Originally posted by: BansheeX
If it doesn't mean a thing that we import more than we export, then let's spend even less time producing exports and issue more currency and bonds. There is either a breaking point or none at all.
There is a breaking point, and that?s the point at which the U.S. gov?t is not financially capable of paying back their debt to countries like China. Is the U.S. gov?t capable of paying back those loans? Yes, quite clearly they are capable of doing so and have continued to do so for many decades (far better than they were doing in the 19th century), especially since they take in nearly $3T in tax revenue and owe China $1.2T.
Whatever hours the Chinese work to underconsume so that we can consume their products with their savings is a meaningless endeavor. They'd be better off laying on the beach than expending that particular labor, at least leisure feels good.
Again, this is why you aren?t taken seriously by anyone that is well educated; if the Chinese would be better off jobless laying on the beach, then why the hell do they (and other nations) continue to trade and make loans with the U.S.? Because they make money on the interest and benefit hugely from our direct foreign investment in their infrastructure, which is a huge reason why their standards of living, wages, and middle class have all boomed since the 1970?s. You can deny that reality all you want, but intelligent people will simply laugh at you for suggesting the Chinese have not benefited greatly from U.S. trade and loans.
It's not the reality that's disputable, it's your cause. The cause is something much more internal and fundamental, and the assertion that treasury purchases are increasing product ownership in China is laughable, that action is a hindrance. It's like someone who has been shackled for a long time gets unshackled. He gets a job and loans some of his earnings each week to his spendthrift brother who never pays him back in real terms. He's doing better for himself despite those loans, but his brother convinces him that the main reason is because of his loans, not his unshackling.
What?s sad is that you don?t even realize you?re contradicting yourself. Tell me exactly why this above paragraph cannot be applied verbatim to the U.S. 50 years ago when we saved more, were on the gold standard, and were a creditor nation (loaning out more than we borrowed)? You can?t explain this contradiction because you don?t understand what you?re saying.
Some of it, most of those "investments" are not investments, it's recycling it back into our treasury market to get more, otherwise the stash would have never grown to the size it has now gotten.
Now, they?re investments, they?re direct foreign investments, inventory investment, business fixed investments, ABS investments, etc. I am sorry you don?t understand any of them.
You just contradicted yourself. Transactions of what? Goods and services. Without the goods and services, there are no transactions, therefore money has no use by itself, because its function is to facilitate the trade/transaction of goods and services by acting as a commonly accepted placeholder.
No, the idea that goods and services can be exchanged for goods and services is the bedrock of successful trade and finance dating back thousands of years. Money was only created to defeat the inefficiency of barter, it was to act like a placeholder for any product. It makes no sense to have a money that, unlike the things it is representing, can be counterfeited by its issuer at no labor or material cost. That ultimately distorts and confounds trade and value when the issuer invariably counterfeits more and more to make excess loans at interest against a smaller and smaller reserve of real deposits. That people individually cannot legally counterfeit like the issuer proves that even the issuers of the currency understand this. It is a supreme contradiction.
Money places a numerical value on goods and services, without them you cannot barter with someone else because you cannot quantitatively describe in detail how much said product is worth. We know a computer is worth more than a bottle of water, but why? Because the market place set a numerical value for it, without which it would become impossible to quantify and no one would have any incentive to build said machines if they were dependent on the extremely high time/energy costs of finding someone willing to randomly barter something they spuriously deemed worth as much as a computer. That?s why the barter system was supplanted by currency and eventually by paper and floating exchange fiat.
Again, if a material cost was needed to make money worthwhile then we?d see more independent countries fixed their currency exchange rate to commodities like gold. Yet we never see such occurrences or they?re inordinately rare. Why is that? What have you figured out that someone with a similar education (high school) in some other nation hasn?t already figured out? Exactly, you can?t explain why fixed exchanges rates aren?t being adopted, you can?t explain why they?re literally going extinct, and you can?t explain why floating fiat, fractional reserve banking, et al have worked for so long because you fundamentally cannot wrap your head around the idea that the combination of a free market place with central banks can help maintain a stable, functional economy capable of raising standards of living based more on borrowing than on loaning. You don?t understand inflation and cannot explain why fixed exchange rates inherently limit your ability to control disasters like the Depression because you don?t know how they came to be in the first place. And you certainly can?t quantify any of it, since you don?t have the prerequisite math skills to do so.
I never said consumption was meaningless, I said it was meaningless for someone to underconsume and then loan the resultant savings to someone who... CONSUMES WITH IT. That makes no sense, if immediate consumption was the usage, the earner would simply consume with it himself, not effectively pass the privilege off to someone else in order to receive an endless stream of paper IOU interest.
And again, tell me how this is any different from what the U.S. was doing 50 years ago (a creditor nation, i.e. loaning more than borrowing, and saving more), a period of time you wish we would get back to?
LOL? Britain and the United States are growing? How?
rofl, the U.S. and Britain have been growing for decades reject, look it up. Enjoy the temporary recession reject, and go ahead and avoid the fact that the Netherlands, China, India, etc. all continue to grow despite the current recession, and despite fundamentally using fractional reserve banking and fiat money. Yeah, woops, you lose your argument either way.
Our productive capacity has declined for decades, we hocked it all to consume the production of someone else's growth and pay ourselves infinite entitlement benefits. Our "growth" is a function of perpetual loans from productive countries who have none of that overhead, a trend that CANNOT BE SUSTAINED.
If it cannot be sustained then how have we been capable of sustaining it? And please describe in detail when it will stop working. I find it funny that you believe any of this yet have not been able to become inordinately rich shorting the market. I guess that?s what makes you a layman.
No, you don't get it. The money they loaned to American consumers gave (a) American consumers their products and (b) deprived capital from far more efficient producers. A kindergartener could have understood the shovel analogy. Such productive increases would have increased the attainability of goods for everyone on Earth, which is what any sane person would consider the road to global prosperity.
Then please explain in detail why countries, China among them, continue to loan us money and trade with us if its not in their best interest. Has every nation in the world not been able to come to the same high school level conclusions you have? I find that unbelievable! :laugh:
They'll certainly sell off their t-bills, but they would have gotten more products and productive efficiency from not buying them in the first place.
You should write a paper on it and submit your statistical findings to the NBER. I?m sure it would be interesting. You and I both know you won?t, because you literally, physically can?t, you?re not capable of proving so.
It was a complete diversion of capital that deprived their own countrymen of products and investment.
The same way the U.S. used to loan out huge amounts of dollars 50 years ago when they were a creditor nation? Woops.
Falling prices of goods and services is not a bad thing unless wages are falling faster. When more goods can be produced at a lower cost in a shorter time, prices are supposed to fall relative to wages. It happens with computers in spite of inflation and everyone loves it, there's nothing debilitating about things becoming more affordable for everyone. Shelter and food should be getting more affordable relative to wages, too, but the opposite has been happening. Junk economists like yourself used to bring up home appreciation and rising stocks as forms of wealth to offset that, but were pointing to illusions, one of which couldn't even be tapped into during most of the person's life.
Except the average American made 6.5%+ on their equity investments over 30 years between 77 and 2007. Between 08 and 2038 we?ll likely see the same trend and you?ll, yet again, have to literally invent facts and numbers to make yourself feel better on the Internet.
No, losing happens when you sell. That gold was temporarily selling for 30% less last year means nothing to me because I never sold.
No, you lost 30% in a year, that is in fact accurate, I did not say it was permanently gone which is precisely why I also mentioned the statistical fact that Schiff?s investors could still make their money back but only if they returned 300% on their end-of-year totals in 2008. Go to school.
You need to include the depression, the bank runs, the inflation crises, and the hyperinflationary collapse we're about to have, and then weigh that against a century that had none of them.
Which century did not have bank runs, depressions, inflation, etc. Don?t say the 19th century kiddo, you?ll only get slapped around like a little kid with the numerous financial crisises that occurred in that century, precisely the reason no one invested in the 19th century for decades.
Ponzi schemes do generate falsified returns, the return is a function of finding new investments, which are used to pay off old investors. Once you can't find any more new investors to oblige old investors, the scheme is exposed. The biggest difference is that we have a printing press, Madoff never counterfeited returns like the Fed does. International bond markets don't have a risk of not being paid, it has a risk of being paid in depreciated currency. If inflation risks outweigh the yield on the bond, we would have to raise the rate to keep them buying. That's why we are going to have to default with hyperinflation, we refuse to face the music and thrust the economy into a correction. It's like choosing cancer over surgery because surgery is the more immediate pain.
rofl. And let me know when hyperinflation occurs. You and Schiff has been bitch slapped around so badly these past 6 months with regards to the dollar, gold, etc. it?s going to be fun to see you make excuses for the next 6 months, and the 6 after that, and after that.
It doesn't "work" any more than Social Security has "worked". Ponzi schemes always create more costs than benefits in the long run and benefit disproportionately the operator.
It has worked because people?s standards of living have risen. You can deny that statistical fact all you want, it?s reality. I know it?s hard for you to accept, but thems the breaks kiddo.
Confidence in the FDIC is false confidence. People believe they guarantee deposits. They DON'T. They only guarantee nominal amounts, which are meaningless. They do not guarantee the value of the dollars relative to goods. It exacerbates the problem by failing to deter people from depositing with imprudent institutions, and debasing the wage values of the extremely poor who have no deposits to be guaranteed.
Except the FDIC has successfully avoided 1907-style runs. The end result is that it worked, the facts support it, we haven?t had a run like that since and all else equal we never will. Again, results are results, and they show you?re outdated and poorly educated.
And 6.5% compounded returns today is just as good as 6.5% on stocks in 1950? What about the fact that our cost of living has skyrocketed? Have you seen where shelter prices were going? Health Care? Tuition? Energy? You're not weighing the return against the cost of living, the return has gotten worse while the cost of living has gotten so high that we need employ our pregnant wives and borrow huge amounts at interest for things we never used to. The interest and taxes we pay directly or indirectly are going to outweigh returns on domestic stocks if they haven't already. Fuck, I pay 16% a paycheck for SS/Medicare that will collapse well before I collect on it. Someone in 1956 was at 4% and they actually got something out of it, adjusted at pre-Boskin inflation calculations no less. But you have the nerve to sit here and claim that stock market returns are a cure all?
The cost of living has risen while the median income has risen even more, per capita income is the highest it has ever been in history
adjusted for inflation, and consumer prices per quality good has risen. Get with the times.
Gold is not an investment, you are changing the argument after the fact to one of investing, that is not what the original argument was about. People were trying to point out to you that a person's retirement horizon is not 200 years, and that past economies were fundamentally different in nature from the ponzi scheme we developed past 1970.
Americans that started making investments in the 1970?s and didn?t touch it (let the dividends be reinvested automatically) made near 7% compounded annually until 2000. That?s a generation that has already been locked into the success of that period of time. Only a very poorly educated person would claim something to be a ponzi scheme where millions of Americans made a boatload of money during that period of time.
This unwinding of it and currency crisis is going to destroy anyone with a retirement horizon within the next 30 years, so for you do suggest staying in domestic stocks based on past performance and fundamentals is foolish. Gold outperformed your stocks the last 10 years and will continue to do so, have fun accumulating a compound interest on collapsed principal right before you retire.
rofl, so now you?re saying gold has outperformed equity since 10 years ago when last week it was gold had outperformed equity since 50 years ago? Your backpedaling in this thread is more predictable than gold?s current bubble or oil?s bubble last year, which of course you got wrong then.
No, they don't, it doesn't matter that they aren't both in the same asset class, they're both priced in dollars and the buy price needs no adjusting either way. I'm done arguing with your oatmeal brain, it's a waste of time.
Of course you?re done, you?re a fucking layman.
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