Thread: The strongest economy in the world

Originally Posted by phomsanuk

The 28-year-long record high in gold price, at $850 per troy ounce, set at the pm fix on January 21, 1980, was broken several times in January and February 2009, hitting a then all-time high of $1,218.25 on December 3, 2009. It was broken again at $1,231.41 on August 19 this year, and again at $1,239.50 on August 25. This reflects the sustained decline in the value of the fiat dollar in gold of constant value.

1218.25 - 850 = 368.25/850 = 45.32 the % $ value loss over 28 year period CORRECT?

At 3% inflation the value of money halves every 25 years roughly.

Gold is artificially high, eventually it will revert back to its long term average

the higher it goes, the harder the fall

Originally Posted by Boon Mee

Common sense countermoonbattery from the great Milton Friedman

It was the great Milton Friedmans Monetarist economics gone mad that landed the US & Europe in the current mess.

Exactly what I've always believed:

Blah Blah Blah. There are loads of 'experts' on youtube. Someday they, like Justin Beeber has, will gain status and power in their fields.

^^ The US has not really practiced Keynesian economics, because during "good" times or "boom" times, the gov is supposed to save.

And then spend these saving when times get "bad" or "slow."

This never happened in the US, ever.

An interesting clip on taxes and reagan.

More hope and change…

The Obama Administration has run a deficit EVERY SINGLE MONTH since his Inauguration in 2009



The $150 billion federal budget deficit this month was the highest ever for a November and 25% higher than in 2009.

No wonder Blow-Job-Bill has stepped into the frey, eh?

Originally Posted by Boon Mee

More hope and change…

The Obama Administration has run a deficit EVERY SINGLE MONTH since his Inauguration in 2009



The $150 billion federal budget deficit this month was the highest ever for a November and 25% higher than in 2009.

No wonder Blow-Job-Bill has stepped into the frey, eh?

Devaluing the $US and inflating their way out of debt is the only way out now for the US. So long as the rest of the world is silly enough to keep buying US dollars and bonds, the govt is going to keep borrowing and printing money. In the end somebody else will pay. Thats why they are doing it. Its a scam. And the Republicans would be doing exactly the same if they were in power.

The inevitable decline of the $US will be good news for jobs in USA by reversing the trade deficit. But as inflation increases, standards of living for ordinary folks will naturally drop. Inflation is USAs choice of austerity measures. It wont be inflation caused by rising wages in a credit bubble with a shortage of labour, but inflation caused by devaluation of the $US. Its happening now. Just about every ordinary person in USA will tell you that the cost of virtually everything is going up, while wages remain stagnant. Its a way of getting people to live within their means; get the government out of debt; and create acceptable levels of employment.

But it will take at least a decade to get the manufacturing infrastructure up and running at full capacity again, so slowly does it. Drip feed in QE2, QE3, QE4 ect until it has the desired effect of devaluing the $US by another 20 or 30%. Keep borrowing and printing and hope it doesnt result in a panic and crash the $US too quickly as that would create a catastrophic recession not just for USA, but the whole world.

Its a scam, but a pretty well thought out one that will address virtually all USAs current financial problems if its managed well. Austerity, employment and debt reduction all rolled into one. Paid for of course by the ordinary US working class and other countries holding US debt.

So there you go. The plan is in progress. Even though what the Fed and the Govt are doing appears to be completely bizarre and irrational in the short term view of ordinary folks, there is a greater long term plan (scam) unfolding.

Originally Posted by Boon Mee

The $150 billion federal budget deficit this month

You can't be Republican and a Deficit Hawk booner.

^
I don't subscribe to a strict party line, sabang, but here's the good news: Federal Reserve Posts One-Day $8 Billion Unrealized Capital Loss.



And when rates start to surge (and they will) this will look like a good day…

"Today we get a brief glimpse of what will happen to the Fed's balance sheet when rates surge. In the span of one day, the Fed took an $8 billion unrealized loss on its $1.07 trillion in Bonds, TIPS and Agencies. It also likely experienced a comparable loss on its MBS portfolio. It's a good thing the Fed has $57 billion in capital accounts. Which means 4 days like today, and all of the Fed's equity buffer is wiped out. What happens next is up to congress".



In One Day, Federal Reserve Posts $8 Billion In Unrealized Capital Losses (And Possibly Double That) | zero hedge

That's Hope & Change you can believe in!

I wouldn't worry about the USA's place in the world as long as more people want to get in than want to get out.

Originally Posted by phomsanuk

I wouldn't worry about the USA's place in the world as long as more people want to get in than want to get out.

The "more people" you talk about are from third world countries like Mexico.
I dont see too many Canadians crashing the border to get into USA.

Actually, I think the gross exchange of population favours US refugees entering Canada. Please correct me if I am wrong as I haven't done any research to confirm this yet.

Its really not anything to brag about people from a economically disadvantaged country like Mexico sneaking across the border. Most developed countries throughout the world get the same.

Americans aren't just losing jobs to foreign countries, they are losing jobs to skilled foreigners who come to the US to work. Those who own the companies don't have to deal with this as much since they can more their company abroad or hire foreigners that might be better than Americans. For the middle class and lower classes things just get harder. They'll never really see pay increases again. After all, they are competing with the rest of the world population.

"from incoming House Financial Services Committee chair Spencer Bachus: “in Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks.”
“Washington and the Regulators Are There To Serve the Banks”

Originally Posted by robuzo

"from incoming House Financial Services Committee chair Spencer Bachus: “in Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks.”
“Washington and the Regulators Are There To Serve the Banks”

From what I have read, he now claims that quote was taken out of context.
Which could be true.

Originally Posted by Panda

Originally Posted by robuzo

"from incoming House Financial Services Committee chair Spencer Bachus: “in Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks.”
“Washington and the Regulators Are There To Serve the Banks”

From what I have read, he now claims that quote was taken out of context.
Which could be true.

He tried to weasel out of it almost immediately. The statement is not out of character, and by "out of context" I suspect Bachus means it was made with more candor than he intended.

More detail:
This is how the GOP Congress will regulate Wall Street? - How the World Works - Salon.com
Rarely do you see a politician quite this honest: Last Wednesday, just hours after securing the position of chairman of the House Financial Services Committee, Spencer Bachus, R-Ala., told the Birmingham News that "in Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks."

In the very next paragraph, the newspaper reported that Bachus "later clarified his comment to say that regulators should set the parameters in which banks operate but not micromanage them." But the damage was already done. ...

The candor of Bachus' initial statement is eyebrow-raising, no doubt about it, but the fuss and bother over his revelation is a little bit disingenuous. ... Together with his fellow Alabaman Republican, Sen. Richard Shelby, the powerful ranking member of the Senate Banking Committee, he's part of a dynamic duo of market fundamentalist crusaders who will likely set the tone for how banking reform and regulatory oversight aimed at Wall Street are implemented for the next two years.

Immediately after the midterm elections were over, and long before his confirmation as chairman, Bachus got quickly to work on his anti-regulation agenda. The day after the election, in fact, Bachus sent a letter to the Financial Stability Oversight Council, that, as I wrote last month, was written as if dictated by bank lobbyists. His main target: the so-called Volcker rule...

Three weeks later, Bachus co-authored letters to the inspector general offices at the Treasury Department and the Federal Reserve, demanding detailed information about how the Consumer Financial Protection Bureau is being set up. ...

Let's recap: Who hates the Volcker rule the most? The banks. Who is most annoyed by the Consumer Financial Protection Agency? The banks. Whose agenda is Spencer Bachus already serving to the best of his ability? The banks'.

Many US states in massive financial trouble.

Collapse of Municipal bonds within 12 months?
State Budgets: Day of Reckoning - 60 Minutes - CBS News

The US as deadbeat: discuss

BBC - Stephanomics: The US as deadbeat: discuss

Asked to name the biggest threat hanging over the global economy in 2011, most people will tell you it's the crisis in the Eurozone. Newsnight spent a lot of time debating its future only last night.
But since I'm moonlighting tonight as Newsnight's presenter, I decided we should also think about a more distant - but ultimately much larger - cloud on the global economic horizon. That is the possibility of a full-scale loss of confidence in US assets.
It's not an issue for the next few months, perhaps, especially with decent prospects for US growth in 2011. But both at the state and the federal level, America is awash with red ink, with debt rising "as far as the eye can see." Looking at thes numbers, and America's dysfunctiona politics, if investors ever started to question America's creditworthiness, or seriously sell the dollar, it could make the bailouts on the European periphery look like a tea party.
Ben Bernanke, the head of the US central bank got his first chance to address the New Republican congress today. He was cautiously optimistic about the US economy - too cautious for many in the markets - the dollar went down today on the back of his remarks, and some disappointingly weak new jobs figures. But this is what he had to say about the long-term threat posed by America's 1.4 trillion dollar federal budget deficit:
"It is widely understood that the federal government is on an unsustainable fiscal path. Yet, as a nation, we have done little to address this critical threat to our economy. Doing nothing will not be an option indefinitely; the longer we wait to act, the greater the risks and the more wrenching the inevitable changes to the budget will be. "
If it were any other country, the ratings agencies would have got that downgrading pencils out for the US a long time ago. The US budget deficit last year was well over 10 per cent of GDP - and thanks to another round of tax cuts, it's going to be at least that high in 2011.
By contrast, the average deficit of the so-called "PIIGs" - the troubled Eurozone economies - was about 7.5 per cent of GDP.
Government debt is rising nearly everywhere, but the IMF forecasts that America's national debt will rise to more than 110 per cent of GDP by 2015 - compared to a developed country median of 81 per cent. And America is the only major economy to have just passes a fresh stimulus package for 2011 and 2012.
The new Republican congress has promised its 'tea party movement' followers that it will cut spending and "take back Washington". Republicans have already supported a new rule, whereby every spending increase has to be matched by a corresponding spending cut. That kind of mechanism has been successfully used in the past to keep a lid on deficits. But there's a big problem: on the new rule, tax cuts do not have to be paid for in the same way.
So, in the new Congress, taxes can go down - but they are extremely unlikely to go up. (Even though, as I've commented before - the IMF and others believe that the US is 'under-taxed'.) And, as the Economist pointed out last week , for all the talk of spending cuts - there is a zero support - in or outside Congress for cuts in the benefit programmes for retirees which take up an ever-larger share of the budget.
Though signs of faster growth have pushed up US bond yields in recent months, you have to say that investors have been remarkably calm about all this so far - for the usual reasons. The US is still the world's largest economy and the dollar is still the world's reserve currency. When it comes down to it, there aren't a lot of other places for investors to take their cash. But if the past few years have taught anything it is that once market doubts start to take hold, they can be very difficult to turn around.
Investors may spend much of 2011 watching Congress and the White House battle it out over the budget - with no agreement on any long-term strategy to cut borrowing. They may also shortly get a few frights at the state level, with serious questions now being raised about a California default or messy bailout, for example.
If any of that leads the financial markets to start questioning the creditworthiness of the US government - or the long-term value of the US currency - things in the global financial system could get quite ugly, quite fast.

Just not a lot of positive energy out there these days.

Rep. Paul Ryan (R-WI) explains the absurd accounting tricks that allow Democrats to pretend that ObamaCare won't crash the economy:



The ObamaCare abomination absolutely must be repealed before it does tear down the strongest economy in the world.

Obamacare is actually the only legislation he has passed that will tangibly reduce the US federal deficit over time. Military spending in particular is still out of control, and tax policy seems deliberately designed to hasten the demise of the US federal government. Many of the states are already basket cases too.

Sadly, in the partisan vitriol and self interested lobbying that is inside the beltway these days, there seems little will and even less ability to do something about it.

So is this the Hope or the Change?

Here Comes $4 Gas, $5 Cups of Coffee.

"The American economy is the strongest in the world and growing faster than that of any other major industrialized country. It grew at an annual rate of 5.3 percent in the first quarter -- the fastest growth in 2 1/2 years. It has added more than 5.3 million jobs since the summer of 2003, and employment is near an all-time high. The unemployment rate (4.6 percent) is well below the average for each of the past four decades. Mortgage rates remain near historical lows, homeownership remains near a record high, and sales of new and existing homes reached record levels in 2005. Real disposable personal income has risen almost 13 percent since President Bush took office; and core inflation rose just 2.3 percent over the past 12 months. The Dow Jones industrial average has risen from under 7300 in 2002 to above 11,000 for most of this year. Tax revenues are at an all-time high -- and so is total household net worth."

And that is not the only good thing to be said about the good ole USA. More here:

http://www.washingtonpost.com/wp-dyn...060400781.html