Debt Economy vs. Real Economy…no so different……

Discussion in 'Economics' started by jueco2005, Feb 2, 2010.

  1. Debt Economy vs. Real Economy…no so different……

    I will try to keep this simple. And pardon my bad English.

    The US economy has relied on huge debt to fuel its massive economic growth. Since 1971 there is virtually no restrain on the amount of money and the types of moneys that can circulate. As most of us know from (mostly) Austrian Economics, such an undertaking will someday come to a painful end.

    I usually hear people talking about the finance economy vs. the real economy in both positive and negative aspects. However, I believe that our real productive economy has been already consumed and corrupted by 40 years of debt driven “growth”.

    I believe that our productive economy adapted itself to high turnover of consumerism fueled by debt. In my home country, Cuba, we still have American cars from 1957, 1954, 1945, running just fine. Today NO American car will make alive after 15 yrs. NOTHING IS BUILD TO LAST ANYMORE. What America produces no longer validates its level of consumption.

    I think this system is quickly coming to an end. Without consumer credit, the real economy will undertake a painful period of adjustment. The burst of the housing bubble has help burst the debt bubble. Also “Cheap” Chinese products are now proving to be very costly to the working American.

    It will take a while for the necessary adjustment to take place and they are likely to be more painful and lasting due to the fiscal and monetary steps of the federal government.

    Thank you.
  2. Someone has to pay for the debt sooner or later, it will be paid by us, although enjoyed by past generations.
  3. Doesn't have to be that way. People can get politically active and get rid of as much of the government as possible.
  4. Gerald Ford and Jimmy Carter did not go overboard with gov't spending. It was Reagan who first took advantage of the floating dollar to start excessive deficit spending. So, it actually started in 1981.
  5. You are absolutely right, except that there will be fiscal and monetary tightening.
    Right now the gov't is the only one who may boost (or at least make hold still) consumption.
    The consumers, are just too heavily indebted to spend.
  6. you're posting on a board where the resident idiots think highly of reagan.

    when in fact the morally bankrupt third rate actor is the one who wrote the playbook on how to bankrupt America.

    his administration gave nixon good competition when it came to corruption and fraud.

    SnL bailouts for his buddies, iran-contra ( trading with the enemy), empowering rogue elements within the CIA, massive deficit spending on a useless arms race. And most of all creating the Arab version of the CIA, the AQ. Allowing the CIA to launder drug money through BCCI. The shit list is endless with the mofo.

    The guy is the epitome of what is wrong with America. Individuals who think they're morally correct while screwing others.

    His trickle down bullshit has now become a piss-storm on the middle class. The same middle class that holds him out to be a hero. The fact is these people deserve the ass ramming they're getting because they keep on voting for the same people.

  7. LeeD


    This effect is spread far outside America and has nothing to do with consumption being fueled by debt.

    50-100 years ago it took many days of people's work to produce a chair or a car or a fridge. These items were somewhet luxurious and, given the associated cost, were ment to last for ages.

    Old furniture was made of quality wood such as oak and it took many days of work for a qualified craftsman to produce a chair or a wardrobe.

    Compare this to IKEA where the material is a the bi-product of cellulose production and the chair or wardrobe is made from whole pieces by making a few holes with a drill.

    Modern industry is based on items that get replaced rapidly. Think of a modern shaving blade that serves for a week compared to the old time shaving blade that looked like a knife and served for generations.
  8. Lethn


    How the hell did you come to that bloody conclusion? If that is true then by all means China should be knee deep in debt and heading towards a great depression now. Debt is in fact the very reason that America is in this mess to begin with and I think you need to study basic economics. It is very simple, you cannot have growth and profit when you are producing nothing and you are just increasing your debt and printing money to pay off what you already owe to other countries.

    The only thing that America is producing around the world right now is the amount of wars we have on the planet because you seem to think its okay to go and bomb anyone who disagrees with you.
  9. '

    You are right about that
  10. There is a HUGE AND PAINFUL adjustment coming, one way or another.

    I'd opt for getting rid of all the Dems and Repubs... and electing a Congress of Constitutional Moderates. If we don't do something like this and soon, the adjustment which will be forced upon us will include the bankruptcy of nearly ALL Americans... and likely a dictatorship of some sort. (Obama is a BIG fan of Hugo Chavez, you know.) :mad: :mad:
    #10     Feb 3, 2010