Obama admits the US is insolvent

[bamacre]

While we would pay more for imports, our exports become relatively cheaper. What is the point of having $3/gallon gas if 20% of the workforce is un or underemployed because they could never work as cheaply as the labor in a country who's fixing their cheap labor to the dollar? I don't understand this huge desire to have an overly strong dollar. Yes, it's nice that we can get imports cheaply but those trade deficits were never sustainable. As long as our dollar is as strong as it is, we will continue to get killed by foreign competition.

If we have a strong dollar, we need not export so much. Listen to what you're saying. Would you like it if the gov't cut your pay, so you could work more? No, but that's exactly what you're suggesting. People work harder for less pay. Do we want to export more goods? Sure. But we don't want to get paid shit for doing it. The goal is to export more and get paid for doing it. The goal is to work less and get paid more, not work more and get paid less. It's sad that people can't even understand the fundamentals of economics. You think an economy is good as long as everyone is working, as long as we export more and import less. If someone created a machine that produced everything we need and everything we want, you guys would try to outlaw it because it would cause unemployment. What makes an economy good is one that improves our standard of living, one that makes our lives easier and richer. Making our ten dollar bill worth 25 cents doesn't increase our standard of living, it makes it worse. Making our money worth less doesn't make us wealthier. I can't believe an educated non-retarded adult could imply such a thing.

 

[werepossum]

If we have a strong dollar, we need not export so much. Listen to what you're saying. Would you like it if the gov't cut your pay, so you could work more? No, but that's exactly what you're suggesting. People work harder for less pay. Do we want to export more goods? Sure. But we don't want to get paid shit for doing it. The goal is to export more and get paid for doing it. The goal is to work less and get paid more, not work more and get paid less. It's sad that people can't even understand the fundamentals of economics. You think an economy is good as long as everyone is working, as long as we export more and import less. If someone created a machine that produced everything we need and everything we want, you guys would try to outlaw it because it would cause unemployment. What makes an economy good is one that improves our standard of living, one that makes our lives easier and richer. Making our ten dollar bill worth 25 cents doesn't increase our standard of living, it makes it worse. Making our money worth less doesn't make us wealthier. I can't believe an educated non-retarded adult could imply such a thing.

Pretty much how I feel about that argument. Yeah, we sell more stuff, but we get less actual value for it - and it takes the same amount of work to produce. Since we import much more than we export and no doubt will until we run out of credit, a falling dollar inevitably means we lose.

 

[BigDH01]

This non-retarded adult is going to have to explain to you some basic principles of economics.... again.

If we have a strong dollar, we need not export so much. Listen to what you're saying.

This is a fallacy driven by the fact that China is deliberately creating this situation. Our dollar is strong not because of market forces, but because they are manipulating the markets. When the Chinese middle-class will no longer accept their weakened purchasing power and the Chinese are forced to revalue, there will be a massive correction and we'll no longer have that relatively strong dollar. Then we'll have no manufacturing base and won't be able to afford the goods we'll then need to import.

What I'm saying is that I'd rather see this correction now when we have excess productive capacity in this country. I'd like to return to a market-driven trading paradigm with China. Don't you want this? Or do your free market principles necessarily play second fiddle to what your perceive to be a relationship that benefits you?

Would you like it if the gov't cut your pay, so you could work more? No, but that's exactly what you're suggesting.

Our gov't won't be in a position to cut your pay when the Chinese finally do it. I'm suggesting we do it now before even more of our capacity is exported. And it's funny that you'd blame our government for this. If our government is guilty of anything about this situation, it's that they didn't pressure China very early on to float their currency and obey market dynamics.

Do we want to export more goods? Sure. But we don't want to get paid shit for doing it.

How do the above statements even make sense? This is the thing that I keep hearing but this is not congruent, unless you're suggesting that you're unhappy with what the market will pay for the things we export. Is that what you are suggesting? Listen, I'm not suggesting that we export more, I'm telling you it's inevitable. It will mean a great deal of hardship for a lot of us, but the world is a smaller place and there are more people to feed and more people who want to buy things. This should be a concept you promote being a free-market libertarian, right?

The goal is to export more and get paid for doing it. The goal is to work less and get paid more, not work more and get paid less.

How in the hell are you going to do this? Capital flows to those nations where labor is cheap, not vice versa. Sure, I'd love it if capital remained here in the US seeking labor but it's going to a place where the workers are basically slaves due to their government's desire to fix their currency and totally kill domestic demand. That capital is not coming back and it will never until labor here is as cheap. It will never be as cheap as long as China continues to fix its currency.

It's sad that people can't even understand the fundamentals of economics.

You're telling me. I find it amazing that you are promoting an unsustainable trade regime marked by massive Chinese intervention instead of promoting a free-market system of trade between the two countries. What do you want? If the world plays by the free market system and China is forced to float we can now compete but pay more. If we accept a strong dollar policy we can buy more, have high unemployment, and just wait for the inevitable revaluing the Chinese will be forced into.

You think an economy is good as long as everyone is working, as long as we export more and import less.

It's not a matter of being good or bad or right or wrong. I'm telling you HOW IT WORKS, now playing in some fairy tale land of how I want it to be. Would it be neat if China would just keep this policy forever and Americans didn't have to work, living off the giant slave labor pool in China? Sure. But it's not sustainable. It will not last forever.

And you're right, I do want more people to work. I believe it'd be great to achieve full employment. Who doesn't? What is your alternative? Capital in the US has seen great returns investing in China and abroad while our labor (who can't compete under the rules) has suffered. Would you be opposed if we took capital away from those who have done well under this non-free market system and gave it to those who have suffered? I bet you would oppose that, which is somewhat hypocritical given how much you seem to be in favor of intervention when it appears to benefit you.

Or are you suggesting that we have entered into a period of post-scarcity? If that's the case then you can stop proselytizing for the free market right now as it will fundamentally not be able to distribute resources.

If someone created a machine that produced everything we need and everything we want, you guys would try to outlaw it because it would cause unemployment.

No I would not. But if this were actually the case I would stop watching YouTube videos about Peter Schiff as the market quits functioning when supply essentially has zero cost.

What makes an economy good is one that improves our standard of living, one that makes our lives easier and richer.

Sure, tell that to the people who lost their jobs to China because of intervention. Be sure to also tell them how you're actually against any intervention in the market so you don't want to help them financially either by giving them support directly or paying for their retooling.

Making our ten dollar bill worth 25 cents doesn't increase our standard of living, it makes it worse.

But of course this isn't what I was talking about was it. I was talking about making our 10 dollar bill worth less than 66 RMB.

I can't believe an educated non-retarded adult could imply such a thing.

And I can't understand why Milton Friedman was in Hong Kong making videos about the power of the free market WHILE Hong Kong was deliberately devaluing their currency to promote export-driven growth and weaken domestic demand. Didn't stop him from doing it and the knowledge apparently hasn't stopped you from wanting both manufacturing growth and a strong dollar.

 

[bamacre]

This is a fallacy driven by the fact that China is deliberately creating this situation. Our dollar is strong not because of market forces, but because they are manipulating the markets.

That's EXACTLY what you want to do, manipulate the value of our currency. I'm so sick and tired of this bullshit about China being so evil because they are devaluing their currency. Bunch of fucking hypocrites you are. Do you think China's policy has been good for China? It's been good in that it has helped increase exports, but it's been a fucking nightmare for the Chinese people, who have been protesting their government due to their inflation. And if you get your way, American people will end up in the streets damning their government for the inflation it caused.

When the Chinese middle-class will no longer accept their weakened purchasing power and the Chinese are forced to revalue, there will be a massive correction and we'll no longer have that relatively strong dollar.

You say that like it's a good thing. Well, it is a good thing, for the Chinese people, when they see their money increase in value, and they get a raise for the work they do. That is EXACTLY what they demand of their government. Of course your dumb ass is demanding our government do the opposite. Maybe your mind will change when you're making $100,000 a year, and bread costs $1,000 a loaf.

What I'm saying is that I'd rather see this correction now when we have excess productive capacity in this country. I'd like to return to a market-driven trading paradigm with China. Don't you want this? Or do your free market principles necessarily play second fiddle to what your perceive to be a relationship that benefits you?

Correction, what correction? What the hell is market-driven? Government intentionally devaluing our currency isn't market-driven, it's government-driven. It's central economic planning, and it won't work.

Our gov't won't be in a position to cut your pay when the Chinese finally do it.

The only pay the Chinese have cut are those of the Chinese. By killing their currency, they have cut the pay of their citizens. The Chinese work harder and get paid less for it.

I'm suggesting we do it now before even more of our capacity is exported. And it's funny that you'd blame our government for this. If our government is guilty of anything about this situation, it's that they didn't pressure China very early on to float their currency and obey market dynamics.

Yeah, because our gov't is so concerned with market dynamics. :whiste:

Here comes the hypocrisy again, it's so fucking blatant and obvious.

How do the above statements even make sense? This is the thing that I keep hearing but this is not congruent, unless you're suggesting that you're unhappy with what the market will pay for the things we export. Is that what you are suggesting? Listen, I'm not suggesting that we export more, I'm telling you it's inevitable. It will mean a great deal of hardship for a lot of us, but the world is a smaller place and there are more people to feed and more people who want to buy things. This should be a concept you promote being a free-market libertarian, right?

How is ANY of this "free market?" This is anything but free market economics.

How in the hell are you going to do this? Capital flows to those nations where labor is cheap, not vice versa.

It's not all about cheap labor. Do you really think China's exports are all due to cheap labor? It's not. Maybe you should look into this. There are many other factors involved. Not everyone eats at McDonalds because it's cheap. Not everyone buys clothes at Wal-Mart. There are people who sell hamburgers for $10, and they make a profit, people buy them even though McDonalds has 99 cent double cheeseburgers. It's not always about cost.

Sure, I'd love it if capital remained here in the US seeking labor but it's going to a place where the workers are basically slaves due to their government's desire to fix their currency and totally kill domestic demand. That capital is not coming back and it will never until labor here is as cheap. It will never be as cheap as long as China continues to fix its currency.

So, your answer is to make us all slaves because we have to compete with China's slaves. No way around that, right? We must become slaves, we must all work 16 hour days for 25 cents a day because that's what China does. And it's working beautifully for the Chinese, I mean, it's not like we see them protesting their government. :whiste:

You're telling me. I find it amazing that you are promoting an unsustainable trade regime marked by massive Chinese intervention instead of promoting a free-market system of trade between the two countries.

You are suggesting NO SUCH thing. And that's exactly why I'm in opposition.

If the world plays by the free market system and China is forced to float we can now compete but pay more. If we accept a strong dollar policy we can buy more, have high unemployment, and just wait for the inevitable revaluing the Chinese will be forced into.

The world is not playing by the rules of the free market system. Government manipulating interest rates and the value of their currency is not how free markets work. That's central economic planning. And it, what you're proposing, will be a disaster for the American people, just as it's been a disaster for the Chinese people.

It's not a matter of being good or bad or right or wrong. I'm telling you HOW IT WORKS,

I understand "how it works," and that's your problem.

 

[bamacre]

BigDH01, if you want to increase employment by lowing the cost of labor, then get rid of the minimum wage.

 

[BigDH01]

That's EXACTLY what you want to do, manipulate the value of our currency. I'm so sick and tired of this bullshit about China being so evil because they are devaluing their currency. Bunch of fucking hypocrites you are. Do you think China's policy has been good for China?

No, I'm suggesting taking action to stop China from manipulating their currency. And China's policy has achieved what China set out to do, massive extensive growth. They are following in the path of the other Asian tigers, economies which people you respect at one time lauded.

It's been good in that it has helped increase exports, but it's been a fucking nightmare for the Chinese people,

Then what problems do you have with the idea that we takes steps to end it?

who have been protesting their government due to their inflation. And if you get your way, American people will end up in the streets damning their government for the inflation it caused.

If it ends up my way and a free market is installed between the US and China, we'll pay more for things imported from China but we could then actually compete on the world market. What is so difficult to understand about this?

You say that like it's a good thing. Well, it is a good thing, for the Chinese people, when they see their money increase in value, and they get a raise for the work they do.

The fixing of their currency has pretty much meant that domestic demand for the goods they are producing can't compete with foreign demand like our's.

That is EXACTLY what they demand of their government. Of course your dumb ass is demanding our government do the opposite. Maybe your mind will change when you're making $100,000 a year, and bread costs $1,000 a loaf.

You don't seem to get it. Get this through your thick skull, a country cannot simultaneously run massive trade deficits and maintain a strong currency sans government intervention. You want both but you can't have them. Go ahead and search YouTube and see if you can find Schiff, Rothbard, Friedman, Hayek, Mises, anyone telling you this is possible.

Correction, what correction? What the hell is market-driven? Government intentionally devaluing our currency isn't market-driven, it's government-driven. It's central economic planning, and it won't work.

Our government has to do it because the Chinese government is not playing by the rules. They are centrally planning to attract our capital and destroy our labor. THEY ARE WINNING.

The only pay the Chinese have cut are those of the Chinese. By killing their currency, they have cut the pay of their citizens. The Chinese work harder and get paid less for it.

And this won't continue forever. They will eventually revalue and what I have been telling you must happen WILL HAPPEN.

Yeah, because our gov't is so concerned with market dynamics. :whiste:

I no longer feel you are in any position to say anything given that you cry foul whenever I suggest that our government take action to make the Chinese fixing untenable.

Here comes the hypocrisy again, it's so fucking blatant and obvious.

The hypocrisy is all your's. You tell me how much you love the free market but you REFUSE to be put in a position where you actually pay what these imports really cost. I'm suggesting we take steps to eliminate the trade deficit while you want to maintain a system that flies in the face of everything we know about free international trade.

How is ANY of this "free market?" This is anything but free market economics.

Which is what I'm telling you. I'm suggesting ways to force to Chinese to relinquish the fix by making it untenable.

It's not all about cheap labor. Do you really think China's exports are all due to cheap labor?

Yes.

It's not. Maybe you should look into this. There are many other factors involved.

Oh, I'm sorry. It must be because of their massive worker productivity. No, that's not it. It must be because of the degree of economic freedom there. No, that's not it. What other huge factors am I missing? That 40% of their GDP is owned by the state? That it takes an average of over 300 days to start a new company? What is the great factor that I'm missing?

Not everyone eats at McDonalds because it's cheap. Not everyone buys clothes at Wal-Mart. There are people who sell hamburgers for $10, and they make a profit, people buy them even though McDonalds has 99 cent double cheeseburgers. It's not always about cost.

You must have missed the part of your economics course where they discussed substitution. I guess YouTube didn't cover it either.

So, your answer is to make us all slaves because we have to compete with China's slaves.

What the fuck are you talking about? If we print money to the extent that China can't maintain their fix then, yes, you will work more for less. But I have news for you, our dollar is already overvalued. It would've already taken this dive were it not for intervention by the Chinese. And when we start exporting more than we import, the value of our currency goes back up. That's how it works. If you feel that in this situation that people will still be slaves then I suggest you really start analyzing your views with regards to markets and economics.

No way around that, right? We must become slaves, we must all work 16 hour days for 25 cents a day because that's what China does.

Oh, I'm sorry. Was there something about the form of Capitalism that you promote that you didn't understand. If, in a free market, the Chinese are willing to work for 16 hour days at 25 cents, then that's what the equivalent labor is worth here in the US. Did you think that all this time you weren't promoting this?

And it's working beautifully for the Chinese, I mean, it's not like we see them protesting their government. :whiste:

And they are attracting huge amounts of capital doing this. You can throw just as much blame at the feet of American capital as you can the Chinese government. But American capital doesn't really give a shit about the Chinese people just like it doesn't really give a shit about you.

You are suggesting NO SUCH thing. And that's exactly why I'm in opposition.

Why exactly? Do you like the situation as it currently stands? I bet your care for the Chinese people doesn't stop you from buying cheap imported Chinese shit, right? It's funny that you pretend to care so much for the plight of the Chinese people yet call me a hypocrite for suggesting that we engage in policy that will increase their purchasing power to the extent they can actually compete for the goods they are producing.

The world is not playing by the rules of the free market system. Government manipulating interest rates and the value of their currency is not how free markets work. That's central economic planning.

And it's achieving exactly the kind of extensive growth that China wants. It worked for the Asian tigers.

And it, what you're proposing, will be a disaster for the American people, just as it's been a disaster for the Chinese people.

The disaster for the American people is coming whether you like it or not. The fact that you know nothing about international trade and thus don't understand why we can't import everything AND have a strong currency disturbs me, especially given the supreme confidence you have that you are right.

I understand "how it works," and that's your problem.

No, you really don't, and it's my problem to the extent that I have to share a country and an economy with you when you have no idea how it works.

 

[theeedude]

We are going to have to get rid of SS tax cap.

 

[piasabird]

What do you do when the interest payment on the debt is more than the taxes you collect in a one year period?

Raise Taxes by 40%?
Severely cut back on the size of Government and cut back on all goverment programs.

These are two possibilities.

Sell Debt Bonds?

Get rid of about half of or all the people on SS and let the gradparents die or move in with family.
Get rid of Medicare?
Get rid of foodstamps and let people starve?

One of my complaints is that the government wastes over half the money we give them.

 

[piasabird]

Looks like you will see higher taxes even if you dont want to. The Middle class will have to pay more taxes.

 

[Darwin333]

Looks like you will see higher taxes even if you dont want to. The Middle class will have to pay more taxes.

It still won't cover the shortfall without significant spending cuts.

As I stated, along with the forecasted increases in entitlement spending, our spending to service the debt (both existing and new) will shoot the moon in the very near future. It is somewhat ironic that the better the economy does, especially the global economy, the higher our cost to service the debt will be. All of our debt being short term makes the budget look better for a few years while interest rates are at historical lows but it also means that a rise in those interest rates shows up in the budget almost immediately. Currently we have to roll almost all of our debt over (sell new bonds to pay off ones that are maturing) in a 4-5 year time frame. Rates go up today and within 5 years ALL of our debt will be at the higher rate. That is why our cost to service the debt has actually gone down in the last few years despite adding a shitload more debt.

Unless someone can come up with a way for the economy to rebound AND still get people/entities to loan us money at damn near zero (and potentially negative) return.

Even with the best case scenarios, I don't see how revenue can possibly come close to expenditures even if we cut non-entitlement spending drastically.

These guys can argue all they want but at the end of the day when revenue barely covers servicing the debt and a portion of our mandatory spending (which excludes all .mil/DOD, DOE, Edu, etc) investors will eventually find a better place to invest/loan their money.

 

[Darwin333]

We are going to have to get rid of SS tax cap.

History tells us that we can only extract so much, as a percentage of GDP, money from the economy via taxation regardless of the tax rates. We would need to extract an unprecedented percentage of GDP to cover expenses. You will forgive me for not being very optimistic that simply removing the SS cap will fix the problem.