How much is $17 trillion? Visualized for reference.

[Fluid Power]

http://demonocracy.info/infographics/usa/us_debt/us_debt.html

This is nuts.

Darren

[Rick D]

:thumbsup:

[WSSix]

It's rather scary that most people hear these numbers all day long while listing to the news but they have no real concept of just how much a trillion is or even how much a billion dollars is.

[Bucketlist2012]

Scary is that the government has liabilities of between 13 and 17 Trillion dollars..


Their assets are 1.5 trillion.. 35% of their assets are Student Loans..Mortgages are 9%. Misc., and tax receivable are 25%..

How do you run a business when your assets are that low, and your Debt is that high, and student loans are the largest chunk of your "assets"...:willy:

[ErikLS2]

Wow, we better all get off of Lat-G and get back to work, the government needs our money! :rofl:

[parsonsj]

How do you run a business when your assets are that low, and your Debt is that high, and student loans are the largest chunk of your "assets"...

If the Federal government was a business that would matter.

[Bucketlist2012]

If the Federal government was a business that would matter.

Since it isn't a business, they don't care because it is other people's money, and they get paid and pensions, no matter what..

Then we get the government that we have...Bloated, mis-managed, and in crisis mode...

[GregWeld]

If they showed this on the major TV news networks -- it might FINALLY get America riled up enough to vote properly (which isn't a political statement - it's a statement that says pay more attention to what your LEGISLATORS are voting for - i.e., your Senators and Representatives!)

People all want to blame the President. The President DOES NOT make laws - he only signs them.... it's the other 535 bozos that piss your money away!

:woot:

[legend]

I was shocked, in china everyone saves 40% of their income, we'd be in a very different position if that was the case in the west

[parsonsj]

I was shocked, in china everyone saves 40% of their income, we'd be in a very different position if that was the case in the westYes, that's true. We'd be way worse off:

http://en.wikipedia.org/wiki/Paradox_of_thrift

An excerpt:

The paradox states that if everyone tries to save more money during times of recession, then aggregate demand will fall and will in turn lower total savings in the population because of the decrease in consumption and economic growth.

[legend]

Ahhh. I see why Greg makes money and I don't now. :D

[GregWeld]

Ahhh. I see why Greg makes money and I don't now. :D

Yep -- Better lucky than smart.... I'm not very smart but I've had some very good luck! :lol:

[Bucketlist2012]

Yep -- Better lucky than smart.... I'm not very smart but I've had some very good luck! :lol:

AMEN Greg.. I am not smart enough to understand the paradox of thrift, or the kensian way of economics...Or am I ? I have been saving 20% of my pay for decades, and it seemed to work out great for me.

I see the out of control printing and spending that devalues our currency, as the problem. Not the individual who saves too much..

Also Luck is not blind luck.It is the meeting of opportunity and preparation..Leading to 2008, I would tell my Wife that a chance of a lifetime is coming. Bad for many, but good for those ready for what will happen..
All the preparation and Investing prepared me for that moment in time.

Sure I could have done better, but the mistakes I made in 2000, I did the exact opposite this time to great success..I am luckier than I am smart, but smart enough to use the luck when it presents itself.:cheers: :woot:

[Bucketlist2012]

The Federal Government has between 13 to 17 trillion dollars in Debt.

The federal Governments assets are 1.4 Trillion..

35% of that is Student loan debt that they are depending on. Housing loans are only 9%. What if the Student loans are forgiven ???

There is a big problem with those numbers, and those that are not saving for a Rainy Day may be sorry..

[GregWeld]

The Federal Government has between 13 to 17 trillion dollars in Debt.

The federal Governments assets are 1.4 Trillion..

35% of that is Student loan debt that they are depending on. Housing loans are only 9%. What if the Student loans are forgiven ???

There is a big problem with those numbers, and those that are not saving for a Rainy Day may be sorry..



Brings to mind an old saying -------


Figures lie -- and liars figure......



The government probably actually has no clue where it owes and to whom and how much... it's just too many departments and way to large of numbers to ever get a handle on it. Probably a good thing nobody knows - it would be too frightening!

:lol:

[Bucketlist2012]

Brings to mind an old saying -------


Figures lie -- and liars figure......



The government probably actually has no clue where it owes and to whom and how much... it's just too many departments and way to large of numbers to ever get a handle on it. Probably a good thing nobody knows - it would be too frightening!

:lol:

I was lying around figuring, and now I figured that I have been lied to...:wow: :rofl:

[parsonsj]

There is a big problem with those numbers, and those that are not saving for a Rainy Day may be sorry..Let's use your number: $17T. It's only a number, and is actually smaller relative to GDP than it has been in the past. What scenario do you see playing out in the future that has you concerned? What is the apocalypse? I'm not being argumentative, just curious.

[parsonsj]

Here's another link about the history of Federal government debt back to the 18th century. It has some nice charts to compare our current situation with our past:

http://www.usgovernmentdebt.us/debt_deficit_history

[Bucketlist2012]

Let's use your number: $17T. It's only a number, and is actually smaller relative to GDP than it has been in the past. What scenario do you see playing out in the future that has you concerned? What is the apocalypse? I'm not being argumentative, just curious.

The only time the debt was higher is World War One and World War Two.

And The printing and spending will only devalue our currency more.. I don't see any apocalypse for me, I am ready.

I see that the continued spending, printing, and entitlements will weaken this country . You cannot spend that kind of money, and not expect consequences..

I don't thing you are arguing at all, just asking..I feel people can do what they want, and I have prepared with the Investments and assets that I have..I do not buy into the media hype and by being prepared, I just don't have to worry..

I just think that people who are not properly deleveraged, and don't have access to liquid cash, and are not invested for the long term, are in trouble...:cheers:

Also those charts do not show the Interest payments due on Fannie and Freddie, so I do not rely on the charts at all..Maybe from the past, but today's charts can be manipulated for political gain.

I don't see armageddon, just a really long rough patch(10 years plus), for the non prepared..

[GregWeld]

Here's another link about the history of Federal government debt back to the 18th century. It has some nice charts to compare our current situation with our past:

http://www.usgovernmentdebt.us/debt_deficit_history



Just look across the pond at Europe if you'd like to see where we're headed... Debt and an entitled population...

If it wasn't for the Chinese buying our paper - we'd already be out of business.

[parsonsj]

Are you referring to the slow growth and possible looming recession in central Europe? Or the high unemployment and sovereign debt crisis in southern Europe?

(probably not the solid growth exhibited by northern European social democracies with their cradle-to-grave government programs :) )

To be fair: Portugal, Ireland, and Spain do have similar problems to the U.S., in that much of their current issues can be traced to a de-leveraging private sector after their housing bubble burst.

But we're talking about government debt, and there is a huge difference between the U.S and Europe: currency. The U.S. has its own currency and can borrow at historically low rates. European governments cannot (due to their shared currency), and borrowing costs are sky-high for them since there is no European bond that would correspond to U.S Treasury bonds.

Anyway, here's the point of my ramble: the UK and much of southern Europe have been on government austerity experiments for the past 2.5 years. And the results have been very disappointing: cutting government spending has reduced growth, reducing tax receipts, resulting in more debt. It's proved to be self-defeating. Recent elections there seem to be pointing to more "growth" policies with more government spending. In fact, many economists and politicians there have started to point to the US as a model. Even though our economy is way below optimum and our unemployment rate is way too high, our growth has been better, in part because we did do some (not that much, but some) stimulus, rather than austerity.

Whew. I need a nap. :cheers:

[John510]

I was shocked, in china everyone saves 40% of their income, we'd be in a very different position if that was the case in the west

I try to do that but then I go on Lateral G and get ideas for my car and there goes my saved money again...:(

[GregWeld]

But we're talking about government debt, and there is a huge difference between the U.S and Europe: currency. The U.S. has its own currency and can borrow at historically low rates. European governments cannot (due to their shared currency), and borrowing costs are sky-high for them since there is no European bond that would correspond to U.S Treasury bonds.




Debt is a "product" -- which, when offered, needs a buyer... when the buyer is afraid of the product - he'll demand a higher premium or he won't buy.

It's the oldest market in the world... Our debt is "cheap" (Low coupon rates) because we are seen as having the ability to pay back the debt with the interest. Europe's debt carries a high coupon rate because there is a far higher risk of default.

As a buyer of bonds and corporate bonds etc... I wouldn't care if Europe paid 15% - I wouldn't touch it. It wouldn't make me a buyer even if all of Europe backed the bonds, because their problems are so systemic that issuing more bonds to cover their current crisis is only adding to their problems.

It's like getting pregnant to save a marriage - or borrowing a third mortgage on your house because you have a debt problem... either way - it's going to end badly.

The real issue is - whether you're a household, or a government - you can't spend more than you earn.

The problem is fixing what got you here in the first place...

[parsonsj]

It's the oldest market in the world... Our debt is "cheap" (Low coupon rates) because we are seen as having the ability to pay back the debt with the interest. Europe's debt carries a high coupon rate because there is a far higher risk of default.

Just look across the pond at Europe if you'd like to see where we're headed... Debt and an entitled population...

Just a couple of points here.
1. "Europe" can't sell debt government debt. Only sovereign governments can, and there's a big difference in yields between Spanish yields and German yields in bond markets. That's a significant problem in how the euro is set up. Shared currency, but not a shared ability to raise money via bond auction.

2. I agree with you about why the yields are so different between the US and Spain, or the US and Italy. The markets see the US as the safe place to invest their funds, with little risk of default or future inflation. That's why yields are so low, and they are low on 10 year bonds too. IOW: the market disagrees with your assertion (and BucketList's) that the US is headed for debt difficulties similar to that in southern European governments within the next decade.

[GregWeld]

Just a couple of points here.
1. "Europe" can't sell debt government debt. Only sovereign governments can, and there's a big difference in yields between Spanish yields and German yields in bond markets. That's a significant problem in how the euro is set up. Shared currency, but not a shared ability to raise money via bond auction.




Well - exactly - and think of it this way.... you pay your bills and have a low mortgage rate (Germany)... would you consider guaranteeing your neighbors (Greece/Spain/Italy) debt when you know he's out of work, and owes everyone in town, and spends money like a fool??

[Bucketlist2012]

The market ? You mean the "free" market ?

The one artificially propped up with worthless dollars ? Pumping money into the markets and the government by the Federal Reserve only prolongs the agony.

You do not see a Debt crisis ? Well you are entitled to your opinion, but there is a Debt crisis, now and in the future.

The Market is feeding on the stimulus money.Take that away and let the market settle to where it should be..

I have set my Investments for "stimulus" for the last 4 years. If it continues, you will be left with the Rich and the Poor, the middle will be hollowed out.

Stimulus without Debt reduction is madness..And the only way to prove it is to let the next few years play out...Charts and opinions mean nothing and time to let it play out is the true way to see who is right. I will bet on the debt crisis..I bet on the 2008 Crisis and was right, so I will follow my gut on this debt crisis..Our opinions are just that, and the true test is Time.

[GregWeld]

Mikes "summation".....


You can not spend your way to wealth...:D


I agree.


If you're in debt - and someone gives you some money - you have two choices. Pay off your debt - or spend it, and spend even more, on your credit card while you're at it. Choose the latter and the guy that gave you the money might get pissed and start making demands that you change your ways, or chooses to cut you off. At some point you either go bankrupt, or you make a deal with your creditors to take a haircut, and you wise up and eventually pay them off.

[Bucketlist2012]

Mikes "summation".....


You can not spend your way to wealth...:D


I agree.


If you're in debt - and someone gives you some money - you have two choices. Pay off your debt - or spend it, and spend even more, on your credit card while you're at it. Choose the latter and the guy that gave you the money might get pissed and start making demands that you change your ways, or chooses to cut you off. At some point you either go bankrupt, or you make a deal with your creditors to take a haircut, and you wise up and eventually pay them off.

Greg,

I have come to find that you can take my long winded posts and summarize them in a few sentences..:cheers:

Also this thread is just to get people thinking about Debt, and the government's debt. It isn't about changing each other's minds. It is just about different opinions. Parsons has his, and we have our's. It gives the readers something to think about.

I have always said that I run MY economy, I am too small in the pond to run the Government's Economy. I can only see what I see, give my opinion, and position myself to protect my wealth, however small or large it may be..:lateral:

[parsonsj]

If you're in debt - and someone gives you some money - you have two choices. Pay off your debt - or spend it, and spend even more, on your credit card while you're at it. Choose the latter and the guy that gave you the money might get pissed and start making demands that you change your ways, or chooses to cut you off. At some point you either go bankrupt, or you make a deal with your creditors to take a haircut, and you wise up and eventually pay them off.

Governments (and especially governments with their own currency) are not the same as households or businesses. The government has an obligation to follow policies to support employment for all its citizens that's very different than what a household or business does. If your reaction to that statement is that that isn't in the Constitution -- imagine the US with a balanced budget and 30% unemployment. The government wouldn't last long in that scenario.

The data shows that the European (UK, Greece, Italy) experiments with austerity -- reducing their future debt by cutting government spending -- has proven counter-productive. Cutting government spending has increased debt by creating more unemployment and reducing tax receipts.

Simply put: you can't save your way to prosperity. You have to invest your way to prosperity.

Fixating on debt at a time when the economy is operating below capacity and millions of people are out of work (or working below their skill level) is a false savings. A better policy would be to pursue an agenda to support more employment and grow the economy to reduce debt in the future. And that's especially true when the US government can borrow money at historically low rates.

[Bucketlist2012]

[QUOTE=parsonsj;425933]

Simply put: you can't save your way to prosperity. You have to invest your way to prosperity.


In one's personal life, Saving and Investing are keys to prosperity. The way you use the word "Invest", is code for Spending. They have changed the word from Spending to Investing. The government is the King of wasteful spending.

As with everything , it is all or nothing..They believe they will spend their way out of this mess..You can call it Investing, but it is spending.And the King of waste, Our government, will waste it away.

An example is California, the way the country is going, but on a smaller scale..They approve your "Investing" on a Bullet train..It will triple in costs, and not be finished.At a time when the state has 17 billion in the hole, and they continue to approve programs that are not funded. Also they pass a budget hoping for the upcoming vote on tax Increases..

Again we can agree to disagree. I won't ever agree with you, and you won't agree with me. I am cool with that.:thumbsup:

But this thread is to give Information for the readers of the thread, so I thank you for your views.:cheers:

Let the Individual Reader decide. That what this thread is about..Not you convincing me, or me convincing you.That for sure will never happen.

We can take the small pill now, or the large pill later..

[camcojb]

Governments (and especially governments with their own currency) are not the same as households or businesses. The government has an obligation to follow policies to support employment for all its citizens that's very different than what a household or business does. If your reaction to that statement is that that isn't in the Constitution -- imagine the US with a balanced budget and 30% unemployment. The government wouldn't last long in that scenario.

The data shows that the European (UK, Greece, Italy) experiments with austerity -- reducing their future debt by cutting government spending -- has proven counter-productive. Cutting government spending has increased debt by creating more unemployment and reducing tax receipts.

Simply put: you can't save your way to prosperity. You have to invest your way to prosperity.

Fixating on debt at a time when the economy is operating below capacity and millions of people are out of work (or working below their skill level) is a false savings. A better policy would be to pursue an agenda to support more employment and grow the economy to reduce debt in the future. And that's especially true when the US government can borrow money at historically low rates.
my biggest concern is we enjoy this advantage because we can print our own money, and it's the world's currency. What happens when the Fed goes too far, and it ever lost that status? We could print all we wanted but it would be worthless, think Zimbabwe........... ;) Also realize that the debt is still owed, and the interest rates will not stay as low as they are. When they rise the more debt you have the worse it will be. And there is NO doubt they are going to go up. We HAVE to address the spending to some point.

There needs to be balance, but the fastest way to reduce the deficit is to get people back to work and see the increased revenues rather than trying to increase taxes. But if they are unwilling to pass a budget or reduce spending also, then I don't see it happening near term. They've proven they're willing to spend money, but at this point it's going to the wrong things in my opinion.

[Bucketlist2012]

Speaking on currency..

In 1964 , you could take a Quarter and buy a Gallon of gasoline..You can take that same Quarter in 2012(Silver), and buy a gallon of Gasoline.

In 1964, you could take a paper Dollar and buy 4 Gallons of gasoline..In 2012, that same paper Dollar now buys 1/4 of a Gallon of gasoline.

That is the state of Fiat or paper currency..The Dollar.

[GregWeld]

I mentioned in an earlier post about Europe's bonds - or any bonds (BORROWING) for that matter....

Why is the US Treasury so low (rate)? And Europe's so high?

Nobody wants to own European debt. They'd rather have a negative net return (rate vs inflation) than own Euro debt.

I think what Mike (Bucketlist) and I are trying to say - and nobody wants to listen - is that what you're seeing in Europe NOW - is where the USA is headed continuing to spend what it doesn't have and to issue debt.

The reasons for the woes of Europe are many... but mostly it is based on entitlements and high tax rates. Too few paying too much - and too many doing too little and getting too much.

We have been given the opportunity to look into the crystal ball and see Americas future.

[parsonsj]

Nobody wants to own European debt. They'd rather have a negative net return (rate vs inflation) than own Euro debt.

I think what Mike (Bucketlist) and I are trying to say - and nobody wants to listen - is that what you're seeing in Europe NOW - is where the USA is headed continuing to spend what it doesn't have and to issue debt.

The reasons for the woes of Europe are many... but mostly it is based on entitlements and high tax rates. Too few paying too much - and too many doing too little and getting too much.

We have been given the opportunity to look into the crystal ball and see Americas future.
The assertion that "mostly it is based on entitlements and high tax rates" doesn't match the data. There is no such thing as "European" debt, and no such thing as a European bond. The argument needs to be based on the individual countries in Europe in order to have data to match the assertion, and when you do that you find the argument doesn't work so well. Here's why:
1. Northern European countries (Finland, Sweden, Norway) have the strongest growth over the past few years, and they have the highest tax rates and most comprehensive safety nets in Europe.
2. Central European countries are doing ok, though they may be in recession now or on their way to recession. Germany, France, Austria, etc. They have lower tax rates, and more private sector safety net (private health insurance, etc.).
3. Southern European and peripheral European countries are doing poorly. The so-called GIPSI (Greece, Ireland, Portugal, Spain, and Italy) countries are in this group, and they are the ones in crisis. These countries are the ones we need to discuss to see if there is a lesson for the US.

When you dig into the the GIPSI countries' data, you find that the assertion that "high tax rates and large entitlements" argument doesn't match either. Recent attempts to cut government spending in those countries have resulted in even larger deficits, and worse, has put millions of people out of work. Cutting government spending is not working. If we look at the GIPSI woes, the lesson is pretty clear: it's better to pursue policies of increasing employment, and growing the economy to reduce future government debt.

[Bucketlist2012]

The assertion that "mostly it is based on entitlements and high tax rates" doesn't match the data. There is no such thing as "European" debt, and no such thing as a European bond. The argument needs to be based on the individual countries in Europe in order to have data to match the assertion, and when you do that you find the argument doesn't work so well. Here's why:
1. Northern European countries (Finland, Sweden, Norway) have the strongest growth over the past few years, and they have the highest tax rates and most comprehensive safety nets in Europe.
2. Central European countries are doing ok, though they may be in recession now or on their way to recession. Germany, France, Austria, etc. They have lower tax rates, and more private sector safety net (private health insurance, etc.).
3. Southern European and peripheral European countries are doing poorly. The so-called GIPSI (Greece, Ireland, Portugal, Spain, and Italy) countries are in this group, and they are the ones in crisis. These countries are the ones we need to discuss to see if there is a lesson for the US.

When you dig into the the GIPSI countries' data, you find that the assertion that "high tax rates and large entitlements" argument doesn't match either. Recent attempts to cut government spending in those countries have resulted in even larger deficits, and worse, has put millions of people out of work. Cutting government spending is not working. If we look at the GIPSI woes, the lesson is pretty clear: it's better to pursue policies of increasing employment, and growing the economy to reduce future government debt.

Forget Europe for a second and then try the argument of continuing spending in America...Take California, and try to argue that you need to increase the spending and the debt to grow it's economy..

Instead of lowering the debt, they continue to spend on Government employees, and Bullet train projects ,that will triple in costs and be unfinished.

City after city is going bankrupt due to massive over spending..

The spending and growth you talk about is only on the government programs, and the government employees, not the private sector..The private sector is being punished with more taxes to pay for the spending.

This is the canary in the coal mine...The nation is following California's lead..

I can appreciate your posts , so that the reader's can decide for themselves.

But i guarantee that I don't see through your eyes and never will..When you say that it is clear what is happening, I say the same thing...It is pretty clear what is happening..There is a Debt crisis due to massive overspending..

Government has always been the most wasteful entity ever, and increasing it's size and power only lends to more wasteful spending..

More bankrupcies to follow.And they will all be cities and states...More bailouts, printing and spending is coming.

[parsonsj]

Yeah, California has real problems. It's a bit of a poster child for austerity efforts not working.. as each new round of spending cuts is instituted, the deficit goes up, not down. It was true for Gray Davis, the Governator (who can spell the man's name), and now for Jerry Brown.

What's the answer? More tax base. How? Invest in the population. Get the unemployed back to work paying texes. If you want to see the cause of California's budget problems, go back to Proposition 13 in 1978, and you can see a series of budget crises that have been happening since then.

There's no easy solutions -- but cutting government spending doesn't work. It hasn't worked in California, it hasn't worked in Texas, it hasn't worked in the UK, and it hasn't worked in Italy, Greece, or Spain. We need to do something else.

Wisconsin has shown some promise. Their approach has been to require government employees to provide a larger percentage of their pension contributions -- in effect, a tax on unionized government employees. I'm just spitballin' but maybe something to try in California is to invest in more school teachers (California is currently 48th in spending per capita in education) and require them to provide a greater percentage of their pension. :cheers:

[Bucketlist2012]

Yeah, California has real problems. It's a bit of a poster child for austerity efforts not working.. as each new round of spending cuts is instituted, the deficit goes up, not down. It was true for Gray Davis, the Governator (who can spell the man's name), and now for Jerry Brown.

What's the answer? More tax base. How? Invest in the population. Get the unemployed back to work paying texes. If you want to see the cause of California's budget problems, go back to Proposition 13 in 1978, and you can see a series of budget crises that have been happening since then.

There's no easy solutions -- but cutting government spending doesn't work. It hasn't worked in California, it hasn't worked in Texas, it hasn't worked in the UK, and it hasn't worked in Italy, Greece, or Spain. We need to do something else.

Wisconsin has shown some promise. Their approach has been to require government employees to provide a larger percentage of their pension contributions -- in effect, a tax on unionized government employees. I'm just spitballin' but maybe something to try in California is to invest in more school teachers (California is currently 48th in spending per capita in education) and require them to provide a greater percentage of their pension. :cheers:

Wow...It is the poster child for austerity not working ??? Now that is funny..Nice twist on things. It is the poster child for...well i cannot get political..But without cutting the government waste and spending, it will just be asking for a bailout soon..Moonbeam got it wrong the first time, and round two will be worse.

Again with comments like that, you and I will never agree...More spending on teacher's ? Less Illegal Immigration maybe. No bullet train..No 1000 employees of the government getting raises..

More spending ? Of money they do not have...They will punish the successful to fund the lazy.. More property tax, mileage tax, all to fund those not putting into the system.

I like your twist on things..In my humble opinion, completely off base and wrong, but again, good for the readers of this thread...

Let them decide what they believe..I know you have, and so have I.
We agree to disagree.:cheers:

[parsonsj]

In related news:

http://www.bloomberg.com/quote/USGG10YR:IND

I'm not trying to change the subject from California, but have a look at Japan.

Its bond yields are even lower than those of the US, with a debt to GDP ratio nearing 200%. And that's been true for a very long time.

[Bucketlist2012]

In related news:

http://www.bloomberg.com/quote/USGG10YR:IND

I'm not trying to change the subject from California, but have a look at Japan.

Its bond yields are even lower than those of the US, with a debt to GDP ratio nearing 200%. And that's been true for a very long time.

I will check it out..

Gotta go, but like I said, it is good to hear all sides and let each reader decide for themselves..:thumbsup: :cheers:lateral:

[Tony_SS]

If we go back and look at our own recent history, we can see what got us out of the depression. And despite what public school textbooks say, it was not going to war, but it was the ending of WW2, reducing taxes by 1/3 and cutting govt spending by 2/3. Those 3 key items gave us baby boomers and prosperity.

John, I don't know if you have Amazon Prime but I want to suggest a neutral movie called IOUSA. It's free to watch if you have Prime. I'm about half way through but so far it does a good job explaining the history of our debt and tells the story of how the Govt Accountability Office basically went on a tour trying to educate voters about the dangers of a then 14 trillion dollar debt.

But a large part of this too, is understanding the Federal Reserve. It is a private cartel of banks that by law is in charge of our currency and fixes interest rates. They are a blank check for a spend happy Congress, and they profit from govt spending. Think of Goldman Sachs financing our govt spending, and allowed to create money from thin air and charge interest on that. You can see how private institutions like this are only concerned with their bottom line and not the end users. Especially when they have a monopoly.

The truth is our govt (which is really us, you and me) is indebted to private central banks in which we are human collateral providing revenue by law. We have literally been enslaved and conquered by these institutions.

[GregWeld]

I love these kinds of discussions....

What people fail to fundamentally understand is that regardless of who owes whom... you can't spend your way out of it. I don't give a rats azz what came first the chicken or the egg... or the why... or the how... or even when. Debt is debt and when you owe more than you can afford to... you're in deep trouble. Borrowing more isn't going to help.

The medicine tastes bad... which is -- SOMEONE has to quit spending. SOMEONE must end the vicious cycle...

JP's version of a fix is to just spend some more and everything will be fine. That might be true -- TEMPORARILY... But in order to spend more we have to borrow more -- which means our interest rates will rise - which will take a larger bite out of everyones pocket INCLUDING the Governments which will exacerbate the deficit since we've been re-financing the older higher rate debt with new lower rate debt (in business we called that a "roll over"). The current low rates on US Treasuries has actually HELPED our deficit. Once that comes to an end... and it will... then what? Borrow more at higher rates to roll over the low rate and what happens?

Remember that when you see these 1 year and 5 year and 10 year Treasury notes... that means that the capital is DUE on those. So while we might be financing that 5 year note at .67%.... in 5 years when that note is due - what's the rate going to be... which means we'll still owe that amount - we'll roll that at the new rate - which sends the deficit even higher.

It's a toilet that just needs to be flushed.


Basically our government is no better at this game than the idiots that bought houses with 1 year teaser rates... Then they couldn't figure out what to do when the real rate hit.

I get JP's position on increasing employment - with stimulus - which creates tax income etc. Except that we're still borrowing from Peter to pay Paul and we'll end up with a sore Peter...

[Shmoov69]

Entitlement society. It only gets worse with each generation. Look at a multi generational welfare family, each passing generation understands less and less of how to actually take care of themselves. I mean honestly, they REALLY DON'T KNOW HOW TO. They never had to and it is just a way of life and they are trapped and don't even know it. And that is just ONE program! That doesn't include all the other "free programs", and haven't even touched on the mass amounts of government/union jobs that are so inefficient that they could not sustain in the private sector!! Somebody has to pay for it.:willy:

Quite simply, we're screwed! Too many hands waiting on that "government spending" and not enough paying for it.

My dad always said that you can never borrow your way out of debt. He also said that you can never argue someone right!

[Tony_SS]

I get JP's position on increasing employment - with stimulus - which creates tax income etc. Except that we're still borrowing from Peter to pay Paul and we'll end up with a sore Peter...

Right, but the fundamental flaw in that premise, is the theory that the govt knows how to spend your money better than you. If that was the case, the govt or the Fed would have never gotten us into this mess or have gotten us out by now. Quite simply, the Congress is very ignorant to monetary policy and the Fed is private, global institution protecting their own interests.

The other argument is investment or stimulus and doing so creates enough prosperity to turn things around. This is also flawed in that yes, you can bail out a failed business, but unless they change their protocol they're going to fail again. It's like giving money to a shopaholic to buy therapy. They will choose to buy something else.

The other HUGE problem is our fiat currency. I think it's interesting that the only thing that gives a $100 bill more value than a $1 is numeral printed on that paper. Fiat currencies always fail. History shows this. It needs to be competing with world currencies and backed by commodities to have value.

Also, I'm feeling the need to dispell the myth that is this "Paradox of Thrift"

The Paradox of Thrift
The whole idea that saving money is bad for the economy comes from the economist John Maynard Keynes, who referred to it as the “paradox of thrift.” (“Paradox of thrift” and John Maynard Keynes is one of those things you can bust out at a party to seem quite smart.) He believed that if everyone saved more money during times of recession, then demand for goods will fall. If demand for goods falls, then economic growth will stall, causing all sorts of additional economic problems (lost jobs, failed businesses, etc.).

It makes some sense on the surface. If everyone stopped spending money tomorrow, the economy would indeed fall apart. There are two big factors that keep this from happening.

First, when demand falls, prices fall, and when prices fall, people are more likely to spend money. That’s why sales always work – and thus businesses regularly have sales. If demand falls across the board, then businesses will lower their prices to get more customers.

and...

Savings Accounts Contribute to the Economy
The second factor – and this is the big one – that makes the “paradox of thrift” fail is that putting money in savings accounts does not remove it from the economy. When you put money in a savings account, it becomes money that the bank can then lend out to businesses. Thus, when more people save, the banks have more resources to pump out to businesses, and when the businesses have more resources, they employ more people, innovate new products, and find new ways to sell.

By saving, you’re actually doing your economic duty, just as you would be if you were buying things. A healthy economy needs plenty of both.

Taken from:
http://www.thesimpledollar.com/2009/05/28/the-paradox-of-thrift-is-saving-money-bad-for-the-economy/

[Shmoov69]

Where's Andrew in this discussion!?! LOL!:cheers:

[parsonsj]

http://economywatch.msnbc.msn.com/_news/2012/07/24/12931119-spain-teeters-on-the-edge-of-a-steep-fiscal-cliff?lite&__utma=14933801.520495609.1342409539.1343151233.13 43188381.40&__utmb=14933801.6.10.1343188381&__utmc=14933801&__utmx=-&__utmz=14933801.1342409539.1.1.utmcsr=(direct)%7Cu tmccn=(direct)%7Cutmcmd=(none)&__utmv=14933801.%7C8=Earned%20By=msnbc%7Ccover=1%5 E12=Landing%20Content=Mixed=1%5E13=Landing%20Hostn ame=www.nbcnews.com=1%5E30=Visit%20Type%20to%20Con tent=Earned%20to%20Mixed=1&__utmk=187396776

A quick summary of the MSNBC article --

1. Exuberance due to low borrowing costs in the early part of the European common currency experiment, resulting in large capital investments in Spain from other portions of Europe, much of which was led by banks around Europe. Much of the exuberance was caused by misreading risks -- investors figured that Spanish investment was the same as German investment.
2. Which caused a big real estate / housing boom in Spain.
3. When the bubble burst, and the economy contracted, the investors pulled their money out of the Spanish economy.
4. As millions of Spaniards lost their jobs (current unemployment is twice that of the US, with young people even higher) government revenues plummeted.
5. As the government started cutting spending to deal with lower revenue, that caused even more job losses. Austerity measures proved to be counter-productive, and as Spanish government spending dropped, revenues dropped faster.
6. Bond yields are climbing, as the time needed for a reasonable economic recovery seems longer and longer, and as Spanish sovereign default looms.
7. Spain seems unable to fix this themselves, and there's a reason why: they don't have their own currency. They don't have a Fed that can backstop their banks and be the lender of last resort.
8. The long-term fix is for Spain to cut prices -- but to cut prices it needs to cut wages, and that's a very difficult problem. Wages are sticky; they are difficult to cut across the whole Spanish economy. Once again, the common currency is the root of the problem. If Spain had its own currency, it could allow it to devalue, effectively cutting the country's wages without having to physically cut the wages of all of its citizens.


A final point: at no point does the article mention high taxes, or people unwilling to work. In fact the article lays more blame on investors misreading risk than on Spanish worker laziness or entitlements.

Tying this back to home: this scenario is similar to the US -- our economy was wrecked by risky trading of mortgage-backed securities that resulted in a housing bubble that burst when investors misread the risks. The good news is that we have stabilized our banks, which now have enough liquidity to weather this de-leveraging of private debt, and there is no risk of sovereign default. Investors are signaling their agreement with that by accepting historically low yields on Treasuries. However, our economy still has millions of people out of work -- through no fault of theirs -- and our revenues are suffering as a result, and you know the rest of my argument. :cheers:

And thank goodness we have our own currency, and a Fed that can intervene to prevent disaster.

[Bucketlist2012]

They don't have a Fed that can backstop their banks and be the lender of last resort

And thank goodness we have our own currency, and a Fed that can intervene to prevent disaster.

While I think your argument is full of more holes than swiss cheese, I must give you a :thumbsup: :thumbsup: :thumbsup: .

I count on the madness you speak of from this administration, and i have made more money on Precious Metals than I spent on my car..

So while I don't agree with you, I am laughing all the way to the bank. Sure I am shaking my head in disgust about what is happening to the Country and the Devalued dollar, and I think the FEDS are crooks, I will continue to make money due to the exact things you talk about..:cheers:

I will continue to run my Portfolio betting on exactly what you argue, because although I know your argument is the wrong thing to do for this Country, I sure will take advantage of it at every turn...:thumbsup:

Normally I only run 5% in Metals for Insurance, but until the administration changes, I will stay where I am, betting on the FEDS

[parsonsj]

Here's another article from the NY Times:

http://www.nytimes.com/2012/07/25/world/europe/euro-remedy-for-greece-becomes-part-of-the-problem.html?_r=2&&pagewanted=all

The article describes how the austerity measures levied on the Greek government in exchange for bailout funds from the rest of Europe may have made the problem worse.

Now, Greece is different than Spain in 2 key ways:
1. Greece has a long history of tax avoidance. Some analysts estimate that Greece loses 30% of its tax revenue due to fraud.
2. Greece has a long history of graft, cronyism, and outright fraud within its government. Despite their ancient history, most of recent Greek history is that of far right governments, and democracy as we know it has only been in place for a few decades.

[Bucketlist2012]

For me, anything that comes from the New York Times is lining for the bottom of a Bird cage to collect poo..

I will stick to the analysis from the Wall Street Journal and other Fiduciary Economists, before I even think of the Times for analysis.:cheers:

And the Euro was a disaster from the Beginning..Greece would have never even made it into the Euro had Goldman Sachs not stepped in and cooked the books for Greece in 2000. Then they stepped in , in the mid 2000's to re-cook the books.

The Federal Reserve is the problem and not the solution...But again, I make money every time they print...

They will not spend there way out of this....No one wants to take the small pill now....

[Tony_SS]

I think we are verging on apples to oranges territory, so I'll keep my comments about our country and its monetary policy.


Tying this back to home: this scenario is similar to the US -- our economy was wrecked by risky trading of mortgage-backed securities that resulted in a housing bubble that burst when investors misread the risks.
----
And thank goodness we have our own currency, and a Fed that can intervene to prevent disaster.

2 clear points:

1. Our economy was wrecked because the Fed fixed interest rates too low for too long creating a housing bubble.

2. That led to the risk behavior by the banking industry. The largest players knew the Fed will bail them out. So the Fed bailed out themselves basically, since the largest banks are the cartel that makes up the Fed. So they went hog wild, because they could, got bailed out and passed the losses and depression onto us, the taxpayers.

I think this tells us everything we need to know. These clowns who caused the problem, do not know how to fix it.

http://static.safehaven.com/authors/berwick/22363_b.jpg

I probably wont get an answer, but I'll ask anyway: John, don't you find in suspicious that these Treasury Secretaries are straight from Goldman Sachs? And that's just one example.

[parsonsj]

Tony,

We probably agree a lot about the underlying mechanism of the housing bubble, but you can't put all of the bubble at the feet of interest rates that were too low, along with the moral hazard of too big to fail. You have to also acknowledge two other contributing factors:
1. The repeal of the Glass-Steagall act, and
2. The complete lack of regulation of credit-default swaps.

Neither of those significant contributing factors had anything to do with the Fed.

Yes, Wall Street caused our housing bubble, with the Fed supplying some of the cash. But better / more regulation of Wall Street is essential to keep it from happening again. You'd think they'd be a bit humbled after their performance leading up to 2008-2009, but they are fighting Dodd-Frank with everything they've got.

You need to read Krugman in context:
SYNOPSIS: Our economy is in trouble

If the story of the current U.S. economy were made into a movie, it would look something like "55 Days at Peking." A ragtag group of ordinary people — America's consumers — is besieged by a rampaging horde, the forces of recession. To everyone's surprise, they have held their ground.

But they can't hold out forever. Will the rescue force — resurgent business investment — get there in time?

The screenplay for that kind of movie always ratchets up the tension. The besieged citadel fends off assault after assault, but again and again rescue is delayed. And so it has played out in practice. Consumers kept spending as the Internet bubble collapsed; they kept spending despite terrorist attacks. Taking advantage of low interest rates, they refinanced their houses and took the proceeds to the shopping malls.

But predictions of an imminent recovery in business investment keep turning out to be premature. Most businesses are in no hurry to go on another spending spree. And those that might have started to invest again have been deterred by sliding stock prices, widening bond spreads and revelations about corporate scandal.

Will the rescuers arrive in the nick of time? Not necessarily. This movie may not be "55 Days at Peking" after all. It may be "A Bridge Too Far."

A few months ago the vast majority of business economists mocked concerns about a "double dip," a second leg to the downturn. But there were a few dogged iconoclasts out there, most notably Stephen Roach at Morgan Stanley. As I've repeatedly said in this column, the arguments of the double-dippers made a lot of sense. And their story now looks more plausible than ever.

The basic point is that the recession of 2001 wasn't a typical postwar slump, brought on when an inflation-fighting Fed raises interest rates and easily ended by a snapback in housing and consumer spending when the Fed brings rates back down again. This was a prewar-style recession, a morning after brought on by irrational exuberance. To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.

Judging by Mr. Greenspan's remarkably cheerful recent testimony, he still thinks he can pull that off. But the Fed chairman's crystal ball has been cloudy lately; remember how he urged Congress to cut taxes to head off the risk of excessive budget surpluses? And a sober look at recent data is not encouraging.

On the surface, the sharp drop in the economy's growth, from 5 percent in the first quarter to 1 percent in the second, is disheartening. Under the surface, it's quite a lot worse. Even in the first quarter, investment and consumer spending were sluggish; most of the growth came as businesses stopped running down their inventories. In the second quarter, inventories were the whole story: final demand actually fell. And lately straws in the wind that often give advance warning of changes in official statistics, like mall traffic, have been blowing the wrong way.

Despite the bad news, most commentators, like Mr. Greenspan, remain optimistic. Should you be reassured?

Bear in mind that business forecasters are under enormous pressure to be cheerleaders: "I must confess to being amazed at the venom my double dip call still elicits," Mr. Roach wrote yesterday at cbsmarketwatch.com. We should never forget that Wall Street basically represents the sell side.

Bear in mind also that government officials have a stake in accentuating the positive. The administration needs a recovery because, with deficits exploding, the only way it can justify that tax cut is by pretending that it was just what the economy needed. Mr. Greenspan needs one to avoid awkward questions about his own role in creating the stock market bubble.

But wishful thinking aside, I just don't understand the grounds for optimism. Who, exactly, is about to start spending a lot more? At this point it's a lot easier to tell a story about how the recovery will stall than about how it will speed up. And while I like movies with happy endings as much as the next guy, a movie isn't realistic unless the story line makes sense.

[Tony_SS]

Tony,

We probably agree a lot about the underlying mechanism of the housing bubble, but you can't put all of the bubble at the feet of interest rates that were too low, along with the moral hazard of too big to fail. You have to also acknowledge two other contributing factors:
1. The repeal of the Glass-Steagall act, and
2. The complete lack of regulation of credit-default swaps.

Neither of those significant contributing factors had anything to do with the Fed.

Yes, Wall Street caused our housing bubble, with the Fed supplying some of the cash. But better / more regulation of Wall Street is essential to keep it from happening again. You'd think they'd be a bit humbled after their performance leading up to 2008-2009, but they are fighting Dodd-Frank with everything they've got.

You need to read Krugman in context:

John I agree with your 1st point. No doubt that was a factor. The repeal opened the doors for abuse. But to your 2nd point, the SEC was supposed to regulate Bernie Madoff. The fact is they failed and/or covered for him in that regard. So we just can not rely on 'regulations' alone.

However, the fact still remains. The Fed is the great facilitator. Without them fixing the rates too low for too long, the sharks would have nothing to feed on. So, yes, the Fed gave Wall St the fuel to start that fire. And Wall St did have the cover too, making the Fed a huge moral hazard. These banks took risks and as an insider cartel members, they put their competition out of business and their losses on to the US govt/taxpayers.

We are talking about a private banking institution, who by law can create dollars out of thin air. All with NO oversight, rules or regulation. So would you agree that the regulation needs to be on the Fed?

To avoid this again, interest rates need to be a result of the free market, not fixed by a handful of special interests at the top of the pyramid.

And the whole Krugman article does not change much for me. Those are still his words and ideals.

[parsonsj]

Somebody overheard us:

http://money.cnn.com/2012/07/25/news/economy/sandy-weill-banks/index.htm?hpt=hp_t3

Interesting stuff.

[parsonsj]

We are talking about a private banking institution, who by law can create dollars out of thin air. All with NO oversight, rules or regulation.That's not true. The Fed is run by a set of regional governors appointed by the President and confirmed by the Senate, with a clear mandate: manage inflation, and maintain full employment. There is a need to keep it from being directly managed by the government, because we don't want politicians managing our economy for political gain.

Creating dollars out of thin air has been the way of the US currency for a long long time, and it is a necessary tool for managing the economy. See Spain, Greece, and Italy as we've been discussing.

I don't see conspiracy and criminal conduct by the Fed, I see principled bankers doing their best in an unbelievably complex environment. Sometimes thing get missed and asset bubbles arise. Sometimes they get flattened in time (dot com), and sometimes they don't (housing).

I'm sure we aren't going to agree on this. :cheers:

[Tony_SS]

Somebody overheard us:

http://money.cnn.com/2012/07/25/news/economy/sandy-weill-banks/index.htm?hpt=hp_t3

Interesting stuff.

This from the guy who lobbied to repeal Glass-Steagal. Yeah, it should be brought back, even after the damage has been done.


That's not true. The Fed is run by a set of regional governors appointed by the President and confirmed by the Senate, with a clear mandate: manage inflation, and maintain full employment. There is a need to keep it from being directly managed by the government, because we don't want politicians managing our economy for political gain.

Creating dollars out of thin air has been the way of the US currency for a long long time, and it is a necessary tool for managing the economy. See Spain, Greece, and Italy as we've been discussing.

I don't see conspiracy and criminal conduct by the Fed, I see principled bankers doing their best in an unbelievably complex environment. Sometimes thing get missed and asset bubbles arise. Sometimes they get flattened in time (dot com), and sometimes they don't (housing).

I'm sure we aren't going to agree on this. :cheers:

We agree on some things though.

As for the Fed chairmen, The president can only appoint from a pre-selected pool of people. Pre-selected by the heads of the Federal Reserve banks. The chairman is accountable only to the shareholders within the Fed system. An the regional directors are all chosen from within, outside of politics.

Let me ask this... What is more dangerous, a top down monetary policy controlled by a cartel or monopoly of private banking institutions, or a monetary policy that is transparent and accountable and reflects the will of the people?

John: I don't see conspiracy and criminal conduct by the Fed, I see principled bankers doing their best...

Well no one see's ANY conduct because the Fed isnt transparent or regulated in any shape or form! It's ironic that people want to regulate Wall St and banks, but not the Fed.... that is made up of banks. The Fed conducts policy completely outside of any oversight.

This is supposed to be our nation's currency, not the bank's currency, that is used for their gain, at our expense. John, I think you give these institutions far too much clout and trust. Even IF they are innocent, trust worthy principled little bankers, they still need to be transparent and held to certain laws to protect our economy.

But c'mon, you gotta get peeved when Goldman Sachs CEO Blankfien said "he's just a banker, doing God's work". :lol: My question is which God?

:cheers:

[Bucketlist2012]

This from the guy who lobbied to repeal Glass-Steagal. Yeah, it should be brought back, even after the damage has been done.




We agree on some things though.

As for the Fed chairmen, The president can only appoint from a pre-selected pool of people. Pre-selected by the heads of the Federal Reserve banks. The chairman is accountable only to the shareholders within the Fed system. An the regional directors are all chosen from within, outside of politics.

Let me ask this... What is more dangerous, a top down monetary policy controlled by a cartel or monopoly of private banking institutions, or a monetary policy that is transparent and accountable and reflects the will of the people?



Well no one see's ANY conduct because the Fed isnt transparent or regulated in any shape or form! It's ironic that people want to regulate Wall St and banks, but not the Fed.... that is made up of banks. The Fed conducts policy completely outside of any oversight.

This is supposed to be our nation's currency, not the bank's currency, that is used for their gain, at our expense. John, I think you give these institutions far too much clout and trust. Even IF they are innocent, trust worthy principled little bankers, they still need to be transparent and held to certain laws to protect our economy.

But c'mon, you gotta get peeved when Goldman Sachs CEO Blankfien said "he's just a banker, doing God's work". :lol: My question is which God?

:cheers:


Man, I agree with everything you wrote.

The House just passed a bill to audit the Feds, but as usually, Harry Reid will not bring it up for a vote, and he will put it on his desk with the other 33 Bills that he won't vote on..

[parsonsj]

We're coming up on 4 years since many economists claimed that fiscal stimulus and Federal Reserve quantitative easing were going to cause massive inflation and high Treasury bond yields.

So far they've uh, been a bit on the wrong side.

http://delong.typepad.com/sdj/2012/07/the-need-for-a-higher-rate-of-increase-in-prices-sebastian-mallaby-is-forty-months-late-department.html

[GregWeld]

I disagree.....


#1 -- Tell me a bill that you pay today that isn't higher than it was last year.

#2 -- What's saving us from INFLATION is the Europe crisis.... companies don't have pricing power or stickiness

#3 -- What's really helping the inflation numbers is GASOLINE prices -- and they're down because GLOBAL demand is down... otherwise we'd be at $5 a gallon already.

[camcojb]

I don't know how anyone believes there is no inflation if they do their own shopping. I have a friend I support who I had to give a "raise" because of the increased food costs, and he can't make it on the same amount of money as he could a year or two ago. He knows all the prices of the food he buys, and it's climbed a lot, and/or the packaging has been reduced in size/weight and price stayed the same. It's undeniable.

[parsonsj]

Jody -- let's look at data:

http://ycharts.com/indicators/us_core_inflation_rate/chart

[Tony_SS]

John,

The Fed is PRO inflation as one of their mandates. And if you believe the "official" inflation numbers, I have a bridge to sell you. As for your last link: The "official" numbers does NOT include the cost of food or energy! So yeah, 'lies, damn lies and statistics' a man once said.

[Bucketlist2012]

We're coming up on 4 years since many economists claimed that fiscal stimulus and Federal Reserve quantitative easing were going to cause massive inflation and high Treasury bond yields.

So far they've uh, been a bit on the wrong side.

http://delong.typepad.com/sdj/2012/07/the-need-for-a-higher-rate-of-increase-in-prices-sebastian-mallaby-is-forty-months-late-department.html

You are drunk on your kool aid..No Inflation ? Sure if your figures leave out Food and energy costs.

Dude you won't convert anyone with your "facts", they are biased numbers.

Again, the readers will decide from this thread what they think, and you are a lone wolf..No one believes what you believe.

Food costs are up, and the size of the products are down. So an increase of 30% in costs, and a reduction of the size of the product by 20% is Inflation, plain and simple.

[parsonsj]

Correct: core inflation excludes food and energy because they have volatile price swings. For example, recent oil prices have trended considerably downward -- which would skew inflation numbers, and cause poor policy choices.

That's not to say the food and energy prices don't show up in the core: they do as they are assimilated into the greater economy. Just not their "retail" numbers.

Here's a look at core vs "headline" (which includes energy and food costs). Note how they are similar, but core is less volatile:

http://www.advisorperspectives.com/dshort/updates/CPI-Headline-and-Core.php

You can see that trying to use headline vs core inflation as a way of saying that we do have high inflation is a red herring.

[realcoray]

Again, the readers will decide from this thread what they think, and you are a lone wolf..No one believes what you believe.

Food costs are up, and the size of the products are down. So an increase of 30% in costs, and a reduction of the size of the product by 20% is Inflation, plain and simple.

I am pretty aligned with what JP believes (or at least his level headed approach), I just don't feel like arguing about it.

What I will say is that I heard something on NPR about a study that demonstrated the fairly obvious concept that people choose to access news/media that aligns with what they already believe.

Granted you could say I was listening to liberal government funded NPR because I believe X or Y, and just ignore whatever I have to say but the source shouldn't matter. Doesn't it just make sense that people would do that?

My point is only that it's good to listen to people with other opinions, and it's pretty weak to attack people that have different views because you just may be wrong.

[Tony_SS]

Correct: core inflation excludes food and energy because they have volatile price swings. For example, recent oil prices have trended considerably downward -- which would skew inflation numbers, and cause poor policy choices.

That's not to say the food and energy prices don't show up in the core: they do as they are assimilated into the greater economy. Just not their "retail" numbers.

Here's a look at core vs "headline" (which includes energy and food costs). Note how they are similar, but core is less volatile:

http://www.advisorperspectives.com/dshort/updates/CPI-Headline-and-Core.php

You can see that trying to use headline vs core inflation as a way of saying that we do have high inflation is a red herring.

The real red herring is that food and energy is excluded and the excuse because it's volatile? That goes for every other commodity. They're all "volatile". Try buying cotton, paper and ink. Should we exclude those too?

It's like real unemployment numbers are cooked too. It does not include workers that settle for part time, ones who's benefits expire or those who gave up and stopped looking. So yes, its true that official are deceptive.

Even the former Comptroller General agreed. David Walker admits the fudged numbers in all sorts of "official" areas. I just finished I.O.U.S.A and it 100% neutral. I'm going to keep recommending it until someone watches it. :lol:

BTW, they had to buy a new debt clock. The owners of it said so, since we broke the $9 trillion mark. :faint:

[Bucketlist2012]

I am pretty aligned with what JP believes (or at least his level headed approach), I just don't feel like arguing about it.

What I will say is that I heard something on NPR about a study that demonstrated the fairly obvious concept that people choose to access news/media that aligns with what they already believe.

Granted you could say I was listening to liberal government funded NPR because I believe X or Y, and just ignore whatever I have to say but the source shouldn't matter. Doesn't it just make sense that people would do that?

My point is only that it's good to listen to people with other opinions, and it's pretty weak to attack people that have different views because you just may be wrong.

You miss my point and call it a weak attack..The point is that one person can post all the "facts" that they want, and we all know that they are just cooked numbers. Reality in the real world,it tell us different. You cannot say that inflation is not happening if you are out buying products.It is obvious that it is here.

Why do you think I post to let the readers decide ? I did not "attack" him.

I own tons of several assets that are Commodity based..I see my profits.I know what is happening..I don't worry about food or gasoline because others are paying me for it.

It is obvious that we will never change each others minds. That isn't what the thread is about..It is to post ALL sides, and let people decide for themselves... Everyone will have their own view, no doctored figures will change my mind, or your mind, and that is what is cool about it. We don't have to think like each other.

So with that, I welcome John's posts, and your thoughts, because the readers need both sides to make their own choice. I personally don't care what someone thinks, I for sure am not posting to win the"argument". There is no arguing.We all have our beliefs and one thread won't change that.

And I really appreciate your post. It makes me realize that I am wasting my time on this thread. Nothing will change, and no one may be reading this but us few people..So I will leave it at that and let the facts speak in the real world, and not on paper, or the Internet.:cheers:

[parsonsj]

Policy choices take time, and need to be done based on reasonable and continuing trends. Excluding volatile data helps keep policies on that path. Commodity prices do get reflected into core inflation as they change long term wages and business costs.

As an example look at Headline inflation in the chart from my previous post. If the US and/or the Fed had reacted to the spikes and valleys in those numbers during the recession of 2008/09, we might have seen an amplification of them, rather than damping.

I was hoping we could discuss these matters using facts -- but we seem to have trouble even agreeing on those. :(

[parsonsj]

No one believes what you believe.Many message boards tend to have echo-chamber tendencies, and this one is no different. But I must point out that there are millions of people, nations even, of people with views different than one's own. We ignore the possibility of being wrong at our own peril.

[Tony_SS]

Policy choices take time, and need to be done based on reasonable and continuing trends. Excluding volatile data helps keep policies on that path. Commodity prices do get reflected into core inflation as they change long term wages and business costs.

As an example look at Headline inflation in the chart from my previous post. If the US and/or the Fed had reacted to the spikes and valleys in those numbers during the recession of 2008/09, we might have seen an amplification of them, rather than damping.

I was hoping we could discuss these matters using facts -- but we seem to have trouble even agreeing on those. :(

But who's facts, the governments? Is 8.2% unemployment a "fact"?

Facts are digging up my receipts from the past 2 years and seeing ink, paper and cotton just WELL over 10%.

But what sort of policy change can reverse the decline of the dollar to the tune of 95%? It doesn't matter because the monopoly known as the Fed is not interested in that. It's an instrument of wealth transfer. Yet we somehow give them clout as innocent, principled bankers just trying to do the 'right thing'. AKA, Gods' work. :lol:

[Tony_SS]

We ignore the possibility of being wrong at our own peril.

A-men!

Here you go:
http://video.google.com/videoplay?docid=270867650600562607

But in reality John, you should be riding high. The Fed is in power, along with Wall St and they are running the show, so what are you so concerned about? The policy of govt stimulus and creating more fiat money is in full effect.. What are you warning us about?

[realcoray]

But who's facts, the governments? Is 8.2% unemployment a "fact"?

I don't think anyone would disagree in terms of 'underemployment', ie people who took part time work or just gave up completely, being much higher than 8.2%, but wasn't that also the case back when unemployment was reported at 5%, chances are some people had to take part time jobs when they would have preferred full time, etc.

It's a number that is not shrouded in secrecy in regards to how it's calculated, just like the inflation values thrown around here. It's common knowledge that it excludes some things, things which actually have a real effect on everyday people. We all notice food and gas prices going up or down, we're less likely to notice the price of paper going up as you point out.

A business owner might but even then, myopia can influence things. If I work at a business that uses a lot of paper, ink and cotton, and they all go up 10%, of course inflation would seem high, but what if I worked at a plant that used natural gas to manufacture things, where the price of it has dropped significantly, wouldn't I have a different view?

[parsonsj]

The policy of govt stimulus and creating more fiat money is in full effect.. What are you warning us about?True enough, though I don't think I'm warning anybody. I'm just trying to round out the discussion a bit. Let's go back to the title of the thread, which implies that $17T is bad. Just... because. It's worth a discussion to see if there is more to it than that. It would be better for us in the long term if we were to do more stimulus to put millions of people back to work, and then pay down the debt with a healthy economy.

We've done it before: after WWII, and again after the 80s.

[Bucketlist2012]

Many message boards tend to have echo-chamber tendencies, and this one is no different. But I must point out that there are millions of people, nations even, of people with views different than one's own. We ignore the possibility of being wrong at our own peril.

OK , my statement was a little harsh and wrong..:cheers:

I guess what I should have said, is many believe that there is Inflation..My other statement was kinda Hypocritical on my part.

The reason I say that I am wrong is I believe that the government thinks exactly like you, and will print and spend more money.

So in fact my statement was way off...Many do think like you, and I was wrong.:thumbsup:

The cool thing is that I have set my Investment for a crushed and devalued dollar. So while I may think it is the wrong thing to do, I plan that they will do exactly as you say that we should do. I do it solely for an Investment strategy and not for my personal beliefs.

So I won't be in any peril at all. In fact every time that Stimulus is used, my assets soar.. So I am not worried if my personal beliefs are wrong, I will still profit from it.

But again, my statement was wrong, and many do think like you, so sorry about the harsh comment...But if I am wrong I win, and if I am right, I win.

What I personally think may be bad for the country means nothing to how I invest.

So either way it goes I am ready..I don't Invest according to my beliefs, but according to what I think the powers that be will do...:cheers:

I guess if you would warn people about anything, it would be to invest for more Stimulus. And against the Fiat Currency. That may be a tip to tell people.:cheers: :thumbsup:

[ErikLS2]

We've done it before: after WWII, and again after the 80s.


I've enjoyed this discussion although I havn't got much to contribute, both sides make some good points. But, isn't this point in time "just another one of those things" that happens in our system that eventually corrects itself and we then see another period of greater prosperity? Since we can't really do much about it, I guess we should just try to educate ourselves on how to survive periods like this.

[sniper]

No one believes what you believe.
Our nation is currently lead by people who share his beliefs.

I am pretty aligned with what JP believes (or at least his level headed approach), I just don't feel like arguing about it.

What I will say is that I heard something on NPR about a study that demonstrated the fairly obvious concept that people choose to access news/media that aligns with what they already believe.

Granted you could say I was listening to liberal government funded NPR because I believe X or Y, and just ignore whatever I have to say but the source shouldn't matter. Doesn't it just make sense that people would do that?

My point is only that it's good to listen to people with other opinions, and it's pretty weak to attack people that have different views because you just may be wrong.
Sounds like you have your fingers in your ears yelling, LA, LA, LA.
I mean come on, there is no arguing in this thread. What is wrong with differing views expressing them?


I was hoping we could discuss these matters using facts -- but we seem to have trouble even agreeing on those. :(
As stated earlier, facts are undisputed. All the figures a governments use will have some sort of twist to them including or excluding data, to achieve their desired results.

Many message boards tend to have echo-chamber tendencies, and this one is no different. But I must point out that there are millions of people, nations even, of people with views different than one's own. We ignore the possibility of being wrong at our own peril.
Would it be possible this is not an echo chamber but people who might just actually agree with one another with a view that differs from yours?

What do we know is that spending trillions of dollars DOES NOT make Americans better off.

[parsonsj]

Many message boards tend to have echo-chamber tendencies, and this one is no different. But I must point out that there are millions of people, nations even, of people with views different than one's own. We ignore the possibility of being wrong at our own peril.
Would it be possible this is not an echo chamber but people who might just actually agree with one another with a view that differs from yours?Exactly. :cheers:

[parsonsj]

What do we know is that spending trillions of dollars DOES NOT make Americans better off.Let's go down a different path; maybe this will generate some good discussion. Here's my question: how much is the US worth? What value do we place on our country? Not just the infrastructure and hardware. Not just on bridges, roads, national parks, and aircraft carriers. The discussion about the national debt often goes hand in hand with what we owe. I'm asking this question: what are getting for our $17T? When we buy a car on credit, we get something. The same is true for the national debt. We are getting something --

Is it worth it?

[camcojb]

Jody -- let's look at data:

http://ycharts.com/indicators/us_core_inflation_rate/chart

John, put yourself on a fixed income and you'll see that the chart is not accurate. I have no idea how or where the numbers came from, but I'm not buying it. My friend is very structured and actually started tracking food costs over a year ago. Identical items have risen WAY more than 2-3% that the chart indicates.

[sniper]

Let's go down a different path; maybe this will generate some good discussion. Here's my question: how much is the US worth? What value do we place on our country? Not just the infrastructure and hardware. Not just on bridges, roads, national parks, and aircraft carriers. The discussion about the national debt often goes hand in hand with what we owe. I'm asking this question: what are getting for our $17T? When we buy a car on credit, we get something. The same is true for the national debt. We are getting something --

Is it worth it?

Debt in and of itself is not always bad.
But it's not just the static number. The spending year over year is incredible. But if debt spending was as great as people like Krugman make it sound, then one must conclude that if 17 trillion is good, then 100 trillion must be astounding. Think about what could be done with that.
Washington has a "debt ceiling". Supposedly, because now they just raise it to fit what they want, not what they need. There are Zero controls on spending.

If spending was a good thing at all costs, why not pay people to dig holes and others to fill them in? That would be a boom to the economy.

Here are some "maybe" facts to chew on.

Government dependency jumped 8.1 percent in the past year, with the most assistance going toward housing, health and welfare, and retirement.
The federal government spent more taxpayer dollars than ever before in 2011 to subsidize Americans. The average individual who relies on Washington could receive benefits valued at $32,748, more than the nation’s average disposable personal income ($32,446).
At the same time, nearly half of the U.S. population (49.5 percent) does not pay any federal income taxes.
In the next 25 years, more than 77 million baby boomers will retire. They will begin collecting checks from Social Security, drawing benefits from Medicare, and relying on Medicaid for long-term care.
As of now, 70 percent of the federal government’s budget goes to individual assistance programs, up dramatically in just the past few years. However, research shows that private, community, and charitable aid helps individuals rise from their difficulties with better success than federal government handouts. Plus, local and private aid is often more effectively distributed.


You ask, "is it worth it"? I guess that depends on if your a Paul or a Peter?

[parsonsj]

John, put yourself on a fixed income and you'll see that the chart is not accurate. I have no idea how or where the numbers came from, but I'm not buying it. My friend is very structured and actually started tracking food costs over a year ago. Identical items have risen WAY more than 2-3% that the chart indicates.I don't understand what a fixed income has to do with any of this. The inflation rates on the chart I referenced are the official government numbers: they come from the Bureau of Labor Statistics. They aren't some sort of private made-up thing:

The Consumer Price Index is a comprehensive report on prices in the United States. It contains national, regional, and local data broken down into population subgroups. Prices are collected from 87 urban areas from 23,000 retail and service establishments. Rent data are collected from approximately 50,000 landlords or tenants. The Consumer Price Index is the most widely used measure of inflation.

I'm sure your friend means well and believes what he's telling you. But I doubt he's sampled from 23000 retail establishments from 87 urban areas. I think most reasonable people would go with the BLS on this one.

[parsonsj]

You ask, "is it worth it"? I guess that depends on if you're a Paul or a Peter?I'm an American. I don't really understand the tribal resonance of that response.

[Beegs]

Really like this thread..... John, I love your writing style, easy to read, polished and to the point. You are very effective in getting your point across. I wish you were "on my side" :yes:

I am self-employed, almost always have been and it has been difficult to "make money" due to everything going UP in price. Tires, parts, insurance, groceries, utility bills...you name it and it has for the most part gone UP.

Article in my local paper yesterday: "Water and sewer bills to rise 7%" Great, I own a four unit and am paying a fortune as it is....AND rents in the area are NOT going up to offset. Oh and the government has been buying homes, spending 300K+ to remodel them and turn around and put them on the market for $159K...........that makes it real easy to compete!

I have lived with debt and without debt and will take without any day of the week. Study the people around you...an alarming number of people have sort of done the same thing: When loans were easy to come by, they maxed out, bought all the toys, went on vacation and partied like rock stars. Now upside down on home loans, toys go first, credit cards get maxed, 401K gets sucked dry, stop payments on the house and then don't ever answer the phone because it's the collections company looking for cash. I am seeing this happen over and over, herd mentality. For the last 5 or 6 years I have been buying up all the stuff they can't afford anymore and have been making good money flipping it, BUT in the last 6-8 months things have changed, it's almost impossible to sell stuff, it has to be a steal of a deal. It's almost like money has been snuffed out and people are just hanging on by a thread.

Strange times....

[Bucketlist2012]

I think most reasonable people would go with the BLS on this one.


You show us your "facts", and tell us that if we don't believe them , that we must be unreasonable..

When food has in some case doubled in the store over the last few years, a reasonable person would understand the facts of reality.

Inflation is the hidden tax, and it is here..Costs are up. The printing and spending cause the dollar to be devalued, so that it takes more dollars to buy a product..

So when you have the printing of money from thin air, the dollar devalues, and along with the costs rising on products(some have doubled), you have higher costs and the devalued dollar.

So a reasonable person would look to what is happening rather than relying on charts. Everyone has a different view, and John, that does not make them unreasonable. That is my point.

Again, I appreciate your posts to give readers the other side of things, but just because we won't buy the data and charts, does not make us unreasonable..Remember that you may be wrong.

And again, I might be wrong, but as I said in previous posts, I Invest according to what you believe, and I don't invest according to what I think is the right way to handle the situation..They will print again.

[realcoray]

Article in my local paper yesterday: "Water and sewer bills to rise 7%" Great, I own a four unit and am paying a fortune as it is....AND rents in the area are NOT going up to offset. Oh and the government has been buying homes, spending 300K+ to remodel them and turn around and put them on the market for $159K...........that makes it real easy to compete!

I've heard zero reports of the government buying homes and remodeling them, even for banks this is a very rare thing to do. I was in the market for months this year and saw nothing like that at all. I wouldn't say it could never happen but that is not typical at all.

If anything, the government is losing a lot of money by practically giving houses away. I can't tell you how many freddy/fannie homes I saw that were listed way below market value. Not only were they cheaper than other REOs, you have to put less down!

My point is this, and it goes back to a lot of things people have said in here. Every persons experience is different, and you have to be cautious drawing any broad conclusions from it. In real estate and in commodities, every market is different, and generally we're all exposed and affected by a relatively small area of either, so as they go, so goes our experience.

[realcoray]

When food has in some case doubled in the store over the last few years, a reasonable person would understand the facts of reality.

Inflation is the hidden tax, and it is here..Costs are up. The printing and spending cause the dollar to be devalued, so that it takes more dollars to buy a product..


Could there be other reasons why food costs have gone up? Certainly gas prices contributed to some of the recent (5-10 year) increases, but while they vary now, it's still in a somewhat consistent range and I think 4$ gas has been priced in.

Could it be the weather? Droughts in China and now the United states along with other similar disruptions around the world probably have the largest impact. When supply drops and demand doesn't (if anything it goes up), the obvious effect is rising prices.

Could it be Ethanol? The CBO estimated that 10-15% of the increase in food prices in 2007-2008 was related to Ethanol. The number is likely higher now, and here's an article talking about it from the wall street journal:

http://online.wsj.com/article/SB10000872396390443343704577550831467098866.html?m od=googlenews_wsj

The mandate was awesome for corn farmers, but affects the price of so many things that everyone else pays the price. The government is to blame on this part.

Combine all of these factors and you'd be hard pressed to find out where all of our printed money actually contributed much towards the price increase. For example, steel costs have gone down what looks like 10%+ in the last year:

http://www.worldsteelprices.com/

If our money was being devalued at such a rapid pace that you point towards food as an example, why would steel be any different? The answer is they are two completely different things and while inflation would affect both, they have many other far more powerful things at play. In the case of food, the above contributed virtually all of the price increase while in the case of steel, decreased demand because of the economic situations around the world probably account for most of the drop in prices.

We all buy food so it seems like things cost more, and while on lat-g we tend to buy more steel than most people, we probably don't see the decrease in cost in our prices because AMD and Goodmark and so forth are likely afraid that prices could go back up, and really they are businesses so as long as the market will bear it, they will keep prices where they are.

[Bucketlist2012]

All Good points, but getting back to the origin of the thread.

Some believe that printing money, Stimulus,is the answer. That for certain devalues the dollar, and you will need more dollars to buy products. The more units that you print, the less it is worth. And the paying back the debt will go on forever, and God forbid when rates rise.then you have real trouble trying to pay just the Interest, let alone the principal.

Some believe that the government is the most wasteful entity on earth. Why are they wasteful ? Because it is not their money. They don't care. GSA, ect.. just waste millions , and multiply that by the thousands of programs that the government has, and you have massive wasteful spending. Billions turn into trillions

Is the answer to print more money ? Is the answer to streamline Government and cut the fat ? The fat has been going on since I was born, so it isn't something new.

I believe it is to cut the wasteful spending, and not print more money.. Will that happen ? I doubt it, so I set my Investments on the case that they will print and spend, and never cut the waste...The waste is the grease for the 537 Politicians.

So, none of us are unreasonable, we just have different views on what should be done..Nothing wrong with that..I mean personally, that is.:cheers:

Again, I appreciate both sides so that the thread gives people choices..Let the readers decide..Individually, we have decided, and nothing someone posts will change our minds, but it would be boring if we all just agreed:thumbsup:

[Beegs]

I've heard zero reports of the government buying homes and remodeling them, even for banks this is a very rare thing to do. I was in the market for months this year and saw nothing like that at all. I wouldn't say it could never happen but that is not typical at all.



I'll sleep better knowing you keep up with what's happening in the Rochester NH Real Estate market....long story short...Rochester got a hold of some fed money, bought up some homes in a distressed area and renovated them. New from top to bottom. Some of that money was used by the Realtor to advertise them...OVER AND OVER AGAIN....with VERY LARGE ADS in the local paper. Oh BTW, if you made a liitle too much money, you couldn't buy it.

One particular duplex they did worked out real well for an older couple trying to unload theirs.....LOL competing against the government!!

One town north of us (Berlin) used their Fed money to raze some homes. Was up to the town as I understand it.

[realcoray]

I'll sleep better knowing you keep up with what's happening in the Rochester NH Real Estate market....long story short...Rochester got a hold of some fed money, bought up some homes in a distressed area and renovated them. New from top to bottom. Some of that money was used by the Realtor to advertise them...OVER AND OVER AGAIN....with VERY LARGE ADS in the local paper. Oh BTW, if you made a liitle too much money, you couldn't buy it.

One particular duplex they did worked out real well for an older couple trying to unload theirs.....LOL competing against the government!!

One town north of us (Berlin) used their Fed money to raze some homes. Was up to the town as I understand it.

Like I said, I didn't discount it being possible, I mean I've heard of certain areas considering grabbing foreclosed houses using eminent domain in order to force them to be sold and not just sit empty, and I've seen reports that in some areas foreclosed and abandoned homes being razed, but they are the types of homes that you hear selling for < 10k because they are in terrible areas and barely livable.

My point is, that is extremely rare and while it may have affected you or people you know, it doesn't mean that's reality for everyone.

And bucketlist, I doubt anyone would disagree that the government could certainly cut a lot of waste and use it's money wiser. The question is about the nature, scale and timing of such things.

[Tony_SS]

True enough, though I don't think I'm warning anybody. I'm just trying to round out the discussion a bit. Let's go back to the title of the thread, which implies that $17T is bad. Just... because. It's worth a discussion to see if there is more to it than that. It would be better for us in the long term if we were to do more stimulus to put millions of people back to work, and then pay down the debt with a healthy economy.

We've done it before: after WWII, and again after the 80s.

I've said this already, but you seem to ignore it. We had prosperity after WW1 for 3 reasons, and it was not fiat stimulus. More money in the economy resulted from the govt taking less out of it. Not to mention that consumers are spend happy after wars are over and troops return home.

My theory is when we end these wars and spending overseas, bring our troops home, we will immediately see more consumer confidence and service men and women buying houses, cars and spending their govt money here at home. Just like after WW2.

But people like Dick Cheney saying deficits don't matter is bunk. And it's why our Sec of Treasury was fired after a year, because he said they do matter. In came Hank Paulson, ex Goldman Sachs CEO and the govt got even more in debt and bailed out his old employer.

You need to look at who benefits from govt spending. And there have been plenty in govt to warn against it. The problem is, they seem to get rooted out.

Now back to your theory about stimulus. If that was true, we would have 4-5% official unemployment and a great economy due to QE1 and 2. But like they've tried, they didn't work as we can see now. This is why you and Krugman have such a hard time selling this idea. But like I said, your people are in power, so why aren't things better?

And the myth that more debt = higher value is almost too crazy to talk about. Debt is the antithesis of value, it's negative equity. % of GDP is what matters, and ours is on track for well over 200% which will lead to an even more worthless dollar, that is now worth 95% since 1913, the birth of the Fed. What do you think of that data?

But instead of arguing data, I like to discuss principle. It's a simple idea that we are arguing, who controls the market and the value of its currency. You say it should be done by a monopoly: the Fed and the govt. I say it should be by a free market: the people.

[Shmoov69]

I've enjoyed this discussion although I havn't got much to contribute, both sides make some good points. But, isn't this point in time "just another one of those things" that happens in our system that eventually corrects itself and we then see another period of greater prosperity? Since we can't really do much about it, I guess we should just try to educate ourselves on how to survive periods like this.

One REALLY big issue nobody is talking about is society. I don't think that it will "just work itself out" and be better. I could be totally wrong, and I'm not the chicken little type either! :willy: LOL. It worked itself out in the past because of people. The morality (which IMO is based on spirituallity, or lack thereof in the current population), work ethic, self pride, self dependence of people has TOTALLY changed over time. And it has changed for the worse. People just plain don't care anymore and want everything to be "someone else's" problem and fault. Anyone that has been in business or has managed people for more than a few years knows exactly what I'm talking about. Call it an entitlement society or whatever, but that IMO is why I think the "good times" are behind us. There will be some peaks, but I don't believe that there will be any long term "good times". Just like I said earlier, there are too many hands "out" for the hands putting in. I know that JP and some others may not agree, but I really feel that it is a "spiritual numbness" of the nation that has caused the downward spiral.

[parsonsj]

You show us your "facts", and tell us that if we don't believe them , that we must be unreasonable..

When food has in some case doubled in the store over the last few years, a reasonable person would understand the facts of reality.

Inflation is the hidden tax, and it is here..Costs are up. The printing and spending cause the dollar to be devalued, so that it takes more dollars to buy a product..Here's the problem with disputing the figures from the Bureau of Labor Statistics (BLS). The same people tell us about the deficit. Here we are discussing the overall national debt ($14T or so today), and how do we know that number? Because the Federal government publishes it. We all believe that number. So why don't we believe the inflation numbers published by the Federal government? Why don't we believe the unemployment numbers published by the Federal government? I find this strange, and it's really inhibiting a good discussion.

[camcojb]

Here's the problem with disputing the figures from the Bureau of Labor Statistics (BLS). The same people tell us about the deficit. Here we are discussing the overall Federal budget deficit ($14T or so today), and how do we know that number? Because the Federal government publishes it. We all believe that number. So why don't we believe the inflation numbers published by the Federal government? Why don't we believe the unemployment numbers published by the Federal government? I find this strange, and it's really inhibiting a good discussion.

because it's easy to see things that make us believe the government numbers are heavily massaged. With the deficit, we can't really see that, have to take their word for it. With unemployment, we know they don't count so many people for so many reasons that the stated number is BS. U6 unemployment is somewhat accurate at least, but they don't talk about that one because it looks really bad. The government likes to quote the much more optimistic figure that doesn't count people who lose their benefits or have given up trying (even though they are all unemployed), that doesn't count underemployed, etc. As far as inflation, I think they should include food, etc. in those figures, because they are a required part of life, and there is no doubt that section is going up WAY more than the governments quoted figures.

[parsonsj]

As far as inflation, I think they should include food, etc. in those figures, because they are a required part of life, and there is no doubt that section is going up WAY more than the governments quoted figures.That number is available, and from the same source, and is called "headline inflation" or Consumer Price Index (CPI). Last month that number was 1.66% -- even lower than core inflation. Why? Probably mostly due to falling oil prices. Next month that number is probably going to go up. Why? Probably due to drought conditions over much of the US.

Core inflation is used by economists and policy-makers because it's not subject to these quickly changing conditions, but still reflects longer-term trends. It's the same reason that retail sales figures are trended with seasonal adjustments, or moving averages, etc., etc. It's not dishonest, or meant to obfuscate, but rather to allow good decision-making based on things that don't change quickly. Over time, CPI and core inflation are within error bars of each other.

We can talk about any of these numbers, but it's not a serious discussion when we take the government's word for one number (deficit), but not another (inflation or unemployment).

[camcojb]

That number is available, and from the same source, and is called "headline inflation" or Consumer Price Index (CPI). Last month that number was 1.66% -- even lower than core inflation. Why? Probably most due to falling oil prices. Next month that number is probably going to go up. Why? Probably due to drought conditions over much of the US. Core inflation is used by economists and policy-makers because it's not subject to these quickly changing conditions, but still reflects longer-term trends.

We can talk about any of these numbers, but it's not a serious discussion when we do take the government's word for one number (deficit), but not another (inflation or unemployment).
ok, I'll go a step further. I'm self-employed for the last 25 years. My supplies, from electrical to construction, to cleaning have all jumped way more than 2-3% from now to last year, and from then to the year before. I just looked online at some of my bulb pricing. These are USA made products.

MH70med up 23% from 7/2010 to 7/2012.
MH400 up 20% same time period
MH100med up 22% same time period

And on and on. These are the exact same pieces from the exact same manufacturer. Same with other supplies............. garbage bags from Costco, up almost 20% in the last 18 months. Window cleaner, up just over 20%............

The bottom line for me is my checkbook tells me their inflation numbers are not real, and you couple that with the advantage for them to under-report them, or manipulate them to make things look better, and I'm just not going to buy it. Don't care to argue the deficit number, other than it's growing too fast at this point. :yes:

[Bucketlist2012]

Here's the problem with disputing the figures from the Bureau of Labor Statistics (BLS). The same people tell us about the deficit. Here we are discussing the overall Federal budget deficit ($14T or so today), and how do we know that number? Because the Federal government publishes it. We all believe that number. So why don't we believe the inflation numbers published by the Federal government? Why don't we believe the unemployment numbers published by the Federal government? I find this strange, and it's really inhibiting a good discussion.

Actually I think the Debt is even higher than they say it is...So no , I don't believe the debt number, it is worse than they are saying. Kinda blows your argument up, eh ?

Never are the "facts" you so much believe, ever lower than reported. They are always higher.

Inflation, Budgets, Debt numbers, Unemployment figures. Always end up higher, and never lower than they report..These are manipulated figures.

I find it strange that you so hold onto what you call "facts", when we in the real world see the increases for ourselves..Those are the facts. What is happening in the Real world.

So you can keep believing and posting your "facts", but the real world tells us differently. So therefore I believe you are just mistaken.

Very impossible to believe your argument, unless I am on your side of the agenda...Where I sit, the costs are up and the debt is way too high.

So I just humbly feel your confusion is just based on an agenda and not reality. Numbers lie...And always to the worse side of the equation.NEVER to the benefit of the people..

[parsonsj]

Jody, please understand that I'm not trying to claim that your costs aren't going up. I am claiming that the BLS numbers are real, and that US policy should be based on the BLS numbers.

If your argument is that the US government is deliberately fudging the numbers and lying to the population, then my question is simply this: why wouldn't the US government do the same thing with the deficit numbers?

[Tony_SS]

Here's the problem with disputing the figures from the Bureau of Labor Statistics (BLS). The same people tell us about the deficit. Here we are discussing the overall Federal budget deficit ($14T or so today), and how do we know that number? Because the Federal government publishes it. We all believe that number. So why don't we believe the inflation numbers published by the Federal government? Why don't we believe the unemployment numbers published by the Federal government? I find this strange, and it's really inhibiting a good discussion.

John, I think you might be confused. The deficit is the amount of money lost for the fiscal year. The debt is the total amount owed by the govt. The deficit is added to the debt every year.

The last 5 fiscal years, our govt has run over 1 Trillion dollar deficits. Right now our total debt is over 17 Trillion, not 14 Trillion. So we add over a trillion dollars to our debt each year... What could go wrong? ;)

As for the deficit and debt numbers being accurate, it's really a red herring in this discussion. We know the unemployment and inflation numbers are skewed to their benefit, there's good reason to question the deficit and debt numbers too.

Generally speaking, I'm not sure why some people have such a hard time trusting corporations, yet they automatically believe any govt numbers are true and honest.

[parsonsj]

I don't believe the debt number, it is worse than they are saying. Kinda blows your argument up, eh ?You bet. Nicely done.

[Bucketlist2012]

Plain and Simple.

Further printing of money is not going to help company's earnings rise, it is not going to help profit margins expand further, it is not going to help GDP expand, it is not going to help global exports volumes increase, it is not going to help the unemployment fall, it is not going to help Greece from eventually defaulting and it is not going to help Spain with it's borrowing costs.

Printing money will only make prices of food, energy, and metals rise dramatically.

Those are the facts, and personally I don't mind if people don't believe it..They do so blindly, and with an agenda that is not fact based. I won't argue the points, because you cannot argue someone right.. They have chosen their "facts" or agenda, and they are sticking with it..

I choose to base my decisions on the facts of the reality of the situation. And although i find it strange that some people will never see it, much of life is strange, so I do my research, and choose my path...Others can decide for them selves..

[parsonsj]

John, I think you might be confused. The deficit is the amount of money lost for the fiscal year. The debt is the total amount owed by the govt. The deficit is added to the debt every year.Not confused. Just a little sloppy with the words. My apologies, and I've fixed my post.

[Tony_SS]

Jody, please understand that I'm not trying to claim that your costs aren't going up. I am claiming that the BLS numbers are real, and that US policy should be based on the BLS numbers.

If your argument is that the US government is deliberately fudging the numbers and lying to the population, then my question is simply this: why wouldn't the US government do the same thing with the deficit numbers?

The policy is based on the numbers they fudge.

And most likely the govt does do the same thing with debt and deficit numbers.. I don't think anyone is disputing that.

The Pentagon can not account for 25% of what it spends. In 2001 our own Sec of Def admitted that they could not account for 2 trillion dollars. That's pretty good evidence they aren't too good with their books in any area.

[Bucketlist2012]

Again, it is always good to hear both sides.

This is something for the readers to decide on their own. We have made our decisions, and are just posting our views on the subject.

Always good to discuss it, even if we will never agree.. No harm, no foul..:cheers:

Just food for thought for all to read. they may agree with John, they may agree with me...No sweat. I am not here to change anyone's mind, but to just point out my views. :lateral: :thumbsup:

[parsonsj]

And most likely the govt does do the same thing with debt and deficit numbers.. I don't think anyone is disputing that.I am. Perhaps it's just my overly optimistic view of other people, but I think the government employees who work with and publish these numbers do the best they can to make them as accurate as possible. I'm sure that errors and oversights occur from time to time, but I don't believe there's any conspiracy here.

[sniper]

I, but I think the government employees who work with and publish these numbers do the best they can to make them as accurate as possible. I'm sure that errors and oversights occur from time to time, but I don't believe there's any conspiracy here.

I can tell you that I have worked for a couple of federal government agencies and that there is plenty of ineptitude. I honestly can say that at one agency, there was easily 70-80% of it's employees that went out of their way to not be as accurate as they could be or at the very least, did not do things to a minimal standard.

Is that indicative of the whole system. Maybe not, but it would be hard to believe that a certain part of the government has found all the best (moral) citizens.

I, like you John, don't understand why the same people trust everything out of their government, and then don't trust anything out of their government. All the same people that opposed a Bush war agenda now support Obama and his war agenda.

[parsonsj]

Is it worth it?It's a bit whimsical in tone, but somebody tried to answer that exact question:

http://business.time.com/2012/07/24/country-half-full-an-optimistic-take-on-our-national-debt-nightmare/?hpt=hp_c2

An excerpt:

Blandly labeled the Inclusive Wealth Report 2012, this impressive research project, which is super fun to explore, is the first serious attempt to measure the total wealth of the planet’s richest countries. Not income, mind you, which is what Gross Domestic Product (GDP) refers to, but rather total wealth, i.e., the comprehensive value of the physical assets (buildings + roads+ equipment + railroad tracks + etc.), human capital (population + education + skills + earning potential + life expectancy) and natural resources (land+ trees + minerals + fossil fuels). As you , the winner, by a long shot, is the United States, with an inclusive wealth figure of roughly $118 trillion (in 2000 dollars). That’s more than double the total of the next wealthiest country, Japan ($55 trillion), and almost six times the cumulative value of all the tea plus everything else in China ($20 trillion).

And another:

More to the point, and despite what you might hear during this year’s election cycle, more traditional measures of indebtedness are actually telling a positive story. Last quarter, public and private debt as a share of the national economy dropped for the first time in about three years, from 3.73 times GDP to 3.36 times GDP. We have a long way to go, but as a country we have actually been “de-leveraging”—paying down debt—which is one of the reasons the economy has been sputtering. It’s an ugly and painful process, but it’s necessary and working.

It’s also a lot better than selling Rhode Island to the highest bidder.

[Tony_SS]

I am. Perhaps it's just my overly optimistic view of other people, but I think the government employees who work with and publish these numbers do the best they can to make them as accurate as possible. I'm sure that errors and oversights occur from time to time, but I don't believe there's any conspiracy here.

Whether it's about a conspiracy or not is a red herring. It's a symptom of a bureaucracy. And that exists in business and in govt, whether we want to believe that or not. But yes, I do think that is part of the problem. Some people wear rose colored glasses looking at the world. I don't think that is realistic at all.

Take for example the Penn St scandal. Yes most of involved in that college are diligent workers are innocent, but look at the level of abuse that was taking place. And look at Sandusky's wife. And this was going on for a long time. There was some serious denial taking place. I'm sure there's people who still might think Sandusky is innocent.

Unfortunately, criminals, fraud, corruption, obedience, ignorance and apathy do exist. Especially in a bureaucracy.

Edit:
This is an example what I'm talking about. Often the worst rises to top and gravitates to govt. Does he sound honest to you?

Disgraced Former Penn State University President Now Working for U.S. Government
http://www.washingtonpost.com/blogs/in-the-loop/post/graham-spaniers-gig-as-a-federal-worker-is-a-mystery/2012/07/26/gJQAbAx5BX_blog.html

His lawyer confirms to the Loop that Spanier is working on a part-time consulting basis for a “top-secret” agency on national security issues. But the gig is so hush-hush, he couldn’t even tell his attorneys the name of the agency.

[Tony_SS]

Bringing this back on topic.... For those who have not seen this great exchange, here are heavyweights, going head to head!

WEoGKpnutyA

[GregWeld]

And you really think "the government" can do ANYTHING efficiently? Wait until the Obamacare debacle gets rolling... I can only imagine the size of the fraud and waste.

This is the IRS for crying out loud! If any agency should be on top of it's game it should be this one!



http://www.washingtonpost.com/politics/courts_law/treasury-audit-says-irs-missed-more-than-5-billion-in-id-theft-related-tax-fraud-last-year/2012/08/02/gJQANLT3RX_story.html

[parsonsj]

And you really think "the government" can do ANYTHING efficiently?It depends. I agree with you that this is unfortunate and dismaying. But: to what are we comparing? Un-normalized numbers without comparison metrics usually make it hard to make good decisions. Has the problem grown worse? Or has the problem gotten better? We don't know from this story. Nor do we know how this sort of thing compares to other large entities, like corporations or the military, or other governments. Making any conclusion from just this information is a leap to judgment.

In related news, we have this:

http://www.bloomberg.com/news/2011-10-17/irs-warns-of-busy-signals-weaker-enforcement-amid-budget-cuts.html

An excerpt:

The Internal Revenue Service is reducing spending in anticipation of budget cuts for the current fiscal year that haven’t taken effect, Commissioner Douglas Shulman said in a letter to lawmakers today.

He warned of a “noticeable degradation” of taxpayer services and enforcement if Congress follows through on a plan to cut about $500 million from the agency’s budget for fiscal 2012.

[Tony_SS]

An excerpt:

The Internal Revenue Service is reducing spending in anticipation of budget cuts for the current fiscal year that haven’t taken effect, Commissioner Douglas Shulman said in a letter to lawmakers today.

He warned of a “noticeable degradation” of taxpayer services and enforcement if Congress follows through on a plan to cut about $500 million from the agency’s budget for fiscal 2012.

By taxpayer services does he mean "collection"? Because last time I checked that's the only service the IRS offers. :lol: If that is the case, I for one, welcome a 'degradation' in 'services'.

The less money taken by the govt, results in more money left in the economy. And that's a good thing.