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a week ago
First of all, oil did not just drop $25, it did a drop that large in the fastest time ever. And that was because of the fall in Chinese demand for the product, because they are shutting factories faster than you can last during a roll in the hay.
Secondly, there are millions of American factory workers either out of work of working for half the pay they once received all because of the greediness of American CEOs and shareholders in the country's largest companies, who have no concern for anything other than their wallets. What they and you do not realize is that capitalism cannot last for long without a growing middle class of consumers progressively buying greater amounts of goods and services as time marches forward. But in the America of the last 35 years, wages have been rising slower than the cost of living and people have to go into debt just to maintain their standard of living,.. The government has had to borrow $22 trillion dollars to replace the buying power lost from the country losing a trillion per year on trade deficits and the costs of taking care of abandoned workers. That is not the recipe for success, and if it continues much longer you will have a deep recession that will destroy both the American economy and the American dream. Is that your prescription about the kind of country you want your kids and grandkids to grow up in? Sorry, but I refuse to accept the idea that the people who work the hardest in this country should not reap the fruit of their labors. I refuse to accept that the Iron Law of Wages must be allowed to wreck havoc on middle class families just so a small percentage of the population can steal all their savings and assets. I refuse to be so cheap as to give my country away to a foreign country all so I can save a few dollars at the store. And I refuse to leave my kids and grandkids with the bill for this idiocy, which now stands at $73,000 for every household in America.
Tariffs are the only way known to reverse this national nightmare. And if you can't see that you are part of them problem. Why don't you become part of the solution instead, rather than see your country squander the greatness that it continues to give away ?
Pump prices where I live have dropped 50 cents in the last month, but we don't have the kind of taxes that you have in Chicago. Perhaps that's the problem, or your gas station vendors are a bunch of crooks. The Lundberg survey of gas prices across the US is reporting the same kind of drop that I am seeing, so maybe you need to buy your gas elsewhere.
I have explained in detail why agricultural prices are where they are and no politician in Washington can compensate for the combination of greed and poor business decisions the farm community continues to make in calculating its production versus demand. If you want prices to rise, every one of you has to commit to planting less acreage and employing the financial tools that can help maximize your income. Its simple supply and demand, its been understood since the 1700's when Adam Smith wrote a book about it. If you blame politicians for your short-comings in your business you will continue to suffer from the same maladies that you complain about today. By every measure, most Americans are better off today than they were two years ago, so if that's not the case for you perhaps you need to examine what you are doing wrong and change for the better.
And after you do all that, try reading about the Electoral College and why the US has it to determine its President. It was agreed to in order to protect the little guy, the person who lives in a smaller State that has no political clout, so that whoever is elected President will have to serve that person's interest instead of just catering to the wealthy or the highly populated States. So this rubbish about who won the most votes is meaningless. Not for nothing, but if that battle ax Cankles had not called half of America "Deplorables", she actually might have won enough States to be President. As it turned out, maybe it was good that she didn't win, because a President is supposed to serve all of the citizens, even the deplorable ones.
a week ago
First please explain what you mean by "black projects" ? Are you referring to the assistance the government gives to poor people ? Like the trillion dollars a year the government soon will be spending to pay for obamacare ?
Secondly, the military budget is $700 billion a year out of a total budget of $4 trillion. Even if you cut all military spending to zero, in three years you would only save $2.1 trillion. But the total US debt is $22 trillion. So your solution, while it needs to be part of the solution, by itself will not make more than a 10% dent in the outstanding debt.
The second or third largest government expenditure each year is the cost of Social Security and Medicare. There are two ways to reduce those costs, either cut the amount of benefits or increase the tax charged to workers. There is a third way that Reagan wanted to implement back when the Dow Jones Industrial Average was at 2200, and that was to allow the Social Security funds to be invested in stocks, which always and still is prohibited. But the democrats who controlled both Houses of Congress during Reagan's two terms as President would not even consider making such a move. By their short sighted stupidity, they gave away the chance to see the Social Security fund grow more than ten fold, since the Dow went from 2000 to 25,000 since Reagan left office. Social Security would now not need any additional money to take care of the present and all future retirees if the democrats had listened to Reagan and invested Social Security money in the stock market, But instead they opposed the idea and forced the country to miss out on the greatest financial opportunity in the history of the United States. And that is the political party you want to manage the country ? What a bunch of losers !
The only way the country is going to pay off this massive debt is a combination of what you alluded to - a cut in spending across the board - and enacting new ways to grow the economy fast enough to generate more tax revenues that will be earmarked to pay down debt. But are you willing to accept a cut in the monthly Social Security payments that you are scheduled to receive ? Or to have a co pay on doctor visits that Medicare now picks up entirely ? Are you willing to wait until 70 to start receiving your Social Security income ? And don't tell me that you are entitled to that money because you paid into the fund, because right now a person who starts collecting Social Security income at 67 years averages only seven or so years of income payments before they get back everything they ever put into the system. Or are you willing to see your Social Security payments get cut in half after you get back all the money you put into the system ?
You see the problems of the national finances are the same problems of the farm finances. No one is willing to make the personal sacrifices that are necessary now to have better financial health in the future. And so the country continues to lose a trillion dollars of capital through its trade deficits every year, and has to borrow that money back to support the people who were screwed by the stupid trade deals the government made that benefit shareholders at the expense of workers. And so the government gets away with spending more than it takes in every year, saving nothing and racking up huge debts, the interest on which soon will be the second or even first biggest expense of the US budget. No one wants to make sacrifices, but everyone has a complaint. That is the sign of a country that has a short time remaining before it implodes financially. And at that point, you will not have to sacrifice half your Social Security income, but all of it because there won't be enough money left after the interest is paid on the debt to fund any other programs.
So yes, you are on the right track in seeing that spending has to be cut and cut drastically as part of the solution to the national debt, But that only scratches the surface., Other measures need to be implemented and soon., Tariffs to protect America's wealth and allow it to grow its GDP and resultant tax revenues is another, personal sacrifice to give up costly benefits which are now free is another part.
Paying off $22 trillion dollars is not at all easy by any measure. Its going to take a tremendous amount of discipline and sacrifice. But that is the payback for 30-something years of irresponsibility.
Saturday - last edited Saturday
Just to point out the obvious Rayc, the $22 Tril will never be paid off. Governments
never pay off their debts, ever. So, that is not even a goal to consider. It is
either inflated away or repudiated, one or the other. The debt only matters when
people (namely investors of substance) stop buying it. When compared to debt
you can buy anywhere else in the world, US debt is incredibly safe and secure.
Thus someone will buy it until they won't anymore and that is tough to predict,
given how ridiculous the rest of the world is on debt, we look pretty safe and
will for a long time most likely.
Saturday - last edited Saturday
The laws of economic nature cannot be denied for too long, and when the breaking point comes it happens swiftly and painfully. Just look at how many crashes the stock market makes. The only reason it has been able to bounce back during the last 30 years is because the central bank has printed the money for financial firms to borrow at lower interest rates than the dividend yields of the stock after a crash occurs, and the Congresses of the past have then borrowed huge sums to replace the fallout in consumer spending to turn the GDP back to positive and restore confidence in the economy.
That shell game ends once the Treasury is no longer able to fund the deficits that Congress creates. At that point the central bank has to create more money to finance the government debt, and that's when the bottom falls out. Inflation rises in a significant way, bond prices get crushed, the stock market implodes, and you wallpaper your barn with those government securities that are worth a tenth of what you paid for them.
If you think I am joking, I remind you that history is littered with the failed regimes of nations who thought they could borrow their way to prosperity. Look at the history of Argentina since the Second World War, at which time they had an economy that rivaled the US in several industries.
The myth that there's no where else to put money if you don't invest in American bonds and equities is a lie. When the bottom falls out there won;t be enough capital left in the world to buy the flood of worthless securities, because fractional lending will create a monstrous margin call that will destroy the phab=ntom wealth of just a few weeks earlier.
The US almost reached this point in 2011, when they could not round up enough new money to fund the enormous deficits that obama and the Congress crested to replace the massive drop in consumer spending after the Great Recession. The Federal Reserve bailed them out with the Quantatative Easing programs. The European Central Bank did the same a few years later, buying in nearly 80% of all corporate debt in Europe. These central banks were able to get away with this monetization only because the world was still in the disinflationary cycle that began in the 1980's. But now times have changed. An inflationary cycle is now building globally, and in that environment central banks will not be able to monetize debts without causing even more inflation.
So to think that the US is safe and secure relative to the rest of the world is a fairy tale bedtime story to tell your kids or grandkids so they won't be afraid of the dark. When the US sneezes the rest of the world catches the flu, and when the US debt collapses, every other country will be drawn down the sewer hole. The US is like the guy who has had a bad heart attack and now smokes more than he did before the attack. The country has one foot in the grave and another on a banana peel. That's how bad the fiscal condition is. It will not be long before the interest payments on the debt become the largest budget line item., and when that happens its going to become increasingly more difficult for the country to borrow, because at that point investors will realize what you wrote is going to happen : either a repudiation of principal or an inflationary spiral that will cut the price of the debt securities so low that the government will be able to pay off much of its debt for a third or less of what they borrowed.
Regardless of how it is redeemed, the situation at that time will be an economic nuclear winter. The credit crunch will be so great that you will have to run your business solely on cash reserves, which will reduce drastically the amount of acreage you can plant. And that credit crunch will stoke the inflationary cycle even more, and you will finally get $10 corn due to the limited supply. It won't do you much good, because you'll be paying $200 a barrel for oil. Government expenditures will be reduced to whatever tax revenue there is since the country will be unable to borrow. Social Security, Medicare, and all other government aid will be cut to below poverty levels.
Your only hope will be to have cash when everyone else needs it. Same as during the Great Depression. You'll have the money to buy the goods you need, and to buy assets at 30% or less than their real value. Which means that now is the time to cash out of the assets that will destroy wealth, and watch while the Rome burns. My guess is we are about 5 to 10 years from the collapse, but it could be sooner. It depends how soon the majority of baby boomers are collecting Social Security, and how many more trillion dollar deficits the US government tries to finance. The day is coming soon, and by the time you recognize it is here it will be too late.
So the bottom line is this : unless this country, individually or collectively, does not start to rapidly change the way it conducts its business, most everyone is going to be buried by an avalanche of economic disasters the likes of which have never been seen in the history of mankind. You think 25% unemployment was bad in the Great Depression ? Try 25% employment instead. And without the benefit of any government aid programs to help you out. You'll be hiring armed security forces to guard your crops from homeless and hungry people who will risk their lives just to get a stalk of your corn or a handful of your beans (so start growing wheat because nearly no one knows how to mill it into flour on their own). The US needs to get rid of its twin deficits - budget and trade - as soon as possible, and all of us will have to suffer to some degree during the transformation. You'll have to pay more for your goods and services so that wages across America rise enough to allow people to pay down their credit card balances. You'll have to pay more for your schools since the Federal government will cut their aid to your school districts. You'll have to pay more taxes to your local municipality who will be charged with repairing the Federal highways that pass through your county. Everyone will have to do with a lot less, because the alternative will be catastrophe.
I don't think Americans have the will to do it. Too much greed and selfishness in American society, no one will want to give up what they feel is owed to them. I could write all day about the countless instances I see of this selfishness and greed, starting with the a-holes who always try to get one car ahead of you in a traffic jam. Like its going to make any difference in their lives to get where they are going a few minutes earlier ? For that they have to be inconsiderate jerks ?
Well anyway, Americans for the most part will scream like stuck pigs about what they have to give up to save the country, They'll blame the bankers and the politicians, even though it was the very people complaining loudest who sat silently while eating their free government cheese or banking their government subsidy, not caring about what it meant to the future of their country. Everyone will believe it won't happen to them, no one will want to believe bad news., Its human nature. And its exactly the kind of attitude that has been prevalent in every failed society throughout history that was not crumbled by natural disaster.
So enjoy the good times while you can, and hope to die before the collapse comes. Those who refuse to learn from the lessons of history are condemned to repeat them.
In a way it`s kind of funny/strange that 2009-2016 "Happy Days!! Don`t worry beeeee Happy!!! Debt don`t matter!!" Now it`s "ooooo what about the debt??? Oh my God things are going to heck in a handbasket!! Gotta raise interest rates!!!". Really??? We went from 2015 and $18 trillion debt and all`s well to now $21 trillion and the Great Depression is coming!!! …$3 lousy trillion makes that much difference?
No, me thinks it`s the revenge of the "swamp monsters".
At some point those that hold T-Bills will be told "Notice: starting yesterday your $1,000 bonds will now be valued at $350...sorry for any inconvenience" ...well what are they gonna do?? Declare war on the United States?
That or a combination of break out the printing press and roll out a few trillion of "cheaper dollars to pay off old debt". Then there`s the Paul Krugman trick (during the previous administration of course....now it wouldn`t work) of the $1 trillion platinum coin