trillion dollar bailout! I'm no economist but hear me out

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I completely agree that the government does a lot better job of creating jobs than a lot of enterprises, especially in manufacturing and construction, and even a lot of services.
It's impossible for government to efficiently create jobs or production. There is a technical reason for this. The market signals to entrepreneurs not just supply and demand, but the amount of capital available. More capital means that there are resources to engage in long projects, less capital means that only short projects should be undertaken until resources are accumulated.

Because governments can endlessly debt spend (until they collapse), they never make any calculations about capital (savings or excess production). Inevitably, they shift the current productive capacity into unproductive courses, like bureaucracies, military, politically connected special interest groups.

Our lifetimes are so short, there is likely no one on this forum who remembers the Depression, probably less than half remember the oil crisis and recession of the late 70s. Democracy (mob rule, institutionalized theft of property for political purposes) is such a new system. Folks assume the system has answers, that we're flies caught in amber, and things will "return" to a "normal" situation.

But everything is constantly changing, it's just some things, like economic movements, socio-political evolution, are still beyond the beginning and end of our lifetimes.

Anyway, von Mises, who predicted the failure of socialism, understood that you cannot engage in entrepreneurship without understanding the amount of REAL capital, not how much debt you can create. Debt is not real capital.

Imagine that you are running your campaigns with endless funds. You work with Smaxor who is a nice fellow. You have unlimited funds, so you don't bother optimizing your bids as often as you should. After awhile, you are just breaking even. You don't care because you always have money. All that matters is that you deliver leads to Smaxor, so you can keep being an IM.

After awhile, Smax says, I need you to deliver 10 times as many leads to me so you quit working with other companies and give him all your traffic.

Then he says he needs 10 times more than that. So you start paying until you are generating a -100% ROI. -200%, -500%. But you don't care about that, because it's not your money. For all intents and purposes, it is endless and free.

You have no incentive to manage your profits because you are not using your own money, and your resources (seem) are limitless.

Eventually, you will pay people to become leads (create jobs). You will pay me $20 (+$30 = $50) so you can get a $30 lead credit because you need leads and the money just keeps flowing.

What you care about, is being an IM, and being on Smax's good side, so he invites you to parties at Affiliate Summits.

You = politician
Smax = Special interest
Money = funds borrowed against people not yet born for work they have not yet done.

Government debt is an implicit tax on every child born into the world. They are born slaves to the consumptive debts of the generations before. Their labor has to be taxed not to pay for services and goods they will get from government in their lives, but what their parents and grandparents before them spent.

Anyone who is a parent, and really loves their children should care about what sort of world they are giving them, because it will be a lot less prosperous than the one they grew up in.

(no disrespect Smax, just an example)
 


Make banks stable = make economy stable (ex. great depression)
Banks stable = people trust banks to save money
Saving money = giving money to banks
Give money to banks = give money to people who lend from banks
People who lend from banks = create more business

Yes, banks lending practices were lax to start with thus why we're in this mess.
Why did they do it? Competition between banks to give out more loans in good economic conditions. If everyone else is doing it, they have to do it as well. Can't compete? -> lose money or go out of business.
The price we pay to live in a free market.
Live and learn.
This entire post is idiotic. You do not know anything about money, banking or business. It is people like you who are ruining the world.

I tried writing a line by line response, but I have real productive spamming to do, and I can't be bothered to teach someone who probably gets all of their information from TV and radio.

You need to start by going to YouTube and watching the video,

[ame="http://www.youtube.com/watch?v=iYZM58dulPE&fmt=18"]YouTube - Money, Banking and the Federal Reserve[/ame]


And this isn't a fucking free market. When the government forces you to use a paper currency they inflate at will, when they arbitrarily set interest rates for political purposes, when they require you register to engage in commerce (working to eat and have clothes, shelter the basic necessities of a modern civilized life), and then tax you for any of your activity, then that is not a free market. Not to mention when they award monopolies, or interfere with regulation.

A free market is where people trade voluntarily, without outside pressures. Just taxes alone negate any intelligent definition of a free market, nowadays we have to settle for "if the government doesn't explicit own and run you, you are private". Meanwhile they tell you who to hire, how much to pay them, how much profit you can keep, what hours you have to be open, what your products are, who your customers are, where you can do business, etc.

200 years ago, private meant no one could tax you for something you own. Now private means, you go take all of the risk and if you do well, we'll take half thank you very much.
 
Why not shut down the electric plants and have people run on hamster wheels? That will create jobs.
Sorry man, I just want to get onto something specific here for a second in regards to the jobs.
In some ways you're looking at the total overview, and others, only the specific circumstance. It could be the way I'm reading you, but it seems to me you're not looking at the "in between".
Hamster wheels, I'm certain we agree on this, is bloody stupid (although I'd probably pay to see it once or twice like a carny act). However, you're kind of onto something about shutting down the powerplants. Some of them at least.
Seed capital or a loan, provided by government, to get some more research into solar panel efficiency (so the patent belongs to the government), and for companies building these efficient panels would be a great idea. Lowers dependence on fossil fuel plants (cleaner air), creates jobs (manufacturing and installation, both of which are useful), and may even help pave the way for electric cars (like the Tesla) thanks to abundant electricity. Hell, if people weren't so shit scared of nuclear, I'd be recommending those micro-fission generators they're doling out in sub-Saharan Africa. $10,000 for 140 years of a steady 15kW stream.
Working 12 hours a day knee deep in shit, that is a bad job.
Actually, it's not a bad job. It's a shitty job. Agriculture would fail abysmally without the fertilizers made available from recycled effluent, and California & Nevada populace would probably shrivel from dehydration if it weren't for water recycling.

What you want are productive jobs. You want people to produce things.
Yes we do! But a lot of things that could get produced are stifled by the people who have the money because they don't see a market for it, as opposed to a need for it. Electric cars are a prime example.

Building politically motivated bridges and roads for inflated wages is totally retarded when an economy is suffering a lack of genuine manufacturing which can be exported, in order to one day pay down the national debt.
In a way this is true. However, building new transport routes & methods would also increase the flow of internal trade. Think of something like a national MagLev network. Other than Pacific Union, all the rail networks (who'd actually stand to gain by being a part of it) have actively lobbied against a lot of the proposals (L.A. to Vegas being the most notable to date).
My point is that you have private enterprise actively working against things that could create new jobs, opportunities, and revenue streams in a large number of cases because they feel threatened by it as they're not willing to spend the billions required to build it themselves.
Ironically, I question whether a Democrat majority government would allow a national infrastructure project of such scope to rest in the hands of a single corporate entity... Although I doubt a Repub government would consider it at all, as they'd rather protect existing corporate interests
 
Yes we do! But a lot of things that could get produced are stifled by the people who have the money because they don't see a market for it, as opposed to a need for it. Electric cars are a prime example.
Nonsense. You should read Adam Smith's "Wealth of Nations". You have demonstrated many times a complete lack of knowledge about markets and creative destruction. I'm not trying to be insulting, but this can't even be an argument, because you are just posting assertions and fallacies.

If there is profit, markets will appear. The reason why governments have to subsidize industries, is because they are not profitable. Normally, this is because the market doesn't exist (no one really wants to pay for it) or it is to the political benefit of someone (regulatory monopoly).

Now in the market, entrepreneurs will take risk, if there is enough real capital (not fake government debt, which is just counterfeit) to try and make electric cars viable. If they succeed, then a market is established. If they fail, then the market never was. If they succeed and are profitable, this invites competitors into the market, to drive prices down and quality high.

Now obviously, government creates a lot of deterrents to small business and entrepreneurship through regulation. The costs to start a business should be as close to zero as possible, to have maximum free entry. Each license, tax code, inspection, certification, degree or diploma, all drives up the costs for individual actors to enter the market, which is why we have an abundance of corporations. People have to pool their capital collectively under incorporation, to meet not only investment and R&D, but the basic costs of doing business in the Empire.

Did you know, the word monopoly used to mean "state granted privilege"? people would go to the Lord or King, and ask to be the sole seller of peanuts in the realm, making arguments about how their peanuts are the highest quality, and how by giving them a monopoly, they will pay more taxes to the treasury and so on and on.

Anyway, the reason why electric cars are not here yet, is that they have to be federally licensed. If someone could produce them, and sell them only to the people who can afford them, or within regions within regions, then they could get a foothold. But the state insists that you produce the vehicle, and it has to pass federal standards. So unless you literally have hundreds of billions to invest, you can't make electric cars, even if you could manufacture them for less than $50k each.

In a way this is true. However, building new transport routes & methods would also increase the flow of internal trade. Think of something like a national MagLev network. Other than Pacific Union, all the rail networks (who'd actually stand to gain by being a part of it) have actively lobbied against a lot of the proposals (L.A. to Vegas being the most notable to date).
You'd have a point except for a few factors.

Internal trade is pointless when you have no productive capacity to utilize it. Secondly, transportation is a great investment, and should be done based upon commercial demand, not political expediency. I still recall the story of how Lincoln made sure the railroad had an important nexus in Council Bluffs or somewhere like that, coincidentally where he had purchased a lot of land. An area that had no value, other than several rich guys secured the property, then made sure government raised it's value by several factors.

There are a lot of great American railroad and canal stories. Like how Illinois I believe spent tons of debt money on a canal system that was outmoded before it was complete. Or how subsidized railroads got paid by the government per mile of track they laid, so they laid the longest possible routes, that when they ran their trains on later, put them out of business because they couldn't compete, meanwhile all of the private track laid was shortest A => B and those companies thrived. Ironically, the same subsidized track railroad companies, ended up being absorbed by the state. So the citizen paid by many factors over for a rail system that sucked.

You see, as I indicated to the lovely and talented Hannah, politicians have no profit motive, and no reason to be efficient. Most will be out of office in 10 years, long before their debts become burdensome on the citizenry. Entrepreneurs, private investors have to be profitable or they go broke. So the products they create are efficient if they succeed. Like an IM, they keep optimizing, testing, squeezing more profit out as competition increases.

Politicians only have 2 incentives. Get re-elected, maintain their power, influence and wealth via special interests. They couldn't give a shit about the future, or the children, or the poor or any of the other bleeding heart strawmen they pander to when it's election time.

My point is that you have private enterprise actively working against things that could create new jobs, opportunities, and revenue streams in a large number of cases because they feel threatened by it as they're not willing to spend the billions required to build it themselves.
But that is utter nonsense. Do you know any successful business people (rhetorical question) that don't exploit opportunities for profit?

And even if you did, how could they stop anyone? See the free market internet? Anyone can start a blog and run Adsense. Anyone can get free hosting, basically staring with zero money, and make enough money to have an empire. How is it that people can do more on the internet than they can do offline?

Hint: there is no regulation about how many languages your blog must be in, what stats you must submit to government to qualify as a blogger, no audits of domain names, no state logos or banners required. You don't have to hire X Indians, Y Queers and Z sheilas to satisfy discrimination quotas. You don't have to do anything you don't want to do! You actually get to run your business, your way, and your only critic is your customers! If you provide value, they will increase your wealth! If you suck, Nickycakes will mock you on his blog!

The way anyone who hinders competition maliciously in the market, is always through the state. And the best way, is to get the state to pay for electric cars, and grant the money to companies like monopoly privilege.

You could be the smartest motherfucker in the world (a stretch, I know) and if you aren't politically connected, someone else is going to build the electric car you dream up.

Ironically, I question whether a Democrat majority government would allow a national infrastructure project of such scope to rest in the hands of a single corporate entity... Although I doubt a Repub government would consider it at all, as they'd rather protect existing corporate interests
Right versus left politics is for people who like to fantasize and dream about the mother state making their lives better. About punishing those evil rich people, and lifting up the poor retarded street urchins.

Both sides work for special interests. They pursue basically the same policies, war, debt, more taxes, more regulation, bigger government. Only superficial issues are ever discussed, because most people are only capable of dealing with superficials like gay marriage or what clothes a candidate wears, or which candidate promises them the most "stuff".
 
[edit]A thought occurs to me. The reason we're not seeing eye to eye is because my tax money is not mishandled nearly as poorly a yours.
Whilst there is government subsidy on things I don't agree with, I can see flow on effects of that money in other related and non-related parts of the economy, because I live in a single commonwealth... not a union where each unit is actively working for its own self interest. Whilst we do have some corruption, some lobby groups, and some mishandling of funds for special interests, it is overall a unified system, in my experience.
I get, what I perceive to be, good value for my taxes... And other than education and medicare (which EVERY citizen gets if they want), I don't receive any kind of government handouts.
[/edit]

Many good points there.
But it seems to me that you're also labouring under another fallacy. The idea that consumers, of any product or service, will do their own research and make economic decisions accordingly.
When stated like that I'm sure you'll agree with me that this is clearly wrong. Because if it were correct we'd all be out of this particular job, and WF would be pointless.

Now my point about interested parties working against free market is based on this. It's not a baseless assertion. There are countless markets that would be open if it were not for already established interests going against them and "helping" people make up their minds about the viability of a product or service. Lobbyists, negative advertising campaigns, little drops here and there that tug at a few individuals who do have a trickle down effect because they're often in gatekeeper positions.

Electric car example.
Here is a product that is arguably superior for short urban trips, which are the vast majority. The device is pilloried by major motoring companies in a number of ways (watch Who Killed the Electric Car, it's actually pretty good even if you don't agree with it) and thus consumers "decide" they don't want something that's ultimately cheaper for them because it can't do things that they don't actually do with their vehicles anyway.

Back to argument proper. The subsidies provided by government may be wasted on a number of industries that fail to innovate and keep up with the market. The big three motor companies really are proof of that. However, there are other industries where there could be a market, but the person attempting to generate it simply does not have the capital base to start at the scale required, or because the service really is essential. Agriculture and Education spring to mind. American agricultural subsidies are insane... But consider the ramifications of a lack of government support in the sector. Whilst America currently wastes more food than it even consumes, I get the feeling that the lack of subsidies would see real food shortages in US, or worse yet, monopolies on types agricultural produce as smaller farms were bought out by corporates. And how can anyone really compete in monopolies like that? Who can be the small independent cattle rancher when there's no good production base (land) left for it? Consider which is worse: A bit of money from your taxes, or an oligarchy over food.
Same with energy supply, primary industrial resources, transport, etc.

I'd go on about some other examples, but it's sort of silly. We both have our stances loaded down with confirmation biases, so I doubt either of us will sway each other one iota... Although this debate is interesting, and maybe we'll sway other readers one way or the other.
 
People arguing for (hyper) inflation seem to be ignoring that the current economic crisis destroyed trillions of dollars worth of equity, so for the near future deflation is going to be a bigger concern than inflation.

Also, I keep hearing the government "gave" this money to the banks. Did I miss something, or are people conveniently confusing a loan with a gift?
 
Also, I keep hearing the government "gave" this money to the banks. Did I miss something, or are people conveniently confusing a loan with a gift?

If you loaned some money to a junkie cousin and had a day or 2 to think about what you just did, would it make more sense to consider it a loan or a gift?
 
Sorry if this is slightly off the topic. I did some math today. Now granted, not every US Citizen is paying the same amount of taxes, and many aren't paying any at all. But just the rough numbers...
[SIZE=+1]700[SIZE=-2] [/SIZE]000[SIZE=-2] [/SIZE]000[SIZE=-2] [/SIZE]000 / 305[SIZE=-2] [/SIZE]846[SIZE=-2] [/SIZE]312 = 2[SIZE=-2] [/SIZE]288.73121[/SIZE]

Wow. If every US citizen were to be paying an equal amount on this stimulus package, we would be paying over 2 Gs a piece. And that is with the lower number, as I have heard a lot recently that this could go upwards of a trillion. I am afraid to do the math for those numbers. It is outrageous.

What really burns me up more is the people sending death threats to the chick that had 8 babies. People are gonna bitch because she is getting some help from the government, when obama is about to write up every one of us a 2,000 bill that we are going to have to pay sooner or later. The amount each person would pay for the girl with the babies, even if she was on getting freebies her entire life, probably would come out under a penny a person.

Shit is nuts.
 
People arguing for (hyper) inflation seem to be ignoring that the current economic crisis destroyed trillions of dollars worth of equity, so for the near future deflation is going to be a bigger concern than inflation.

Also, I keep hearing the government "gave" this money to the banks. Did I miss something, or are people conveniently confusing a loan with a gift?

Those "trillions in equity" were marked-to-model OTC vaporware to begin with. The bailouts are, to a great extent, designed to keep that vaporware and the brainics who designed it, floating. Marked-to-market puts their REAL "value" at exactly zero.

Deflationary forces are only in play for the very short-term. The Fed's answer to the specter of deflation is to jam the printing presses on high 24/7. Their answer to the stratospheric debt is to devalue the currency in a quick yet controlled manner. Wow, a mo-money printing extravaganza two-fer!

Once all that "liquidity" inevitably starts parsing out, hyperinflation is the result. It's never been NOT so, every single time in history such a fiscal "cure" has been implemented. Look it up, it has not worked right even once, it always ends up making things much, much worse. You can't spend your way out of debt, plain and simple.

Perma-loans (loans that roll over continously, what you have happening right now at the TARP, TAF and other CRAP "lending" windows) are effectively the same thing as giving the $$ away. If the loan never comes due, you never have to actually give the money back, do you?

There's no fix, buddy. We're insolvent and past the point of no return. Instead of taking our medicine and letting things purge themselves in the natural economic order, the goobermint is gonna make the process as long, drawn-out and painful as possible in order to keep their goobermint-related jobs and bankster buddies safe.

Denial, Not Just A River In Egypt...
 
Then house prices would inflate and 300k would buy you nothing. And it wouldn't be called the "dollar menu" any more at Micky Ds. Look what happened to Germany's currency after WWII.

Exactly. If you had a house that was valued around 100k and you knew every person just got 300k in their pockets to spend on a house, you can be you would be asking a lot more than 100k. Great point.

Denial, Not Just A River In Egypt...
LOL, and also a good point. I agree that its beyond fixing. Sorry to say it but they should have let auto makers go out of business. Yes it would have made hard times for all those employees, but it would balance itself out quicker. Sometimes you have to take losses to start gaining again. We're just making these bad times last longer :(
 
To join all the double posters... If we all got $300,000 everything would over inflate... Bread would cost $50+ and everything else would sky rocket.

In the end, prices would be sky high and those who got the money first would have spent it all and get stuck with $50 bread prices and then the economy would tank.
 
If you loaned some money to a junkie cousin and had a day or 2 to think about what you just did, would it make more sense to consider it a loan or a gift?

You don't make any sense. It's a loan, no matter how much you try to belittle the financial institutions.

1) Those "trillions in equity" were marked-to-model OTC vaporware to begin with. The bailouts are, to a great extent, designed to keep that vaporware and the brainics who designed it, floating. Marked-to-market puts their REAL "value" at exactly zero.

2) Deflationary forces are only in play for the very short-term. The Fed's answer to the specter of deflation is to jam the printing presses on high 24/7. Their answer to the stratospheric debt is to devalue the currency in a quick yet controlled manner. Wow, a mo-money printing extravaganza two-fer!

Once all that "liquidity" inevitably starts parsing out, hyperinflation is the result. It's never been NOT so, every single time in history such a fiscal "cure" has been implemented. Look it up, it has not worked right even once, it always ends up making things much, much worse. You can't spend your way out of debt, plain and simple.

3) Perma-loans (loans that roll over continously, what you have happening right now at the TARP, TAF and other CRAP "lending" windows) are effectively the same thing as giving the $$ away. If the loan never comes due, you never have to actually give the money back, do you?

4) There's no fix, buddy. We're insolvent and past the point of no return. Instead of taking our medicine and letting things purge themselves in the natural economic order, the goobermint is gonna make the process as long, drawn-out and painful as possible in order to keep their goobermint-related jobs and bankster buddies safe.

1) Actually, it's just a litte over 5 trillion in financial stocks. Add to that the decline in value of property, the general stock loss wiping out 401ks and other retirement plans and you have "real" requity being destroyed. Also, the bailouts weren't designed to prop up these illiquid (not vaporware or trashy as people seem to believe) assets, but rather keep the banks from failing. The issue isn't that these items are worthless, it's just that there is no market right now due to different expectations by both sellers and buyers; the government needs to step in and lay down their rules and not change them.

2) Growth in money supply doesn't directly lead to inflation if credit is not being extended to the customers, which is not happening right now. The feds balance sheets also pals in comparison to private debt. And most importantly, the consumers attitude also directly plays into it. You have retirees getting a big chunk of their life savings wiped out and the younger generation growing up witnessing their parents facing bankruptcy or foreclosures, both -will- adopt a more frugal attitude.

Oh and the money multiplier lag theory has been pretty much disproved. Credit is being created up to a year before a corresponding change occurs in government issued money. Also, the total money supply needs to exceed the total debt, with the difference being the government created money. Which is not happening.

Also, we have never had all governments doing the same thing, which is why you can't point to past events. And even if you could, none of the factors that caused or cause hyperinflation in post WW1 Germany or Zimbabwe are currently being met. In both cases credit wasn't being extended because banks would be afraid the money would be worthless when the loan would be due, and the customers wouldn't deposit their savings for the same reason. Banks currently aren't lending because they are afraid the creditor is not going to be able to pay the loan back at all.

We are seeing falling treasury yields, stock markets, credit market to market, home-, commodity-, and consumer prices, a negative GDP, rising unemployment and on the other side a rising dollar, corp bond yields, saving rates and banks are hoarding cash. That's deflation.

3) That's how it's been for decades. Except in rare cases (say Norway) debt is essentially never being paid, but paid by issuing new bonds instead. And institutions and countries buying these bonds don't look at ones ability to actually pay it back, but at the chance of you defaulting or not paying the interest. This didn't just start recently. And it's only not limited to the U.S., virtually every country on earth finances itself this way.

4) The U.S. is not insolvent. Oh and your proposed "solutions" would only lead to the destruction of the world wide economy and lead to political instabilities. I don't know about yourself, but I'd rather have a government trying to prevent this. That's all I'm going to "argue" about 4), discussing these issues always feels like discussing ones favorite console and never leads to any worthwhile debate.
 
You cannot spend your way out of debt.

The world-wide economy is crumbling as we speak.

All fiat currencies are in a devaluation race.

Political instabilities are not just a reality, but escalating.

The government is managing the avalanche, nothing more.

There is no fix for this.
 
1) Actually, it's just a litte over 5 trillion in financial stocks.
There are more than $50 trillion in leveraged derivatives.

Also, the bailouts weren't designed to prop up these illiquid (not vaporware or trashy as people seem to believe) assets, but rather keep the banks from failing.
The banks were failing because they have worthless assets, that they used as collateral reserves to leverage by 30 times. So they borrowed 30 times against a worthless mortgage securitization, and now when the debt comes due, the government just gives them the money, rather than forcing them to admit fraud and bankruptcy.

There is a myth that we need banks. We do not. Not in the digital age. All we need is enforcement of contract law, and secure digital encryption.

The issue isn't that these items are worthless, it's just that there is no market right now due to different expectations by both sellers and buyers; the government needs to step in and lay down their rules and not change them.
The government cannot change lead to gold. People bought gold, and scratched the paint to find out they have lead. But the banks who did this, leveraged up the gold that is lead.

These assets are not worthless, they are almost worthless. You could probably sell them for 2 or 3 cents on the dollar.

2) Growth in money supply doesn't directly lead to inflation if credit is not being extended to the customers, which is not happening right now.
This is incorrect. Lending is still at all time highs. Even the regional FED banks have argued that the central FED in NY is distorting the figures. You can google for this data, try "bob higgs lending" or "bob higgs credit crunch"

And most importantly, the consumers attitude also directly plays into it. You have retirees getting a big chunk of their life savings wiped out and the younger generation growing up witnessing their parents facing bankruptcy or foreclosures, both -will- adopt a more frugal attitude.
Actually, what is happening, is a ponzi scheme unraveling. Wait and see how seniors and young adults respond when social security, the second biggest ponzi scheme unwinds in 2011.

Oh and the money multiplier lag theory has been pretty much disproved.
Source?

Also, the total money supply needs to exceed the total debt, with the difference being the government created money.
Do you understand fractional reserve banking? Because the TMS you are referencing is the monetary base. It's not the True Money Supply, which includes a minimum 10 times leverage on that base.

Yes, it really is that bad. I've seen people like you for the last several years. I argue for gold, and that the stock market will crack up, everyone calls me a nut. There are still a handful of you who continue to cling to urban legends and fallacies, people who are economically ignorant, and rather than educating yourself you continue to insist that up is down and red is blue.

We are seeing falling treasury yields, stock markets, credit market to market, home-, commodity-, and consumer prices, a negative GDP, rising unemployment and on the other side a rising dollar, corp bond yields, saving rates and banks are hoarding cash. That's deflation.
Inflation and deflation technically are related to the money supply. The media has managed to confuse inflation and deflation with prices. Rising and falling prices are natural consequences of a market system. Prices are not constant, as resources, scarcity, environmental factors, and the big ones like government intervention and monetary policy, fluctuate.

Because there has been non-stop inflation since 1913, we're all expected to get raises over time, not because we necessarily produce more, or our jobs have gotten tougher, but strictly as cost of living increases. Adjusted for real (inflation adjusted) values, homes are a lousy investment. Wages have been falling for 2 decades. Our purchasing power is shrinking, as our savings, and asset values are debased with inflation (monetary supply increases).

Those are actual facts.

3) That's how it's been for decades. Except in rare cases (say Norway) debt is essentially never being paid, but paid by issuing new bonds instead. And institutions and countries buying these bonds don't look at ones ability to actually pay it back, but at the chance of you defaulting or not paying the interest. This didn't just start recently. And it's only not limited to the U.S., virtually every country on earth finances itself this way.
Yes, it has been that way for decades. And like Bretton Woods collapsing, when Nixon defaulted on the dollar and closed gold window, the current system is also going to end.

Our lives are short, but these events are coming quicker and quicker as entropy increases. Don't assume the last 20 years predict the next 20 years. Certainly not when you have a distorted view of the last 20 years (we all do, it's natural for us to adjust our biases ex post facto)

4) The U.S. is not insolvent.
It is. The only good news is, just about everyone is insolvent. You can't run a country, or anything for that matter, on debt indefinitely.

Oh and your proposed "solutions" would only lead to the destruction of the world wide economy and lead to political instabilities.
That's a good thing. Let's throw out the Wall Street scammers, warmongers and political nutjobs. Let's get back to civil rights, property rights and a truly liberal society that treats every man, woman and child as a sovereign human being, not a slave to the welfare and warfare debt state.
 
Here is another thing.

Inflation is bad for people who save money. Your money buys less.

Inflation is good for people in debt. That is why the world economy has shifted to everyone having debt. Because inflation makes it cheaper to pay off the principal later, and the interest costs are almost for free.

We're all socialized to fear deflation. If you have money, deflation means your money buys MORE! If you are poor, deflation means that your money goes farther!

When the government tries to prop up bad businesses, bad assets and bad mortgages, it is keeping prices high. High prices are bad for poor people, high prices are bad for everyone.

It's the idiot mentality, that demand creates supply. We have infinite demand. Everyone wants stuff, the cheaper it becomes, the more of it we want. If you give away free jelly beans, there will be a lineup around the block. Demand is endless, especially as prices get lower.

What is always short is production. Time is finite. Labor is finite. Energy and daylight hours, materials are finite. There is only so much. In order to increase trade and economic activity, you need more production, not more demand.

If your personal finances were sucking, would you spend more, or work more? Would you work on your flower garden, or get a paying job?

People really need to start thinking this stuff through. A lot of it is axiomatic or "self evident". A lot of what politicians and media economists repeat is completely illogical, but we're trained to defer to expert opinions, instead of our own capacity to reason.

Even with a colder winter, people are still droning on about global warming and talking about Al Gore's hockeystick of rising temperatures. It's getting colder, and people that used the increasing heat to justify global warming, are now trying to convince us that colder weather is a sign of global warming. And people are eating it up, ignoring their own practical experience with temperature, to conform to so-called expert talking heads.

They want to tax carbon dioxide. We exhale carbon dioxide. Plants need carbon dioxide to create oxygen. Are we not teaching people how photo-synthesis works anymore? How can Obama in any seriousness promote climate change and carbon taxes?

Do they really think we are this stupid? Are we this stupid?

Free your mind. Think. For yourself.
 
And I know some people will say, who the fuck is this idiot Guerilla? He's so arrogant, he thinks he knows more than the experts.

Well, all I can do is make simple arguments based on our real life experiences, and ask people to evaluate the facts for themselves. If those conclusions you come up with differ from what "everyone thinks" then don't be afraid to consider that you might be right!

It is possible that we are all a lot smarter than the idiots in this video who laughed at Peter Schiff the last 3 years.

[ame="http://www.youtube.com/watch?v=2I0QN-FYkpw"]YouTube - Peter Schiff Was Right 2006 - 2007 (2nd Edition)[/ame]

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They all just parroted the conventional line. Most of them are no longer allowed on TV because they have been so badly discredited.
 
You cannot spend your way out of debt.

The world-wide economy is crumbling as we speak.

All fiat currencies are in a devaluation race.

Political instabilities are not just a reality, but escalating.

The government is managing the avalanche, nothing more.

There is no fix for this.

Glad you actually took the time to add a constructive response.

1) There are more than $50 trillion in leveraged derivatives.

2) The banks were failing because they have worthless assets, that they used as collateral reserves to leverage by 30 times. So they borrowed 30 times against a worthless mortgage securitization, and now when the debt comes due, the government just gives them the money, rather than forcing them to admit fraud and bankruptcy.

The government cannot change lead to gold. People bought gold, and scratched the paint to find out they have lead. But the banks who did this, leveraged up the gold that is lead.

These assets are not worthless, they are almost worthless. You could probably sell them for 2 or 3 cents on the dollar.

3) This is incorrect. Lending is still at all time highs. Even the regional FED banks have argued that the central FED in NY is distorting the figures. You can google for this data, try "bob higgs lending" or "bob higgs credit crunch"

Source?

4) Do you understand fractional reserve banking? Because the TMS you are referencing is the monetary base. It's not the True Money Supply, which includes a minimum 10 times leverage on that base.

Inflation and deflation technically are related to the money supply. The media has managed to confuse inflation and deflation with prices. Rising and falling prices are natural consequences of a market system. Prices are not constant, as resources, scarcity, environmental factors, and the big ones like government intervention and monetary policy, fluctuate.

5) It is. The only good news is, just about everyone is insolvent. You can't run a country, or anything for that matter, on debt indefinitely.

1) Stock losses for financial institutions. Didn't say anything else.

2) They aren't almost worthless, certainly worth more than the 2 or 3 pennies. The issue is no one knows what the government is going to do about them, which is why there is no market. If everyone would be clear on what to expect, banks could get rid of these assets. As it stands right now, banks aren't willing to budge on the price, neither are the buyers because one decision by the government could turn a good investment into a bad one and vice versa.

3) This is incorrect. If they were we wouldn't be in this mess.

St. Louis Fed: Series: EXCRESNS, Excess Reserves of Depository Institutions
St. Louis Fed: Series: RSBKCRNS, Reserve Bank Credit
St. Louis Fed: Series: MULT, M1 Money Multiplier
AFP: Corporate, government borrowing plummets in third quarter: BIS

4) I'm well aware of how it works. You seem to be missing the essential point though, without the money ever entering the economy, it doesn't matter with a fiat currency. Banks could be holding ten times the amount, and unless they start actually freely extending credits, it would be the same as not having it. Without a net increase in money supply and/or credit there can't be any inflation. It just doesn't work.

5) It's not. And as long as the market is convinced you will not default on your loan, you will be able to borrow. And as such you are per definition not insolvent (Unable to meet debt obligations).

One last point about your friend Schiff. Actually, you are right, people stopped laughing. Mainly his investors and people that followed his advice. Buying foreign equities and commodities and shorting the dollar sure worked out well for them. Oh and decoupling? Yeah, that somehow didn't work out either. Who knew.
 
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Wow. Just wow. You're so far off the beam, it's like watching Wile E. Coyote rolling along before he figures out he's run out of butte and he's out over the canyon....
 
1) Stock losses for financial institutions. Didn't say anything else.
On the contrary, you did. The stocks are worthless, whether they realize their bad assets, or the government nationalizes them. Either way, the shareholders got burned.

2) They aren't almost worthless, certainly worth more than the 2 or 3 pennies. The issue is no one knows what the government is going to do about them, which is why there is no market.
There was no market before the government got involved, which is why the government got involved, and guess what? There is still no market. They are trying to price trash like it is gold, and no one will touch it.

As it stands right now, banks aren't willing to budge on the price, neither are the buyers because one decision by the government could turn a good investment into a bad one and vice versa.
Actually, it's level 3 accounting that was the problem. Smart people knew that 3 years ago. That is why people like Jim Rogers were short the financials. The dreamers believed that you could give anyone a mortgage, get the corrupt rating agencies to call it AAA, and then turn it into billions of free dollars in leverage. They were wrong.

Where is your source on the money multiplier lag being disproven?

Credit Is Flowing, Sky Is Not Falling, Don’t Panic | The Beacon

Although certain financial institutions are undeniably in deep trouble—difficulties of their own making, we might add—the problems in particular financial circles should be kept in perspective. Note especially that credit markets in general have NOT ceased to operate. Moreover, lenders are extending credit in historically great amounts. To see this reality, however, we must break away from anecdotes in the financial press, which is eager to attract readers, and from fear-mongering by the political class, which is eager to seize more power, and examine the data that describe wider market transactions. For this purpose, the St. Louis Fed’s Web site is a useful resource.
The Great Credit-Crunch Hoax of 2008 - Robert Higgs - Mises Institute

Probably the most important measure of credit-market conditions is the amount of commercial-bank credit outstanding. These figures show that although the middle part of 2008 does stand out in the long view, it does so not by virtue of credit's frightening contraction, but only by virtue of its hitting a six-month plateau from April through September.
Next time you post graphs do back up your position, post graphs that are relevant, such as credit outstanding. Showing those idiotic graphs that just show that the FED is endlessly printing money in exchange for any asset, no matter how toxic, is known as a balance sheet swamp. They are irrelevant to the discussion on lending.

4) I'm well aware of how it works. You seem to be missing the essential point though, without the money ever entering the economy, it doesn't matter with a fiat currency. Banks could be holding ten times the amount, and unless they start actually freely extending credits, it would be the same as not having it. Without a net increase in money supply and/or credit there can't be any inflation. It just doesn't work.
Banks are increasing credit. I posted the above information which shows that. You're completely out to lunch on money, credit and banking.

5) It's not. And as long as the market is convinced you will not default on your loan, you will be able to borrow. And as such you are per definition not insolvent (Unable to meet debt obligations).
Insolvency is not the lack of borrowing capacity. Try again.

Try using the figures from the Government Accountability Office or the Bank of International Settlements.

One last point about your friend Schiff. Actually, you are right, people stopped laughing. Mainly his investors and people that followed his advice. Buying foreign equities and commodities and shorting the dollar sure worked out well for them. Oh and decoupling? Yeah, that somehow didn't work out either. Who knew.
Actually, the people who lost money are the ones who tried to play Peter's strategy short. If you read his book, Crash Proof, his investment strategy is a multi-year plan. It is not for short buyers looking for a 6 month investment. Even then, only a fraction of his clients were down and anyone with him since Nov has been killing it.

Schiff just finished speaking in Saudi Arabia, and is still on the circuit appearing on Fox for an hour the other day. Because he hasn't been wrong, idiots who misplayed his strategy got hosed and are crying foul.

The dollar has seen it's best days. With massive printing, shrinking manufacturing, and more debt, there is no reason to invest in dollars. That's why the Chinese and Arabs have started to convert their dollar holdings to gold.

The only thing holding up the dollar on the index, is that the other central banks in the basket have all agreed to debase their currencies to prop up the dollar in the exchange markets. That won't last, as there are already riots in Korea and other parts of Asia. The Germans are also backing off from inflationary policy as their own people have stopped accepting Euros from Spanish or Greece.

You don't have to agree with me, but please bring some knowledge.
 
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