Oreville: Obviously I share your concern. Railroads will have to take on a greater burden to compensate for decreased oil production, but these can be upgraded pretty quickly. It appears this process has started.
Electric transmission is a mess and one of the greater challenges, but like the refinery pro- blem, there is relatively little to gain upgrading systems which will be greatly changed or obsolete.
Wind and nuclear need to be set free now.
It appears that the government believes there is plenty of time yet but this may not be the case. Despite the huge oil price increases demand is virtually unaffected to date. If this continues it will mean an almost certain recession to bring down oil demand.
Please let me tell you why your chart from the government says the Gov. owes this money to itself. This is the reason,
“The Bush administration opposes including Social Security and Medicare in the audited deficit. Its reason: Congress can cancel or cut the retirement programs at any time, so they should not be considered a government liability for accounting purposes.”
I do appreciate your work in sending us this link. I for one am too dumb to figure out what, “we are being paid in interest here”, but the fact is we are NOT being paid.
If you personally own a T-bill you receive interest, you pay taxes on that interest, and you spend the difference, and either roll into a new bond or do something else.
In the case of any interest the Gov. might PAY of any of the trusts, the interest is paid to no one; it is simply added to new I.O.U’S, that by the governments own admission they can cancel at any time.
Lets you and I go to the Bank and tell the bank here is what we want, we want a loan that can be rolled over forever. All the interest shall be added to the loan, so it is never paid out by us, and we want a provision on the loan that we can cancel this loan at any time and never pay you back. Let me know when you find a banker like that I will meet you there.
Yes you are right, through the last few years I have indeed searched out the media to give me some explanation as to why the optimists, and the government, keep telling us, don’t worry everything will be fine, its all working perfect.
I searched out the media because I could not believe my own eyes, and what the government published make no logical sense.
In the last five years the value of our currency has dropped significantly worldwide.
Over the last five years the average price of a single family home has averaged an increase nationwide of 35%
Over the last five years the U.S. stock market has been flat making little or no profits for the millions of folks that are getting close to retirement.
Over the last five years our gasoline and utilities costs have increased by 30 to 40%
Over the last five years my wife’s grocery bill has increased by 27 to 35%
Over the last five years our basic commodities have increased 100 to 150 %
Over the last five years our U.S. savings rate has dropped to -0-
Over the last five years what savings we did have, and did receive interest payments on, has been a negative number when adjusted for even government inflation numbers, and taxes paid on that interest.
Steve I know what you are going to tell me here, you are going to tell me that all your numbers from the Gov. are indeed correct, and we have very low inflation. You are going to tell me don’t worry that our countries assets are being sold to foreign entities by the thousands each year, presumably in the form of redeemed U.S. debt, and you are going to tell me that there is no possible way I should even believe my own eyes.
Lets get down to the real heart of the matter. Here is what I, and many other conservatives, on this thread have advised folks to do.
Pay off all the day-to-day debt you can.
Pay off the mortgage on your own home if possible.
Pay those credit cards off, and only use the ones you can pay off each month .
Do some real planning for your own retirement, don’t depend on the Gov. look for a part time comfortable retirement job.
Put some of your savings into Gold, or other hard assets.
If you have loads of T-Bills and stock assets, as well as older children, sell the T-bills/stocks and buy paid for homes for your kids, and let them make payments to you that includes a decent interest rate. When you die they get the houses.
Cut your monthly expenses, and stop buying all this junk from China.
Work on trying to cut your tax burden, half of all your earned income is going to one tax or another.
Now if I am completely wrong how will doing these conservative things hurt you?
But if you are completely wrong, and no one prepares for what looks like some rocky times ahead, then what?
Since we're on the topic of "entitlement" programs such as Social Security, here's a couple of brief articles on the subject by investment manager Ron Muhlenkamp:
(Edited because it won't let me link directly to the articles...You can find both articles in the "Archive" section though, and they're worth the read.)
"...do you think that deficit spending is, in fact, a necessary element of our financial system?" Yes. To maintain the dollar's value at a constant level (i.e., no inflation and no deflation) in a growing economy, the money supply must grow. To grow the money supply, the Fed purchases Treasury securities from the public. But without deficits, the public would hold no Tsy secs, in which case the government would have two very unpleasant choices: (1) purchase private assets to keep the money supply growing at the necessary, noninflationary pace; or (2) do nothing, thereby halting money supply growth, thereby deflating the currency, thereby stifling real economic growth and probably sending the economy into a deflationary depression. Note that (1) moves the country towards socialism, and (2) moves us towards a barter economy.
I wrote a six-article series on this that takes the logic step-by-step. Link.
"Is it, in fact, a desirable situation to run some degree of deficit?" Yes, under the current definition of the "unified budget deficit" (i.e., the increase in publicly-held debt). Here's an explanation: Link.
"The assumption of nearly everyone is that a balanced budget is the ideal situation, with neither surplus nor shortfall. Would you take issue with that fundamental assumption?" Yes, I would. I advocate maintaining the ratio of debt to GDP at a constant level, which means that the debt can grow just as fast as the economy grows. Here is a more-detailed explanation: Link.
I've thought about it for many years, and I'm convinced that the basic disconnects between that idea versus conventional wisdom are (1) the misperception that the government will someday have to pay its debt down to zero, and (2) the false assertion that deficits are automatically inflationary and cause interest rates to rise. (Further, I suspect that both of those misperceptions stem largely from economic ideas rooted in 19th century mercantilism.)
I'd like to see "balanced budget" redefined to this: "The fiscal budget that results in no change in the ratio of publicly-held debt to Gross Domestic Product". That would force the denominator into public debates about fiscal policy. I'd also like to see the Federal Reserve's mission redefined to a single, unequivocal point: maintain steady, predictable value for its product, the Federal Reserve note; i.e., maintain inflation (as it is measurable today) at 2%, nor more, no less. (Why 2% instead of 0%? The measures are imperfect, most economists think inflation is overstated by some amount, and 2% gives the Fed some room to maneuver when the inflation measure falls below that number.)
I got it. You think the trust funds contain nothing but a worthless bunch of "IOUs".
What do you advocate "locking up" in those trust funds? The SS sytem is running a surplus today. Let's assume that a coalition of you, Al Gore, Ron Paul, Jim Cooper, and John Tanner enjoy the phenomenal success of making it illegal for the general fund to borrow from that surplus. Therefore, the surplus accumulates and accumulates, and you have been appointed guardian of the surplus, in total control of the form it takes. Specifically, what form will that surplus take, now that you are in charge of it?
In other words, when I open the door to the trust fund, what do I see in there? (Gold, maybe?)
Not being of a communist mind, if I had control of these trust funds the very first thing I would do is send everyone a letter, tell them what a poor job we had done, come clean on how badly we had managed their money, and offer them all the money back they had ever paid into the system.
Yes it would take us several decades to reduce government liabilities for this repayment but then we would know where we were, and the programs would be over.
I see no reason to lie to people and then pull the rug out from under them when they are to old to do anything about this.
Who says the government would be the best investor for our savings.
If you are one of those that think the government does a wonderful job managing the money they collect from us each month, how would I ever be able to convince you otherwise.
The S.C program was set up as a safety net for widows. It was never supposed to include all Americans. Why should a guy like you and a guy like me ever pay into this system? It is not a retirement insurance program, it is just another welfare program, and the money gets spent on Lord knows what.
I already know your opinion, we should all contribute to a system backed by nothing, that never really has to pay out either the principle or the interest. You say that this money is backed by the good faith and credit of the U.S. government, this is yet another lie. The U.S government does not issue any money. When you buy these T-bills the only way you can pay for them is through some private banking group called the Federal Reserve, and when you get your money back you also receive those same notes. Now take one of those notes out of your wallet and look at it. Does it say anywhere backed by the good faith and credit of the U.S. government? It used to, but no longer.
I see know what you meant about the Brits. I guess they traded some of our debt for our pipeline and wells in Alaska.
I see British Petroleum is shutting their pipeline down today since it is leaking.
I must say that I would prefer they get some of our assets, rather than the communist Chinese, or the Arabs, but gee is everything in America going to be owned by foreigners before all this is over?
On the other hand perhaps the Arabs own control of BP?
Globalization, isn’t it great?
Funny I had not heard that a British company owned our pipeline until today, I guess that is one of the CIFUS projects that did not need congresses approval?
I really don’t think your roll over plan is working my friend!
So you are a believer in the Fed conspiracy theory, too -- on top of all the other paranoia?
I can see that I am wasting my time. I sincerely hope that those who share your outlook will remain a tiny, insignificant minority, talking amongst themselves.
Here are two links to a paper that thoroughly explains money in general, and how our present-day money system really works.
1. This is the section of the paper that deals with the "Fed versus the Gold Standard" -- a topic I'm guessing is of interest to some in this forum. Link
2. This is the table of contents for the whole paper, titled "Money and the Federal Reserve System: Myth and Reality. " Link
No doubt at least one person in this forum will think this paper is just a bunch of lies from another conspirator. So be it. I hope others will find it useful.
Standard Oil of Ohio, headquartered in Cleveland, Ohio was the leading oil company among the original sister Rockefeller oil trust companies to invest in the Alaska Oil pipeline back in the 1970's.
I remember; I worked in downtown Cleveland, right near the headquarters for the SOHIO company. I often lunched with many olf their employees and even the Famed coin collecting Norwebs joined us a few times to talk coins!
It did so well financially that British Petroleum made a huge public offering to buy out SOHIO (Standard Oil of Ohio) that was very well publicized in the newpapers to buy the stock out at a large premium. The stockholders at the time, including the typical small investor owning 100 shares or less were quite enthusiastic in getting BP stock or a combination of BP stock and cash at the time. No one at the time ever grumbled about foreigners buying the company out. They were too busy "cashing in!"
Here is a Wipedia excerpt on Standard Oil of Ohio:
Standard Oil of Ohio or Sohio was an American oil company that was acquired by British Petroleum, now called BP.
It was one of the successor companies to Standard Oil after the antitrust breakup in 1911. Standard Oil of Ohio was the original Standard Oil company founded by John D. Rockefeller.
BP took majority ownership of the company in the 1970s in return for its share of the Prudhoe Bay oilfield in Alaska. In 1987, after all other Standard Oil descendants had minimized use of the name Standard, Standard of Ohio, proud to be the original, sought to corporately rebrand itself under the Standard name while continuing to use the Sohio brand and others to sell gas in Ohio. The company used the same logo, but with Boron as the name in other states. However, the next year BP bought out the minority interest in Sohio and renamed all the Sohio and Boron stations 'BP' in 1991.
Although Sohio gas stations have ceased to exist, a few marina gas stations on Lake Erie and the Ohio River still exist bearing the Sohio name.
When BP merged with Amoco, its American headquarters moved from the former Sohio Building on Public Square in Cleveland, Ohio to Chicago, Illinois.
Sad to see you go. I do not think you have given this forum enough time.
While I may not agree on some of your points, you at least argue your points well.
But you should not give up so easily because some of us believe in the conspiracy theory or whatever theory. In fact, most of this group does question the conventional thinking of business as usual which makes most of us skeptics.
To me that is good. We are kind of the "show me, I am from Missouri" people as President Harry Truman used to say.
While I do not believe in the conspiracy theory, I do believe in that oftentimes the US Government has been derelict in its duty to safeguard and improve our infrastructure, especially when they cross state lines.
Everything from health care, railroad system, hospitals systems to electrical grids seems to be decaying under our governments watch in the past 30 years. The government can do more to partner with our 50 states to encourage positive growth.
<< <i>I can see that I am wasting my time. I sincerely hope that those who share your outlook will remain a tiny, insignificant minority, talking amongst themselves. >>
Steve2 - you are a smart man, it has taken you only a few days to figure out the irreversible psyche of the gold bug - our corrupt government is the source of their imaginary problems, and gold is the answer. They were singing the same song 20 years ago, as they will be 20 years from now.
Thanks for the links, very interesting reading.
Robert Scot: Engraving Liberty - biography of US Mint's first chief engraver
So you are a believer in the Fed conspiracy theory, too -- on top of all the other paranoia?
I can see that I am wasting my time. I sincerely hope that those who share your outlook will remain a tiny, insignificant minority, talking amongst themselves. >>
Steve, I would also like to add my thanks to you for coming into, the lion’s den, so to speak. I think it was very brave of you to come here into an open forum and express your views.
As you can tell by our discussion here many on one side or the other often get labeled because of their views. Everyone that thinks the government is way to big, and has over stepped our original founding fathers principles of small government, hard work, self-reliance, etc. is labeled here a conspiracy theory nut and a gold bug.
In my case I believe myself to be neither a conspiracy theorist, nor a gold bug. I do own some gold perhaps 5% of my net worth.
I do think we are in for some troubling economic times. All socialist governments through history fail in the end. You cannot continue to take the hard made earnings of our best and brightest people and re-distribute it to those that will not pull there weight.
In our country at the present time we have nearly one third of our working people working for one form of government or another, county, city, state, or federal. We also have one third of our adult population that depend entirely on those governments for complete, or partial subsistence.
Do I think that our governments officials hearts were in the right place when they offered to help everyone with every life problem, yes I do.
Do I think there is no possible way for those of us still working and producing to pay for all of this? Yes I do.
The simple fact of life here is that there is not going to be enough investment dollars in the entire world to keep rolling this debt as it is added to by trillions of dollars each year.
You may have noticed that our best and brightest are taking the only way out they can to avoid our coming economic deterioration. They are moving their money into gold and other commodities, foreign currencies, real properties, and moving their businesses to foreign lands.
Do I think that there are lots of deals made with foreign countries and companies to keep rolling our huge debt? Absolutely, why do you think we ever let Japan have such a huge market here? Why do we let the communist Chinese sell in every store in America, but you cannot buy a Cuban cigar?
Why would any central bank want to own billions of our debt backed by these federal reserve notes that do not pay enough interst to cover our government stated inflation and the continued downward fall of our currency world wide?
At any rate I wish you the very best in your endeavors, and I actually hope you are right and I am wrong in all of this.
“Standard Oil of Ohio or Sohio was an American oil company that was acquired by British Petroleum, now called BP.”
Hey Oreville my old friend,
This was a halfhearted dig at Steve, I just could not resist with yesterdays news, on the other hand, who knows who owns, and controls the board of this great company now?
Steve one last item. I know you think I am a radical nut, but there are much greater Americans that believe the way I do.
People say that your intellect is colored by the company you keep. I am sure that is true in my case. I guess the company I keep, and more particularly kept, for many years were those fathers of American conservatism. You know the America First crowd.
Below are a couple of picture I thought you might enjoy. These were taken several years ago and all of us are grayer, if not smarter.
The first is my wife Kim and I in Dallas with Pat Buchanan for dinner.
The second is at the ranch in Texas, not far from Crawford, with Brent Bozell, his wife, and myself.
I do not know if you know Brent. He is the nephew of William F. Buckley who started the National Review, and had the PBS program Firing Line for many years.
Brent owns Media Research Center in Alexandria VA, is an author of several books, and writes for the Wall Street Journal, the New York Post, Nation Review, and Investors Business Daily.
Media Research is a great company, that checks all the stories that come out each day in the mainstream media, to see who is lying. You might want to contact them to find out where the other 30 trillion went. Just kidding have a great week,
We spent a lot of time the past two weeks talking about our U.S. problems with debt and how our politicians here lie to us to “protect us” from the truth. I think it is important for us to keep in mind that these problems are worldwide. Many financial writers today advise their clients to move their assets offshore, or to invest in those growth economies of the East. Is that really a good idea? Below is a long, but very interesting article by an Indian financial writer. A very worthwhile article that gives an honest look at India today and her prospects.
Please keep in mind I am just the messenger here, and I am not saying go buy gold!
THE WORLD IN A SEA OF DEBT AND POLITICAL DECEIT! By Shailendra Kakani August 10, 2006
“Although the international community criticizes the handling of American economy, I feel we are somewhat unjustified in fixing all the blame on the American financial managers. Not because they are not to be blamed, but simply because they are not the only ones to be blamed. The fact is that almost every government in the world has mismanaged its economy. Here I will speak of India, because I live in the country, so I have a closer look at the mismanagement.
India in the international press has been getting rave reviews of late. There was a time whenever international journalists wrote about India it was confined to snakes, sadhus, holy men, dust, heat, and bride burning. It was the country where people had no food, where girls were killed in their infancy to save the dowry, and where children were sold because their parents had no money to feed them.
During last five years this has changed, which is kind of surprising, since all these things are happening even today - though on a lesser magnitude, thank god. Today foreign journalists sing an entirely different tune: that of India having "arrived." They glorify India for its software proficiency, for its role in stealing the jobs of Western clerks and service professionals, and for being an Asian tiger.
Nothing can be far from the truth. It is true that India has achieved some success in software industry, it is true that the country generates hundreds of thousands of code writers and programmers, the fact is the all the software exports from the country even today amount to nothing more than one per cent of the global IT industry turnover.
Indian BPO companies employ almost half a million people today, but none of them have a guaranteed job. Their jobs depend on the wish of the US companies and the politicians. In every western country there has been some political backlash against the job outsourcing to India, even though, according to a report of Mckinsey , for every dollar of work outsourced to India, the US gains $1.12-$1.14.
John Kerry, the Democratic candidate in the US elections had made a lot of hue and cry about it, and other politicians have done the same in other countries. They are not to be blamed; the general population itself is not happy. Many Europeans and Americans abuse Indian call center workers on the telephone. Many say "I don't want to talk to you, pass me to someone who can speak my language."
According to a report published recently, the BPO industry analysts have seen the phenomenon of "racist" clients grow in recent years, as customers in the UK and the US become increasingly sensitive to the political issue of jobs outsourced to India. "Workers face a spectrum of rudeness -- from sexual harassment to fury at unsolicited sales calls, to "open racism", the report said. "Some workers are deeply hurt by this abuse." The report further mentioned. "The issue of xenophobia cannot be resolved from India-end: there must be a battle against it in the countries responsible."
There can only be one end to this problem: let it last while it last. Sooner or later, the US/Western companies may cut down on outsourcing work to India either due to economic considerations or due to rising political pressure. And when that happens, India will be soaked in a sea of tears. After all those Americans/Europeans who have lost their jobs to Indians still have their social security, can still move around in minivans, and can still afford deluxe health treatment. No sacked Indian worker will have such privileges.
And this is the industry on which entire Indian economy is pinning its hope. Coming to the mismanagement of the economy, the gold bugs complain about budget and trade deficits in the US. They talk of US trade deficit with China alone reaching beyond $200 billion; they talk of how these days it takes five dollars of debt to create one dollar of growth. All of this is true, but let me tell them what Indian politicians and economists have done in this glorious land of Vedas and holy rivers. Recent official data showed the country's deficit for April and May stood at 777.40 billion during the first quarter of 2006-07, accounting for 52.30 per cent of the projected figure of Rs 1486.86 billion for the entire fiscal.
Of course like his US counterparts, the Indian Finance Minister is unfazed. "We should be able to be within our target," Chidambaram said when asked if huge spending plans threatened government finances. "It is good that spending is happening. We are not unhappy about it. Increased spending will mean more money in the system," Chidambaram said, even as the international rating agencies and multilateral institutions cite India's large fiscal deficit as a barrier to sought after double-digit economic growth.
Just as in the US the politicians don't wish to confront the population by telling people in their face that they are living beyond their means and need to curtail their spending, the politicians in India don't wish to tell the people to reduce their oil consumption. Neither do they increase the prices, fearing the backlash of opposition parties and a loss of votes during the elections. So the government goes on selling petrol and diesel at much cheaper price even as the international crude price goes on rising. Yet another parallel. Budget deficits are a fact of life, virtually in every country where the politicians are either corrupt or inefficient, often both, as is the case in India. The risk here in India however is that the borrowed funds are used for non-priority and unproductive expenditure. More money is spent on doling out compensation to the relatives of the dead people in a train accident than is spent on improving the infrastructure so that accidents could be minimized or avoided. Such expenditure, goes without saying, only fuels inflation and reduces funds for critical public investment.
Peter Schiff accuses the US government of camouflaging the inflation figures. He has been tirelessly highlighting how the government has been fiddling with the core CPI basket, and how it has been hedonically adjusting the prices and transforming a 5% increase into a 3% decrease based on a subjective assessment of quality improvement. My word, if Peter was observing Indian politics and governance closely, his attack would be even more scathing.
In India the government doesn't even show the true deficit in the budget. According to an article by A Rangachari, "the budget is insulated from the effects of oil price increases by issuing special oil bonds to the oil companies to cover partly under recoveries of cooking gas and kerosene subsidies payable by the Government (Rs 73,500 crore in 2006-07 and Rs 40,000 crore in 2005-06) and these are not shown as expenditure in the budget ."
Americans often joke about comments of the US Finance Secretary or the Fed Chairman, poking fun at their inane comments; all I can say is they ain't seen anything yet. They ought to listen Indian politicians on a daily basis if they wish to have the best of financial buffoonery. Take for example the present Finance Minister; though he is worshipped by the media here and abroad, he keeps coming out with statements which only can result from a serious foot in the mouth disease. During May 2006 when gold was on its path to scale glorious heights, this FM had a string of meetings with officials to find out if international gold price was going up because of hoarding by Indians.
Even a child knows that Indians can't hoard that much gold to influence the international price. Even an Economics junior understands that India, even though the largest buyer of gold in the world, is basically a "price taker" and not a "price maker".
Recently the same FM urged various sectors of business and industry to replicate the success achieved in the information technology industry - without realizing that Indian success in IT was a matter of luck, simply because when the boom came two decades back, Indians were the only people who spoke English and were willing to work at a tenth of the salary given to an American programmer. More luck came their way when the Y2K scare pushed more and more work to Indian shores.
Fortune doesn't favour every time, and such a success is impossible to replicate in other fields. In fact India is not even likely to keep its software advantage beyond another decade. As more and more countries gear up their younger lot is catching up fast with Indians. China is doing everything to beat India at its own game. Millions of people are learning English in China, thousands of students are coming to India to study software technology, and dozens of Indian companies are setting up shop in China to teach them everything about IT and ITES. Reason enough why recently the doyen of Indian software industry Narayan Murthy predicted that China could catch up with India in the IT industry in five years.
"I do think China is running very fast to catch up with India. Chinese are much more determined than we are. And already we are seeing visible signs of progress by China in our industry." His own company, Infosys, has major plans to expand operations in China. It is right now using China as a development centre for their global clients. In phase-II, they will enhance our focus on the market opportunity in China from multinational companies. In phase-III, they will focus on the Chinese companies. As anybody can understand, by the time all these phases phase out, the doughty Chinese would have seized the software advantage.
While I don't wish to approve of the actions of Bush, Bernanke & Co., I wish to highlight the fact that most of the governments are mismanaging their finances and playing with the future of their populations. No doubt Bush, Bernanke & Co. are to be blamed but let us not spare other charlatans either.
Meanwhile, the presence of so many bogeymen simply means extra bullish factors for gold. When people around the world ultimately lose their faith in fiat currencies, they will realise that all are worse than one another, and that there is only one currency which can't be debauched by the governments, bureaucrats, and politicians: gold.
Incidentally this will also prove the veracity of good ol ' Greenspan's words: "In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value."
Hey Guys, I am surprised one of you financial eagles did not pick this up and repot it yesterday?
CNN August 14th 2006
Standard and Poor’s announced today that it had sent a warning to the U.S. Treasury Department that the finances, and debt, of the United States was totally out of control.
They told Treasury officials that unless some serious steps were taken that U.S. government issued bonds would be rated as junk in less than two decades.
This story came out today and it was interesting...$12,000 cash for every bombed house to be paid to Lebanese homeowners. Well, the interesting thing is that when the story was on Fox news this evening it actually showed some of these folk getting paid their money. They were being paid in Bens...I'm sorry but I just can't wrap my mind around the implications of this picture. A terrorist group paying it's constituents in Bens in a place that Israel bombed. I could imagine that there are many Bens in arab states. And people want to suggest the Ben is weak...me thinks not. But what the hell are they doing there? Oh yea, the money came from Iran...Hello, hello?
Here are two links to a paper that thoroughly explains money in general, and how our present-day money system really works.
1. This is the section of the paper that deals with the "Fed versus the Gold Standard" -- a topic I'm guessing is of interest to some in this forum. Link
2. This is the table of contents for the whole paper, titled "Money and the Federal Reserve System: Myth and Reality. " Link
No doubt at least one person in this forum will think this paper is just a bunch of lies from another conspirator. So be it. I hope others will find it useful.
As expected the author is a macroeconomist, who need to say these things to continue to stay in the fold, win govt grants, and have a nice lifestyle. Those that bend against the flow do not pass go, do not collect $200, and usually end up in jail. Some excerpts from the above links. Just because the author writes don't make it so:
WHAT BACKS A FEDERAL RESERVE NOTE? -- The principal form of currency in the United Stated consists of Federal Reserve Notes. These notes are by law "legal tender," which is to say they may be used to satisfy obligations denominated in dollars. Should a suit arise over a commercial or public transaction, the law holds that a monetary obligation is satisfied if these notes have been "tendered" in the correct amount.
-Payment cannot be refused on the grounds that these are not money.
-The lack of backing, however has no bearing on the suitability of Federal Reserve Notes as currency.
-The government creates money out of nothing in order to purchase goods and services of value. The note that it pays with is basically an IOU. Anyone who owes the government taxes, dues, or fees can return the note and have his obligation canceled.
-Such money is said to be "fiat" money. It does not have any intrinsic value as a commodity itself, and is said to be produced and introduced by fiat of the government. Fiat money, therefore, is a debt of the government. Like any other debt from a creditworthy borrower, these IOUs are assets to those who hold them. Thus, these evidences of debt are usually well-suited and widely used to settle accounts. The fact that the note can be transferred to others who might use it in their transactions with the government makes it perfect for effecting private exchanges.
-Debt makes good money because the debt of one person or institution is an asset to whomever it is owed. Consequently, the debt can be used for exchange by the creditor (the individual who holds the debt), and then in turn by the person who receives it, and so on. When finally the chain of transactions comes round to the original issuer (the debtor), the debt can be canceled against whatever obligation one has toward the issuer, and the series of exchanges becomes complete.
-Federal Reserve Notes and other paper money are indeed "unbacked" IOUs. The fact that they are IOUs is the very thing that makes them suitable to be money. .....now those were mouthfuls to swallow. And if you believe it all, you are good little fiatian.
Considering the Alan Greenspan also supported a gold standard back in the 1960's and called our Federal Reserve System one of confiscation and wealth transference, I know who knows what's the real story. Sorry Steve, but I also support the theory of "conspiracy." Whether by intent or just plain old stupidity, the outcome is nevertheless the same....where we are today. The FED system has nearly bankrupted our society and has met the goals of its founders. Well done to JPM and their posse. It took 93 years but anything good is worth waiting for.
<< <i>Hey Guys, I am surprised one of you financial eagles did not pick this up and repot it yesterday?
CNN August 14th 2006
Standard and Poor’s announced today that it had sent a warning to the U.S. Treasury Department that the finances, and debt, of the United States was totally out of control.
They told Treasury officials that unless some serious steps were taken that U.S. government issued bonds would be rated as junk in less than two decades. >>
I looked for this story and could not find it. Anyone have a link to this?
H&R Block says mortgage loan default causes them to take charge against earnings. Most of their loans are sub-prime but these will always be the first to default.
Now Government officials are saying the U.S. is in fact bankrupt. Is your financial house in order?
By Terry Savage TheStreet.com Contributor 8/27/2006
Is the U.S. bankrupt?
The U.S. is responsible for $80 trillion in future entitlement promises -- a figure about six times larger than the U.S. economy. To make good on those promises, future workers would have to pay tax rates ranging from 55% to 80% of their incomes!
The U.S. comptroller general, David Walker, is on a national "Fiscal Responsibility Wake-Up Tour" -- a nonpartisan effort to educate the public to the crisis that looms, not only in the next few years, but as baby boomers retire.
Walker, who is in the midst of a 15-year term, is being supported by both political liberals and conservatives in his efforts to shine a light on the budget problems that are approaching. Here are some of the facts that he pointed out in a presentation last week:
· About 60% of our federal spending is now mandatory, primarily because of Medicare and Social Security obligations and interest on the national debt.
· While the 2005 budget deficit was widely reported at $318 billion, if it is calculated on an operating basis like one that most companies use, the year's deficit was easily double that amount.
· We finance our deficits by borrowing -- and 50% of our public debt is currently owned by foreigners.
· Interest on the national debt is expected to be about $200 billion this year -- around the same amount that we spend on Medicare.
· We currently have a $46 trillion liability for Medicare and Social Security obligations -- and the new drug bill will easily add another $8 trillion in promises.
· Over the next 25 years, Medicare spending will grow at nearly five times the rate of GDP growth.
· Every newborn arrives with an immediate debt of $156,000 -- which constitutes fiscal child abuse!
Walker's presentation is on the General Accountability Office's Web site. You should see the data for yourself because a picture is worth a thousand bullet points!
These are MEGO numbers. That stands for "My Eyes Glaze Over." And that's why our huge and growing financial disaster doesn't stand much chance of gaining attention, especially in a world dominated by reality television shows and news headlines about perverts. When more people take the time to vote for dancing partners or dubious singing talent than vote for the president or their own congressional representatives, then we have only ourselves to blame. “
I thought it was interesting when we were having our discussion with Steve that his pie chart said that foreigners owned very little of our debt, but the U.S. comptroller says they own 50%?
“We finance our deficits by borrowing -- and 50% of our public debt is currently owned by foreigners.”
And then there is this,
“future workers would have to pay tax rates ranging from 55% to 80% of their incomes!”
If we currently already pay 60% of our income in ALL taxes just how will we ever be able to pay 55 to 80% in just Federal taxes?
If you were paying 20% in Federal taxes now plus 40% in all other taxes, and you had an increase of 35 % in your Federal taxes that comes to 95%.
I don’t know about you folks, but I just do not think I could live on 5% of my income!
In addition just how much money will we be able to invest to roll the debt?
I understand that that Government says we are many years out from this disaster, on the other hand in 18 months the baby boomers start collecting their benefits, with millions entering the system each year and every year going forward.
In my opinion the Government will never be able to pay these entitlements so we better forget about those S.C. and medicare checks in the mail.
On a side note I see my friend Pat Buchanan is pushing his new book to try to stop us from adding 20 million illegal aliens to our entitlement system!
On Fire...may be a bit of an overstatement but it sure is nice to see some activity after a couple of months of nothing. It is certainly appears to be a good time to get ya' some.
I certainly think the majority here agrees with you!
Unfortunately the shame our forefathers felt about being on the “dole” is long gone in America. Today if you offer a job in one hand, and federal check in the other, most will take the check and feel no guilt what so ever for doing so.
I think this includes even most political leaders. Did you see how Governor Bush declared a state of emergency last week even before he had an emergency? So many hands out for Federal dollars and so little time to print it all!
“The U.S. government announced today that they would contribute $230,000,000 to help rebuild Lebanon.”
Gee why not, it won’t take to long to print that money. $230 million for concrete blockhouses at $100,000 a pop would build 2,300 houses. Did the Israelis blow up that many?
How many of those wood frame house were destroyed in New Orleans?
“The U.S. government announced today that they would contribute $230,000,000 to help rebuild Lebanon.”
Gee why not, it won’t take to long to print that money. $230 million for concrete blockhouses at $100,000 a pop would build 2,300 houses. Did the Israelis blow up that many?
How many of those wood frame house were destroyed in New Orleans? >>
Money is mostly to rebuild infrastructure such as bridges and roads.
Worry is the interest you pay on a debt you may not owe.
<< <i>“Money is mostly to rebuild infrastructure such as bridges and roads.”
O.K. Perry,
So why exactly do you think we want to do that?
No doubt when we are finished rebuilding the place they will all love us, and become a very peaceful democracy?
Perhaps now the Lebanese will become great friends and supporters of Israel?
Perhaps they will change their evil ways and not buy arms from Iran with some of the extra money they get from other countries?
What kind of lesson is ever learned from these terrorist countries, when they know after each war we rebuild their countries? >>
Hey!!! I never said I agreed with this expenditure. If it were up to me, I would cut foreign aid. Most of it is going to countrys where they hate us. Makes no sense to me.
Worry is the interest you pay on a debt you may not owe.
I thought it was interesting when we were having our discussion with Steve that his pie chart said that foreigners owned very little of our debt, but the U.S. comptroller says they own 50%?
“We finance our deficits by borrowing -- and 50% of our public debt is currently owned by foreigners.”
And then there is this,
“future workers would have to pay tax rates ranging from 55% to 80% of their incomes!”
If we currently already pay 60% of our income in ALL taxes just how will we ever be able to pay 55 to 80% in just Federal taxes?
If you were paying 20% in Federal taxes now plus 40% in all other taxes, and you had an increase of 35 % in your Federal taxes that comes to 95%.
I don’t know about you folks, but I just do not think I could live on 5% of my income!
In addition just how much money will we be able to invest to roll the debt?
I understand that that Government says we are many years out from this disaster, on the other hand in 18 months the baby boomers start collecting their benefits, with millions entering the system each year and every year going forward.
In my opinion the Government will never be able to pay these entitlements so we better forget about those S.C. and medicare checks in the mail.
On a side note I see my friend Pat Buchanan is pushing his new book to try to stop us from adding 20 million illegal aliens to our entitlement system! >>
the US comptroller statistics is correct!
I manage money. I earn money. I save money . I give away money. I collect money. I don’t love money . I do love the Lord God.
Lets come up with a simple plan to get us out of the Middle East.
Here is mine,
We tell the Iraqis we want a ninety nine-year lease on several thousand acres in Iraq next to the Iran border.
We want a no fly zone within several hundred miles of the base for the term of the lease.
We are going to build a large base there. We also want a ten-year agreement on oil at $45 per barrel.
We are going to give the current government 6 more months to take control of their country, after that we move our troops to the base, and let them have a civil war. Naturally the right side will win or we will step back in for another 3 weeks.
We sell our bases in Germany back to the Germans for a few billion, and use that money to help the current Iraqi government, and build the new base.
We move all the men and equipment including the nukes out of Germany to the new base, and point everything at Iran.
We tell the Iranians to build whatever they want. but if they ever shoot off a single missile we are going to blow ALL their installations to hell.
We set up al-American TV. Stations on the base and broadcast propaganda day and night to Syria and Iran.
We cut all foreign aid to everyone except food supplies for the starving, and tell our enemies if they, or they people, attack us any where in the world we are going to take it out on their governments, and we are not rebuilding anything.
If this is a war on terror lets do like we did with the Soviets and park the planes and booms on their doorstep.
The latest jobs report this past week was taken as a positive by the "street" since it exceeded the forecasters estimates by a small amount (<10,000 jobs). What they don't see is that 121,000 of the "new" 128,000 jobs reported were via the BLS modeling system, not through actual recorded jobs (see CES birth death model). One could say that 7,000 new jobs were really recorded. The rest still remains to be seen.
The above single page table is easy to follow and understand. Basically, the model predicts on average about new 900,000 to 1,000,000 jobs each year. If no new jobs were actually created it would not matter. The model still inputs those numbers. Over years the model will get corrected. The majority of those million jobs are available in Feb-June and August of each year. September through December only a small number of jobs are inputted. Those are the "tough" months to be job-positive! January is a month with a huge estimated decline (almost -200 million estimated this past January). It does not appear coincidental that the BD Model mirrors strengths and declines in equities and commodities. Gold tends to be strong in the fall through January when equities are often weakening. The BDM is weak from Sept-January as well. The BDM is a cheerleader of sorts. Job growth by definition will be strong in Feb-June & August and then weak the rest of the year. An interesting spin on the "wag the dog" story.
<< <i>SAN FRANCISCO (Market Watch) -- Gold futures fell by almost 3% Thursday to tally a two-session loss of $22 an ounce as the dollar strengthened against some of its counterparts and traders digested news of rising production in China and major mine expansion in South Africa. >>
Is too much potential supply the reason gold is dropping - or is this the pause that refreshes?
Is too much potential supply the reason gold is dropping - or is this the pause that refreshes? >>
Nothing has changed. Gold will continue it's violent sideways movement until there is insufficient metal to keep it from going higher. The central banks are sitting on huge amounts but will be in- creasingly hesitant to sell.
They could forestall the inevitable for many years but won't.
15 more months until millions of the Boomers each year begin to settle in retirement. It will be interesting to see how many second homes get unloaded, as time runs out on the boomers clock. What do you think we should be investing in now that Boomers will want later?
Danielle DiMartino: Boomers won't drive consumption! 10:24 PM CDT on Wednesday, September 6, 2006
Will the baby boomers save the U.S. economy?
Baby boomers do not drive consumption. Baby boomers trade. We trade one house for another; one car for another; one office for another. The group that drives consumption are the people who go from zero to one. Absent this entry-level age group, pricing power dries up.
What a simple concept. Too bad it's lost on the current generation of corporate America, because it's certainly not lost on the 77 million or so baby boomers.
A 57-year-old recently retired Rhode Island reader e-mailed to say that his cohorts are generally looking to downsize to 1,800-square-foot ranch homes or single-level condominiums.
He suggested that the builders who insist on erecting 6,000-square-foot McMansions are missing a huge segment of the market and would be well served by reading AARP magazine.
A few days ago, a reader from Missouri echoed this sentiment, saying a soft landing is simply not in the cards for the economy this time around, that "the demographics show that there's nowhere for the economy to 'land.' "
In what will go down as one of his most eloquent missives, Bill Gross of Pacific Investment Management Co. recently explained the impact of the coming wave of boomers:
"Approaching 60, their focus is less on off-roading and more on off-loading – retirement, the transfer of responsibility and anxiety to a younger generation”.
Complicating this process is the fact that there are so many more boomers than their succeeding generation. One solution is more babies, but as Mr. Gross astutely noted, "babies take 20-plus years to grow into worker bees, and we've long since passed the point of no return."
The arguments offered by the bullish Wall Street community have become increasingly insulting. The theory is that baby boomers, with their vast stores of wealth, will choose to retain not just one, but both of their homes; that the weight of two mortgages, maintenance budgets, insurance and property taxes can be carried into retirement on fixed incomes.
Mr. Gross' counter: "In financial terms alone, Laurence Kotlikoff, a Boston University economist, has estimated the unfunded liabilities associated with health care and retirement amount to $80 trillion, over seven times our annual GDP!"
Sure gold fell a lot in the past few days, it also went up a lot in the few days before that. The majority of each move in one day. Volatility, manipulation and gamesmanship. I read one article this past week that stated that only 4 gold shorts made up the vast majority of all shorts. This compared to thousands making up the longs. The hint was that there was obvious "hidden" manipulation.
I read one article this past week that stated that only 4 gold made up the vast majority of all shorts
Who are they? They must have super deep pockets and access to great credit. They too will be crushed. No one will stop gold until the deficit and balance of payments are rectified.
I read one article this past week that stated that only 4 gold shorts made up the vast majority of all shorts. This compared to thousands making up the longs
Looks like my "masses are asses" theory holds true again.
Comments
to compensate for decreased oil production, but these can be upgraded pretty quickly. It
appears this process has started.
Electric transmission is a mess and one of the greater challenges, but like the refinery pro-
blem, there is relatively little to gain upgrading systems which will be greatly changed or
obsolete.
Wind and nuclear need to be set free now.
It appears that the government believes there is plenty of time yet but this may not be the
case. Despite the huge oil price increases demand is virtually unaffected to date. If this
continues it will mean an almost certain recession to bring down oil demand.
Ha ha ha ha
Steve,
Please let me tell you why your chart from the government says the Gov. owes this money to itself. This is the reason,
“The Bush administration opposes including Social Security and Medicare in the audited deficit. Its reason: Congress can cancel or cut the retirement programs at any time, so they should not be considered a government liability for accounting purposes.”
I do appreciate your work in sending us this link. I for one am too dumb to figure out what, “we are being paid in interest here”, but the fact is we are NOT being paid.
If you personally own a T-bill you receive interest, you pay taxes on that interest, and you spend the difference, and either roll into a new bond or do something else.
In the case of any interest the Gov. might PAY of any of the trusts, the interest is paid to no one; it is simply added to new I.O.U’S, that by the governments own admission they can cancel at any time.
Lets you and I go to the Bank and tell the bank here is what we want, we want a loan that can be rolled over forever. All the interest shall be added to the loan, so it is never paid out by us, and we want a provision on the loan that we can cancel this loan at any time and never pay you back. Let me know when you find a banker like that I will meet you there.
Yes you are right, through the last few years I have indeed searched out the media to give me some explanation as to why the optimists, and the government, keep telling us, don’t worry everything will be fine, its all working perfect.
I searched out the media because I could not believe my own eyes, and what the government published make no logical sense.
In the last five years the value of our currency has dropped significantly worldwide.
Over the last five years the average price of a single family home has averaged an increase nationwide of 35%
Over the last five years the U.S. stock market has been flat making little or no profits for the millions of folks that are getting close to retirement.
Over the last five years our gasoline and utilities costs have increased by 30 to 40%
Over the last five years my wife’s grocery bill has increased by 27 to 35%
Over the last five years our basic commodities have increased 100 to 150 %
Over the last five years our U.S. savings rate has dropped to -0-
Over the last five years what savings we did have, and did receive interest payments on, has been a negative number when adjusted for even government inflation numbers, and taxes paid on that interest.
Steve I know what you are going to tell me here, you are going to tell me that all your numbers from the Gov. are indeed correct, and we have very low inflation. You are going to tell me don’t worry that our countries assets are being sold to foreign entities by the thousands each year, presumably in the form of redeemed U.S. debt, and you are going to tell me that there is no possible way I should even believe my own eyes.
Lets get down to the real heart of the matter. Here is what I, and many other conservatives, on this thread have advised folks to do.
Pay off all the day-to-day debt you can.
Pay off the mortgage on your own home if possible.
Pay those credit cards off, and only use the ones you can pay off each month .
Do some real planning for your own retirement, don’t depend on the Gov. look for a part time comfortable retirement job.
Put some of your savings into Gold, or other hard assets.
If you have loads of T-Bills and stock assets, as well as older children, sell the T-bills/stocks and buy paid for homes for your kids, and let them make payments to you that includes a decent interest rate. When you die they get the houses.
Cut your monthly expenses, and stop buying all this junk from China.
Work on trying to cut your tax burden, half of all your earned income is going to one tax or another.
Now if I am completely wrong how will doing these conservative things hurt you?
But if you are completely wrong, and no one prepares for what looks like some rocky times ahead, then what?
Social Security by the Numbers
and
Social Security Revisited
(Edited because it won't let me link directly to the articles...You can find both articles in the "Archive" section though, and they're worth the read.)
RJ
You recognized a few key points very quickly.
"...do you think that deficit spending is, in fact, a necessary element of our financial system?"
Yes. To maintain the dollar's value at a constant level (i.e., no inflation and no deflation) in a growing economy, the money supply must grow. To grow the money supply, the Fed purchases Treasury securities from the public. But without deficits, the public would hold no Tsy secs, in which case the government would have two very unpleasant choices: (1) purchase private assets to keep the money supply growing at the necessary, noninflationary pace; or (2) do nothing, thereby halting money supply growth, thereby deflating the currency, thereby stifling real economic growth and probably sending the economy into a deflationary depression. Note that (1) moves the country towards socialism, and (2) moves us towards a barter economy.
I wrote a six-article series on this that takes the logic step-by-step. Link.
"Is it, in fact, a desirable situation to run some degree of deficit?"
Yes, under the current definition of the "unified budget deficit" (i.e., the increase in publicly-held debt). Here's an explanation: Link.
"The assumption of nearly everyone is that a balanced budget is the ideal situation, with neither surplus nor shortfall. Would you take issue with that fundamental assumption?"
Yes, I would. I advocate maintaining the ratio of debt to GDP at a constant level, which means that the debt can grow just as fast as the economy grows. Here is a more-detailed explanation: Link.
I've thought about it for many years, and I'm convinced that the basic disconnects between that idea versus conventional wisdom are (1) the misperception that the government will someday have to pay its debt down to zero, and (2) the false assertion that deficits are automatically inflationary and cause interest rates to rise. (Further, I suspect that both of those misperceptions stem largely from economic ideas rooted in 19th century mercantilism.)
I'd like to see "balanced budget" redefined to this: "The fiscal budget that results in no change in the ratio of publicly-held debt to Gross Domestic Product". That would force the denominator into public debates about fiscal policy. I'd also like to see the Federal Reserve's mission redefined to a single, unequivocal point: maintain steady, predictable value for its product, the Federal Reserve note; i.e., maintain inflation (as it is measurable today) at 2%, nor more, no less. (Why 2% instead of 0%? The measures are imperfect, most economists think inflation is overstated by some amount, and 2% gives the Fed some room to maneuver when the inflation measure falls below that number.)
I got it. You think the trust funds contain nothing but a worthless bunch of "IOUs".
What do you advocate "locking up" in those trust funds? The SS sytem is running a surplus today. Let's assume that a coalition of you, Al Gore, Ron Paul, Jim Cooper, and John Tanner enjoy the phenomenal success of making it illegal for the general fund to borrow from that surplus. Therefore, the surplus accumulates and accumulates, and you have been appointed guardian of the surplus, in total control of the form it takes. Specifically, what form will that surplus take, now that you are in charge of it?
In other words, when I open the door to the trust fund, what do I see in there? (Gold, maybe?)
Steve,
Not being of a communist mind, if I had control of these trust funds the very first thing I would do is send everyone a letter, tell them what a poor job we had done, come clean on how badly we had managed their money, and offer them all the money back they had ever paid into the system.
Yes it would take us several decades to reduce government liabilities for this repayment but then we would know where we were, and the programs would be over.
I see no reason to lie to people and then pull the rug out from under them when they are to old to do anything about this.
Who says the government would be the best investor for our savings.
If you are one of those that think the government does a wonderful job managing the money they collect from us each month, how would I ever be able to convince you otherwise.
The S.C program was set up as a safety net for widows. It was never supposed to include all Americans. Why should a guy like you and a guy like me ever pay into this system? It is not a retirement insurance program, it is just another welfare program, and the money gets spent on Lord knows what.
I already know your opinion, we should all contribute to a system backed by nothing, that never really has to pay out either the principle or the interest. You say that this money is backed by the good faith and credit of the U.S. government, this is yet another lie. The U.S government does not issue any money. When you buy these T-bills the only way you can pay for them is through some private banking group called the Federal Reserve, and when you get your money back you also receive those same notes. Now take one of those notes out of your wallet and look at it. Does it say anywhere backed by the good faith and credit of the U.S. government? It used to, but no longer.
Hey Steve,
I see know what you meant about the Brits. I guess they traded some of our debt for our pipeline and wells in Alaska.
I see British Petroleum is shutting their pipeline down today since it is leaking.
I must say that I would prefer they get some of our assets, rather than the communist Chinese, or the Arabs, but gee is everything in America going to be owned by foreigners before all this is over?
On the other hand perhaps the Arabs own control of BP?
Globalization, isn’t it great?
Funny I had not heard that a British company owned our pipeline until today, I guess that is one of the CIFUS projects that did not need congresses approval?
I really don’t think your roll over plan is working my friend!
So you are a believer in the Fed conspiracy theory, too -- on top of all the other paranoia?
I can see that I am wasting my time. I sincerely hope that those who share your outlook will remain a tiny, insignificant minority, talking amongst themselves.
Here are two links to a paper that thoroughly explains money in general, and how our present-day money system really works.
1. This is the section of the paper that deals with the "Fed versus the Gold Standard" -- a topic I'm guessing is of interest to some in this forum. Link
2. This is the table of contents for the whole paper, titled "Money and the Federal Reserve System: Myth and Reality. " Link
No doubt at least one person in this forum will think this paper is just a bunch of lies from another conspirator. So be it. I hope others will find it useful.
Standard Oil of Ohio, headquartered in Cleveland, Ohio was the leading oil company among the original sister Rockefeller oil trust companies to invest in the Alaska Oil pipeline back in the 1970's.
I remember; I worked in downtown Cleveland, right near the headquarters for the SOHIO company. I often lunched with many olf their employees and even the Famed coin collecting Norwebs joined us a few times to talk coins!
It did so well financially that British Petroleum made a huge public offering to buy out SOHIO (Standard Oil of Ohio) that was very well publicized in the newpapers to buy the stock out at a large premium. The stockholders at the time, including the typical small investor owning 100 shares or less were quite enthusiastic in getting BP stock or a combination of BP stock and cash at the time. No one at the time ever grumbled about foreigners buying the company out. They were too busy "cashing in!"
Here is a Wipedia excerpt on Standard Oil of Ohio:
Standard Oil of Ohio or Sohio was an American oil company that was acquired by British Petroleum, now called BP.
It was one of the successor companies to Standard Oil after the antitrust breakup in 1911. Standard Oil of Ohio was the original Standard Oil company founded by John D. Rockefeller.
BP took majority ownership of the company in the 1970s in return for its share of the Prudhoe Bay oilfield in Alaska. In 1987, after all other Standard Oil descendants had minimized use of the name Standard, Standard of Ohio, proud to be the original, sought to corporately rebrand itself under the Standard name while continuing to use the Sohio brand and others to sell gas in Ohio. The company used the same logo, but with Boron as the name in other states. However, the next year BP bought out the minority interest in Sohio and renamed all the Sohio and Boron stations 'BP' in 1991.
Although Sohio gas stations have ceased to exist, a few marina gas stations on Lake Erie and the Ohio River still exist bearing the Sohio name.
When BP merged with Amoco, its American headquarters moved from the former Sohio Building on Public Square in Cleveland, Ohio to Chicago, Illinois.
Sad to see you go. I do not think you have given this forum enough time.
While I may not agree on some of your points, you at least argue your points well.
But you should not give up so easily because some of us believe in the conspiracy theory or whatever theory. In fact, most of this group does question the conventional thinking of business as usual which makes most of us skeptics.
To me that is good. We are kind of the "show me, I am from Missouri" people as President Harry Truman used to say.
While I do not believe in the conspiracy theory, I do believe in that oftentimes the US Government has been derelict in its duty to safeguard and improve our infrastructure, especially when they cross state lines.
Everything from health care, railroad system, hospitals systems to electrical grids seems to be decaying under our governments watch in the past 30 years. The government can do more to partner with our 50 states to encourage positive growth.
<< <i>I can see that I am wasting my time. I sincerely hope that those who share your outlook will remain a tiny, insignificant minority, talking amongst themselves. >>
Steve2 - you are a smart man, it has taken you only a few days to figure out the irreversible psyche of the gold bug - our corrupt government is the source of their imaginary problems, and gold is the answer. They were singing the same song 20 years ago, as they will be 20 years from now.
Thanks for the links, very interesting reading.
<< <i>Goldsaint,
So you are a believer in the Fed conspiracy theory, too -- on top of all the other paranoia?
I can see that I am wasting my time. I sincerely hope that those who share your outlook will remain a tiny, insignificant minority, talking amongst themselves. >>
Steve,
I would also like to add my thanks to you for coming into, the lion’s den, so to speak.
I think it was very brave of you to come here into an open forum and express your views.
As you can tell by our discussion here many on one side or the other often get labeled because of their views. Everyone that thinks the government is way to big, and has over stepped our original founding fathers principles of small government, hard work, self-reliance, etc. is labeled here a conspiracy theory nut and a gold bug.
In my case I believe myself to be neither a conspiracy theorist, nor a gold bug. I do own some gold perhaps 5% of my net worth.
I do think we are in for some troubling economic times. All socialist governments through history fail in the end. You cannot continue to take the hard made earnings of our best and brightest people and re-distribute it to those that will not pull there weight.
In our country at the present time we have nearly one third of our working people working for one form of government or another, county, city, state, or federal. We also have one third of our adult population that depend entirely on those governments for complete, or partial subsistence.
Do I think that our governments officials hearts were in the right place when they offered to help everyone with every life problem, yes I do.
Do I think there is no possible way for those of us still working and producing to pay for all of this? Yes I do.
The simple fact of life here is that there is not going to be enough investment dollars in the entire world to keep rolling this debt as it is added to by trillions of dollars each year.
You may have noticed that our best and brightest are taking the only way out they can to avoid our coming economic deterioration. They are moving their money into gold and other commodities, foreign currencies, real properties, and moving their businesses to foreign lands.
Do I think that there are lots of deals made with foreign countries and companies to keep rolling our huge debt? Absolutely, why do you think we ever let Japan have such a huge market here? Why do we let the communist Chinese sell in every store in America, but you cannot buy a Cuban cigar?
Why would any central bank want to own billions of our debt backed by these federal reserve notes that do not pay enough interst to cover our government stated inflation and the continued downward fall of our currency world wide?
At any rate I wish you the very best in your endeavors, and I actually hope you are right and I am wrong in all of this.
Terry
Hey Oreville my old friend,
This was a halfhearted dig at Steve, I just could not resist with yesterdays news, on the other hand, who knows who owns, and controls the board of this great company now?
Steve one last item. I know you think I am a radical nut, but there are much greater Americans that believe the way I do.
People say that your intellect is colored by the company you keep. I am sure that is true in my case. I guess the company I keep, and more particularly kept, for many years were those fathers of American conservatism. You know the America First crowd.
Below are a couple of picture I thought you might enjoy. These were taken several years ago and all of us are grayer, if not smarter.
The first is my wife Kim and I in Dallas with Pat Buchanan for dinner.
The second is at the ranch in Texas, not far from Crawford, with Brent Bozell, his wife, and myself.
I do not know if you know Brent. He is the nephew of William F. Buckley who started the National Review, and had the PBS program Firing Line for many years.
Brent owns Media Research Center in Alexandria VA, is an author of several books, and writes for the Wall Street Journal, the New York Post, Nation Review, and Investors Business Daily.
Media Research is a great company, that checks all the stories that come out each day in the mainstream media, to see who is lying. You might want to contact them to find out where the other 30 trillion went. Just kidding have a great week,
Terry
Please keep in mind I am just the messenger here, and I am not saying go buy gold!
THE WORLD IN A SEA OF DEBT AND POLITICAL DECEIT!
By Shailendra Kakani
August 10, 2006
“Although the international community criticizes the handling of American economy, I feel we are somewhat unjustified in fixing all the blame on the American financial managers. Not because they are not to be blamed, but simply because they are not the only ones to be blamed. The fact is that almost every government in the world has mismanaged its economy. Here I will speak of India, because I live in the country, so I have a closer look at the mismanagement.
India in the international press has been getting rave reviews of late. There was a time whenever international journalists wrote about India it was confined to snakes, sadhus, holy men, dust, heat, and bride burning. It was the country where people had no food, where girls were killed in their infancy to save the dowry, and where children were sold because their parents had no money to feed them.
During last five years this has changed, which is kind of surprising, since all these things are happening even today - though on a lesser magnitude, thank god. Today foreign journalists sing an entirely different tune: that of India having "arrived." They glorify India for its software proficiency, for its role in stealing the jobs of Western clerks and service professionals, and for being an Asian tiger.
Nothing can be far from the truth. It is true that India has achieved some success in software industry, it is true that the country generates hundreds of thousands of code writers and programmers, the fact is the all the software exports from the country even today amount to nothing more than one per cent of the global IT industry turnover.
Indian BPO companies employ almost half a million people today, but none of them have a guaranteed job. Their jobs depend on the wish of the US companies and the politicians. In every western country there has been some political backlash against the job outsourcing to India, even though, according to a report of Mckinsey , for every dollar of work outsourced to India, the US gains $1.12-$1.14.
John Kerry, the Democratic candidate in the US elections had made a lot of hue and cry about it, and other politicians have done the same in other countries. They are not to be blamed; the general population itself is not happy. Many Europeans and Americans abuse Indian call center workers on the telephone. Many say "I don't want to talk to you, pass me to someone who can speak my language."
According to a report published recently, the BPO industry analysts have seen the phenomenon of "racist" clients grow in recent years, as customers in the UK and the US become increasingly sensitive to the political issue of jobs outsourced to India. "Workers face a spectrum of rudeness -- from sexual harassment to fury at unsolicited sales calls, to "open racism", the report said.
"Some workers are deeply hurt by this abuse." The report further mentioned. "The issue of xenophobia cannot be resolved from India-end: there must be a battle against it in the countries responsible."
There can only be one end to this problem: let it last while it last. Sooner or later, the US/Western companies may cut down on outsourcing work to India either due to economic considerations or due to rising political pressure. And when that happens, India will be soaked in a sea of tears. After all those Americans/Europeans who have lost their jobs to Indians still have their social security, can still move around in minivans, and can still afford deluxe health treatment. No sacked Indian worker will have such privileges.
And this is the industry on which entire Indian economy is pinning its hope.
Coming to the mismanagement of the economy, the gold bugs complain about budget and trade deficits in the US. They talk of US trade deficit with China alone reaching beyond $200 billion; they talk of how these days it takes five dollars of debt to create one dollar of growth. All of this is true, but let me tell them what Indian politicians and economists have done in this glorious land of Vedas and holy rivers. Recent official data showed the country's deficit for April and May stood at 777.40 billion during the first quarter of 2006-07, accounting for 52.30 per cent of the projected figure of Rs 1486.86 billion for the entire fiscal.
Of course like his US counterparts, the Indian Finance Minister is unfazed. "We should be able to be within our target," Chidambaram said when asked if huge spending plans threatened government finances. "It is good that spending is happening. We are not unhappy about it. Increased spending will mean more money in the system," Chidambaram said, even as the international rating agencies and multilateral institutions cite India's large fiscal deficit as a barrier to sought after double-digit economic growth.
Just as in the US the politicians don't wish to confront the population by telling people in their face that they are living beyond their means and need to curtail their spending, the politicians in India don't wish to tell the people to reduce their oil consumption. Neither do they increase the prices, fearing the backlash of opposition parties and a loss of votes during the elections. So the government goes on selling petrol and diesel at much cheaper price even as the international crude price goes on rising.
Yet another parallel. Budget deficits are a fact of life, virtually in every country where the politicians are either corrupt or inefficient, often both, as is the case in India. The risk here in India however is that the borrowed funds are used for non-priority and unproductive expenditure. More money is spent on doling out compensation to the relatives of the dead people in a train accident than is spent on improving the infrastructure so that accidents could be minimized or avoided. Such expenditure, goes without saying, only fuels inflation and reduces funds for critical public investment.
Peter Schiff accuses the US government of camouflaging the inflation figures. He has been tirelessly highlighting how the government has been fiddling with the core CPI basket, and how it has been hedonically adjusting the prices and transforming a 5% increase into a 3% decrease based on a subjective assessment of quality improvement. My word, if Peter was observing Indian politics and governance closely, his attack would be even more scathing.
In India the government doesn't even show the true deficit in the budget. According to an article by A Rangachari, "the budget is insulated from the effects of oil price increases by issuing special oil bonds to the oil companies to cover partly under recoveries of cooking gas and kerosene subsidies payable by the Government (Rs 73,500 crore in 2006-07 and Rs 40,000 crore in 2005-06) and these are not shown as expenditure in the budget ."
Americans often joke about comments of the US Finance Secretary or the Fed Chairman, poking fun at their inane comments; all I can say is they ain't seen anything yet. They ought to listen Indian politicians on a daily basis if they wish to have the best of financial buffoonery. Take for example the present Finance Minister; though he is worshipped by the media here and abroad, he keeps coming out with statements which only can result from a serious foot in the mouth disease. During May 2006 when gold was on its path to scale glorious heights, this FM had a string of meetings with officials to find out if international gold price was going up because of hoarding by Indians.
Even a child knows that Indians can't hoard that much gold to influence the international price. Even an Economics junior understands that India, even though the largest buyer of gold in the world, is basically a "price taker" and not a "price maker".
Recently the same FM urged various sectors of business and industry to replicate the success achieved in the information technology industry - without realizing that Indian success in IT was a matter of luck, simply because when the boom came two decades back, Indians were the only people who spoke English and were willing to work at a tenth of the salary given to an American programmer. More luck came their way when the Y2K scare pushed more and more work to Indian shores.
Fortune doesn't favour every time, and such a success is impossible to replicate in other fields. In fact India is not even likely to keep its software advantage beyond another decade. As more and more countries gear up their younger lot is catching up fast with Indians. China is doing everything to beat India at its own game. Millions of people are learning English in China, thousands of students are coming to India to study software technology, and dozens of Indian companies are setting up shop in China to teach them everything about IT and ITES. Reason enough why recently the doyen of Indian software industry Narayan Murthy predicted that China could catch up with India in the IT industry in five years.
"I do think China is running very fast to catch up with India. Chinese are much more determined than we are. And already we are seeing visible signs of progress by China in our industry."
His own company, Infosys, has major plans to expand operations in China. It is right now using China as a development centre for their global clients. In phase-II, they will enhance our focus on the market opportunity in China from multinational companies. In phase-III, they will focus on the Chinese companies. As anybody can understand, by the time all these phases phase out, the doughty Chinese would have seized the software advantage.
While I don't wish to approve of the actions of Bush, Bernanke & Co., I wish to highlight the fact that most of the governments are mismanaging their finances and playing with the future of their populations. No doubt Bush, Bernanke & Co. are to be blamed but let us not spare other charlatans either.
Meanwhile, the presence of so many bogeymen simply means extra bullish factors for gold. When people around the world ultimately lose their faith in fiat currencies, they will realise that all are worse than one another, and that there is only one currency which can't be debauched by the governments, bureaucrats, and politicians: gold.
Incidentally this will also prove the veracity of good ol ' Greenspan's words: "In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value."
Hey Guys,
I am surprised one of you financial eagles did not pick this up and repot it yesterday?
CNN August 14th 2006
Standard and Poor’s announced today that it had sent a warning to the U.S. Treasury Department that the finances, and debt, of the United States was totally out of control.
They told Treasury officials that unless some serious steps were taken that U.S. government issued bonds would be rated as junk in less than two decades.
"The silver is mine and the gold is mine,' declares the LORD GOD Almighty."
We'll all be pulling rickshas anyhow. Unless we maybe sold our house before the invasion and fled to Switzerland.
From Drudge
This story came out today and it was interesting...$12,000 cash for every bombed house to be paid to Lebanese homeowners. Well, the interesting thing is that when the story was on Fox news this evening it actually showed some of these folk getting paid their money. They were being paid in Bens...I'm sorry but I just can't wrap my mind around the implications of this picture. A terrorist group paying it's constituents in Bens in a place that Israel bombed. I could imagine that there are many Bens in arab states. And people want to suggest the Ben is weak...me thinks not. But what the hell are they doing there? Oh yea, the money came from Iran...Hello, hello?
Worry is the interest you pay on a debt you may not owe.
1. This is the section of the paper that deals with the "Fed versus the Gold Standard" -- a topic I'm guessing is of interest to some in this forum. Link
2. This is the table of contents for the whole paper, titled "Money and the Federal Reserve System: Myth and Reality. " Link
No doubt at least one person in this forum will think this paper is just a bunch of lies from another conspirator. So be it. I hope others will find it useful.
As expected the author is a macroeconomist, who need to say these things to continue to stay in the fold, win govt grants, and have a nice lifestyle. Those that bend against the flow do not pass go, do not collect $200, and usually end up in jail.
Some excerpts from the above links. Just because the author writes don't make it so:
WHAT BACKS A FEDERAL RESERVE NOTE? --
The principal form of currency in the United Stated consists of Federal Reserve Notes. These notes are by law "legal tender," which is to say they may be used to satisfy obligations denominated in dollars. Should a suit arise over a commercial or public transaction, the law holds that a monetary obligation is satisfied if these notes have been "tendered" in the correct amount.
-Payment cannot be refused on the grounds that these are not money.
-The lack of backing, however has no bearing on the suitability of Federal Reserve Notes as currency.
-The government creates money out of nothing in order to purchase goods and services of value. The note that it pays with is basically an IOU. Anyone who owes the government taxes, dues, or fees can return the note and have his obligation canceled.
-Such money is said to be "fiat" money. It does not have any intrinsic value as a commodity itself, and is said to be produced and introduced by fiat of the government. Fiat money, therefore, is a debt of the government. Like any other debt from a creditworthy borrower, these IOUs are assets to those who hold them. Thus, these evidences of debt are usually well-suited and widely used to settle accounts. The fact that the note can be transferred to others who might use it in their transactions with the government makes it perfect for effecting private exchanges.
-Debt makes good money because the debt of one person or institution is an asset to whomever it is owed. Consequently, the debt can be used for exchange by the creditor (the individual who holds the debt), and then in turn by the person who receives it, and so on. When finally the chain of transactions comes round to the original issuer (the debtor), the debt can be canceled against whatever obligation one has toward the issuer, and the series of exchanges becomes complete.
-Federal Reserve Notes and other paper money are indeed "unbacked" IOUs. The fact that they are IOUs is the very thing that makes them suitable to be money. .....now those were mouthfuls to swallow. And if you believe it all, you are good little fiatian.
Considering the Alan Greenspan also supported a gold standard back in the 1960's and called our Federal Reserve System one of confiscation and wealth transference, I know who knows what's the real story. Sorry Steve, but I also support the theory of "conspiracy." Whether by intent or just plain old stupidity, the outcome is nevertheless the same....where we are today. The FED system has nearly bankrupted our society and has met the goals of its founders. Well done to JPM and their posse. It took 93 years but anything good is worth waiting for.
roadrunner
<< <i>Hey Guys,
I am surprised one of you financial eagles did not pick this up and repot it yesterday?
CNN August 14th 2006
Standard and Poor’s announced today that it had sent a warning to the U.S. Treasury Department that the finances, and debt, of the United States was totally out of control.
They told Treasury officials that unless some serious steps were taken that U.S. government issued bonds would be rated as junk in less than two decades. >>
I looked for this story and could not find it. Anyone have a link to this?
Just the tip of the iceberg?
Article
Knowledge is the enemy of fear
Link to above
Now Government officials are saying the U.S. is in fact bankrupt. Is your financial house in order?
By Terry Savage
TheStreet.com Contributor
8/27/2006
Is the U.S. bankrupt?
The U.S. is responsible for $80 trillion in future entitlement promises -- a figure about six times larger than the U.S. economy. To make good on those promises, future workers would have to pay tax rates ranging from 55% to 80% of their incomes!
The U.S. comptroller general, David Walker, is on a national "Fiscal Responsibility Wake-Up Tour" -- a nonpartisan effort to educate the public to the crisis that looms, not only in the next few years, but as baby boomers retire.
Walker, who is in the midst of a 15-year term, is being supported by both political liberals and conservatives in his efforts to shine a light on the budget problems that are approaching. Here are some of the facts that he pointed out in a presentation last week:
· About 60% of our federal spending is now mandatory, primarily because of Medicare and Social Security obligations and interest on the national debt.
· While the 2005 budget deficit was widely reported at $318 billion, if it is calculated on an operating basis like one that most companies use, the year's deficit was easily double that amount.
· We finance our deficits by borrowing -- and 50% of our public debt is currently owned by foreigners.
· Interest on the national debt is expected to be about $200 billion this year -- around the same amount that we spend on Medicare.
· We currently have a $46 trillion liability for Medicare and Social Security obligations -- and the new drug bill will easily add another $8 trillion in promises.
· Over the next 25 years, Medicare spending will grow at nearly five times the rate of GDP growth.
· Every newborn arrives with an immediate debt of $156,000 -- which constitutes fiscal child abuse!
Walker's presentation is on the General Accountability Office's Web site. You should see the data for yourself because a picture is worth a thousand bullet points!
These are MEGO numbers. That stands for "My Eyes Glaze Over." And that's why our huge and growing financial disaster doesn't stand much chance of gaining attention, especially in a world dominated by reality television shows and news headlines about perverts. When more people take the time to vote for dancing partners or dubious singing talent than vote for the president or their own congressional representatives, then we have only ourselves to blame. “
Yes I know. ha ha
Claus,
I thought it was interesting when we were having our discussion with Steve that his pie chart said that foreigners owned very little of our debt, but the U.S. comptroller says they own 50%?
“We finance our deficits by borrowing -- and 50% of our public debt is currently owned by foreigners.”
And then there is this,
“future workers would have to pay tax rates ranging from 55% to 80% of their incomes!”
If we currently already pay 60% of our income in ALL taxes just how will we ever be able to pay 55 to 80% in just Federal taxes?
If you were paying 20% in Federal taxes now plus 40% in all other taxes, and you had an increase of 35 % in your Federal taxes that comes to 95%.
I don’t know about you folks, but I just do not think I could live on 5% of my income!
In addition just how much money will we be able to invest to roll the debt?
I understand that that Government says we are many years out from this disaster, on the other hand in 18 months the baby boomers start collecting their benefits, with millions entering the system each year and every year going forward.
In my opinion the Government will never be able to pay these entitlements so we better forget about those S.C. and medicare checks in the mail.
On a side note I see my friend Pat Buchanan is pushing his new book to try to stop us from adding 20 million illegal aliens to our entitlement system!
and there you have the crux of the matter.
if there were more personal responsibility, incentive to create value, and abiding by the golden rule,
and less "take care of me" and "how can I get something for nothing" in this country, nay, the world,
we'd all be better off.
the only case I've ever made in this thread (and I think I commented extensively a couple hundred pages ago)
is that thems that takes care of themselves needn't worry about "being taken care of" by the govmint
Liberty: Parent of Science & Industry
“our entitlement system!
and there you have the crux of the matter.
if there were more personal responsibility,”
Baley,
I certainly think the majority here agrees with you!
Unfortunately the shame our forefathers felt about being on the “dole” is long gone in America. Today if you offer a job in one hand, and federal check in the other, most will take the check and feel no guilt what so ever for doing so.
I think this includes even most political leaders. Did you see how Governor Bush declared a state of emergency last week even before he had an emergency? So many hands out for Federal dollars and so little time to print it all!
"The silver is mine and the gold is mine,' declares the LORD GOD Almighty."
<< <i>The Hows and Whys of Gold a Great Read >>
I read this, but I am wondering about the source. Does anyone know anything about FN Arena News, or the author?
“The U.S. government announced today that they would contribute $230,000,000 to help rebuild Lebanon.”
Gee why not, it won’t take to long to print that money.
$230 million for concrete blockhouses at $100,000 a pop would build 2,300 houses. Did the Israelis blow up that many?
How many of those wood frame house were destroyed in New Orleans?
<< <i>FOX NEWS YESTERDAY!
“The U.S. government announced today that they would contribute $230,000,000 to help rebuild Lebanon.”
Gee why not, it won’t take to long to print that money.
$230 million for concrete blockhouses at $100,000 a pop would build 2,300 houses. Did the Israelis blow up that many?
How many of those wood frame house were destroyed in New Orleans? >>
Money is mostly to rebuild infrastructure such as bridges and roads.
Worry is the interest you pay on a debt you may not owe.
O.K. Perry,
So why exactly do you think we want to do that?
No doubt when we are finished rebuilding the place they will all love us, and become a very peaceful democracy?
Perhaps now the Lebanese will become great friends and supporters of Israel?
Perhaps they will change their evil ways and not buy arms from Iran with some of the extra money they get from other countries?
What kind of lesson is ever learned from these terrorist countries, when they know after each war we rebuild their countries?
<< <i>“Money is mostly to rebuild infrastructure such as bridges and roads.”
O.K. Perry,
So why exactly do you think we want to do that?
No doubt when we are finished rebuilding the place they will all love us, and become a very peaceful democracy?
Perhaps now the Lebanese will become great friends and supporters of Israel?
Perhaps they will change their evil ways and not buy arms from Iran with some of the extra money they get from other countries?
What kind of lesson is ever learned from these terrorist countries, when they know after each war we rebuild their countries? >>
Hey!!! I never said I agreed with this expenditure. If it were up to me, I would cut foreign aid. Most of it is going to countrys where they hate us. Makes no sense to me.
Worry is the interest you pay on a debt you may not owe.
Yeah!
<< <i>"There you go again!"
Yes I know. ha ha
Claus,
I thought it was interesting when we were having our discussion with Steve that his pie chart said that foreigners owned very little of our debt, but the U.S. comptroller says they own 50%?
“We finance our deficits by borrowing -- and 50% of our public debt is currently owned by foreigners.”
And then there is this,
“future workers would have to pay tax rates ranging from 55% to 80% of their incomes!”
If we currently already pay 60% of our income in ALL taxes just how will we ever be able to pay 55 to 80% in just Federal taxes?
If you were paying 20% in Federal taxes now plus 40% in all other taxes, and you had an increase of 35 % in your Federal taxes that comes to 95%.
I don’t know about you folks, but I just do not think I could live on 5% of my income!
In addition just how much money will we be able to invest to roll the debt?
I understand that that Government says we are many years out from this disaster, on the other hand in 18 months the baby boomers start collecting their benefits, with millions entering the system each year and every year going forward.
In my opinion the Government will never be able to pay these entitlements so we better forget about those S.C. and medicare checks in the mail.
On a side note I see my friend Pat Buchanan is pushing his new book to try to stop us from adding 20 million illegal aliens to our entitlement system! >>
the US comptroller statistics is correct!
I give away money. I collect money.
I don’t love money . I do love the Lord God.
Lets come up with a simple plan to get us out of the Middle East.
Here is mine,
We tell the Iraqis we want a ninety nine-year lease on several thousand acres in Iraq next to the Iran border.
We want a no fly zone within several hundred miles of the base for the term of the lease.
We are going to build a large base there. We also want a ten-year agreement on oil at $45 per barrel.
We are going to give the current government 6 more months to take control of their country, after that we move our troops to the base, and let them have a civil war.
Naturally the right side will win or we will step back in for another 3 weeks.
We sell our bases in Germany back to the Germans for a few billion, and use that money to help the current Iraqi government, and build the new base.
We move all the men and equipment including the nukes out of Germany to the new base, and point everything at Iran.
We tell the Iranians to build whatever they want. but if they ever shoot off a single missile we are going to blow ALL their installations to hell.
We set up al-American TV. Stations on the base and broadcast propaganda day and night to Syria and Iran.
We cut all foreign aid to everyone except food supplies for the starving, and tell our enemies if they, or they people, attack us any where in the world we are going to take it out on their governments, and we are not rebuilding anything.
If this is a war on terror lets do like we did with the Soviets and park the planes and booms on their doorstep.
Bureau of Labor & Statistics Birth Death Model table
The above single page table is easy to follow and understand.
Basically, the model predicts on average about new 900,000 to 1,000,000 jobs each year. If no new jobs were actually created it would not matter. The model still inputs those numbers. Over years the model will get corrected. The majority of those million jobs are available in Feb-June and August of each year. September through December only a small number of jobs are inputted. Those are the "tough" months to be job-positive! January is a month with a huge estimated decline (almost -200 million estimated this past January). It does not appear coincidental that the BD Model mirrors strengths and declines in equities and commodities. Gold tends to be strong in the fall through January when equities are often weakening. The BDM is weak from Sept-January as well. The BDM is a cheerleader of sorts. Job growth by definition will be strong in Feb-June & August and then weak the rest of the year. An interesting spin on the "wag the dog" story.
roadrunner
<< <i>SAN FRANCISCO (Market Watch) -- Gold futures fell by almost 3% Thursday to tally a two-session loss of $22 an ounce as the dollar strengthened against some of its counterparts and traders digested news of rising production in China and major mine expansion in South Africa. >>
Is too much potential supply the reason gold is dropping - or is this the pause that refreshes?
Buy gold and silver.
<< <i>
Is too much potential supply the reason gold is dropping - or is this the pause that refreshes? >>
Nothing has changed. Gold will continue it's violent sideways movement until there is insufficient
metal to keep it from going higher. The central banks are sitting on huge amounts but will be in-
creasingly hesitant to sell.
They could forestall the inevitable for many years but won't.
It will be interesting to see how many second homes get unloaded, as time runs out on the boomers clock. What do you think we should be investing in now that Boomers will want later?
Danielle DiMartino:
Boomers won't drive consumption!
10:24 PM CDT on Wednesday, September 6, 2006
Will the baby boomers save the U.S. economy?
Baby boomers do not drive consumption. Baby boomers trade. We trade one house for another; one car for another; one office for another. The group that drives consumption are the people who go from zero to one.
Absent this entry-level age group, pricing power dries up.
What a simple concept. Too bad it's lost on the current generation of corporate America, because it's certainly not lost on the 77 million or so baby boomers.
A 57-year-old recently retired Rhode Island reader e-mailed to say that his cohorts are generally looking to downsize to 1,800-square-foot ranch homes or single-level condominiums.
He suggested that the builders who insist on erecting 6,000-square-foot McMansions are missing a huge segment of the market and would be well served by reading AARP magazine.
A few days ago, a reader from Missouri echoed this sentiment, saying a soft landing is simply not in the cards for the economy this time around, that "the demographics show that there's nowhere for the economy to 'land.' "
In what will go down as one of his most eloquent missives, Bill Gross of Pacific Investment Management Co. recently explained the impact of the coming wave of boomers:
"Approaching 60, their focus is less on off-roading and more on off-loading – retirement, the transfer of responsibility and anxiety to a younger generation”.
Complicating this process is the fact that there are so many more boomers than their succeeding generation. One solution is more babies, but as Mr. Gross astutely noted, "babies take 20-plus years to grow into worker bees, and we've long since passed the point of no return."
The arguments offered by the bullish Wall Street community have become increasingly insulting. The theory is that baby boomers, with their vast stores of wealth, will choose to retain not just one, but both of their homes; that the weight of two mortgages, maintenance budgets, insurance and property taxes can be carried into retirement on fixed incomes.
Mr. Gross' counter: "In financial terms alone, Laurence Kotlikoff, a Boston University economist, has estimated the unfunded liabilities associated with health care and retirement amount to $80 trillion, over seven times our annual GDP!"
in one day. Volatility, manipulation and gamesmanship. I read one article this past week that stated that only 4 gold
shorts made up the vast majority of all shorts. This compared to thousands making up the longs. The hint was that
there was obvious "hidden" manipulation.
roadrunner
Who are they? They must have super deep pockets and access to great credit. They too will be crushed.
Looks like my "masses are asses" theory holds true again.
Knowledge is the enemy of fear