Of course, Clinton administration cronies such as Rubin, Summers and G-Span lobbied to end Glass-Steagall AND ran Brooksley Born out of the CFTC since she wanted to increase regulation. It's just another inconvenient factoid for all the two party zealots around here.
Bingo. That's exactly it. All this stuff is elementary to somebody with a basic understanding of how the pieces fit together. The endless bailouts/moral hazard/derivatives/no doc liar loans/end of glass steagal/deficits etc. At the very least, Geithner, Summers, G-Span, Paulson, Bernacke, they're on the bankers payroll. LITERALLY. Fuck, half of them are ex GoldmanSachs. They know what they're doing. None of this happened by accident. The general public can barely wipe their own ass, so when the money powers shrug and plead ignorance, they believe it. Not every one is idiot. Basically, criminals took over Government. The public are completely clueless as to how anything works outside their rudimentary job, and believe anything they're told. So, in this case, the financial criminals play dumb and get away with murder. Notice, they blew the bubble, popped it, then gave themselves nearly unlimited regulatory power to intervene in the future. It's not just a simple case of shearing the fools up and down. It's power consolidation to BANKS (via the Fed Reserve) using engineered financial crisis. It's like 911, OKC or the Gulf of Tonkin for the economy.
Same bullshit, different depression. FDR didn't get us out of the depression in the '30's. The countries that did the most stimulus recovered last! The US was very slow in recovering, nearly last on the planet! Of course, getting these leftist garbage brained people to understand that is quite impossible. They are more like union people with baseball bats looking for scabs than people that actually want to understand something. I was talking to one yesterday, she was all upset about something she saw on the news and was shoving her philosophy down my throat so I asked her how she was proposing we pay the $100 Trillion in unfunded liabilities and she told me to shut up! The stupid Ameribitch told me to shut up and then changed the subject!
Not much time to reply, so I'll scratch this out. It's sufficient. Later in this thread you congratulate yourself overmuch for this post, but what I see is a lot of quantification hiding a kernel of qualification, namely, psychology. As Ron Paul himself admits in the video up now, the one with Krugman, everything keeps working as long as the psychology holds. The catastrophe you describe is not inevitable, it's a failure of nerves. Besides, it's not even that bad, countries with higher debt loads, and to foreigners to boot, are not in freefall and can still borrow money cheaply. Why? Because balance of trade money needs to be put somewhere anyway. Also, again, we mostly owe the money to ourselves, it's not all due "at once", and what we do owe to foreigners is also not all due at once, it's not all owed to one entity, and it's largely offset by our own foreign asset holdings. I have no objection to your quantifications for two reasons, 1) They rest on the psychological premise, which is the actual weak point of your argument, and 2) they acknowledge the existence of the economic multiplier--thank you! most libertarians won't go there, as it gives weight to Keynes's position.
Beautiful. I do love simplicity, but I obviously don't have it all figured out quite so capably, clearly and assuredly as you do. I find prediction, especially when combined with numeric specificity and certitude, to be fine entertainment. So please give me the numbers and the approximate timeline, since you have it all figured out: 1. You predicted that the economy will contract by about 25%. By when? 2. You predicted that the US dollar would collapse? By how much and by when? Any other measurable economic predictions you'd like to share? I'm all ears. Please provide your best case, worst case and most likely numbers and timelines. And then, let's bookmark this thread for posterity, to ensure that you assume your rightful place among other noted visionaries.
Bookmark away. Within 5 years (probably 3), we'll see a mass exodus of foreign ownership of Treasuries, Fed monetization, a dollar collapse (40-50%), social upheaval, probably some type of martial law, price controls, and likely the end of the Constitution. Basically, a repeat of Argentina. The US is headed for 2nd world status. This isn't some bullshit I spew to pass time. Im long gold, silver, guns, looking to buy farmland. I'm getting ready for a collapse.
Don't forget the canned beans. So basically you're calling for US economic Armageddon. Got it. Yeah, it happened every other time it had been predicted, eh? Will you be carrying placards, signs or a sandwich board? You know, talking up your position, so to speak. I trust you'll understand if I don't wish you luck with your predictions. As an aside, against which major trading partner currencies will the US dollar collapse by 40-50%? This is all getting very exciting.
A failure of nerves, huh? Why do you suppose banks cease lending to individuals or corporations after their debt exceeds assets by a fixed amount? Does that same creditworthiness formula not also apply to sovereigns, like the PIIGS in Europe? (Hint: Yes, it does!). Which countrieS carry much higher debt loads and borrow at cheap rates? There's only one. Japan. The old canard Keynesians throw out in the vein hope we're them. Gives us a lot of breathing room, doesn't it? I noticed that Keynesian socialists always point to the relatively scant outliers to "prove" their wayward policies. That practice isn't healthy, nor does it meet academic standards. On the one hand, you've got the nordic tigers that "prove" massive taxation works (while ignoring the hundreds of national failures where it didn't). In the case of excessive sovereign debt, Japan is the only examples that appears to be working (read: not imploding), and the hundreds of examples that ended in a Depression or collapse, are ignored. Rogoff and Reinhart compiled an exhaustive study on sovereign debt and growth rates, probably the largest ever done, and discovered that debt-to-GDP exceeding 90% results in 2% points lower growth. At debt-to-GDP in excess of 120%, growth is on average 3-5% lower. What this means is the fairy tale politicians throw at us that we can "grow our way" out of this mess is just that. Most countries that are indebted in excess of 120% GDP either default or inflate. As for Japan, they fit the criteria well. Their lost decade is turning into 2 lost decades, of contracting growth and mounting debt. I'll try to explain the differences with Japan from the little I know. 5% of Japans debt is owned by foreigners compared to 37% of US debt. The FED Reserve only owns some 1.8 Trillion in Treasury bonds (12%), whereas in Japan, it's roughly the same (9%). Japan runs a mercantile economy and exchange rate system, where the US is the worlds "consumer engine" and continually runs massive trade deficits. All those pieces fit together and tell a story. Basically, the US exports debt, whereas Japan exports high-tech products the world wants. When international investors dump Japanese Government bonds, it will have a negligible impact on the Yen. It will have a huge impact on the dollar (+ reserve premium). Japan didn't implode because their export-based economy was propped up by global demand. Had they ran an import-based economy like ours, they would have imploded a long time ago. IOW, Japan is structurally deficient by 7-10% GDP, but that's "papered over" by a massive export surplus. America is the total opposite. We ran massive trade deficits for nearly two decades. As for the degree of monetization. First, the US FED only owns some 12% of Treasury debt. It's not a huge amount. Second, when foreign investors dump US Treasuries, the FED will have to monetize the difference. How much? Roughly triple their current holdings (from 12% to 36%). Look at commodities now with a FED balance sheet at 2 Trillion. How much more will commodities jump (and the dollar drop....don't forget about the loss of premium built into reserve status), when the FED holds a balance sheet of 5.6 Trillion, that accumulates 1.2 Trillion, per year?