of them,
certainly when the alternative seems to be to spend hundreds of
billions on wars and war preparations.
> "hard times" wrote:
> > ...a very big lie about inflation can
> > be told and sold year after year, when, for the vast majority of people
> > in this country who are in a group with shrinking discretionary income,
> > inflation is closer to 10% than the claimed 3% or whatever lie is being
> > promoted this month.
> >> Marcello wrote:
> Let's assume that 10% is accurate, and people like you and I are obviously
> aware of the trend. So what? Only people who put invest their fortunes
> with research based on mere government information are hurt. I doubt you
> and I hare the only one's that have looked at the facts and realized
> this...I have invested on this basis my whole life, just as anyone else
> could have. Where is the problem?
The problem is most people are incompetent in these matters and can't
be blamed for avoidance because of the way they were brought up and
educated. Whose fault is that? It's the fault of those who would
build more prisons instead of schools to incarcerate 13-y.o. boys who
grab butts/boobs of their classmates.
hxxp://www.oregonlive.com/oregonian/
> "hard times" wrote:
> > So, some people do well in inflationary times. Most public employees
> > are doing well, as are pensioners (mostly ex-public employees) who have
> > COLAs. But many pension systems are Ponzi schemes, including social
> > security, so hard times will cause problems because tax revenues
> >> Marcello wrote:
> Relying on the schemes is an awful retirement plan, always has been. Still,
> people do, and they pay in inflationary times. That's their decision.
I think you're assuming too much about people. You're expecting too
much.
> "hard times" wrote:
> > slacken when times get bad. Most people have managed their affairs as
> > they were taught (little) in good faith, relying on the system for
> > stability and continued prosperity. Will you be happy that you planned
> > for inflation when people about you are suffering? Or will you look
>
> >> Marcello wrote:
> Again, why is it assumed that I take pleasure in the misery of others? That
> is an awful leap from me suggesting I have no responsibility in their
> misplanning. There is a big difference between taking pleasure in one's
> misery versus not having any responsibility. If I see someone hit by a car
> who is rushed of by ambulance to the hospital, do I have any responsibility
> to pay for their ambulance and hospital bills? Of course, not, but does
> that mean I am happy they got hit? That would be a near absurd statement,
> yet the leap of logic is the same.
Okay, so, what... you just don't care, or you want them to die in the
waiting room? The treatment of all is a policy I hope will never be
abandoned. And I don't mind paying more for my care to subsidize those
who can't pay. I grew up in a small town where the doctor treated
everyone and people who could pay knew that they were helping to pay
for the ones who couldn't pay. The present system reflects that
principle. With the exception that hospitals charge a lot more to
people who can't pay than they do when billing a health insurer, and I
think that's wrong. If you don't have an insurer cutting your deal,
you get the worst deal in terms of costs. When these are billed,
collected or written off, or eventually get reimbursed through a gov't
disability payment, that's where the crime is committed, not when
treatment without hope of repayment by some poor injured person is
extended.
> "hard times" wrote:
> > the other way like most people do when they step over or around a
> > homeless drunk on the sidewalk who's sleeping off last night's bottle
> > of wine.
> >> Marcello wrote:
> Blah. Its this saddening line of thinking that hurts an intelligent
> conversation.
Au contraire. Most people who are "making it" not only don't want to
see or hear about those who aren't, but they try as hard as they can to
avoid them (like the drunk on a sidewalk, or the "homeless and hungry"
guy on the freeway exit).
> >> Marcello wrote:
> >> I am talking about a wide spread of investment, not just securities.
> >> There
> >> are plenty of good books available on having a portfolio that will hedge
> >> inflation.
> "hard times" wrote:
> > Of course, you know that 50% of the population is functionally
> > illiterate, right? And many of the rest roll their eyeballs back in
> >> Marcello wrote:
> Which population are you referring to.
The population of the United States of America.
> >> Marcello wrote:
> US illiteracy is well into the high 90s last I saw.
There are who are really literate and those who can read and write well
enough to avoid having to make an "X" instead of writing their names,
and only to reading the larger type in advertisements, not to reading a
contract or, even worse, to attaching any meaning to materials they
read about investments or economics. The marginally literate do better
working in a business than investing in business.
> >> Marcello wrote:
> If you
> want to discuss those nations with rates below 50% and their policies, that
> is a totally different story and discussion. I believe you are veering well
> of course bring up this stat that does not apply...and might not be
> accurate. If by functionally illiterate you mean that they do not read and
> write well enough to hold a job, well in the US again you would be well
> off - as the mere basis that 95% of the working population is employed
> provides evidence of the opposite.
Maybe you live in a parallel universe? One where people read the words
on a package at the grocery store rather than merely looking at the
picture of the finished product and dreaming how they think it tastes?
If I have given you the wrong impression, it could be because I lump in
the marginally illiterate with the functionally illiterate and call
them all functionally illiterate, which is true particularly as it
concerns investing and matters economic.
> "hard times" wrote:
> > It would be an interesting discussion, but my thrust in relation to
> > good vs. hard times has to do with wealth creation, and we have
> > dissipated our strengths in terms of taking something out of the ground
> > (crops or minerals, oil) or adding value in a manufacturing process.
> > We are increasingly unable to sustain our capital cycle except by large
> > measures of debt accumulation, deficit spending, and low interest rates
> > while consumers fuel the whole process by buying shiploads of foreign
> > products without regard to the consequences of it. It's an inflate or
> > die policy. But the FED is caught now, after many years of unwise
> > policy, between a rock and a hard place. Should they cut rates and
> > abandon the dollar in order to stimulate the economy? or should they
> > raise rates to defend the dollar (and the confidence of debt holders
> > that they will be paid back with something other than worthless paper)?
> > What are your thoughts on this?
> >> Marcello wrote:
> There is ample room to raise rates which of done gradually (which seems to
> be the current strategy, but I mean over 10+ year span) will ease the
> slowdown.
Okay, now I know that you live in a parallel universe. In a high debt
environment, higher rates will precipitate a credit crunch (as they are
now) and a recession. Higher rates slow down the economy, lower rates
stimulate.
> >> Marcello wrote:
> I think its wise to recall that the confidence of debt holders is
> also accomplished by a growing GDP, even if backed by large debt.
Notice that the current problems involving speculation and the
unwinding of the paper economy come at a time when the economy is
touted as being strong.
> >> Marcello wrote:
> I believe
> a control on federal spending will need to be enacted at some point or much
> of what you see will be inevitable;
If government spending is reduced, that's deflationary and a recession
will follow. The economy is hooked on government spending.
> >> Marcello wrote:
> however where we disagree wholeheartedly
> is on when the economic fire alarm needs to be pulled. You seem to be
> desiring to pull it today, when I am saying that some proper attention and
> "actual" fiscal reposbliitbuty (not the farce that is purported by our
> politicinans in all parties) will keep the nation growing economy over
> time - with time being on our side relative to our debt.
The economic fire alarm isn't mine to pull. When it gets pulled, it
will be pulled by a large number of people and it will precipitate a
crisis in confidence and panic (human nature, again). However, I don't
want to see the economic fire alarm pulled even though I think it's
inevitable that it will be done, and a lot of suffering is ahead of us
(due to debts, deficits, free trade, speculation). My talking about it
is for informational purposes and it constitutes my view of the
situation, mostly involving end-of-empire behavior on the part of the
US (read recent comments by David Walker, comptroller general of the
US). It's not a popular topic.
> "hard times" wrote:
> > The slow-motion train wreck continues to gain momentum. I may be an
> > early pessimist, but at some point everyone's a pessimist. And at some
> > point people will finally realize that the American Empire is
> > declining. I suspect that the day of reckoning will come when the
> > Dollar loses its status as the world's reserve currency
> >> Marcello wrote:
> I clipped some as this is getting intensely long and I fear I will
> eventually not have the time (or desire to spend the time) to continue a
> discussion that requires 30 minutes of typing to continue (hopefully you
> understand).
Okay. Clip away. I do it, too.
> >> Marcello wrote:
> Anyhow, I wanted to keep the last few lines as perhaps this
> best explains our difference of opinion. You may be an early pessimist, or
> as I said earlier, you might want to push the economic fire alarm now. I
> agree on a lot of what you see that is negative, however I disagree that it
> is as big an emergency and that with proper care things will be guided out
> of trouble.
I'm a pessimist. The things I'm saying people don't want to hear and
will automatically tune out. When hard times arrive, people will ask
themselves "what happened?" And it's a hallmark of any panic or
contraction or puncturing of a bubble that people think it can't happen
because this is a "new age" with market control mechanisms, everything
is under control, under control, under control... (to quote a
well-known joke).
> "hard times" wrote:
> > To say that (some people say) the sky is falling is not a good choice
> > of words because it promotes an image of a children's story. Other
> > children's stories that are called to mind include the three little
> > pigs (and the brick house) and maybe even the one about the finger that
> > plugged the dike. But, really, there are patterns and themes in
> > history that play out over and over again. In 1928 they proclaimed a
> > new age, a panic-proof age, with blue skies all around. But there are
> > no new ages when it comes to human nature. Human nature will never be
> > repealed, controlled, and crises of confidence eliminated. At some
> > point, the "bubbles" you hear about in housing, credit, stocks and
> > other investments, currencies (the carry trade comes to mind) will
> > deflate. It's a characteristic in times of panic for the slide into
> > the valley of despair to be directly proportional to the heights of the
> > mountain of speculation and debt. It's happened with great regularity,
> > and it will happen again at some point.
> >> Marcello wrote:
> But as soon as you imply? I disagree. We have a lot of triggers within our
> securities alone to eliminate a lot of the dangers that have occurred form
> the past. We learn form the past. Are we bullet proof? hardly, there will
> be ups and downs and its plausible to have the economy run right into the
> ground. Are the signs we are seeing now an indication this is near? No : )
It may not happen, but there certainly are signs. And forget about any
beneficial manipulation. When human nature takes over, nothing can or
will prevent a panic. The economy is at a crucial point where the FED
can't raise or lower rates for the benefits of either because the
problems of either are too great to risk. So, manipulation will at
some point force a move that has great risks of pushing the economy
into inflation or deflation. I personally believe that the FED will
abandon the dollar at some point and ease if the credit crunch deepens.
But the FED isn't in control anymore since they only control short
rates and that control is severely constrained.
> "hard times" wrote:
> > What future generations will experience are the consequences of free
> > trade on the world's biggest and most prosperous economy that
> > dissipated it's capital and wealth creation in a free-trade feeding
> > frenzy. Other's boats will rise, but future generations will not be
> > happy with the level to which our boat has sunk.
> >> Marcello wrote:
> ...or, future generations will experience the consequence of a free trade on
> the world's biggest and most prosperous economy that was partially built up
> by military might as oppose to market superiority. As bad as I feel having
> to admit this, I do believe that a part of our economy's strength is the
> result of military action that is unparallel to free market trade. How much
> of it is the question.
The world's single biggest trade is arms. Any reduction of gov't
spending will be felt by defense contractors (which is one of the
pressures for continued deficit spending) because there isn't much now
that can be cut anywhere else. Free trade is a loser. The US economy
was built on trade restrictions, which protected jobs and markets.
Removing those restrictions will do to us what it did to Britain and
the Romans.
> >> Marcello wrote:
> >> I do not believe that anyone is better than anyone
> >> else for merely being born in a certain sector of the world, so naturally
> >> as
> >> the rest of the world takes to our superior system the playing field will
> >> level worldwide. If this is perceived as the death of America then so be
> >> it, but could anything be more just worldwide...to have everyone with the
> >> same basic level of economic opportunity? I am not so sure this is a
> >> world
> >> I would find overly concerning as many war might not exist within such a
> >> world. This is a discussion for another thread perhaps.
> "hard times" wrote:
> > What you are saying is a fantasy. Democracy is just. Capitalism is
> > not. If you try to level the playing field with capitalism, then you
> > will be very disappointed. Capitalism thrives on haves and have-nots
> > and on investment by those who can exploiting the factors of
> > production. That goes for countries as well as people. We are not
> > faring well in this regard.
> >> Marcello wrote:
> I am not sure what I said is in total disagreement with what you just stated
> other than your case of exploitation. In a true free market economic where
> laws are upheld exploitation of production is a mere cause for less inclined
> as oppose to an actuality. Find me someone who has a gun held to their head
> to work and you have a case for exploitation.
The exploitation of the factors of production does not mean
exploitation in the way of holding a gun to someone's head or causing
harm. To exploit someone like forcing them to work under bad
conditions and for low pay is not what is meant by the exploitation of
a factor of production. Exploitation of factors of production (land,
labor, capital) produces new wealth and gainfully employs workers who
are not exploited in the bad sense of the word.
> >> Marcello wrote:
> >> You are forgetting however that this debt is being held at very low
> >> rates,
> >> rates that if you include both the growth of our economy and inflation
> >> are
> >> actually negative. Time is our friend in this regard.
> "hard times" wrote:
> > Time is not our friend in this regard. Do you think that it goes
> > unnoticed where foreigners hold our dollars in the form of treasuries
> > that negative returns prevail?
> Of course not, but compared to Chinese investments offering 2% returns it
> goes noticed and accepted.
The Chinese repatriate our dollars and hold treasuries because they
want to maintain free trade which benefits them greatly. They are
actually losing money in real terms on their dollar reserves because of
inflation, but I'm sure they see it as a cost of our continued
large-scale purchases of Chinese goods. And they know that they bear
the risk of default. That's why they can't, unless there is a trade
war or a worse kind of war, follow through on their recent threat to
dump treasuries.
> "hard times" wrote:
> > Just as capital compounds over time, so does debt. If we took the
> > returned capital and invested it in infrastructure or established
> > wealth creation activities with it, then you can talk about low rates.
> > But the dollars that are being returned (and there are so many of them)
> > have treasuries issued for them and the proceeds are deposited in the
> > general fund. The Administration and Congress see these as revenue,
> > not as debt. So they spend the capital for wars, social programs,
> > pensions, etc., and it winds up as non-productive deficit spending to
> > the tune of almost 10 trillion dollars accumulated debt, all of which
> > needs to be rolled over periodically and constitutes a huge interest
> > expense.
> >> Marcello wrote:
> Hmmm, on this we agree wholeheartedly. I have stated from the beginning
> that government spending is the number one economic issue.
And one that's practically impossible to deal with without
precipitating recession. Instead, the inflation it and other factors
cause means the average person in the US will take a cut in his/her
standard of living (if that's the mildest consequence of it). The
"average" American is middle class, and a cut in standards of living
necessarily falls hardest on them, pushing many into the lower class.
And many who avoid the push into the lower class (say from lower middle
class to upper lower class) do so with debt. As the debt house of
cards comes tumbling down, the majority of Americans will be
marginalized, meaning the realization that they have changed economic
classes, the consumer economy will suffer, all the while the FED will
cut interest rates trying to avoid deflation, and THEN the Chinese will
"diversify" their reserves.
> >> Marcello wrote: >> Again, your glass is half empty. Throughout every generation since the
> >> existence of federal debt, people have prospered.
> "hard times" wrote:
> > Let me put it this way. You work hard all your life and build a
> > personal empire for yourself. Then you find that your expenses are
> > higher than your income. So you go to the bank and repeatedly borrow
> > more and more over a long period of time until you owe so much that you
> > will never pay it off. But you have had repeated and increasing
> > infusions of cash so you can maintain your lifestyle and "the illusion"
> > of prosperity, at least until something happens that causes the bank to
> > refuse to loan you more. That's where the US is now. Living a
> >> Marcello wrote:
> There is a hole in your analogy, and that is that the US economy does not
> retire,
At some point every empire goes into a phase of declining fortunes,
meaning people have declining fortunes (or mobility).
> >> Marcello wrote:
> and not only continually brings in tax revenue and will for the life
> of it (unless major change of philosophy takes hold - see Austrian school of
> thought), and while expenses are larger than incomes, the problem can be
> corrected by controlling expenses. Do you agree or disagree that if there
> was a cap on federal expenditures that caused for a surplus in at least the
> majority of the time, that our debt would be controllable and far less a
> concern?
It would be true if we had begun before half a trillion dollars of
deficit spending each year became the norm. Not a cap, but simple
restraint would be nice.
> >> >> Marcello wrote:
> Currently the debt is less than 5 times federal revenues...we
> support this debt and interest with strong tax revenues and could reduce the
> debt with some control on federal spending. This was the very point I made
> with my first post to this group - that the "sky is not falling" meaning
> that things are not great with regard to how the economy is managed...but
> some good management will quickly turns things around.
In order to make a dent in the trillions of dollars in debt we already
have, the budget would have to be balanced to the tune of half a
trillion dollars a year, and then there is still the matter of a
quarter of a trillion dollars interest expense each year on the debt
that still exists. This country could not take a 3/4 trillion dollar
hit in the budget, much less whatever contribution needs to be made to
reduce principal.
> >> >> Marcello wrote:
> >> perhaps
> >> (only a guess) sheltered by a perception that you are a realist. In all
> >> your analization of all the data, I must know - when you consider how
> >> quickly the debt could be paid down with a mere 10% reduction in federal
> >> spending combined with a cap of spending growth tied to that of the GDP,
> >> do
> >> you really think the concern should be on the US economy as a whole of
> >> the
> >> political process of out of control spending by both major parties?
> "hard times" wrote:
> > Where do those figures come from? No debt can be paid down until the
> > deficits are licked. Do you see the federal government trimming the
> > budget by half a billion dollars (or higher, which some people
> > believe), _then_ taking 10% of true revenues to apply to the debt? The
> > day those measures were announced, not implemented but merely
> > announced, we'd have the beginning of a huge depression.
The fly in the ointment, if what you say is possible, which I think it
isn't because of the decoupling of revenues going into the general fund
from the sources of it, like earmarking, and defense, and homeland
security, and the wars (drugs, pornography, Iraq, Afghanistan), and
low-level crime in general (which has a couple of million people in
prison), and natural disasters, of which there seem to be more and
more, and a host of other programs which cannot be cut like SS, and now
infrastructure (the true cost of upgrading will be a trillion dollars),
and a Mars landing program which means establishing a presence on the
Moon, and a missile defense program, not to mention entire carrier task
forces and subs and planes that are reaching ends of useful lives...
are you catching my drift? The ocean of cash spent on things is like
the ocean of fish, which once was thought unlimited, like trees, and
now we find that things previously thought inexhaustible are not so.
The leadership does not exist to deal with the budget, either party,
and Ron Paul would cause the biggest depression ever. Not only does
nobody who could be president in the present pack in each party have
the leadership to straighten out the budget, but Congress would go into
rebellion because it would be too painful for elected officials to vote
for bills (esp. a budget) that means less for their constituencies. If
you're hoping for fiscal restraint, then you're dreaming (and, possibly
contrary to what you believe about me, I _dream_ about it, too).
> >> >> Marcello wrote:
> >> Additionally, why do those who jump to the size of the national debt
> >> never
> >> take into consideration the stored wealth of the US in its holdings
> >> across
> >> the country. A perfect example is the land covered by the military base
> >> in
> >> coastal Southern California (Camp Pendleton). This land, if sold in to
> >> the
> >> private sector, is estimated to have value in excess of $900 billion. I
> >> am
> >> not suggesting a fire sale, but if one single asset among thousands of
> >> freely owned assets accounts for almost 10% of the current debt, how can
> >> anyone sincerely be concerned about the meditate (next 150 years) future
> >> of
> >> this country? If there should be any concern, its should be on that
> >> which
> >> politicians push on us all.
> "hard times" wrote:
> > So you're saying we should accumulate as much debt as we want because
> > we have Camp Pendleton and maybe Yosemite to sell? To China, I
> >> >> Marcello wrote:
> Not at all, I am saying that the US is far richer than its ability to merely
> tax its people...so rich in fact that the debt pail in comparison. And for
> the record, I am not oppose to the US selling Pendleton and moving its
> activities to cheap land in the desert - it would seem we are going to be in
> the desert for the next long while fighting wars anyway.
The richness you refer to is paper wealth and can never be realized.
Not only because no politician in his right mind would mortgage such
assets, but the American people would never stand for the acquisition
of parks and facilities like Yosemite and Pendleton by foreigners.
Will you include in your list of assets to be used as collateral or
sold the contents of the Smithsonian museums? Maybe the White house
and Congress, too?
> > suppose? Even if that made any sense, the revenues would go into the
> > general fund and would not likely to be used to reduce debt. And you
> > should remember that any surplus federal properties go through a
> > process whereby other governmental entities in a well-established
> > pecking order can lay claim to them or to parts of them.
>
> Yes I agree, its not realistic currently as changes to processes would be
> required. That hardly eliminates a portion of this plan from being
> reasonable at some point.
With all due respect, you should file this one away. The country will
devalue the currency and default on debt long before the assets you
mention are sold off to... what, maintain our standard of living?
> "hard times" wrote:
> > I don't think we're on the same wavelength at all. Sure, I'm a
> > pessimist, but for good reason. History is on my side. Empires are
> > born and they die. Bubbles blow up and deflate. Human nature will
> > never be repealed, so the occasional panic is to be expected and the
> > severity of it is directly proportional to the boom that precedes it.
> > Since the beginning of the Industrial age and the proliferation of
> > capitalism, there have been regular booms and busts. I happen to think
> > that we're staring the latter in the face. Your mileage may vary.
> >> >> Marcello wrote:
> I guess there is where optimism pays off then. I see boom and bust as
> opportunity.
Only within certain limits. We may have exceeded those limits now and
it's just a matter of time until a day of reckoning comes. Blood in
the streets (which, BTW, is an economic saying, not a reference to
revolution, which is a practical impossibility).
I'd say that our relative positions are: You - fairly much status quo
with faith in the future, more so if the budget is contained; Me - we
have exceeded the limits and a car is coming up behind us with lights
flashing. We await the consequences of... um, living beyond our means.
I would be the first to admit that we both may be wrong (for instance,
if we go totalitarian/dictatorship), but I lean more toward disaster
because I have been watching the slow train wreck for many years.
Marcello
I guess we will just have to disagree then. The source of any inequity
among ability to receive and/or absorb critical information to allow us all
to plan financially on an equal basis is a result of government run
programs. The problem is that you have a system run by politicians who
speak so eloquently about giving and taking care of others like which is all
too easy to do when you are dealing with only giving other people's money
away. Now add to that the limited accountability for how that money is
spent (evidenced by the flow of money into continuously failed programs) and
what you have in the end is a system set up theoretical principals with zero
accountability. Now you want to go and tell me that as a result of all this
I don't have the right to decide on my own if I should be charitable or not?
That is a rhetorical question, not meant to further the debate as I think
its clear where we both fall. What you seem to miss is a laiezzez faire
situation relies on a moral basis for protecting those in need not a
government dictated financial obligation. The fact that anyone would
believe otherwise is a basis for their own morals; much as in a person who
trusts no one is generally not a trustworthy person themselves. I am not
suggesting you are not a moral person and that you would look the other way
if given the option, but your lack of faith in charity (versus forced
charity via taxation) is disappointing.
I am going to leave as I think what has been stated is adequate for
understanding one's view from either side of the equation. Well, that and
the fact that this thread is just too enormously large to justify the time
required to continuously respond especially when you consider we may be
last two people reading anything in these groups.
All the best.
hard times
> >> "hard times" wrote:
> > Theoretically, each person is responsible for the charting of his/her
> > own course through life, making favorable decisions for themselves with
> > the right information and education. In reality, the vast majority of
> > people are ignorant of matters economic, so they avoid it. Throw in
> > the truly meager efforts of high schools and colleges to make economic
> > individuals out of students, the great bias in our economy to forego
> > savings in favor of spending on consumer goods, the high debt levels of
> > gov't, individuals and corporations, along with the myriad of
> > statistics that are fudged for by the gov't, and you're going to have a
> > very large group of functionally incompetent people as far as personal
> > finance is concerned. Add to this the people who make mistakes and
> > those who are taken advantage of and you're going to have quite a few
> > who fall through the cracks. This is not and should not be a laissez
> > faire situation. The only question is how many will be kept from
> > falling into the pit of helplessness and hopelessness by the safety
> > net.
> Marcello wrote:
> I guess we will just have to disagree then. The source of any inequity
> among ability to receive and/or absorb critical information to allow us all
> to plan financially on an equal basis is a result of government run
> programs.
There's inequity everywhere. Most people fall within an acceptable
envelope and do okay. If inequity is experienced at the front end (bad
school years, bad neighborhood, a disability, etc.) then we as
Americans pretty much agree that we will extend a helping hand. Nobody
looks at the success stories, at the poor kids from the projects whose
mothers made ends meet with welfare checks or rent subsidies and made
sure their kids attended school. And there are many more success
stories than you might think. You can talk to many Americans and hear
stories about climbing out of poverty courtesy of the safety net. Many
families survived the Great Depression because of safety net programs
like WPA and TVA. I don't have a big problem with the fact that there
is cheating and fraud because some of it gets rooted out and the rest
of it is worth bearing because of the flip-side benefits.
> The problem is that you have a system run by politicians who
> speak so eloquently about giving and taking care of others like which is all
> too easy to do when you are dealing with only giving other people's money
> away. Now add to that the limited accountability for how that money is
> spent (evidenced by the flow of money into continuously failed programs) and
> what you have in the end is a system set up theoretical principals with zero
> accountability.
Corruption and unaccountability affect me as much as the next guy. But
it isn't limited to government. It's everywhere. Again, there are
functional levels of lots of things, not just unemployment, and
corruption is one of them. But you don't thwart the desire of the
compassionate majority because of wrongdoing. It gets rooted out
eventually, and if some of it persists, it doesn't justify eliminating
social programs like welfare, unemployment, disability, and the like.
> Now you want to go and tell me that as a result of all this
> I don't have the right to decide on my own if I should be charitable or not?
Not when it comes to your local charities like UGN, Girl Scout cookies,
or food bank. But, when it comes to our collective responsibility to
citizens who aren't making it, you the right you have is to elect
politicians who pass the laws you want. I think you're in the minority
when you say that you oppose safety-net programs.
The solution, which I think I mentioned, is to let citizens have more
input concerning how much is spent and on what. Each voter (or
taxpayer at tax time) should receive a paper ballot with budget choices
on the back, where perhaps the top 100 budget items are categorized and
the voter writes in a percentage he thinks should be spent on what
(with the current budget percentage specified). It doesn't have to be
binding, just a suggestion from the electorate about priorities, and
the Congress or Administration that allocates otherwise at least owes
the country an explanation for the discrepancy. That way, folks who
want to spend more on defense and less on welfare, or vice versa, can
say so. I believe, hands down, that social programs will come out on
top. We might also be given an opportunity to say yea or nay on
matters like immigration reform, national health care, wars in distant
places, extracting resources from national parks, or rebuilding New
Orleans.
> That is a rhetorical question, not meant to further the debate as I think
> its clear where we both fall. What you seem to miss is a laiezzez faire
> situation relies on a moral basis for protecting those in need not a
> government dictated financial obligation. The fact that anyone would
> believe otherwise is a basis for their own morals; much as in a person who
> trusts no one is generally not a trustworthy person themselves. I am not
> suggesting you are not a moral person and that you would look the other way
> if given the option, but your lack of faith in charity (versus forced
> charity via taxation) is disappointing.
You _want_ a laissez faire system? It might work if we all lived on
farms and in little fishing villages, but it ain't going to work where
300 million people need to be served. And I say served because welfare
and other programs like unemployment, etc., and universal health care
to come, really serve us all whether we are the givers or the takers.
You can have welfare or warfare. That's basically what it boils down
to. Social programs do not meet everyone's needs and there is cheating
and corruption to be sure, but the level of peace in the streets in
most big cities is directly proportional to the dimensions of the
safety net.
I don't have a problem with private charity at all. Our food bank
meets an important need in the community. Our Women's shelter, which I
support, does a great job in emergency situations, helping women
through, yes, eventual qualification for social services, but also job
training, day care, housing, until a woman can become independent and
gain a little self esteem. Like disease, though, the best approach is
prevention. That's why I think we could eliminate the need for some
demand for social services and prevent a lot of crime by upgrading our
schools. Y'know what they say, you can spend a little now or a lot
more later.
> I am going to leave as I think what has been stated is adequate for
> understanding one's view from either side of the equation.
Oh, but we are just beginning. My gosh, think of the compromises that
forged a nation where colonists had so many differences (although it's
regrettable that slavery was part of the bargain to satisfy
southerners).
> Well, that and
> the fact that this thread is just too enormously large to justify the time
> required to continuously respond especially when you consider we may be
> last two people reading anything in these groups.
You have a point there, but perhaps if we continue to contribute to
this group, whether we agree or not, will stimulate other discussion
and revitalize things around here.
> All the best.
Backatcha!
P.S. (excerpt from my autobiography, a WIP):
I'm reminded of a friendly disagreement I had with someone once upon a
time during my barnstorming youth. After quitting a race crew, I
happened to find myself out of luck, out of money, and without a car,
in a small town in the hot, humid, tornado-y Heartland of America. A
guy I twisted a wrench with whose name is long forgotten suggested we
buy some beer after work and go cruising for chicks. So we did. At
one point he said hoo-wee, lookie there. To which I asked where (all I
could see were fat chicks) and he pointed to a couple of fat chicks
across the street. He did a u-ie and talked them into the car because
he knew them from high school where he was a heart throb. I won't
describe what transpired after that, or the fate of the better part of
a case of beer, but later on I asked the guy about his taste in wimmen
and he said I know you West Coast guys like them skinny surfer chicks,
but around here we prefer a meatier cow because we got farms to run and
a skinny chick lasts maybe five minutes doin' farm chores. Soon after,
another race team came through town and I talked the owner into letting
me cast my lot with them, so it was back to the world of racing and
skinny chicks for me. I always wondered what happened to the farm guy,
and he probably does me as well, maybe, since I'm vain enough to think
this song is about me. I reckon he wonders if I wake up every morning
next to a surfer-girl bag-of-bones. He's probably ploughing his way
through life with his fat wife, a farm hopefully with the mortgage paid
off, and a couple of fat daughters walking the streets of some small
town molesting unsuspecting beer-loving guys and trying to get them out
onto the farm to be corn fed and prolific, parents to more fat-chick
loving guys and fat chicks. What goes around comes around, so to
speak, and that guy tried to open a door for me. Oh, Mama Cass, what
were you doing in LA when all of the love and respect you needed was
right there in the Heartland? "Say nighty night, I love you."