Growth based on Debt

Discussion in 'Economics' started by Mecro, Nov 20, 2003.

  1. Mecro


    I'm just curious how long can this last before it just all crashes. I'm also starting to wonder whether high debt/credit is going to become the norm.

    Now since of SEC's wonderful decision I cannot short stocks anymore, I'm really hoping for a bull market. Not expecting it but still hoping for it.

    Greenspan and Gang have been able to pull off this debt financed growth for quite a while. It is possible that they are starting to set a new standard for first world nations. Europe is not too much different in its economic criteria and Japan, well, their debt is tremendous.

    What do you all think?
  2. Debt growth is completely unsustainable. If it wasn't for the explosion of credit card debt, home equity debt, you name it, the economy would be in a deep recession right now.

    Look at a chart of personal debt relative to income over the past few years. It can't last.

    I believe sometime in this decade, we will see the end of debt/credit induced growth in the US. Check cashing places, credit card counseling places, these will be a thing of the past. People will finally start to get their financial houses in order after a decade of wild spending.

    Some random indicators that are flashing "warning signs" for our spending orgy:

    Materialism on TV that makes the 80's pale in comparison. The "greed is good 80's" had LifeStyles of the Rich and Famous. Now we have shows on vh1, E!, etc that give us a look into the world of super wealthy overspending celebs. Its so ostentatious and over the top (P Diddy is one example), you know it can't last.
    The entire Hip Hop "bling bling" culture is rooted in materialism.

    The growth in Check Cashing places. Back in the 50's and 60's, when families had their financial houses in order, you didn't see these kinds of places. Its sad that so many families in this country need these places to survive til their next paycheck (at 200-300% annual interest per year??).

    The FNM/FRE/Alan Greenspan credit machine. No comment. The numbers speak for themselves.
  3. Not to oversimplify, but its not just the debt, its also who the money goes to. the amount of government debt owed to foreign entities is astounding. All that cash, as well as the money spent on the trade deficit puts money outside of the US economy. Capitalism in its most basic form can not run this way in the US for too long.

    Even with that we must remain unbiased and do what the market tells us, remain in the now.
  4. Godenbar's Editorial: "Exploiting the Delusions of Money"

    Exploiting the Delusions of Money
    21 April 2003
    Get Printer Friendly Version

    by Ed Bugos

    Today's Highlights:
    Liberty's enemies are empowered from within
    How inflation funds big government
    Sure central banks sell gold, but they need reserves to always sell
    Earnings delusions - past and present - subscription req'd
    Weak dollar outlook becomes part of bullish delusion - subscription req'd
    Deflation & yield guarantee delusions cap bond yields - subscription req'd
    Conclusion - subscription req'd

    Liberty's enemies, when it comes down to being specific, are the social architects of the New World Order; the one world government; and the one world currency.

    Liberty's enemies oppose money as the basis for peaceful relations in society. Instead, they prefer a morality governed by some democratically arrived at principles to the moral discipline thrust upon them by "sound" money. Naturally, they can't differentiate between honest and dishonest money. It's all evil.

    Liberty's enemy is socialism, fascism, or big government - particularly when totalitarian (as if it ever wasn't). For then, individual liberty is less important.

    But these are not primarily external dangers. Socialist economies typically haven't been able to sustain their armies for long absent the constant conquest of new resources to exploit, which would make them more like fascists by the way. No. The enemy of liberty is not external. It is from within - all of us.

    Large numbers of the conservative right on this continent have no idea. Anybody not with the US government today is perceived to be left wing.

    Let me tell you something. Anybody that doesn't understand our criticism of the US government today is not anywhere as right of center as we are. If you think being fascist represents a right wing choice of any kind, you're wrong. There are very few differences between socialism and fascism. Both are totalitarian, and involve big government.

    At dinner last night, with another libertarian, we wondered why it is that amid all the right wingers in America today, the government continues to grow. And despite one privatization scheme after another, or one promise after another to reduce taxes here or government there, the government continues to grow.

    The American Constitution, as I understand it, was set up initially to protect the individual's liberty by making it incumbent on Congress to limit government. How else do you protect the market's (consumer's) sovereignty? But despite all the hoopla about how capitalist the Republican right appears to represent themselves today, most of them are simply part of the winning argument - big government. The rest of us, libertarians included, are irrelevant. Individuality is irrelevant. Because government continues to grow, somehow, and despite all the conservatives in power.

    Today you're going to find out how, if you don't already know.

    Inflation Funds Big Government
    It's really a two-step process in the big scheme of things, and it has everything to do with money.

    Inflation leads to economic problems beginning with monetary debasement and ending / resulting in malinvestment, unemployment, capital thinning, excessive indebtedness, financial volatility, and political corruption.
    Then everyone blames the markets and capitalism for all the bad outcomes and asks the government to help them out of the mess it helped create. Government expenditures, taxes, inflation, and regulatory power increase.
    This is how the government grows over time. It's how inflation is a confiscation of wealth, or a means of wealth transfer to political circles. It's the reason inflation is a hidden form of taxation - because people don't generally come to realize it to be the main problem, and so they beg for more of it in order to cure the economy of the symptoms or imbalances caused by it in the first place.
  5. According to Congressman Ron Paul in August 30th of this year:

    "I think there are 25,000 individuals that have used offices of powers, and they are in our Universities and they are in our Congresses, and they believe in One World Government. And if you believe in One World Goverment, then you are talking about undermining National Sovereignty and you are talking about setting up something that you could well call a Dictatorship - and those plans are there!..."

    This rejoins the warning of Dr. Johannes B. Koeppl advisor to former NATO Secretary General Manfred Werner
    According to him terrorism is just a pretext for a planned "open world dictatorship" within 5 years :

    Dr. Johannes B. Koeppl, Ph.D. a former German defense ministry official and advisor to former NATO Secretary General Manfred Werner. On November 6, he told FTW, "The interests behind the Bush Administration, such as the CFR, The Trilateral Commission - founded by Brzezinski for David Rockefeller - and the Bilderberger Group, have prepared for and are now moving to implement open world dictatorship within the next five years. They are not fighting against terrorists. They are fighting against citizens."

    "If we do not follow the dictates of our inner moral compass and stand up for human life, then this lawlessness will threaten the peace and democracy of the emerging ‘New World Order’ we now see, this long dreamed-of vision we’ve all worked toward for so long."
    President George Bush (January 1991)

    “The ultimate aim of the Council on Foreign Relations [directed by Rockfeller] is to create a one-world socialist system and make the United States an official part of it.”

    Dan Smoot, a former member of the FBI staff in Washington conducted an investigation of the aims of the Council on Foreign Relations

    "All countries are basically social arrangements.… No matter how permanent and even sacred they may seem at any one time, in fact they are all artificial and temporary.… Within the next hundred years … nationhood as we know it will be obsolete; all states will recognize a single, global authority."

    Deputy Secretary of State Strobe Talbott, Clinton's roommate at Oxford, wrote this in Time magazine, July 20, 1992

    "Further global progress is now possible only through a quest for universal consensus in the movement towards a new world order."

    Mikhail Gorbachev, in an address at the United Nations (December 1988)

    It's impossible to understand how this is happening today without linking to past not only 50 or 100 years ago but also 200 and 300 years ago when it has begun see
    That is to say it will be their achievement of a long term and careful planning that is inimaginable from our short life point of view. I say WILL since the process is not yet achieved that's why people are not on guard yet, it will be too late when they will see and then realise.
  6. Taxes: "100 percent of what is collected is absorbed solely by interest on the Federal debt and by Federal Government contributions to transfer payments. "

    Grace Commission under President Reagan
    Founded in 1984 by the late industrialist J. Peter Grace and syndicated columnist Jack Anderson, CAGW is the follow-on organization to President Ronald Reagan's Private Sector Survey on Cost Control, also known as the Grace Commission. In 1982, President Reagan directed the Grace Commission to "work like tireless bloodhounds to root out government inefficiency and waste of tax dollars." For two years, 161 corporate executives and community leaders led an army of 2,000 volunteers on a waste hunt throughout the federal government. Funded entirely by voluntary contributions of $76 million from the private sector, the search cost taxpayers nothing. The Grace Commission made 2,478 recommendations which, if implemented, would save $424.4 billion over three years, an average of $141.5 billion a year – all without eliminating essential services. The 47 volumes and 21,000 pages of the Grace Commission Report constitute a vision of an efficient, well-managed government that is accountable to taxpayers. CAGW has worked to make that vision a reality and, in 17 years, has helped save taxpayers $687 billion through the implementation of Grace Commission findings and other recommendations.

    One-third of all their taxes is consumed by waste and inefficiency in the Federal Government as we identified in our survey.

    Another one-third of all their taxes escapes collection from others as the underground economy blossoms in direct proportion to tax increases and places even more pressure on law abiding taxpayers, promoting still more underground economy-a vicious cycle that must be broken.

    With two-thirds of everyone's personal income taxes wasted or not collected, 100 percent of what is collected is absorbed solely by interest on the Federal debt and by Federal Government contributions to transfer payments.

    In other words, all individual income tax revenues are gone before one nickel is spent on the services which taxpayers expect from their Government
  7. rodden


  8. maxpi


    Those are for people that can't have a savings account, Ie; Illegals
  9. Mecro


    7 posts and most of them are just harrytrader BS?

    Come on people, I know more of you have thoughts about this non stop cheap money printing. I'm wondering why inflation is not even setting in.
  10. Agreed.
    OTH, food, energy, transportation costs have been going up. I'm not convinced that inflation numbers as reported represent the "true" picture. I could be mistaken.

    Numbers come out, excluding food, energy, and transportation.

    eg. on energy, heating oil prices have been up close to 9% since mid March., we all know what gasoline costs these days, and trips to buy groceries are getting more expensive.
    Inflation numbers come out low, but we do eat, heat/cool our homes, and we definitely move around. Someone that has access to detail numbers could shed some more light on inflation.
    #10     Nov 25, 2003