Joe Doaks and Scataphagos, you guys honestly blaming all this on obama? lol no your right lowering taxes and financing a war didn't have much to do with the deficits, yea your right. morons
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DEBT? What debt? How can the US ever theoretically have a debt problem?
- Thread starter MathAndLogic
- Start date
Quote from gtizzle101:
Joe Doaks and Scataphagos, you guys honestly blaming all this on obama? lol no your right lowering taxes and financing a war didn't have much to do with the deficits, yea your right. morons
He has been too hyped up, there is no hope and change coming. For some reason as well, the unemployment rate can never go above 10% when things are so bad out there, there is defo some skullduggery going on here. time to wake up
Quote from MathAndLogic:
First, there is an idea call trust, i.e., credit.
Second, the Fed can create credit out of thin air. Just call this Federal Reserve Note the Bernanke Vapor (or Bernanke Gas).
Third, the world is addicted to this Vapor and thinks it smells good. Wars have been fought over it; people work their asses off the obtain it; they even risk their lives for it. They trust the Vapor.
Now the debt with interest.
The total US sovereign and public debt is in the amount of X (that is all the debt to China, Japan, and all the medicare, social security debt now and in the future), and the total interest on X is Y. Now Bernanke goes to a Fed computer and types enough 0's following a 1 so that this number is >= (X + Y); he then wires this amount of Vapor to China, Japan, and medicare and social security. Debt and interest paid, and all Americans live happily ever after.
Here is the catch: China is worried about drug overdose on Vapor and the Vapor quality, and demanded higher interest. Bernanke then follows the same procedure but types more 0's. Problem solved by the same algorithm. However, this creates a problem for the little working child slave of the IRS, because after he pays higher interest and taxes to his owner, he has nothing left to himself. Bernanke saw the problem, and he types more 0's for social welfare. Problem solved.
This proves that any countries that manages its own currency (in contrast to Greece) cannot possibly have credit or debt problems.
I am angry. Please enlighten me.
Actually the problem might be that the world now needs a BORROWER of last resort, because the world may be working on paying down the debt and/or increasing savings, and therefore if no/enough borrowing takes place, the GDP would head down. Therefore, the world will be "begging" the US to borrow. I believe the chinese understand it, and that is why they have been lending to the US. The problem for the chinese might be if the USA decides not to borrow from them, and borrow from inside (US) instead. This can create havoc for China, because their GDP can fall as a result of their savings not converted to spending. In a deflation, being a trusted wanted borrower can become an asset, and not a liability.
The other solution could be to have the third world countries do the borrowing, and have the trusted borrowers backed them up, and get a piece of the work done in those countries as a result of this backing up.
Quote from achilles28:
You can't print debt away. That explodes commodity and consumer prices. It also destroys the currency, purchasing power and living standards. You're talking third world solutions that have predictably failed a million times.
The problem is the United States - like other European sovereigns - are boxed in. In most cases, the debt is so large, interest rates can never be raised. On the flip side, if the US balances the budget, the economy implodes. This "recovery" is 100% deficit financed. The leading indicator here is the US consumer. Once their debt-load is paid down and they get some legs, the economy will recover, juice up a bit, then inflation goes parabolic. How long will it take the US consumer to recover? I don't know. Key metrics are household debt-to-equity ratios. When they retreat to historical baselines - where debt repayment shifted to accumulation - then, it's on.
Quote from achilles28:
You can't print debt away. That explodes commodity and consumer prices. It also destroys the currency, purchasing power and living standards. You're talking third world solutions that have predictably failed a million times.
Third world world currencies are not reserve currencies, and are not the unit of exchange in commodity prices. The dollar does not have those two problems. Think about it a bit more.
Quote from Random.Capital:
First + Second = Fed can create trust out of thin air.
That's obviously false, therefore one or both of your initial statements must be false.
"That's obviously false": why? Consider the case where the world is leveraging. There could be demand for US debt, not because they want it, but because they need it.
Quote from tradingjournals:
Third world world currencies are not reserve currencies, and are not the unit of exchange in commodity prices. The dollar does not have those two problems. Think about it a bit more.
I doubt you have a clue. Reserve and dollar-priced commodities didn't stop the Nazdaq, real estate, banking, DJIA and oil bubble. Did it? Whether the dollar implodes, or most G20 currencies flush together, is immaterial. We'll either see a dollar collapse, or a world-wide commodity explosion.
Quote from tradingjournals:
Third world world currencies are not reserve currencies, and are not the unit of exchange in commodity prices. The dollar does not have those two problems. Think about it a bit more.
the $US role as a reserve currency is diminishing. how many months or years will pass before there are negatives consequences for the US economy? how long before commodity prices particularly for rare metals are priced in yuan rubles and basket of other currencies?
"Niall Ferguson,scholar of empire and professor of history at Harvard says contrary to popular opinion, empires fall swiftly and the US will cut defence spending and withdraw its forces from the world as its deficit rises to insurmountable levels.
http://www.theaustralian.com.au/news...-1225898187243
* Niall Ferguson
* From: The Australian
* July 29, 2010
Niall Ferguson is professor of history at Harvard University.
WE have been raised to think of the historical process as an essentially cyclical one.
We naturally tend to assume that in our own time, too, history will move cyclically, and slowly.
Yet what if history is not cyclical and slow-moving but arhythmic, at times almost stationary, but also capable of accelerating suddenly, like a sports car?
But there comes a moment when complex systems "go critical". A very small trigger can set off a phase transition from a benign equilibrium to a crisis.
Think of Spain in the 17th century: already by 1543 nearly two-thirds of ordinary revenue was going on interest on the juros, the loans by which the Habsburg monarchy financed itself.
Or think of France in the 18th century: between 1751 and 1788, the eve of Revolution, interest and amortisation payments rose from just over a quarter of tax revenue to 62 per cent.
Finally, consider Britain in the 20th century. Its real problems came after 1945, when a substantial proportion of its now immense debt burden was in foreign hands.
Quietly, discreetly, the Chinese are reducing their exposure to US Treasuries. Perhaps they have noticed what the rest of the world's investors pretend not to see: that the US is on a completely unsustainable fiscal course, with no apparent political means of self-correcting"
http://www.elitetrader.com/vb/showthread.php?s=&postid=2911886&highlight=spain#post2911886
http://snipurl.com/103k87