It's Ok You're welcome

[aginvestorr]

4wd,

I wish I had more time to type more.  i am going to have to make this brief.  Just like krafty said,"Ah but those of us with debt will pay it off with cheap dollars."   The dollar will continue to cheapen until their is a crisis that changes the monetary system or until value is zero!  Which means high inflation and major wealth destruction for the middle and lower class(inflationary depression). 

The only way not to have this would be for the politicians to actually do the right thing.  Problem with that is, it would lead to a deflationary depression that would dwarf the Great Depression of the 30's.   They will choose inflation and the only way to prosper(increase net worth) in this scenario is to use moderate amount of debts and invest in tangible and real things(farmland,gold,silver,carefully selected stocks,etc).  Personally, I don't hold anyone political party responsible for this mess.  They all got us into this mess,  or should I say we all got ourselves into this mess.  Again my main point in posting this is, they don't have any choice but to run the printing press if they want to continue their power and rule.  Have a good day. 

[jec22]

Aginvestor, I would appreciate it if when you do have more time you would write more.  The one reason I asked Kraft if his selling was effected by the election, was because cuts in spending will change the system.  Let see, 48 million on food stamps, many of those have more spending power on food than the guy paying his own grocery bill.  Cut that and unemployment benefits, and the demand for food goes down quickly..  Inflation has made alot of farmers rich, and/or saved their farms.  Cut equipment and farmland prices 30% or more like in the 80's, and the ability to secure a line of credit for many would be greatly challenged.

So when you say the fed has no choice, are you saying this country's debt is so bad that there is no fixing it?  So party as long as you can? 

[SouthWestOhio]

JEC, extreme cuts like that will not happen.  The food banks are woefully unprepared to feed even half those people and we don't have enough police and army forces to quell the unrest caused by 48 million hungry people.

[kraft-t]

No, my decision was a personal one based simply on the math. My income is extablished for this year and the next baring a terrible crop failure in 2011.  Generally a crop failure here would not qualify for federal crop benefits.

[jrsiajdranch]

Thats why I moved so close to you no crop failures near Kraftys farms!

[JRfrom OR]

"So when you say the fed has no choice, are you saying this country's debt is so bad that there is no fixing it?" 

The quote below is from John Williams, Shadowstats.  August 5, 2010.

"The government is effectively bankrupt. Using GAAP accounting principles, the annual deficit is running in the range of $4 trillion to $5 trillion. That's beyond containment. The government can't cover it with taxes. They'd still be in deficit if they took 100% of personal income and corporate profits. They'd also still be in deficit if they cut every penny of government spending except for Social Security and Medicare."

[SouthWestOhio]

JR you are right, the Fed will not be able to balance the budget through cuts, at least in any real time way.  What I expect will happen is we will see a round of modest reductions, some additional taxes for the upper brackets, leaving us with another a 1.5 trillion decicit.  Eventually new revenue from a slowly recoverng economy will be the key to reducing the deficit..  Remember every reduction in unemployment equals new revenue without raising taxes.  The economy is a resilient beast and will come back eventually. This recovery will likely be slower than those in the past since wage growth has not been keeping up with inflation and corporations will be overly cautious when it comes time for raises.

[Palouser]

You say, as a defense against inflation that would create wealth destruction, "The only way not to have this would be for the politicians to actually do the right thing.  Problem with that is, it would lead to a deflationary depression that would dwarf the Great Depression of the 30's."

I would say that the Great Depression involved wealth destruction. The economy and jobs collapsed. So, what is this 'Right Thing' that politicians should do that is so 'right'???

I for one don't see that a Fed struggling to right the economy after a disaster is a 'moral' matter if it is an attempt to mitigate and stabilise the economy. It would be immoral IMO if it did NOT try and prevent disaster. There seems to be great confusion over morality and fiscal policy. They aren't necessarily the same by any means. There is nothing moral about letting the economy go down a rat hole and destroying the lives of millions. There is nothing fiscally responsible for that either. The decision involving morality were taken before the crash - and oddly, not one single person is going to jail for fraud. That's certainly a moral problem. I guess these people are just too important to us to send them to jail.

[JRfrom OR]

every reduction in unemployment equals new revenue without raising taxes. " 

Along with driving down interest rates, it looks like strengthening US production is one of the main thrusts behind the feds decision to further QE. 

Even with a weaker dollar we had a 44billion current account deficit in Sept.  We have had a trade deficit every year since 1975.  Over time, this imbalance would have normally devalued the dollar.  Since this devaluation has not occured in a timely and orderly fashion, huge economic pressures are building, as we see in our total debt, $180,000 for every US citizen, and in our society's expectations of further status quo.  But the Feds can see this, and are in an ever increasingly tight corner.

[kraft-t]

The truth is that there are no simplistic solution for complex problems and we are up to our neck in a complex problem.

Our deficit problems are basically a revenue problem. Lots of folks are out of work  and drawing benefits instead of paying taxes. Those with good earnings don't want to pay taxes or are doing their damnedest to avoid or postpone taxes.

Everyone cannot pay less taxes. Taxes are not too high historically and that no new taxes mentality is ludicrous.

Now they want to punish seniors for deficits that seniors are not responsible for. The debt is caused not by social spending but failure to pay for those great adventures or for tax cuts that fail to produce as advertised.