"hard times"
semitdrah.com> wrote in message
news:100820071145199588%%semitdrah@semitdrah.com...
>
> 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.
