Not an easy question. Silver is an industrial metal, and in a depression industrial demand will fall because the consumer products that contain silver, (mostly electronics and photography) will be the first to be cut off of home budgets. The flip side is that silver is more affordable, so people scrambling to protect their assets might suck up the world supply quickly leaving a genuine crisis in industries that MUST have it to operate.
Except for NASA and a few other very tiny industrial applications, gold isn't necessary to conduct business and the price will be strictly set by who wants it and who doesn't. Gold doesn't have the storage problem that silver does and is probably seen as the "gold standard" for storing wealth. (sorry I couldn't resist)
My personal preference is about 80% silver and 20% gold. Even in an economic crisis we will still trend tor wards more and more technology, and silver does actually disappear and become unrecoverable when used in industry. It also has a spectacular speculative record that people can point to and say "See? I can make $50 an ounce just like last time!" (600% short term gain) while gold bugs can only show maybe 150% at best. Silver's duel role as both a vehicle for holding wealth and a production commodity give more scenarios for making money. I also think Warren Buffett happens to be the smartest investor in the world which doesn't hurt.
"...reality has a well-known liberal bias." -- Stephen Colbert
Forget the metals. Just buy the mining stocks. I usually buy Newmont or Barrick Gold. Sometimes another one if I feel a big push coming on. Stocks generally move at 3x the rate of the metal. For example, during the time gold went from $230 to $450, Newmont went from 15 to 50. Stocks are much easier to buy, can be sold in about 3 seconds, require no carrying cost (unless you buy on margin), and some even pay dividends.
If you think your neighborhood retailer will accept your gold bullion then by all means buy it. But if you want to make $$$$, then buy stock.
Silver has the most leverage and probably the biggest potential. I'd be leery of holding "paper" silver as there is not enough physical silver to pay off all the trades that are made.
If you do go after gold stocks, it's probably safer to stay with the unhedged producers. A list of those in the HUI index is available on Kitco. Just "hit" the "HUI" next to it's current price to see those who make up the index. Hedged companies bet that the price of gold will fall and make money that way also. However if gold should rise too far before a hedged company can unwind its bets, the entire company could fold. Barrick had a large hedge position a few years back but has been unwinding it. Newmont is a non-hedged company. When the price of gold goes up, they benefit on the price of their unmined assets as well.
Mining stocks have great leverage, in both directions though. Having some physical gold and silver makes sense.
Here's a great link that takes about 30 minutes to wade through. But it is a comprehesive analysis of our current economic problems with the backdrop of our last 200 years as a comparison. I especially liked the paragraph describing how the FED was created in 1913 at Christmas time while 28 Senators were on vacation. Another point brought out is that the loose monetary policy of 1914-1920 followed by easy credit and pumping the money supply in the 1920's was really the cause of the depression. Hoover and his boys made it "Great" by tinkering with the economy further (sound familiar??). A number of common misconceptions are "popped." What I found the most fascinating is that with the large increase in money supply only assets were inflated, not general consumer prices. Hence, they never saw what was coming at them (again, sound familiar). Steady prices, stock prices going up, everyone happy, but a huge credit imbalance. One reason we don't see as much price inflation as we should today is that foreign imports are still plentiful and cheap. But of course assets are getting inflated. Things we currently don't import are getting more expensive.
A good basic primer. Sums things up very nicely imo. A nice read for someone who is just getting into the field.
I guess I'm on this real estate thing. Hence the story below. By the way, real estate in Saigon's district 1 ( Saigon is in Vietnam for those of you who have a public funded education) which would make anyone who thinks they have big bucks whimper like a baby ( it's more expensive than NYC), has for the most part crashed in the last 2 months ( but you won't read about this anywhere in english anyway)
Yes and my wife and I will be back in 11 weeks. Hmmmm.
Well something is happening and you don't know what it is.......do you Mr. _______ fill in the blank
And the news ( this is news?)
Tom
Real Estate What Happens If Real Estate Goes Bust The Wall Street Journal Online By Greg Ip
Five years ago, the bull market for stocks came crashing to a halt after a glorious run. Now, many worry that the roaring housing market may be headed for a train wreck as well.
What's the likelihood this could happen? For his part, Federal Reserve chairman Alan Greenspan said last week that a nationwide housing bubble was improbable, while warning of "froth in some local markets." He said a broad price decline in the housing market was unlikely to happen or to have much economic impact.
While house prices aren't likely to deflate as quickly as a hot Internet stock during the dot-com bust, the consequences have the potential to be far more devastating.
Here's how the stock and housing booms look similar -- but differ in several important respects.
The key difference is that stocks are purely financial investments. You can sell a stock on a whim, and you don't have to run out and buy another. By contrast, people live in houses, and if they sell they have to move -- which is both costly and time-consuming.
"How could you have a housing crash?" asks Ted Aronson, managing partner at Aronson Johnson Ortiz, a Philadelphia money manager. "We all just sell our houses and move into a trailer park?"
Houses are also much more expensive to sell. Mr. Greenspan says commission and other transaction costs approach 10% of the price of a home. By contrast, Mr. Aronson says big institutions typically incur transaction costs of 1% to 2% on their stock purchases.
The cost of moving is why homes change hands much less than stocks. Sales of new and existing homes in the U.S. in 2003 were equal to about 6% of total housing units in the U.S. By contrast, annual turnover on the New York Stock Exchange is about 100% of all shares outstanding. A home normally sits on the market for several weeks before selling; a stock usually sells in seconds.
Stocks also move as a single market more than houses do because they are subject to many of the same influences and often are bought and sold as part of a broad portfolio. Houses are more subject to local influences. Stocks can also be sold "short" by people who don't own them, or via derivatives. You can't bet on declining housing prices the same way. That means when houses appear overvalued, it's harder for contrarians to nudge them the other way.
I think Greenspan has a screw loose. The economic impact of a housing market crash would be huge. I can think of three main effects.
1. Equity borrowing would almost totally cease thus ending the ability of the middle class to fuel the economy. 2. Demand for cash would dry up and interest rates would dive. 3. The entire housing industry (agents, lenders, appraisers, escrow corps., title corps. & builders) would grind to a near halt laying off millions of workers.
"...reality has a well-known liberal bias." -- Stephen Colbert
I think Greenspan is saying (or at least trying to say!) that he believes that there will not be a major correction in housing prices, and therefore not much impact on the economy. I think he would agree with Iwog that a dramatic decline in prices would hurt the economy.
Regarding a prior question about the possibility of deflation (the question was basically -- if the US is printing so much money, how could there be a risk of deflation), a key point is that the US is not really printing money, but implementing policies/engaging in activities that increase the money supply. Virtually all of the increase in money supply actually occurs as a result of private activities (borrowing and spending money) rather than the US printing and spending money. In the case of a sudden shock to the economy (eg. -- foreigners deciding they don't want to fund our debt, coupled with a dramatic decline in consumer spending, causing a burst in a housing bubble, causing more belt tightening, defaults on mortgages, followed by no demand for new borrowing . . . ), the leveraging effect by which money and credit are creating in the private sector first comes to a crashing halt, and then reverses itself. The amount of electronic money declines suddenly. Paper money, such as it is, gets stuffed under matresses. As witnessed many times in history, it can happen quickly, and is not a pretty sight!
Greenspan and all his cronies certainly know that the housing market is going to collapse in a big way at some point. For now he is trying to keep it afloat until he retires. Volcker preceded Greenspam and predicts a very different future for real estate than Sir Allan. He should know, he commanded the FED during the 2nd worse crisis we've had to date. The housing market bursting will make the Dot.com mania look like small potatoes, and the FED is out of bullets to have much effect. All they could do is lower interest rates further and try to create other bubbles to take their place. At this point I think the aveage American would finally get "IT."
The entire housing industry (agents, lenders, appraisers, escrow corps., title corps. & builders) would grind to a near halt laying off millions of workers.
But on the bright side, the stock of moving van companies would skyrocket as people left their homes to the Banks and Mortgage companies. National Van lines stock as well as Ryder and UHaul are the places to be.
I dont know a lot about all of the economic theories espoused in this thread. Im sure there is some basis in fact for all of them. I do know a little bit about human nature. It is important to buy low and sell high for obvious reasons. However, that is never what most people do. In fact, they do just the opposite. No one wants to buy gold or silver until it is at extremely high prices. Why is this? I dont know. Unless one has a lot of money(at least a million) to use just to buy bullion, I dont think bullion is the best play. I think the best play is PCGS or NGC graded ms64 or 65 twenty libs or PCGS or NGC graded ms64, 65, 66 saints. These coins will climb like wild fire if gold ever goes above 500 an oz. Todays prices will look like chicken feed. For those of you who say they are over priced right now and gold will fall soon, I say you will be one of the above folks who jump in at the top. Woe is you. JMHO.
In an insane society, a sane person will appear to be insane.
I think gold in general is an excellent investment but I can't see high grade gold coins moving as much as bullion does. In 1980 when silver went insane, many antique silver holloware sets found their way into the furnace because collectors were simply not willing to pay a premium over melt when the value reached thousands of dollars. I can see this happening with gold coins too.
I'm not saying it's a bad play, and I've certainly bought my share of gold in PCGS slabs. It's primarily because I wish to own examples as a collector and not because I expect the coins to outperform pure metal.
"...reality has a well-known liberal bias." -- Stephen Colbert
The leverage in MS64 and 65 saints has already been demonstrated (MS66's and 63's didn't see the leverage as much) in the last 3 runs. First it was the run to $378 and then the next run to $425 and finally the last run to $457. Recall that when gold was at $300 an ounce that MS64 Saints were at $425. It will not take gold to hit $600 to get MS64 Saints to $850. Heck they almost hit $800 on the way to $457! This trend will continue to $500 and probably $600 too. At some point the leverage will disappear, but that might not be until $1000/oz. I could easily see MS64 saints trading hands for $1200-1500 again while MS65's could be at $2500-$3000 with gold at far less than $1000/oz. It would only take gold at $600-750 an ounce to incite that kind of frenzy.
Mr Early, after being suckered by 2 consecutive bubbles (dot.com and real estate) I think the US public would be leery enough to recognize an attempt at a 3rd or 4th in succession. But maybe not.
Mr Early, after being suckered by 2 consecutive bubbles (dot.com and real estate) I think the US public would be leery enough to recognize an attempt at a 3rd or 4th in succession. But maybe not.
roadrunner >>
Roadrunner, but then again the existence of common sense has reached nearly R-7
<< <i>I dont know a lot about all of the economic theories espoused in this thread. Im sure there is some basis in fact for all of them. I do know a little bit about human nature. It is important to buy low and sell high for obvious reasons. However, that is never what most people do. In fact, they do just the opposite. No one wants to buy gold or silver until it is at extremely high prices. Why is this? I dont know. Unless one has a lot of money(at least a million) to use just to buy bullion, I dont think bullion is the best play. I think the best play is PCGS or NGC graded ms64 or 65 twenty libs or PCGS or NGC graded ms64, 65, 66 saints. These coins will climb like wild fire if gold ever goes above 500 an oz. Todays prices will look like chicken feed. For those of you who say they are over priced right now and gold will fall soon, I say you will be one of the above folks who jump in at the top. Woe is you. JMHO. >>
This touches on what few people really comprehend. Even economist and politicians often miss the forest for the trees. There are no simple ways to gauge anything simply because of the per- versity of human nature. When something is being given away by the market no one wants it and when the "value" soars then no price can be too high. Most people live most of their lives just going along with the flow and we all live parts of our lives this way. We know intuitively that predictions are almost always meaningless so rather than strike out on our own with "predictions" we'll usually either follow the crowd or do what has served us or others well in the past. At least when the market or rea- lity makes fools of us we'll be in good company. This means we're more likely to buy tulips in a mania than when we're planting a garden.
The market (and the future) is made up of the sum total of all the buying and selling decisions that people make. Yet we make most such decisions with very little understanding of what we're buying and selling and no clue what the future holds. There are numerous rules and laws which govern nature and our behavior but even here nothing is set in stone. Since nature behaves chaotically we don't know what effect our actions will have on the future much less what actions the other six billion people are taking or their effect.
The best we can do is keep our eyes open and try to correlate current events and forces to how they've unfolded in the past. It may not help much with predicting the future but it will usually help with understanding the present.
<< <i>Understanding the madness of the crowds is indeed the basis for investment. I'll take my Tulip with a lemon twist.
roadrunner >>
Well yes Mr Roadrunner and I was going to add that while nobody wants to admit to being a slave to any degree, it's certainly pathetic where a people from a "free" country find not only ways to disagree with the definition of freedom but actually make arguments albeit weak ones as to how we/they are NOT slaves.
Meanwhile is there a "game" on?
Hahahahaha
And you were thinking that the "baaaaaaaaah's" would become words of some sort?
I think economics is a simple science that gets hopelessly mired in self-interest, ego, and politics. It's also made harder to understand by the sheer size and the difficulty in taking accurate measurments.
I had some real doubt about my predictions in 2002 after the recession, because the economy seemed to be recovering for no apparent reason. The real estate bubble was the missing link and it seems our "recovery" was borrowed and will have to be paid back soon. I only hope the real cause of the next depression is revealed to the public, and not covered up by our government trying to cover their collective buttocks. When the aristocracy is once again dismantled, I look forward to a resurgence of the middle class.
"...reality has a well-known liberal bias." -- Stephen Colbert
When the aristocracy is once again dismantled, I look forward to a resurgence of the middle class
You and I will be worm feed before that happens. This country has always had the mega-rich and politically connected. Big deal. You have control of your doings. If you dont like being middle class then do something about it. There are 10's of thousands of stories where the poor ole boy made it big. Go for it.. Take a chance.. If you believe in yourself then others will also. And if you dont like the freedoms that this glorious country provides then move out. Chances are we wont miss you.
cohodk, it is like the old saying "If you don't stand for something ,you will fall for anything". If people will only stop and look they will find that it is the people who have made this coutry great...now it is the government, who is taking it down...because the people are no longer standing for something...they have forgotten that Government is for the people and by the people...so Government goes on its marry way and the people are not voicing their true belief...if the people want a change than take it to the street...Paul Revere did not walk from town to town in a silent voice and say the British Were Coming...he rode his horse hard and fast through the night screeming at the top of his lungs...Paul Revere, where has't you gone!
When I talk to people on the street...I say the Americans should take America Back...but they say Americans are to soft and have become to weak...my forefathers blood lies all over this land...I would fight until the bitter end to keep this country free even if it meant war on our home land...this is my land, this is my home, I am an American!!!
<< <i>When I talk to people on the street...I say the Americans should take America Back...but they say Americans are to soft and have become to weak...my forefathers blood lies all over this land...I would fight until the bitter end to keep this country free even if it meant war on our home land...this is my land, this is my home, I am an American!!! >>
The lead in parapgrah from this article on www.safehaven.com indicates strong M3 growth. This could explain some of the recent strength in gold....and could also indicate another rise in equities not too far down the road. You would think that this much printing would have gotten more press. Maybe that $300 BILL purchase in S&P stocks from the Carribean is Bernanke's "old helicopter" scheme of dropping money from the sky once again. The solution to the current dilemma just may be printing a ton more money since our foreign partners China and Japan aren't lending enough. And this would of course continue to support the gold and coin markets.
The Feds At It Again. What Do They Fear? by Robert McHugh
M-3 is rising hard again, the Federal Reserve pumping aggressively in clandestine fashion. Seasonally adjusted M-3 rose 18.1 billion last week, is up 42.2 billion over 2 weeks, is up 64.0 billion over 3 weeks, and 152.6 billion over 12 weeks. These translate into the following annualized rates of growth in the money supply: 9.7%, 11.4%, 11.5%, and 6.94%. But these are government adjusted M-3 numbers. Take a look at the profligate growth in the raw M-3 figures this week: Up $79 billion in just the last week alone, a 42.5 percent annualized rate of growth! Up 98.6 billion the past two weeks, a 26.6 % annualized rate of growth. You see, dear friends, the Fed is full of malarkey. They are not tightening money supply. Oh, sure they are raising short-term interest rates, but it is a great deception thrust upon a wanting investment community. M3 growth is on fire
You and I will be worm feed before that happens. This country has always had the mega-rich and politically connected. Big deal. You have control of your doings. If you dont like being middle class then do something about it. There are 10's of thousands of stories where the poor ole boy made it big. Go for it.. Take a chance. If you believe in yourself then others will also. And if you dont like the freedoms that this glorious country provides then move out. Chances are we wont miss you
First of all, this country has NOT always had the mega-rich. Between the depth of the depression and the middle of the 1970's Billionaires were unheard of. There had been plenty of mega-rich in the 20's but the ability to amass gigantic sums of money was turned off because of the role wealth disparity had in the Great Depression. There was exactly ONE billionaire in the world in 1975. (Howard Hughes) In 1982 there were 13. In 1990 there were 99. In 2005 there is 691.
Secondly this is not about what's fair or right. This is about how an economy can be maintained without subjecting the country to another depression where EVERYONE suffers, the rich included.
Now for some reason you said something very odd. You implied that I was arguing against freedom and invited me to move out, how come? Do you think that allowing total freedom for business will ensure personal freedom? If this is the case I STRONGLY suggest you rethink your opinion. A free market without limits will result in slavery, not freedom and this fact has been demonstrated NUMEROUS times in history if one cares to look. I'll make the same point I have before; allowing a corporation to hire minor children and work them 12 hours a day is freedom while making laws against it is tiranny. Which do you vote for?
"...reality has a well-known liberal bias." -- Stephen Colbert
<< <i> A free market without limits will result in slavery, not freedom and this fact has been demonstrated NUMEROUS times in history if one cares to look. I'll make the same point I have before; allowing a corporation to hire minor children and work them 12 hours a day is freedom while making laws against it is tiranny. Which do you vote for? >>
This is laughable. We have child labor laws, labor boards and all sorts of controls in place. If a person doesn't like their job, they can seek another. If a company abuses it employees, it will have federal laws to deal with and fewer and fewer applicants until they either decide to offer what the competition does or go out of business. That's the way a free market works and the semi-free market in this country does not operate without limits, quite the opposite in fact.
You do sound like you are against free markets and for a strong central govenment that levels the playing field by discriminating against those who succeed.
You seem to preach just the opposite of what the founding fathers had in mind.
I have yet to hear an arguement based on logic that explains why one person should be forced to pay 35% of their income in taxes while another individual may pay half that or less. Class warfare does not fall under the heading of "logic".
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose." John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
You do sound like you are against free markets and for a strong central govenment that levels the playing field by discriminating against those who succeed.
Since you totally missed the point I'll make it a bit more clear. Allowing child labor is a FREE MARKET. Allowing large corporations to destroy smaller ones is a FREE MARKET. A corporate owned factory that requires employees to live in shacks and only shop at company stores is a FREE MARKET. This isn't a theory, this was the state of the country just after the industrial revolution and it was DISMAL! YES, I am against a free market and FOR a regulated market because a free market is a horrible place to live for a majority of the population. It leads to mass poverty and usually revolution.
Absolutely I am for a strong central government taxing those who succeed more than those who WORK HARD AND ENABLE THOSE WHO SUCCEED. You cannot make a billion dollars in this country unless thousands of employees toil under you. It's a fact not subject to debate yet for some reason you have NO PROBLEM discriminating against those who work at the bottom. What twisted sick person determined that an employee making $30,000 - $70,000 dollars a year has to pay 25% tax while a CEO paying himself entirely in options only has to pay 15%?????? This is current law supported and passed by George Bush and the Republican party while YOU keep harping on the old lie about punishing success! We're not only rewarding success, but we are punishing the people who helped the successful get there. So lets talk about the estate tax. Are the heirs to the Bill Gates fortune successful or are they getting free money they didn't have to work 1 minute for? You know the answer but you never talk about punishing freeloaders do you, it's only discriminating against those who succeed. Yet the country that by its laws, its military, and its people enabled Bill Gates to succeed are now going to be STRIPPED of the right to inherit their share of his fortune because Bush is supporting aristocracy and wealth disparity.
Don't agree? Bill Gates, Warren Buffett, and David Rockefeller......the richest men in the world are fighting to restore the estate tax because it's blatently unfair and damaging to our country. But of course you know better don't you..........
You seem to preach just the opposite of what the founding fathers had in mind.
Your damn right I do. The founding fathers considered slavery a very important aspect of the economy. I couldn't disagree with them more. If you're talking about taxation however then you need to understand that they didn't have a 400 billion dollar a year military to support. But then again.......you think the military was gutted so you LOVE spending, you just don't like paying.
I have yet to hear an arguement based on logic that explains why one person should be forced to pay 35% of their income in taxes while another individual may pay half that or less. Class warfare does not fall under the heading of "logic".
Because you're not listening. I'll give you two reasons why a progressive tax is both fair and desirable. Both are VERY reasonable and well tested by history.
1. Massive wealth disparity causes an economy to collapse and if left unchecked will eventually lead to revolution and war. Most of the Eurpoean countries have already experienced this at least once. Thus an aristocracy is bad got it? And a government policy to prevent it good. This is very logical.
2. A person cannot make a ton of money without using workers to do it. Bill Gates did not create all his wealth, HIS EMPLOYEES DID and he simply used the laws of corporate ownership to profit from it. Since the wealth of Bill Gates was a group project instead of an individual one, it's only fair that Gates be required to pay a larger share of the tax burden JUST as his emplyees gave up a share of THEIR individual wealth creation to make him rich. Conservatives talk endlessly about wealth redistribution being evil and a form of class warfare. What they refuse to consider is that ALL corporations practice wealth redistribution. The workers at the bottom create wealth, and it is redistributed to the top. This argument is also very logical.
Bill Gates would have done exactly the same thing had his reward been 100 million dollars instead of 50 billion. The conservative myth of class warfare is simply propeganda.
"...reality has a well-known liberal bias." -- Stephen Colbert
It's all relative. Besides, at the bottom there is a factory worker making minimum wage to load windows software into retail boxes. He's absolutely necessary for the success of the others but for some reason HIS wealth transfer is always forgotten.
"...reality has a well-known liberal bias." -- Stephen Colbert
”I think it is very important here to make the following point. There is NO wealth transference going on in this country from the middle class citizens to the rich unless it is voluntary.”
Let me expand somewhat on that and see if I can make a little sense out of what is happening in the World economy , and most particular here in the U.S. Below I will use several quotes from other financial thinkers to make my point.
This may seem a little complicated at first but stay with me and it gets very simple.
The reason there is so much wealth in the World now is the ability to transfer PROMISES TO PAY.
We must first of all make a distinct difference between what are REAL assets, and what are assets based on PROMISES TO PAY.
For thousands of years real assets were physical hard assets, land, buildings, gold, silver, bricks, trees, etc., anything that one could own or control that had a value to some other person.
During those thousands of years PROMISES TO PAY were paper, either in the form of fiat money, loans, debts, mortgages, etc. During most of those thousands of years the transactions for PROMISES TO PAY were simple. Someone transferred some REAL asset to someone else and they gave them a PROMISE TO PAY. This PROMISE TO PAY always had a time limit on payment set in the future.
In yester years the proportions of PROMISES TO PAY compared to REAL assets might have been 20% promises and 80% REAL assets.
In today’s financial World we have the reverse of that situation we have 80% plus PROMISES TO PAY and 20% in real Assets.
Not only that, but in today’s financial World it is no longer necessary to have a time limit on many of the PROMISES TO PAY since they can be simply be transferred for other PROMISE TO PAY.
Now here is the important part, the majority of wealth held be the riches Americans today are in PROMISES TO PAY.
All shares of stock, all bonds, all C.D’S, all notes, all mortgages, and all paper money are simply PROMISES TO PAY.
The majority of these PROMISES TO PAY are being created out of this air, just like my example of my friends who are taking their Mortgage company public as quoted from one of my other threads at the bottom.
On a much larger scale the U.S. government, the Fed, and larger corporations, are issuing POMISES TO PAY on a scale that boggles the mind, simply put it is billions each day.
All of these PROMISES TO PAY are being traded for other promises around the World. Corporations trade their share promises for fiat paper promises, people created debt promises via credit cards for paper promises, the government creates trillions of promises via social programs, and on and on and on.
So how does all this end? It ends when one large group of people decide they no longer need or want PROMISES TO PAY, they want or need REAL assets.
At some point in time there must be a break in the PROMISE TO PAY chain and when that break comes panic will ensue simple because the trillions of dollars in promise CAN NOT be redeemed for REAL assets.
On an individual financial basis if one wishes to get out of the loop before the S…. hits the fan, all one has to do is pay off, or relieve themselves, of the PROMISES TO PAY one owes, and cash in the PROMISES TO PAY one owns for REAL assets, and set back and watch as the play goes down.
“ Three concepts are key to understanding the creation of money,.
1.. When we think of money, we tend to think of cash - both bills and coin. However, less than 5% of money exists in this form - the majority of money in existence exists as bank deposits. They are merely accounting totals.
2.. All money in existence has come into existence as a loan and reflects a current loan in the financial system. The constant increase in the money stock reflects a continual increase in debt in the fiat money banking system. Conversely, if loans are paid-down, the money stock contracts.
3.. Money is created by Banks , not the government or the central bank, with loans injecting money into the monetary system and economy. Banks simply credit accounts by making loans in response to two mechanisms:”
“If the Fed wants to increase the money supply in the economy, they simply buy something - anything - in exchange for U.S. Dollars. For example, if the Fed buys bonds from Citigroup, bonds leave the economy (Citigroup's inventory of bonds decreases) and U.S. Dollars are placed into the economy that were formerly at the Fed (Citigroup's cash position rises). Or, if the Fed buys a portfolio of S&P 500 stocks from an offshore account, equities in inventory of the banking house that owned them declines and that banking house's U.S. Dollar cash position increases. The Fed's secret portfolio of equities increases (and of course equity market values rise, or don't fall as much as they might have otherwise without the big buyer). Or, if the Fed buys 14 tons of bricks from Joe's Block and Brickhouse, Incorporated, there are less bricks in the economy, but more dollars as the Fed pays U.S. Dollar denominated money to Joe's for the bricks.
Now the Fed is in a unique position in that it can print all the money it cares to, with no accountability. It need not earn it first, need not explain that it is printing it. It just prints it and buys stuff, and voila, the price of what they buy is supported and money supply rises.
What the Federal Reserve has done in stealth fashion is to devalue the American Dollar by 50% over the past five years. The trade weighted dollar was at 120 in 2002, and recently fell 50% to 80. Money Supply was $6.6 billion in January 2000, and today it is $9.7 billion, 46.9 percent more fiat currency in five years. This is why it seems like everything has doubled in cost since the turn of the millennium. But wages have not come close to keeping pace. Of course the government CPI and PPI figures have hidden the devaluation, hyperinflationary truth, as well. They don't want us to know. Worse, one benefit of currency devaluation is the repudiation of debts. Unfortunately, just the opposite has occurred. Americans and our government have more debt than ever. Sadness.”
GOLDSAINT Wednesday June 08, 2005 8:30 AM “Here is a more practical example. You know the little mortgage company that I have talked about. I told you we were taking it public; it comes on the over the counter market in a few weeks.
We analyzed the company as a private company several months ago and made a determination that it could e sold for 3 million.
We also analyzed the stock market and found that companies of this size and type were trading at about $3.00 per share. We issues the two principles 10 million shares and we fully expect the stock to trade at $3 within 30 days of the market opening.
Wow the principles will have 10 million shares at $3 so $30,000,000 worth of stock compared to $3 million from a sale. With the help of a few Wall Street types, and a little pay-o-la, the stock can stay at $3 for years. So is their $30,000,000 in stock real money, sure why not, they can sell some anytime they want.”
Goldsaint, I read that same article this weekend that you are referencing. Very insightfull. And this could partially explain why all of a sudden $300 BILLION was dumped into the S&P. ESF propping up the market? The FED/Treasury duo appears to be picking up the shortfall left by the Chinese & Japanese towards the $2 billion we need each day to keep fiat floating alive and well. At some point they may be the only support.
This concept of wealth redistribution via taxation is one I never paid too much attention to. Iwog has brought out some very good points.
Man, I never realized that raising my taxes did me such a big favor
Bush's agenda is further skew the tax system so that the wealthy pay a smaller and smaller share. Currently less than what someone earning less than $200K/yr pays. And by wealthy we are talking about people with tens of millions in assets to billionaires.
Man, I never realized that raising my taxes did me such a big favor
It all depends on what you spent the money on. Did you support Iraq? Going to war raises your taxes. How about anti-terrorism? Raises taxes. Do you want cost of living increases or a drug benefit program in social security and medicare? Those are also tax increases. TAXES ARE INCREASED BECAUSE OF SPENDING NOT BECAUSE OF REVENUE COLLECTION. When viewed in the correct light a tax cut is ONLY a transfer of liability to your children. If you want a REAL tax cut support smaller government and stop this president maniac from spending us into oblivion.
Once you accept the fact that spending is taxation then you can examine who must pay the bill. The most fair tax in my opinion is on dead people. They have a low cost of living and cannot vote against tax increases. The estate tax MUST be restored. Warren Buffett can leave 21 billion to his heirs, and 21 billion to help pay Uncle Sam's bills. In fact Warren Buffett totally agrees with me.
Next we need a progressive tax system that allows for people to succeed and get rich, but prevents the kind of insane money aquisition we've seen in the last decade. Someone worth 100 million dollars can enjoy the EXACT same lifestyle as someone who has 10 billion so why not add a few more tax brackets to the upper class? Tax incomes over 1 million at 50%, incomes over 3 million at 60% and incomes over 5 million at 80%. Restore the tax on capital gains and dividends and treat them like normal income so a CEO can't grab $5 million in options and pay 15%.
Finally, eliminate the bottom tax bracket. The working class in this country is already burdened with making upper management rich so why punish them further? Besides they will actually SPEND the extra money and increase demand for products, which in turn creates jobs. The reduction in revenue would be tiny anyway.
This is pretty much the system we used during the last 50 years before Reagan showed up. (adjusted for inflation) It worked quite well and kept us out of trouble. I see no reason we can't return to it.
"...reality has a well-known liberal bias." -- Stephen Colbert
I am telling you we are way past the point where TAXATION of any kind can do much to help our situation. All of the governments that can, all of the corporations that can, all of the Banks that can, all of the mortgage lenders that can, everyone that can, are now producing so many PROMISES TO PAY (PTP),that they can ever be paid. Not with total confiscation of all the wealthy’s assets, not through taxes. Anyone who is holding out for REAL change through ANY type of political change is going to be very disappointed. Here are the stats just for the U.S.
“ The U.S. has a total debt (Government, Corporate, and Household combined) of $38 Trillion. In addition, in 2002 Treasury Secretary Paul O'Neill commissioned a report identifying that the U.S. had future unfunded entitlement liabilities (Medicare, Medicaid, and Social Security) with a present value of $43 Trillion16 of which in 2002 would have required an immediate and perpetual income tax of 69% for everyone if they were to be met. The U.S.'s net annual economic production (Gross Domestic Product or GDP) is $11.75 Trillion with a current budget deficit of $500 Billion per year (includes Iraq War costs). It is clear from these numbers that, even if the economy was healthy, these debts and liabilities cannot be paid.”
As I see this, a financial disaster can be caused by any group trying to exchange their PROMISES TO PAY (PTP) for REAL assets. Here are a few examples:
1. The Asian want to convert their PTP into commodities, oil, copper, gold etc.
2. The Arabs want to do the same!
3. The baby boomers want their PTP out of their mutual funds for retirement.
4. Large groups of Americans actually demand payment of S.C. and Medicare.
It is only a matter of time until one of these groups, or one not mentioned, come to exchange their PTP for REAL assets and when that happens everyone will want to follow suit, but then of course it will be to late!
GoldSaint: Interesting post. Lots of food for thought here.
Ask yourself this. What if somehow we don't have a crash right away and all this debt just keeps balloning. What if the national debt actually reaches a couple quadrillion dollars and and nearly all money is merely promises rather than something tangible. What if personal debt and each person's share of public debt gets so great that only the wealthiest can ever possibly repay it.
Right before the well earned crash isn't the amount of real wealth (dams, bridges, factories, cities, gold, houses, etc) going to be greater than at any time in the past? Isn't wealth the ability to do the things humans need and wish to do? This wealth will not be destroyed in a financial panic. We'll all still have the same means and desires to continue on as before. Yes, there is every chance the system can collapse but it won't be a structural problem (less oil), it will be an operational problem. Simply knowing this can avert it until a new system can be put in place.
Betting against the American economy has been a sucker bet for a long long time. While this is likely to change in the long run one should not lose sight of the fact that profiting in a collapse can only be accomplished if one can survive it.
There are still a lot of people who are not alarmed at current debt levels. Greenspan has only very recently expressed concern for the direction of the debt. I suspect he's expected inflation for years now but is beginning to become alarmed about its possible magnitude. The dollar has farther to fall and inflation is going to take a heavy toll on debt levels but most of us will muddle through.
Right before the well earned crash isn't the amount of real wealth (dams, bridges, factories,cities, gold, houses, etc) going to be greater than at any time in the past?
The answer is no. I live near San Francisco and there haven't been any new bridges built in the last 40 years. (They are finally replacing a few because of the earthquake but the net increase will be zero) The population during that time has exploded. The only reasonable way to view wealth is per capita. There is much less silver per capita than in 1964. There is much less gold. There are FAR FAR fewer bridges, highways, dams, and cities per capita than in 1964. I'm not sure about the number of houses, however the amount of real estate is fixed and has been declining as a function of population since man first evolved. Wealth today is defined by garbage produced overseas then shipped to the USA and sold for cheap. I would agree that there is more JUNK per capita than in any other time in history, however you cannot use a plasma TV to create wealth. It's a pure consumable that will break in 10 years leaving nothing. Our homes and garages used to be filled with tools and vehicles that would last three generations. Now they are filled with polished plastic that wont even last 5 years.
And it gets worse. Wealth in natural resources as remained fixed or declined. There are fewer forests per capita than in 1964. FAR less oil, fewer fish, less land suitable for farming, and less gold, silver, copper, and other metals in the ground. (except for aluminum which is endless)
So how come we're basically happy when we're so poor? Because a mountain of debt has purchased trinkets to make us happy. Consumer electronics, disposable vehicles, and cookie cutter housing. That's all most americans own. Silver isn't even given out at weddings anymore, it's usually a bunch of potmetal junk or chromed flatware. There is no more savings in this country and even the average home that used to sit on half an acre has been reduced to a postage stamp lot and two stories of pre-fab. (Lots in my area are now developed at .08 acres) Food is cheap because most farmers are gone. What's left is huge corporations paying near slave wages to illegal aliens.
This is the true nature of our country. Durable goods, those objects which can actually create wealth and add value, are almost entirely owned by the corporations. Those corporations are mostly owned and controlled by the aristocracy. You can't even buy an office building (believe me I've tried) because landlords would rather keep them vacant for years than give up a monopoly.
Don't dispair, the deck is about to be reshuffled.
"...reality has a well-known liberal bias." -- Stephen Colbert
<< <i>Don't dispair, the deck is about to be reshuffled. >>
Don't dispair? LMAO!
All you preach is gloom and doom.
Your tax suggestions are ludicrous. A person making 5 mil would take home less than a person making 3 mil. Take away the incentive to succeed and then you have a real reason for dispair.
Eliminate the bottom tax bracket? We've been doing that for years. Currently the the top half of all wage earners pay over 96% of all taxes. I'm just a regular guy watching over 50% of my income being taken through federal taxes, FICA, medicare, sales taxes, property taxes and such a whole host of hiddden taxes and fees that it would fill several pages to try and list them all and you wonder why people want a tax break? No one should wonder why personal savings are at at all time low, there is nothing left to save. I have no idea what making a million annually is like and I'm fairly certain I never will. Still, you don't have to make all that much to be in the top 5% and when all is said and done you are lucky to keep half to support yourself and family.
No, I don't dispair because there have been Chicken Littles running around for years telling us that the sky was falling and it hasn't happened yet. It never will.
Remember "the Late Great Planet Earth" the big smash best seller by Hal Lindsey back in 1968? Here we are nearly 40 years later and nothing he so carefully laid out has happened yet.
Yet people still flock to listen to that fool. He appeared here in Houston a few months back and they were turning people away.
Now you say the deck is about to be reshuffled? What sort of madness do you have in mind for this reshuffling? A worldwide depression that would make 1929 seem like a tea party?
Yes, I believe we are going to see a dollar crash and the housing bubble burst, but it won't be the end of the world, far from it. Probably not near as much a crisis as those who are trying to benefit by it are saying. An econmomic hiccup in the bigger picture. Those that have planned accordingly will be fine, those that haven't will look to the government to rob those who saved and take care of them. It won't be long till things are back the way they were before. If you rob Peter to pay Paul, you will get Pauls's vote, but the untimate result is a short Peter and that's never a good thing.
So what else is new?
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose." John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
Your tax suggestions are ludicrous. A person making 5 mil would take home less than a person making 3 mil.
In all seriousness, this is a person who doesn't have the slightest idea how taxes work and is trying to debate taxation policy. Can someone please explain to Deadhorse how tax brackets function?
All you preach is gloom and doom.
I can see Marie Antoinette talking to a key advisor and saying "All you preach is doom and gloom......let them eat cake!" It only needs to happen once. Hey wait a minute, it's already happend once!!!! MAYBE we should take steps to stop it?? Nawwww.......we'd be anti-american for suggesting that our economy isn't bullet-proof.
"...reality has a well-known liberal bias." -- Stephen Colbert
<< <i>Your tax suggestions are ludicrous. A person making 5 mil would take home less than a person making 3 mil.
In all seriousness, this is a person who doesn't have the slightest idea how taxes work and is trying to debate taxation policy. Can someone please explain to Deadhorse how tax brackets function?
All you preach is gloom and doom.
I can see Marie Antoinette talking to a key advisor and saying "All you preach is doom and gloom......let them eat cake!" It only needs to happen once. Hey wait a minute, it's already happend once!!!! MAYBE we should take steps to stop it?? Nawwww.......we'd be anti-american for suggesting that our economy isn't bullet-proof. >>
Look, you seem to have a serious problem with insulting anyone who questions you. That seems to be perfectly acceptable in your world, but if someone tosses a rock back your way, then you act as if they have commited some horrid sin. I know that 80% removed from 5 mil leaves less than 60% removed from 3 mil. Taking away incentive has never proved to be a prosperous choice. I know haw tax brackets work. Yes, the guy with the 5 mil still has a tiny fraction more left over, but hardly enough to justify an additonal 67% effort. You can't tax your way to success. You failed to address the rest of my points regarding regular people having the dog taxed out of them. You come across sounding like you hate the common man.
So, how does this reshuffling you promise work? I'm still waiting to to hear this one. Do you think I'm just too stupid, or was it uneducated or what ever insults you tossed my way to begin with, to understand your deep revelations?
I don't believe our economy is bullet proof, far from it. But the world isn't going to end if we don't begin raising taxes on everbody again. Make no mistake, every tax sceme to tax the rich somehow reaches down to tax the regular woking people or the retired in our last president's case. That was actually double taxation and no amount of spin can change that fact.
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose." John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
Now for some reason you said something very odd. You implied that I was arguing against freedom and invited me to move out, how come? Do you think that allowing total freedom for business will ensure personal freedom? If this is the case I STRONGLY suggest you rethink your opinion. A free market without limits will result in slavery, not freedom and this fact has been demonstrated NUMEROUS times in history if one cares to look. I'll make the same point I have before; allowing a corporation to hire minor children and work them 12 hours a day is freedom while making laws against it is tiranny. Which do you vote for
Iwog,
I was not referring to you in any shape or form. However there another poster to this thread who has expressed his dissatisfaction with the USA and has mentioned his intention to flee our glorious land.
First of all, this country has NOT always had the mega-rich. Between the depth of the depression and the middle of the 1970's Billionaires were unheard of
First you cannot use the word "billionaire" since this a modern occurance. A better way to judge ones wealth would be to compare it to the the US GNP at the time of their death. This way you can accurately compare one's fortune to their peers and to the size of the US. The data I am supplying is from the book"The Wealthy 100 " published in 1996. BTW--Rockefeller was worth 1.4 billion at the time of his death in 1937.
NAME..........Date of death............wealth as a percentage of GNP Rockefeller.........1937......................1/65 Vanderbilt..........1877.......................1/87 Astor..................1848.......................1/107 Girard.................1831.......................1/150 Carnegie............1919........................1/166 Stewart..............1876........................1/178 Weyerhauser......1914.......................1/182 Gould..................1892.......................1/185 Van Rensselaer...1839.......................1/194 Field....................1906.......................1/205 Ford.....................1947.......................1/231 Mellon Bros..........1937 & 1933...........1/258 each Walton.................1992.......................1/275 Fair......................1894........................1/280 Weightman..........1904........................1/286 Taylor...................1882.......................1/286 Sage.....................1906.......................1/287 Blair......................1899........................1/289 Curtis....................1933........................1/320
This is just the top 20 wealthiest Americans. Notice that there is only 1 person of the "modern" era on the list--Sam Walton. Maybe you could include Henry Ford who died 58 years ago.
I think demonstrates that there was indeed a class of mega-rich well before our time. These 20 people dwarf the riches of Bill Gates who was #31 in 1996 with $15 billion equal to 1/425 of GNP. You could say that Rockefeller was 7x wealthier than Gates. And Ford almost 2x wealthier.
I think we must stop using todays dollars to compare to yesterday. Saying our founding fathers didnt have to deal with a $400 billion defense dept doesnt make sense. Elias Derby who died in 1799 was worth $800,000 and is #38 on the list. John Hankokk who died in 1793 was worth $350,000 and #54. George Washington, 1799, $530,000, #59, Ben Franklin, 1790, $150,000, #86. Clearly there was an "aristocracy" that helped form this country and gave it its definition. The word billionaire didnt even exist when our country was formed.
You proved my point. I stated that between World War II and the present era the mega rich didn't exist. Not a single person on your list falls in this range.
Prior to the Great Depression we had an economic depression approximately every 20 years in this country. After the New Deal we haven't had a single one. Your chart also supports too much money in too little hands being a possible cause.
Anyway your book is old and out of date. Bill Gates was worth 35 Billion in 1997, and he's worth almost 50 billion today. Warren Buffet is worth 46 billion I think. Both men would be on your chart above Sam Walton even as a % of GNP. So here we have the top 20 richest men in US history AND 3 OF THEM ARE FROM THE LAST 15 YEARS!!!
I hope this makes an impact. Wealth disparity is reaching a all time high and will cause a new depression. Just remember that it's not the few people at the top........they are just an indication of what's below. There are 691 Billionaires today and they represent the aristocracy that controls most of the industry and political power in this country.
"...reality has a well-known liberal bias." -- Stephen Colbert
Look, you seem to have a serious problem with insulting anyone who questions you. That seems to be perfectly acceptable in your world, but if someone tosses a rock back your way, then you act as if they have commited some horrid sin. I know that 80% removed from 5 mil leaves less than 60% removed from 3 mil. Taking away incentive has never proved to be a prosperous choice. I know haw tax brackets work. Yes, the guy with the 5 mil still has a tiny fraction more left over, but hardly enough to justify an additonal 67% effort. You can't tax your way to success. You failed to address the rest of my points regarding regular people having the dog taxed out of them. You come across sounding like you hate the common man.
How come you expect me to be civil when I have to spend 90% of my posts back you to defending outright lies?
Under my proposed tax law the following wage earners would net the following incomes after taxes. (not including deductions)
1 million: Net $650,000 3 million: Net $1,650,000 5 million: Net $2,450,000 10 million: Net $3,450,000
This is per year. Using this system it would not be difficult to gain 100 million dollars wealth in your lifetime if you were at the top, but it would be near impossible to gain billions. You can see your comment about the 5 million guy having a tiny fraction left over is clearly nonsense......he nets $800,000 more.....a very large fraction.
If you expect me to be civil, do your homework.
"...reality has a well-known liberal bias." -- Stephen Colbert
Gates, is now worth several multiples of that $15 Billion, and is not yet dead either. So he falls solidly within that pack. Though the stats certainly show the ravages of inflation and taxation to where we are today. Our economy is quite susceptible to a depression-like event, possibly more so that in 1929. We've made all the same mistakes so far and added many new levels of risk to the pot.
Comments
Except for NASA and a few other very tiny industrial applications, gold isn't necessary to conduct business and the price will be strictly set by who wants it and who doesn't. Gold doesn't have the storage problem that silver does and is probably seen as the "gold standard" for storing wealth. (sorry I couldn't resist)
My personal preference is about 80% silver and 20% gold. Even in an economic crisis we will still trend tor wards more and more technology, and silver does actually disappear and become unrecoverable when used in industry. It also has a spectacular speculative record that people can point to and say "See? I can make $50 an ounce just like last time!" (600% short term gain) while gold bugs can only show maybe 150% at best. Silver's duel role as both a vehicle for holding wealth and a production commodity give more scenarios for making money. I also think Warren Buffett happens to be the smartest investor in the world which doesn't hurt.
If you think your neighborhood retailer will accept your gold bullion then by all means buy it. But if you want to make $$$$, then buy stock.
Knowledge is the enemy of fear
So a 1000+ threads...and....
has anyone considered the affects of Providence on all this?
BBpM ( Finest All-Time Set $100 Plats, Da Big Coins)
My problem is with stocks in general and the silly games played by corporations.
I'd be leery of holding "paper" silver as there is not enough physical silver to pay off all the trades that are made.
If you do go after gold stocks, it's probably safer to stay with the unhedged producers. A list of those in the HUI index is available on Kitco. Just "hit" the "HUI" next to it's current price to see those who make up the index. Hedged companies bet that the price of gold will fall and make money that way also. However if gold should rise too far before a hedged company can unwind its bets, the entire company could fold. Barrick had a large hedge position a few years back but has been unwinding it. Newmont is a non-hedged company. When the price of gold goes up, they benefit on the price of their unmined assets as well.
Mining stocks have great leverage, in both directions though. Having some physical gold and silver makes sense.
Here's a great link that takes about 30 minutes to wade through.
But it is a comprehesive analysis of our current economic problems with the backdrop of our last 200 years as a comparison. I especially liked the paragraph describing how the FED was created in 1913 at Christmas time while 28 Senators were on vacation.
Another point brought out is that the loose monetary policy of 1914-1920 followed by easy credit and pumping the money supply in the 1920's was really the cause of the depression. Hoover and his boys made it "Great" by tinkering with the economy further (sound familiar??). A number of common misconceptions are "popped."
What I found the most fascinating is that with the large increase in money supply only assets were inflated, not general consumer prices. Hence, they never saw what was coming at them (again, sound familiar). Steady prices, stock prices going up, everyone happy, but a huge credit imbalance. One reason we don't see as much price inflation as we should today is that foreign imports are still plentiful and cheap. But of course assets are getting inflated.
Things we currently don't import are getting more expensive.
A good basic primer. Sums things up very nicely imo. A nice read for someone who is just getting into the field.
Denial???
roadrunner
Yes and my wife and I will be back in 11 weeks. Hmmmm.
Well something is happening and you don't know what it is.......do you Mr. _______ fill in the blank
And the news ( this is news?)
Tom
Real Estate
What Happens If Real Estate Goes Bust
The Wall Street Journal Online
By Greg Ip
Five years ago, the bull market for stocks came crashing to a halt after a glorious run. Now, many worry that the roaring housing market may be headed for a train wreck as well.
What's the likelihood this could happen? For his part, Federal Reserve chairman Alan Greenspan said last week that a nationwide housing bubble was improbable, while warning of "froth in some local markets." He said a broad price decline in the housing market was unlikely to happen or to have much economic impact.
While house prices aren't likely to deflate as quickly as a hot Internet stock during the dot-com bust, the consequences have the potential to be far more devastating.
Here's how the stock and housing booms look similar -- but differ in several important respects.
The key difference is that stocks are purely financial investments. You can sell a stock on a whim, and you don't have to run out and buy another. By contrast, people live in houses, and if they sell they have to move -- which is both costly and time-consuming.
"How could you have a housing crash?" asks Ted Aronson, managing partner at Aronson Johnson Ortiz, a Philadelphia money manager. "We all just sell our houses and move into a trailer park?"
Houses are also much more expensive to sell. Mr. Greenspan says commission and other transaction costs approach 10% of the price of a home. By contrast, Mr. Aronson says big institutions typically incur transaction costs of 1% to 2% on their stock purchases.
The cost of moving is why homes change hands much less than stocks. Sales of new and existing homes in the U.S. in 2003 were equal to about 6% of total housing units in the U.S. By contrast, annual turnover on the New York Stock Exchange is about 100% of all shares outstanding. A home normally sits on the market for several weeks before selling; a stock usually sells in seconds.
Stocks also move as a single market more than houses do because they are subject to many of the same influences and often are bought and sold as part of a broad portfolio. Houses are more subject to local influences. Stocks can also be sold "short" by people who don't own them, or via derivatives. You can't bet on declining housing prices the same way. That means when houses appear overvalued, it's harder for contrarians to nudge them the other way.
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
1. Equity borrowing would almost totally cease thus ending the ability of the middle class to fuel the economy.
2. Demand for cash would dry up and interest rates would dive.
3. The entire housing industry (agents, lenders, appraisers, escrow corps., title corps. & builders) would grind to a near halt laying off millions of workers.
Regarding a prior question about the possibility of deflation (the question was basically -- if the US is printing so much money, how could there be a risk of deflation), a key point is that the US is not really printing money, but implementing policies/engaging in activities that increase the money supply. Virtually all of the increase in money supply actually occurs as a result of private activities (borrowing and spending money) rather than the US printing and spending money. In the case of a sudden shock to the economy (eg. -- foreigners deciding they don't want to fund our debt, coupled with a dramatic decline in consumer spending, causing a burst in a housing bubble, causing more belt tightening, defaults on mortgages, followed by no demand for new borrowing . . . ), the leveraging effect by which money and credit are creating in the private sector first comes to a crashing halt, and then reverses itself. The amount of electronic money declines suddenly. Paper money, such as it is, gets stuffed under matresses. As witnessed many times in history, it can happen quickly, and is not a pretty sight!
At this point I think the aveage American would finally get "IT."
The entire housing industry (agents, lenders, appraisers, escrow corps., title corps. & builders) would grind to a near halt laying off millions of workers.
But on the bright side, the stock of moving van companies would skyrocket as people left their homes to the Banks and Mortgage companies. National Van lines stock as well as Ryder and UHaul are the places to be.
roadrunner
roadrunner >>
Why?
Tom
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
I'm not saying it's a bad play, and I've certainly bought my share of gold in PCGS slabs. It's primarily because I wish to own examples as a collector and not because I expect the coins to outperform pure metal.
(MS66's and 63's didn't see the leverage as much) in the last 3 runs.
First it was the run to $378 and then the next run to $425 and finally the last run to $457. Recall that when gold was at $300 an ounce that MS64 Saints were at $425. It will not take gold to hit $600 to get MS64 Saints to $850. Heck they almost hit $800 on the way to $457! This trend will continue to $500 and probably $600 too. At some point the leverage will disappear, but that might not be until $1000/oz. I could easily see MS64 saints trading hands for $1200-1500 again while MS65's could be at $2500-$3000 with gold at far less than $1000/oz. It would only take gold at $600-750 an ounce to incite that kind of frenzy.
Mr Early, after being suckered by 2 consecutive bubbles (dot.com and real estate) I think the US public would be leery enough to recognize an attempt at a 3rd or 4th in succession. But maybe not.
roadrunner
roadrunner >>
Roadrunner, but then again the existence of common sense has reached nearly R-7
Tom
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
Isn't that the wierdest thing?
<< <i>I dont know a lot about all of the economic theories espoused in this thread. Im sure there is some basis in fact for all of them. I do know a little bit about human nature. It is important to buy low and sell high for obvious reasons. However, that is never what most people do. In fact, they do just the opposite. No one wants to buy gold or silver until it is at extremely high prices. Why is this? I dont know. Unless one has a lot of money(at least a million) to use just to buy bullion, I dont think bullion is the best play. I think the best play is PCGS or NGC graded ms64 or 65 twenty libs or PCGS or NGC graded ms64, 65, 66 saints. These coins will climb like wild fire if gold ever goes above 500 an oz. Todays prices will look like chicken feed. For those of you who say they are over priced right now and gold will fall soon, I say you will be one of the above folks who jump in at the top. Woe is you. JMHO. >>
This touches on what few people really comprehend. Even economist and politicians often miss
the forest for the trees. There are no simple ways to gauge anything simply because of the per-
versity of human nature. When something is being given away by the market no one wants it and
when the "value" soars then no price can be too high. Most people live most of their lives just going
along with the flow and we all live parts of our lives this way. We know intuitively that predictions are
almost always meaningless so rather than strike out on our own with "predictions" we'll usually either
follow the crowd or do what has served us or others well in the past. At least when the market or rea-
lity makes fools of us we'll be in good company. This means we're more likely to buy tulips in a mania
than when we're planting a garden.
The market (and the future) is made up of the sum total of all the buying and selling decisions that
people make. Yet we make most such decisions with very little understanding of what we're buying
and selling and no clue what the future holds. There are numerous rules and laws which govern
nature and our behavior but even here nothing is set in stone. Since nature behaves chaotically
we don't know what effect our actions will have on the future much less what actions the other six
billion people are taking or their effect.
The best we can do is keep our eyes open and try to correlate current events and forces to how
they've unfolded in the past. It may not help much with predicting the future but it will usually help
with understanding the present.
roadrunner
<< <i>Understanding the madness of the crowds is indeed the basis for investment. I'll take my Tulip with a lemon twist.
roadrunner >>
Well yes Mr Roadrunner and I was going to add that while nobody wants to admit to being a slave to any degree, it's certainly pathetic where a people from a "free" country find not only ways to disagree with the definition of freedom but actually make arguments albeit weak ones as to how we/they are NOT slaves.
Meanwhile is there a "game" on?
Hahahahaha
And you were thinking that the "baaaaaaaaah's" would become words of some sort?
Tom
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
I had some real doubt about my predictions in 2002 after the recession, because the economy seemed to be recovering for no apparent reason. The real estate bubble was the missing link and it seems our "recovery" was borrowed and will have to be paid back soon. I only hope the real cause of the next depression is revealed to the public, and not covered up by our government trying to cover their collective buttocks. When the aristocracy is once again dismantled, I look forward to a resurgence of the middle class.
Yup. Economists are almost as bad at investoring as doctors.
You and I will be worm feed before that happens. This country has always had the mega-rich and politically connected. Big deal. You have control of your doings. If you dont like being middle class then do something about it. There are 10's of thousands of stories where the poor ole boy made it big. Go for it.. Take a chance.. If you believe in yourself then others will also. And if you dont like the freedoms that this glorious country provides then move out. Chances are we wont miss you.
Knowledge is the enemy of fear
<< <i>When I talk to people on the street...I say the Americans should take America Back...but they say Americans are to soft and have become to weak...my forefathers blood lies all over this land...I would fight until the bitter end to keep this country free even if it meant war on our home land...this is my land, this is my home, I am an American!!! >>
AMEN Brother!!!!
Knowledge is the enemy of fear
indicates strong M3 growth. This could explain some of the recent strength in gold....and could also indicate another rise in equities not too far down the road. You would think that this much printing would have gotten more press. Maybe that $300 BILL purchase in S&P stocks from the Carribean is Bernanke's "old helicopter" scheme of dropping money from the sky once again. The solution to the current dilemma just may be printing a ton more money since our foreign partners China and Japan aren't lending enough. And this would of course continue to support the gold and coin markets.
The Feds At It Again. What Do They Fear?
by Robert McHugh
M-3 is rising hard again, the Federal Reserve pumping aggressively in clandestine fashion. Seasonally adjusted M-3 rose 18.1 billion last week, is up 42.2 billion over 2 weeks, is up 64.0 billion over 3 weeks, and 152.6 billion over 12 weeks. These translate into the following annualized rates of growth in the money supply: 9.7%, 11.4%, 11.5%, and 6.94%. But these are government adjusted M-3 numbers. Take a look at the profligate growth in the raw M-3 figures this week: Up $79 billion in just the last week alone, a 42.5 percent annualized rate of growth! Up 98.6 billion the past two weeks, a 26.6 % annualized rate of growth. You see, dear friends, the Fed is full of malarkey. They are not tightening money supply. Oh, sure they are raising short-term interest rates, but it is a great deception thrust upon a wanting investment community. M3 growth is on fire
roadrunner
First of all, this country has NOT always had the mega-rich. Between the depth of the depression and the middle of the 1970's Billionaires were unheard of. There had been plenty of mega-rich in the 20's but the ability to amass gigantic sums of money was turned off because of the role wealth disparity had in the Great Depression. There was exactly ONE billionaire in the world in 1975. (Howard Hughes) In 1982 there were 13. In 1990 there were 99. In 2005 there is 691.
Secondly this is not about what's fair or right. This is about how an economy can be maintained without subjecting the country to another depression where EVERYONE suffers, the rich included.
Now for some reason you said something very odd. You implied that I was arguing against freedom and invited me to move out, how come? Do you think that allowing total freedom for business will ensure personal freedom? If this is the case I STRONGLY suggest you rethink your opinion. A free market without limits will result in slavery, not freedom and this fact has been demonstrated NUMEROUS times in history if one cares to look. I'll make the same point I have before; allowing a corporation to hire minor children and work them 12 hours a day is freedom while making laws against it is tiranny. Which do you vote for?
<< <i> A free market without limits will result in slavery, not freedom and this fact has been demonstrated NUMEROUS times in history if one cares to look. I'll make the same point I have before; allowing a corporation to hire minor children and work them 12 hours a day is freedom while making laws against it is tiranny. Which do you vote for? >>
This is laughable. We have child labor laws, labor boards and all sorts of controls in place. If a person doesn't like their job, they can seek another. If a company abuses it employees, it will have federal laws to deal with and fewer and fewer applicants until they either decide to offer what the competition does or go out of business. That's the way a free market works and the semi-free market in this country does not operate without limits, quite the opposite in fact.
You do sound like you are against free markets and for a strong central govenment that levels the playing field by discriminating against those who succeed.
You seem to preach just the opposite of what the founding fathers had in mind.
I have yet to hear an arguement based on logic that explains why one person should be forced to pay 35% of their income in taxes while another individual may pay half that or less. Class warfare does not fall under the heading of "logic".
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
Since you totally missed the point I'll make it a bit more clear. Allowing child labor is a FREE MARKET. Allowing large corporations to destroy smaller ones is a FREE MARKET. A corporate owned factory that requires employees to live in shacks and only shop at company stores is a FREE MARKET. This isn't a theory, this was the state of the country just after the industrial revolution and it was DISMAL! YES, I am against a free market and FOR a regulated market because a free market is a horrible place to live for a majority of the population. It leads to mass poverty and usually revolution.
Absolutely I am for a strong central government taxing those who succeed more than those who WORK HARD AND ENABLE THOSE WHO SUCCEED. You cannot make a billion dollars in this country unless thousands of employees toil under you. It's a fact not subject to debate yet for some reason you have NO PROBLEM discriminating against those who work at the bottom. What twisted sick person determined that an employee making $30,000 - $70,000 dollars a year has to pay 25% tax while a CEO paying himself entirely in options only has to pay 15%?????? This is current law supported and passed by George Bush and the Republican party while YOU keep harping on the old lie about punishing success! We're not only rewarding success, but we are punishing the people who helped the successful get there. So lets talk about the estate tax. Are the heirs to the Bill Gates fortune successful or are they getting free money they didn't have to work 1 minute for? You know the answer but you never talk about punishing freeloaders do you, it's only discriminating against those who succeed. Yet the country that by its laws, its military, and its people enabled Bill Gates to succeed are now going to be STRIPPED of the right to inherit their share of his fortune because Bush is supporting aristocracy and wealth disparity.
Don't agree? Bill Gates, Warren Buffett, and David Rockefeller......the richest men in the world are fighting to restore the estate tax because it's blatently unfair and damaging to our country. But of course you know better don't you..........
You seem to preach just the opposite of what the founding fathers had in mind.
Your damn right I do. The founding fathers considered slavery a very important aspect of the economy. I couldn't disagree with them more. If you're talking about taxation however then you need to understand that they didn't have a 400 billion dollar a year military to support. But then again.......you think the military was gutted so you LOVE spending, you just don't like paying.
I have yet to hear an arguement based on logic that explains why one person should be forced to pay 35% of their income in taxes while another individual may pay half that or less. Class warfare does not fall under the heading of "logic".
Because you're not listening. I'll give you two reasons why a progressive tax is both fair and desirable. Both are VERY reasonable and well tested by history.
1. Massive wealth disparity causes an economy to collapse and if left unchecked will eventually lead to revolution and war. Most of the Eurpoean countries have already experienced this at least once. Thus an aristocracy is bad got it? And a government policy to prevent it good. This is very logical.
2. A person cannot make a ton of money without using workers to do it. Bill Gates did not create all his wealth, HIS EMPLOYEES DID and he simply used the laws of corporate ownership to profit from it. Since the wealth of Bill Gates was a group project instead of an individual one, it's only fair that Gates be required to pay a larger share of the tax burden JUST as his emplyees gave up a share of THEIR individual wealth creation to make him rich. Conservatives talk endlessly about wealth redistribution being evil and a form of class warfare. What they refuse to consider is that ALL corporations practice wealth redistribution. The workers at the bottom create wealth, and it is redistributed to the top. This argument is also very logical.
Bill Gates would have done exactly the same thing had his reward been 100 million dollars instead of 50 billion. The conservative myth of class warfare is simply propeganda.
the employees got rich, too, particularly those that have been there a while..
Liberty: Parent of Science & Industry
Man, I never realized that raising my taxes did me such a big favor.
In one of my previous posts I made this comment,
”I think it is very important here to make the following point. There is NO wealth transference going on in this country from the middle class citizens to the rich unless it is voluntary.”
Let me expand somewhat on that and see if I can make a little sense out of what is happening in the World economy , and most particular here in the U.S. Below I will use several quotes from other financial thinkers to make my point.
This may seem a little complicated at first but stay with me and it gets very simple.
The reason there is so much wealth in the World now is the ability to transfer PROMISES TO PAY.
We must first of all make a distinct difference between what are REAL assets, and what are assets based on PROMISES TO PAY.
For thousands of years real assets were physical hard assets, land, buildings, gold, silver, bricks, trees, etc., anything that one could own or control that had a value to some other person.
During those thousands of years PROMISES TO PAY were paper, either in the form of fiat money, loans, debts, mortgages, etc. During most of those thousands of years the transactions for PROMISES TO PAY were simple. Someone transferred some REAL asset to someone else and they gave them a PROMISE TO PAY. This PROMISE TO PAY always had a time limit on payment set in the future.
In yester years the proportions of PROMISES TO PAY compared to REAL assets might have been 20% promises and 80% REAL assets.
In today’s financial World we have the reverse of that situation we have 80% plus PROMISES TO PAY and 20% in real Assets.
Not only that, but in today’s financial World it is no longer necessary to have a time limit on many of the PROMISES TO PAY since they can be simply be transferred for other PROMISE TO PAY.
Now here is the important part, the majority of wealth held be the riches Americans today are in PROMISES TO PAY.
All shares of stock, all bonds, all C.D’S, all notes, all mortgages, and all paper money are simply PROMISES TO PAY.
The majority of these PROMISES TO PAY are being created out of this air, just like my example of my friends who are taking their Mortgage company public as quoted from one of my other threads at the bottom.
On a much larger scale the U.S. government, the Fed, and larger corporations, are issuing POMISES TO PAY on a scale that boggles the mind, simply put it is billions each day.
All of these PROMISES TO PAY are being traded for other promises around the World. Corporations trade their share promises for fiat paper promises, people created debt promises via credit cards for paper promises, the government creates trillions of promises via social programs, and on and on and on.
So how does all this end? It ends when one large group of people decide they no longer need or want PROMISES TO PAY, they want or need REAL assets.
At some point in time there must be a break in the PROMISE TO PAY chain and when that break comes panic will ensue simple because the trillions of dollars in promise CAN NOT be redeemed for REAL assets.
On an individual financial basis if one wishes to get out of the loop before the S…. hits the fan, all one has to do is pay off, or relieve themselves, of the PROMISES TO PAY one owes, and cash in the PROMISES TO PAY one owns for REAL assets, and set back and watch as the play goes down.
“ Three concepts are key to understanding the creation of money,.
1.. When we think of money, we tend to think of cash - both bills and
coin. However, less than 5% of money exists in this form - the majority of
money in existence exists as bank deposits. They are merely accounting
totals.
2.. All money in existence has come into existence as a loan and
reflects a current loan in the financial system. The constant increase in
the money stock reflects a continual increase in debt in the fiat money
banking system. Conversely, if loans are paid-down, the money stock
contracts.
3.. Money is created by Banks , not the government or the central bank,
with loans injecting money into the monetary system and economy. Banks
simply credit accounts by making loans in response to two mechanisms:”
“If the Fed wants to increase the money supply in the economy, they simply buy something - anything - in exchange for U.S. Dollars. For example, if the Fed buys bonds from Citigroup, bonds leave the economy (Citigroup's inventory of bonds decreases) and U.S. Dollars are placed into the economy that were formerly at the Fed (Citigroup's cash position rises). Or, if the Fed buys a portfolio of S&P 500 stocks from an offshore account, equities in inventory of the banking house that owned them declines and that banking house's U.S. Dollar cash position increases. The Fed's secret portfolio of equities increases (and of course equity market values rise, or don't fall as much as they might have otherwise without the big buyer). Or, if the Fed buys 14 tons of bricks from Joe's Block and Brickhouse, Incorporated, there are less bricks in the economy, but more dollars as the Fed pays U.S. Dollar denominated money to Joe's for the bricks.
Now the Fed is in a unique position in that it can print all the money it cares to, with no accountability. It need not earn it first, need not explain that it is printing it. It just prints it and buys stuff, and voila, the price of what they buy is supported and money supply rises.
What the Federal Reserve has done in stealth fashion is to devalue the American Dollar by 50% over the past five years. The trade weighted dollar was at 120 in 2002, and recently fell 50% to 80. Money Supply was $6.6 billion in January 2000, and today it is $9.7 billion, 46.9 percent more fiat currency in five years. This is why it seems like everything has doubled in cost since the turn of the millennium. But wages have not come close to keeping pace. Of course the government CPI and PPI figures have hidden the devaluation, hyperinflationary truth, as well. They don't want us to know. Worse, one benefit of currency devaluation is the repudiation of debts. Unfortunately, just the opposite has occurred. Americans and our government have more debt than ever. Sadness.”
GOLDSAINT Wednesday June 08, 2005 8:30 AM
“Here is a more practical example. You know the little mortgage company that I have talked about. I told you we were taking it public; it comes on the over the counter market in a few weeks.
We analyzed the company as a private company several months ago and made a determination that it could e sold for 3 million.
We also analyzed the stock market and found that companies of this size and type were trading at about $3.00 per share. We issues the two principles 10 million shares and we fully expect the stock to trade at $3 within 30 days of the market opening.
Wow the principles will have 10 million shares at $3 so $30,000,000 worth of stock compared to $3 million from a sale. With the help of a few Wall Street types, and a little pay-o-la, the stock can stay at $3 for years. So is their $30,000,000 in stock real money, sure why not, they can sell some anytime they want.”
This concept of wealth redistribution via taxation is one I never paid too much attention to. Iwog has brought out some very good points.
Man, I never realized that raising my taxes did me such a big favor
Bush's agenda is further skew the tax system so that the wealthy pay a smaller and smaller share. Currently less than what someone earning less than $200K/yr pays. And by wealthy we are talking about people with tens of millions in assets to billionaires.
It all depends on what you spent the money on. Did you support Iraq? Going to war raises your taxes. How about anti-terrorism? Raises taxes. Do you want cost of living increases or a drug benefit program in social security and medicare? Those are also tax increases. TAXES ARE INCREASED BECAUSE OF SPENDING NOT BECAUSE OF REVENUE COLLECTION. When viewed in the correct light a tax cut is ONLY a transfer of liability to your children. If you want a REAL tax cut support smaller government and stop this president maniac from spending us into oblivion.
Once you accept the fact that spending is taxation then you can examine who must pay the bill. The most fair tax in my opinion is on dead people. They have a low cost of living and cannot vote against tax increases. The estate tax MUST be restored. Warren Buffett can leave 21 billion to his heirs, and 21 billion to help pay Uncle Sam's bills. In fact Warren Buffett totally agrees with me.
Next we need a progressive tax system that allows for people to succeed and get rich, but prevents the kind of insane money aquisition we've seen in the last decade. Someone worth 100 million dollars can enjoy the EXACT same lifestyle as someone who has 10 billion so why not add a few more tax brackets to the upper class? Tax incomes over 1 million at 50%, incomes over 3 million at 60% and incomes over 5 million at 80%. Restore the tax on capital gains and dividends and treat them like normal income so a CEO can't grab $5 million in options and pay 15%.
Finally, eliminate the bottom tax bracket. The working class in this country is already burdened with making upper management rich so why punish them further? Besides they will actually SPEND the extra money and increase demand for products, which in turn creates jobs. The reduction in revenue would be tiny anyway.
This is pretty much the system we used during the last 50 years before Reagan showed up. (adjusted for inflation) It worked quite well and kept us out of trouble. I see no reason we can't return to it.
Yes this was a good article.
IWOG
I am telling you we are way past the point where TAXATION of any kind can do much to help our situation. All of the governments that can, all of the corporations that can, all of the Banks that can, all of the mortgage lenders that can, everyone that can, are now producing so many PROMISES TO PAY (PTP),that they can ever be paid. Not with total confiscation of all the wealthy’s assets, not through taxes. Anyone who is holding out for REAL change through ANY type of political change is going to be very disappointed. Here are the stats just for the U.S.
“ The U.S. has a total debt (Government, Corporate, and Household
combined) of $38 Trillion. In addition, in 2002 Treasury Secretary Paul
O'Neill commissioned a report identifying that the U.S. had future unfunded
entitlement liabilities (Medicare, Medicaid, and Social Security) with a
present value of $43 Trillion16 of which in 2002 would have required an
immediate and perpetual income tax of 69% for everyone if they were to be met. The U.S.'s net annual economic production (Gross Domestic Product or GDP) is $11.75
Trillion with a current budget deficit of $500 Billion per year (includes
Iraq War costs). It is clear from these numbers that, even if the economy
was healthy, these debts and liabilities cannot be paid.”
As I see this, a financial disaster can be caused by any group trying to exchange their PROMISES TO PAY (PTP) for REAL assets. Here are a few examples:
1. The Asian want to convert their PTP into commodities, oil, copper, gold etc.
2. The Arabs want to do the same!
3. The baby boomers want their PTP out of their mutual funds for retirement.
4. Large groups of Americans actually demand payment of S.C. and Medicare.
It is only a matter of time until one of these groups, or one not mentioned, come to exchange their PTP for REAL assets and when that happens everyone will want to follow suit, but then of course it will be to late!
I'm not disagreeing with you, it's just sad that our government forgot the lessons of the 1920's and let it all go to hell like this.
Ask yourself this. What if somehow we don't have a crash right away and all this debt just
keeps balloning. What if the national debt actually reaches a couple quadrillion dollars and
and nearly all money is merely promises rather than something tangible. What if personal
debt and each person's share of public debt gets so great that only the wealthiest can ever
possibly repay it.
Right before the well earned crash isn't the amount of real wealth (dams, bridges, factories,
cities, gold, houses, etc) going to be greater than at any time in the past? Isn't wealth the
ability to do the things humans need and wish to do? This wealth will not be destroyed in a
financial panic. We'll all still have the same means and desires to continue on as before. Yes,
there is every chance the system can collapse but it won't be a structural problem (less oil), it
will be an operational problem. Simply knowing this can avert it until a new system can be
put in place.
Betting against the American economy has been a sucker bet for a long long time. While this
is likely to change in the long run one should not lose sight of the fact that profiting in a collapse
can only be accomplished if one can survive it.
There are still a lot of people who are not alarmed at current debt levels. Greenspan has only
very recently expressed concern for the direction of the debt. I suspect he's expected inflation
for years now but is beginning to become alarmed about its possible magnitude. The dollar has
farther to fall and inflation is going to take a heavy toll on debt levels but most of us will muddle
through.
5. PTP's to generations who have not and will not contribute to the system.
The answer is no. I live near San Francisco and there haven't been any new bridges built in the last 40 years. (They are finally replacing a few because of the earthquake but the net increase will be zero) The population during that time has exploded. The only reasonable way to view wealth is per capita. There is much less silver per capita than in 1964. There is much less gold. There are FAR FAR fewer bridges, highways, dams, and cities per capita than in 1964. I'm not sure about the number of houses, however the amount of real estate is fixed and has been declining as a function of population since man first evolved. Wealth today is defined by garbage produced overseas then shipped to the USA and sold for cheap. I would agree that there is more JUNK per capita than in any other time in history, however you cannot use a plasma TV to create wealth. It's a pure consumable that will break in 10 years leaving nothing. Our homes and garages used to be filled with tools and vehicles that would last three generations. Now they are filled with polished plastic that wont even last 5 years.
And it gets worse. Wealth in natural resources as remained fixed or declined. There are fewer forests per capita than in 1964. FAR less oil, fewer fish, less land suitable for farming, and less gold, silver, copper, and other metals in the ground. (except for aluminum which is endless)
So how come we're basically happy when we're so poor? Because a mountain of debt has purchased trinkets to make us happy. Consumer electronics, disposable vehicles, and cookie cutter housing. That's all most americans own. Silver isn't even given out at weddings anymore, it's usually a bunch of potmetal junk or chromed flatware. There is no more savings in this country and even the average home that used to sit on half an acre has been reduced to a postage stamp lot and two stories of pre-fab. (Lots in my area are now developed at .08 acres) Food is cheap because most farmers are gone. What's left is huge corporations paying near slave wages to illegal aliens.
This is the true nature of our country. Durable goods, those objects which can actually create wealth and add value, are almost entirely owned by the corporations. Those corporations are mostly owned and controlled by the aristocracy. You can't even buy an office building (believe me I've tried) because landlords would rather keep them vacant for years than give up a monopoly.
Don't dispair, the deck is about to be reshuffled.
<< <i>Don't dispair, the deck is about to be reshuffled. >>
Don't dispair? LMAO!
All you preach is gloom and doom.
Your tax suggestions are ludicrous. A person making 5 mil would take home less than a person making 3 mil. Take away the incentive to succeed and then you have a real reason for dispair.
Eliminate the bottom tax bracket? We've been doing that for years. Currently the the top half of all wage earners pay over 96% of all taxes. I'm just a regular guy watching over 50% of my income being taken through federal taxes, FICA, medicare, sales taxes, property taxes and such a whole host of hiddden taxes and fees that it would fill several pages to try and list them all and you wonder why people want a tax break? No one should wonder why personal savings are at at all time low, there is nothing left to save. I have no idea what making a million annually is like and I'm fairly certain I never will. Still, you don't have to make all that much to be in the top 5% and when all is said and done you are lucky to keep half to support yourself and family.
No, I don't dispair because there have been Chicken Littles running around for years telling us that the sky was falling and it hasn't happened yet. It never will.
Remember "the Late Great Planet Earth" the big smash best seller by Hal Lindsey back in 1968? Here we are nearly 40 years later and nothing he so carefully laid out has happened yet.
Yet people still flock to listen to that fool. He appeared here in Houston a few months back and they were turning people away.
Now you say the deck is about to be reshuffled? What sort of madness do you have in mind for this reshuffling? A worldwide depression that would make 1929 seem like a tea party?
Yes, I believe we are going to see a dollar crash and the housing bubble burst, but it won't be the end of the world, far from it. Probably not near as much a crisis as those who are trying to benefit by it are saying. An econmomic hiccup in the bigger picture. Those that have planned accordingly will be fine, those that haven't will look to the government to rob those who saved and take care of them. It won't be long till things are back the way they were before. If you rob Peter to pay Paul, you will get Pauls's vote, but the untimate result is a short Peter and that's never a good thing.
So what else is new?
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
In all seriousness, this is a person who doesn't have the slightest idea how taxes work and is trying to debate taxation policy. Can someone please explain to Deadhorse how tax brackets function?
All you preach is gloom and doom.
I can see Marie Antoinette talking to a key advisor and saying "All you preach is doom and gloom......let them eat cake!" It only needs to happen once. Hey wait a minute, it's already happend once!!!! MAYBE we should take steps to stop it?? Nawwww.......we'd be anti-american for suggesting that our economy isn't bullet-proof.
<< <i>Your tax suggestions are ludicrous. A person making 5 mil would take home less than a person making 3 mil.
In all seriousness, this is a person who doesn't have the slightest idea how taxes work and is trying to debate taxation policy. Can someone please explain to Deadhorse how tax brackets function?
All you preach is gloom and doom.
I can see Marie Antoinette talking to a key advisor and saying "All you preach is doom and gloom......let them eat cake!" It only needs to happen once. Hey wait a minute, it's already happend once!!!! MAYBE we should take steps to stop it?? Nawwww.......we'd be anti-american for suggesting that our economy isn't bullet-proof. >>
Look, you seem to have a serious problem with insulting anyone who questions you. That seems to be perfectly acceptable in your world, but if someone tosses a rock back your way, then you act as if they have commited some horrid sin. I know that 80% removed from 5 mil leaves less than 60% removed from 3 mil. Taking away incentive has never proved to be a prosperous choice. I know haw tax brackets work. Yes, the guy with the 5 mil still has a tiny fraction more left over, but hardly enough to justify an additonal 67% effort. You can't tax your way to success. You failed to address the rest of my points regarding regular people having the dog taxed out of them. You come across sounding like you hate the common man.
So, how does this reshuffling you promise work? I'm still waiting to to hear this one. Do you think I'm just too stupid, or was it uneducated or what ever insults you tossed my way to begin with, to understand your deep revelations?
I don't believe our economy is bullet proof, far from it. But the world isn't going to end if we don't begin raising taxes on everbody again. Make no mistake, every tax sceme to tax the rich somehow reaches down to tax the regular woking people or the retired in our last president's case. That was actually double taxation and no amount of spin can change that fact.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
Iwog,
I was not referring to you in any shape or form. However there another poster to this thread who has expressed his dissatisfaction with the USA and has mentioned his intention to flee our glorious land.
Knowledge is the enemy of fear
First you cannot use the word "billionaire" since this a modern occurance. A better way to judge ones wealth would be to compare it to the the US GNP at the time of their death. This way you can accurately compare one's fortune to their peers and to the size of the US. The data I am supplying is from the book"The Wealthy 100 " published in 1996. BTW--Rockefeller was worth 1.4 billion at the time of his death in 1937.
NAME..........Date of death............wealth as a percentage of GNP
Rockefeller.........1937......................1/65
Vanderbilt..........1877.......................1/87
Astor..................1848.......................1/107
Girard.................1831.......................1/150
Carnegie............1919........................1/166
Stewart..............1876........................1/178
Weyerhauser......1914.......................1/182
Gould..................1892.......................1/185
Van Rensselaer...1839.......................1/194
Field....................1906.......................1/205
Ford.....................1947.......................1/231
Mellon Bros..........1937 & 1933...........1/258 each
Walton.................1992.......................1/275
Fair......................1894........................1/280
Weightman..........1904........................1/286
Taylor...................1882.......................1/286
Sage.....................1906.......................1/287
Blair......................1899........................1/289
Curtis....................1933........................1/320
This is just the top 20 wealthiest Americans. Notice that there is only 1 person of the "modern" era on the list--Sam Walton. Maybe you could include Henry Ford who died 58 years ago.
I think demonstrates that there was indeed a class of mega-rich well before our time. These 20 people dwarf the riches of Bill Gates who was #31 in 1996 with $15 billion equal to 1/425 of GNP. You could say that Rockefeller was 7x wealthier than Gates. And Ford almost 2x wealthier.
I think we must stop using todays dollars to compare to yesterday. Saying our founding fathers didnt have to deal with a $400 billion defense dept doesnt make sense. Elias Derby who died in 1799 was worth $800,000 and is #38 on the list. John Hankokk who died in 1793 was worth $350,000 and #54. George Washington, 1799, $530,000, #59, Ben Franklin, 1790, $150,000, #86. Clearly there was an "aristocracy" that helped form this country and gave it its definition. The word billionaire didnt even exist when our country was formed.
Knowledge is the enemy of fear
Prior to the Great Depression we had an economic depression approximately every 20 years in this country. After the New Deal we haven't had a single one. Your chart also supports too much money in too little hands being a possible cause.
Anyway your book is old and out of date. Bill Gates was worth 35 Billion in 1997, and he's worth almost 50 billion today. Warren Buffet is worth 46 billion I think. Both men would be on your chart above Sam Walton even as a % of GNP. So here we have the top 20 richest men in US history AND 3 OF THEM ARE FROM THE LAST 15 YEARS!!!
I hope this makes an impact. Wealth disparity is reaching a all time high and will cause a new depression. Just remember that it's not the few people at the top........they are just an indication of what's below. There are 691 Billionaires today and they represent the aristocracy that controls most of the industry and political power in this country.
How come you expect me to be civil when I have to spend 90% of my posts back you to defending outright lies?
Under my proposed tax law the following wage earners would net the following incomes after taxes. (not including deductions)
1 million: Net $650,000
3 million: Net $1,650,000
5 million: Net $2,450,000
10 million: Net $3,450,000
This is per year. Using this system it would not be difficult to gain 100 million dollars wealth in your lifetime if you were at the top, but it would be near impossible to gain billions. You can see your comment about the 5 million guy having a tiny fraction left over is clearly nonsense......he nets $800,000 more.....a very large fraction.
If you expect me to be civil, do your homework.
roadrunner