One nice thing to know is, when we crash and burn, we'll take most of the world with us. Just look at those poor stock markets across the pond and in Asia.
we'd end up paying 5x's as much in education,welfare,medical and law enforcement. Also just because u charge them 5k doesn't mean they will pay the 5k and become legal.
Agreed..one professor's paper and one guy's rant against all things "yuppie" and middle class doesn't send me running for my guns or the hills. Interesting none the less.
Hey, I need the government to wipe my ass for me. Seriously, I shit like a fucking fire hose right now; it gets everywhere.
I browsed it, and from what I read it just seemed like a rant about current day America. With gems like: Thanks for the ramble, but what does this have to do with finance? Sure I get what he’s saying; the education system does a poor job preparing our children. In the grand scheme of things it doesn’t matter, there will always be the smart few who will control the ignorant masses, this isn’t anything new, it’s just becoming increasingly obvious as the ignorant masses grow larger and pass their “knowledge” to their stupid children. The education system isn’t entirely to blame, but it could use some fixing, as could many of the things done in the US these days. I can’t say I completely disagree with the article, but I find it has less to do with finance then it does him complaining about the state of current America, and well I agree, frankly as A Canadian, I Don’t really care. America has always had a superiority complex, its time you all face the repercussions of the lifestyle American have become accustomed to over the last 60 years. He really makes two claims in the article that stick out to me. And Now to me, it seems like he's contradicting himself here... to me a worthless currency means what use to be $1 is now worth pennies at best. This is not the situation he is referring to in the second quote. The second quote in my opinion is realistic. Anyone who has completely maxed themselves out with debt and completely disregarded savings altogether is in for a shock... and with good reason, they would be anywhere else in the world aswell. Markets go through cycles, and when things get bad these people will have nowhere to turn, they will have piles of debt and no money to ride out the hard times. I can’t say I pity those who in a regular basis spend largely more then they make simply because finance companies allow it. Be happy you actually live in a country that actually allows you to declare bankruptcy and start over, not everyone has that luxury. Again it comes down to the smart profiting from the ignorant. The first scenario I have an issue with. Again to me saying “near worthless” means pennies on the dollar. Currencies adjusted based on the strengths of an economy, its nature that a currency drops when the economy suffers. 6 years ago Canada’s dollar was worth nearly 50 cents to the US dollar, in fact I recall American’s use to have a good laugh at our expense…. It doesn’t mean the world as we all know it is ending. You mentioned “When the bill collectors come to collect” who exactly are these bill collectors? China? Canada?! Europe? The Middle East? We ALLLL have vested interests in each other. This isn’t the 1930 and the world doesn’t operate in the same fashion as it once did, we live in a global economy. China purposely continues to deflate its currency so that it will be attractive for America to continue to purchase from them. America’s are the largest consumers on the planet, and it’s in any country(that counts) best interest that they continue to be. America is filled with some the wealthiest people, and more importantly companies on earth. The owners of these companies are smart enough to diversify their investments across the globe, as long as someone is making money they are making money and as long as they are making money they will continue to buy, spend, employ and grow. There will be up’s and down’s, but I won’t be betting that proctor and gamble or GE is going out of business any time soon. The average Joe blow does need to be concerned about his current financial situation; things can’t continue to be peachy forever. But the complete collapse of the US dollar? I don’t think so. Try to imagine what would happen to the global economy if the rest of the world completely stopped buying and selling from and to America. Both you and the author seem a little hung up on the gold standard, He talks like everyone else in the world follows it and America is the crazy financial rebel. I’ve never formally studied the gold standard, so I’m no expert, but care to tell me which major economy power in the world uses it? As far as I know…. None. We allllll follow the Fiat system just like America does. What makes gold important anyways? It’s basically a very expensive piece of soft metal; we might as well have the oil standard or the cheese standard for that matter. It was used as currency in the past because we had no other real way to prevent fraud, Precious metals could be tested for authenticity, and paper at the time could not. Ultimately here’s what I took from the article: It appears everyone has an agenda; his was to scare you, and to lead you to believe that his magical website has all the answers. What he can rant for 2 pages about all these problems but you need to subscribe to get the answers? What is this scientology? If you’re really that concerned, why not get rid of all you’re America money? Get a forex account and purchase whatever currency you believe the future will operate on once America’s dollar is worthless. HURRY BEFORE ITS TO LATE!!!!!
PS I highly recomend reading a book called: The World Is Flat: A Brief History of the Twenty-First Century by Thomas L. Friedman. it speaks on topics of globalization and why other countries are quickly catching pass with america, and will surpass them in future if these trends continue.
the more I look at this thread and that article, the more I'm convinced that guy has a stick up his ass and just wants attention. I said proportionally, ie inflation. its a pretty common concept in economics, and one that all these sensationalist OMGBUSH asshats seem to forget. I'm not going to do the math, but if I had to pull something out of my ass, I'd say look at post-WWII numbers. edit: WHAMMY Why America's Debt Burden Is Declining Look at the graph about 1/3 of the way down. I think everyone can agree that council of economic advisors is a pretty neutral source. The economy is always great, then goes to shit, rinse and repeat.
But the factors like sociology, societal decline (including family units), pure idiocracy, and laziness, that affect the bottom line, the economy, is on the downward spiral and not on a cycle of up and down.....only down.
The Heritage article was not written by any sort of classical fiscal conservative. It has all the hallmarks of a "neocon" who doesn't care about fiscal responsibility. The article depends on the economy always going upward, as does any good bubble-induced reasoning. Of course a growing economy can absorb an increasing debt level, but that debt level will bite one on the ass when the economy doesn't do well. Just because we can get away with something for the moment, doesn't mean that we should! Right now the problem is, all this upward momentum has been fueled by reeling from one bubble to the next. This last bubble, in the housing market, has bitten really bad, so that most of the main banking institutions have written losses from unpaid personal debt of sub-prime mortgages that are in foreclosure, when the debt load of people, sustainable while the housing market was going up, came crashing down on them when the housing market slowed, which acted as an accelerator for the current downward spiral, which will in turn affect the Federal Debt Load ratio, which itself will act as an accelerator for any further market correction. Nonetheless, our debt is three times the amount of money we take in each year. The budget deficit is twice the amount of the interest payment. All deficits are paid for by borrowing, thus, basically we're paying off interest payments with new loan money, which means we aren't even paying the interest really, at all. People who poo-poo this, like the one's who poo-poo'd the critics of the dot com boom, and the ones who poo-poo'd the housing bubble, are succumbing to the "it's not hurting now, so there's nothing to worry about" philosophy that will ultimately take the US economy to a total train wreck in the future. Of course we're talking about business cycles, but when we have aggrevating factors like huge unpayable debt loads, these cycles start looking like a person bungee-jumping off the world's tallest bridge, and can have lows of Great Depression levels. The reason we have a Fed in the first place, is to keep this sort of stuff from happening in the first place, but Volker and Bern... whatzizname, the new guy, are both hands-off administrators, loath to use the full regulatory powers of the Fed, preferring just to tinker with the interest rate instead. For that reason, the cycles have been slowly increasing in height and depth.
The housing market also ate total shit during the great depression, way more so than today. I think that debt-ridden jerkoffs (like mista was describing) are definitely going to be getting a hell of a lot harder this time than any other in recent memory, but I don't think that the US as a whole is fucked by any stretch. The (semi?)intelligent voting population is pissed enough right now that whoever comes in next is going to do a decent job cleaning up to get us back on track (I think/hope we're in the depths of the cycle right now actually). We'll start prospering again, everyone gets happy, then it all goes to shit again. Wash, rinse, repeat. Its pretty much gone that way during the 1900s, I don't see it changing too soon. When china finally comes into its own, I think the US will be relegated to a lower-class but still important world power, sort of the way Britain is today. On the topic of the Fed, they need to get greenspan's ass back in there, or slowly start dissolving it and let the market correct itself. Thats the one big thing I'm on the fence about regarding ron paul. Just axing the fed would be a clusterfuck, but I think that if he did get in, that at best he would be able to reduce its role a lot, which would be wonderful. The way the market reacted to that first big cut was fucked up. They're lucky they got any cuts at all those fuckers. On the topic of economics, I heard a good quote today: Gold is for fillings, the finger on your left hand, and making other shiny things, not for commodities trading. My professor flipped out cause some kid was going off about gold trading. Goofus: I'm not seeing what you're talking about. A lot of the people poo-poo'ing this are the ones who believed that the dotcom boom was an overinflated piece of crap, or at least all the people I talk to in agreement with me (and the handful of articles I have seen). They're the same people deriding the web 2.0 boom
The Federal Government is one of these "debt ridden jerks", this time around. I don't particularly care one way or the other about gold standards, since there are pros and cons to either position, and if one can control inflation well enough with a responsible Fed policy, then it's not too bad. As to the rest of it, I'm not sure but what we're just talking past each other, and may actually be in agreement without knowing it. Theres nothing like economics, to get one lost in a maze of words that have different meanings to different folks!
Crazy article by an award winning Author. Great find, great read, thanks for posting. This article completely floored me. It doesn't reek of conspiracy theories or the like. It's brutally logical, and provides lots of context. US will be spending 1.1 trillion on military this year. That's Canada's entire GDP! I couldn't believe it when I read it. Whether or not this recent bear market is a precursor to a great collapse, just the market's cyclical nature, or nothing more than a correction seems irrelevant to me now. ____ edit: I showed this article to knowledgable fellow I work with and he had a good point: "There is one thing the article doesnt consider, the dollar is the worlds reserver currency, as long as we borrow with the right to repay in dollars we will never go backrupt because we can print whatever we need to pay it back or let the dollar fall to erase debt. You dont need to worry about bankrupcy until the world will only lend money in something other than dollars, then we are screwed. And the best part of the huge military spending is if we do print our way out of debt, or let the dollar fall big, no one will give anything other than lip service to getting screwed." I find it so hard to wrap my head around this subject. I never feel like I have enough general knowledge to view an article with any more context than said article gives me.
Actually that's wrong, because just printing more money will cause the sort of hyper inflation that will ruin the dollar's ability to BE a reserve currency. The reason for the Dollar's status is it's STABILIY, which is directly tied to the Fed and the Treasury not going crazy with the printing presses, but maintaining a tight control on infusions of new cash into the money supply. If we started printing like crazy, the Dollar's reserve status would evaporate, and it's value would plummet to nothing as folks desperately dumped Dollars in exchange for Euros. We will then be unable to buy raw materials we need, like Cobalt, or, increasingly, oil, which are unavailable in the US in sufficient quantity. Think about post WW-I Germany, where folks had to literally wheel in a wheelbarrow-full of cash to buy a loaf of bread. If the Dollar isn't a good reserve currency for the rest of the World, we won't be able to force that "Pay 'em back in dollars" clause down creditors throats. Letting the Dollar fall will not erase our debt (which will stay the same because it too is in dollars), but it will make Foreign (and domestic) creditors leery of financing any more debt, since Treasury Bonds would become nothing more than something to wipe one's self with in the outhouse. At this point, deficit spending would become impossible, because the borrowed money would not be available to do so. The Military "big stick" approach won't do much either. Right now we're overextended just by our presence in two third-world countries. There's no way we could strong-arm the rest of the world, some of which have Military power of their own that can take on ours at our current "all-volunteer" recruitment levels. If you don't mind being drafted, however... Just remember, military spending of just this sort was the downfall of the old USSR. EDIT: The reason we have a Federal Reserve Bank controlling the money supply in the first place, is because all Governments have been unable to resist "printing" their way out of their debts, and we wanted this power in the hands of folks who truly had money's best interest at heart! Bankers are a dollar's best friend!
He's just being a bit of a wise ass I'd say, or something else. In anycase, what you're saying makes sense to me, and I agree completely. Thanks for the thorough explaination.
It really is getting to the point where everyone is aware of the crisis and will start rioting about it eventually. Bush sending out this extra tax return bulljive is just to appease those who would actually believe that we're getting free money. I just hope our big revolution is peaceful and not something like out of 'Jericho'. I meant what I said in my first post, but you better bring something with you. That number will be valid for years so save it. I'm not paranoid about a lot of things but I trust my gut and it tells me that things are beginning to go very sour. I give it 10 years.
I think you guys are getting pretty tinfoil here. The soulution seems simple to me; cut back on the Iraq and Afghan bullshit, and get ready for when China takes a swing at us.
China isn't interested in taking a swing at anyone, except Tibet. They're too busy making money off us! They also own a significant portion of our debts, in their attempts to keep the Dollar strong against the Yuan
so what exactly do you guys think is happening here? do you honestly believe that this is the end of america as we know it? the US currency will no longer have any value in the near future? Please explain.
I hope the economy keeps getting worse! Interest rates keep dropping and I need to refinance soon, if this keeps up I might be able to get a fixed interest rate at the same rate that I got my ARM back in 2003! The only thing that is going to help us out of this recession is fiscal responsibility, personally and most definitely at the government level. Giving out puny little tax rebates only puts off the inevitable, we need to stop such hand outs and other such stop gaps (subsidies among others). Once we do that the only thing that will save us is innovation. I'm not a believer in global warming being caused purely by man but I do believe in the global warming movement, not because I'm worried about the environment but because if we take the required steps to prevent "global warming" we will be investing in a whole new "boom" (like the tech boom) which will in turn be creating more new jobs, new industries, and it will end up stimulating the economy because people with be purchasing new goods and services and investing in new environmentally friendly technology and related companies. Unfortunately none of this will ever happen because this freaken government has their head up their ass and lacks any foresight. Too much regulation when none is needed and no regulation when it is needed. For example: The big deal right now (for us nerds anyway) is the whole net neutrality debate. Instead of regulating the industry and preventing ISP's from throttling various types of traffic they are sitting back and letting the ISP's figure out ways to make more money. This may sound fine but then think about all this technology that is relying on fat pipes to consumers homes, downloadable/streaming movies and IPTV's is one segment that has been trying to take off but will ultimately fail if ISP's limit or start throttling bandwidth.
If our government continues on the same path they have been on for the last seven years then America's end as a super power will most definitely happen. History has shown that almost every super power collapsed from either over spending over extending of their armed forces or over indulgence and laziness (ie a lack of innovation). Right now America is not in favor with a lot of countries (meaning others view America in a negative light) and if we don't start changing our ways we will lose our power over other countries (especially with regards to our debt held by other countries). The big problem is that Americans know that this country is not moving in the right direction but it's our government that's not understanding this and not making decisions to change the direction. If this continues, I can almost guarantee you will start to see sixties like revolutions and protests.
Ah yessss.....the '60's/70's. It was a rough time. Riots were common to hear about on the evening news, police/natl. guard brutality, protests, rallys, civil disobedience run amok. those were the daze my friends. In the end.....not a damn thing changed at all. Here we are again. It's not the fact that USA will no longer be in a position to call all the shots, be reduced to a second rate military power and not as capable of forcing it's own destiny that worries the fuck out of me. It's the fact that this monster of a government is capable of being total idiots in an attempt to hang onto what's been squandered and lost. There's still alot of nukes pointed right at us and more will to use them against us every day. NRDC: Nuclear Data - Table of Global Nuclear Weapons Stockpiles, 1945-2002 Russia has read the writing on the wall and has begun to stand rigid against any and all threats from the west. It's not just rhetoric coming out of the former USSR, but a stern warning to leave them the fuck alone....well in advance. Again, it's not what other governments may do that worries me...it's our government and what it's capable of that gets me all tinfoil and shit.
