OT - who really controls the US economy

1jester · January 25, 2004 7:07AM

Vote Libertarian.

Pherris · January 25, 2004 7:10AM

You patriotic types should tune into gcnlive.com it is radio network that spends all the broadcast hours in a day on these very subjects. Good debate and in the end a little gold around may not be a bad thing if all else fails you can sell it on ebay. :-)

1jester · January 25, 2004 7:20AM

Welcome, Pherris!

roadrunner · January 25, 2004 7:31AM

Andy, for starters, we could back our currency with some % of gold reserves. Would restore some faith to our dollar.

Rein in govt expenses. Make hard choices and trim down the bureaucracy....return some of that control to the states where it should be. Balance the budget. Teach our citizens how to save again like we did from the 1700's to mid-1900's. There's lots of things that should be done. Maybe get rid of the fractional banking system too.

roadrunner

MrEureka · January 25, 2004 7:33AM

return some of that control to the states where it should be

That would be my first choice.

roadrunner · January 25, 2004 7:34AM

What do you figure the pork ratio is with our govt spending. I dare say that 80% of what we spend is wasted. From useless bureaucratic offices, public works, subsidies, funding studies to determine the mating habits of the american male, etc. Let's run the damn company like a business, not a perk-shop.

Lots of pork to trim.

RR

MrEureka · January 25, 2004 8:08AM

What do you figure the pork ratio is with our govt spending. I dare say that 80% of what we spend is wasted. From useless bureaucratic offices, public works, subsidies, funding studies to determine the mating habits of the american male, etc. Let's run the damn company like a business, not a perk-shop.

80% sounds high. On the other hand, I'd guess that 80% of the Federal Government's spending is unconstitutional under the 10th Amendment: "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people."

cladking · January 25, 2004 8:19AM

Pork and waste combined likely account for well over 80% of spending if interest
on public debt is considered waste.

Gold is having a large upswing in the midst of a long term downtrend. Those who
hold it long enough will lose a lot of money. The dollar will stabilize and strenghten
at some point. This should not be far in the future though it may be at much lower
levels. One should be mostly out of gold before this occurs.

SportsModerator · January 25, 2004 8:23AM

Mr Eureka

<< <i>FDR closed the banks AFTER the runs began >>

Unless he was gifted with the remarkable clairvoyant powers of Miss Cleo, it would have been hard to close them before the run began. However he did close them DURING the run.

roadrunner · January 25, 2004 8:35AM

Miss Cleo told me to stock up on 64 saints 2 months ago. I listened to her. But since she's been in the slammer, I haven't heard her sell recommendation yet. Damn that Cleo.

Cladking, have to concur with your thoughts. I think we have at least a year left on the run in gold and possibly a few more after that. Right now I'm not looking past the first half of 2005.

roadrunner

dollardude · January 25, 2004 8:37AM

RR, I didn't say the whole article was bad. You misunderstood me. It made some good points -- one of which was that banks are ultimately in control of the economic system due to the large debt (both by government and by individuals), and the fact that interest must be paid on that debt. Let this be a lesson that DEBT IS A CURSE. STAY AWAY FROM DEBT!!!!! We have a mess to clean up, I agree, and this article outlines the mess we're in (but, gold, IMO, is not the answer to the mess).

1jester · January 25, 2004 8:39AM

"(but, gold, IMO, is not the answer to the mess)." --DD

Well, we figured you'd say that.....

AValde · January 25, 2004 9:13AM

<< <i>The govt would pay you their going rate on the books which I think is around $34/ounce. What a deal. >>

The federal gold reserve going rate for an ounce is $ 42.22 / ounce.

tradedollarnut · January 25, 2004 9:17AM

Let this be a lesson that DEBT IS A CURSE. STAY AWAY FROM DEBT!!!!!

Absolutely 100% incorrect. A company [or country for that matter] that is entirely debt free is operating inefficiently - even if extraordinarily wealthy.

mercurynut · January 25, 2004 9:18AM

The Federal Reserve.....The money supply dicatates what everyone is going to do.

AValde · January 25, 2004 9:48AM

<< <i>STAY AWAY FROM DEBT >>

The US Government holds very little in debt. The majority of the debt is owned by the public in form of treasury bonds, state bonds, municipal bonds, and other government debt instruments.

MrEureka · January 25, 2004 10:50AM

A company [or country for that matter] that is entirely debt free is operating inefficiently - even if extraordinarily wealthy

TDN - I need help understanding that one. Modigliani and Miller won a Nobel prize for explaining, in effect, that a firm's capital structure (debt vs equity) is irrelevant to the company's enterprise value. Of course equity is preferred because loans can be called. Equity is safer. But I don't see why debt would ever be preferred. And if a debt-free company is so wealthy that it is ready to return equity to its investors or pay a big dividend, why on earth would they consider taking on debt? All that said, any company that can achieve a marginal return on capital greater than its borrowing costs would be foolish to religiously avoid debt.

tradedollarnut · January 25, 2004 11:52AM

All that said, any company that can achieve a marginal return on capital greater than its borrowing costs would be foolish to religiously avoid debt.

Exactly.

wingedliberty · January 25, 2004 12:02PM

You two are assuming that the cost of debt and the return on capital are based on a fixed index.
Who may I ask controls the index upon which the rate of the debt is based? What happens to the performance of equities when Allan Greenspan speaks?

roadrunner · January 25, 2004 12:09PM

Paying back debt down the road with inflated dollars is always the way to go if your are the one paying down the debt. This is the "magic" of currency inflation. But in the long run, it ALWAYS catches up to the debtor. You can't escape it. We have 90 years of currency inflation under our belts. Some debt is ok but how about $7 TRILLION worth and climbing $1.58 BILLION each day.

roadrunner

MrEureka · January 25, 2004 12:09PM

You two are assuming that the cost of debt and the return on capital are based on a fixed index.

You mean fixed interest rates and fixed ROI? Then NO, there is no such assumption. Just an educated guess as to how things will unfold. Running a business is just a serious of calculated risks.

MrEureka · January 25, 2004 12:10PM

Some debt is ok but how about $7 TRILLION worth

I dunno. Lend me seven large and we'll see how it works out.

wingedliberty · January 25, 2004 12:17PM

No one has commented on the psychological impact of debt vis a vis consumer and small business confidence. Debt causes stress, and stress impacts consumer confidence.
Obviously , credit is an intergral part of our economy. New business could not start without business loans. Low rate mortgages drive new home sales. All of those things are a given and simple economics.
,but when you think about it deeper, you realize that the National Debt is something that affects all of us on a psychological level. Nobody likes to owe money. Personal bankruptcies are at an all time high.
As a senior mortgage underwriter for a major financial institution, I see good , hard working people file bankruptcies due to unforseen circumstances, such a divorce, medical emergencies, failed startup business, etc. , in the end, what really controls our economy is PSYCHOLOGY and CONSUMER CONFIDENCE.

tradedollarnut · January 25, 2004 12:24PM

One major difference between the US and Russia is the ability to efficiently bring items to market. Part of that efficiency is infrastructure. Without roads and rail, the economy of the US would not be what it is today. Should the government have borrowed money in the 40's and 50'sto fund the infrastructure that brought us our economy of today? Absolutely. Should the government borrow money today to fund equivalent improvements to infrastructure that will bring us a comparative economy of tomorrow? I think so. If the government borrows wisely and invests properly, the current deficit will remain a small percentage of the overall economy. Debt is not evil - it is necessary.

MrEureka · January 25, 2004 12:33PM

If the government borrows wisely and invests properly...

Uh oh.

OT - who really controls the US economy

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