Monetizing debt and economic fallacy

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http://www.reuters.com/article/marketsNews/idUSNYE00259720090604 ...are one in the same. While ignoring almost academic principles and countless examples that history provides...the US is monetizing its debt (in significant volume) nonetheless. perhaps you need a little of: http://en.wikipedia.org/wiki/Monetize results in.... http://news.bbc.co.uk/2/hi/africa/7859033.stm every time.... but when so called economists write articles such as this: http://www.forbes.com/2008/12/09/dollar-devaluation-gold-pf-ii-in_fb_1209soapbox_inl.html It's all so predictable a person's foolish at best with the knowledge to do so and simply ignorant without. All too many fall under the category of the latter. ...and now in combination we now have for the first time in what was once a free country.... "Crony capitalism in the government absorbed industries." We got change allright. Move over Zimbabwe. Move over Argentina. Move over Cuba. Give us a little room on your bench please.
 
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You might benefit from reading Crash Proof by Peter D. Schiff. The stuff they are talking about has been happening for decades regardless of who is in charge. Don't blame the current administration, they are just trying to fix a mess created by previous administrations and irresponsible consumers.
 
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 Originally Posted By: Billy007
You might benefit from reading Crash Proof by Peter D. Schiff. The stuff they are talking about has been happening for decades regardless of who is in charge. Don't blame the current administration, they are just trying to fix a mess created by previous administrations and irresponsible consumers.
I keep hearing this. But I'm still trying to understand how a problem created by too much debt based spending can be fixed by even more debt based spending...
 
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The root cause according to Schiff is the shift from a production economy to a service economy. He illustrates what’s happening by a group of nations stuck in an island, Where everyone is producing something except for the US. The US is issuing IOU (acknowledgment of debt. Short for I owe you) to buy what others in the island are selling. All will be fine until the nations in the small island figure out their US won’t be able to pay. One of the fixes is simple but not politically popular with both parties. Raise the tax receipts and lower the spending. Which also goes against the teaching of Keynesian economics that has been the fixture in Washington.
 

digitalSniperX1

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Well, currently we have a cancer. And that cancer is debt. It is what created the meltdown in the banks, and the governments response to it may create another meltdown. The cause of the cancer may've been what you posted. Actually, IMO it's a bit oversimplified. You'd have to include other factors almost all of which classified as meddling in free markets...to include currency manipulation, outright intellectual property theft, collusion, etc.
 
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 Originally Posted By: digitalSniperX1
...Actually, IMO it's a bit oversimplified...
It is oversimplified. The government will keep acting irresponsible as long as they govern irresponsible citizens. Once we all start becoming responsible and start living within our means things will change. We can't complain about the government if we are acting the same way.
 

digitalSniperX1

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We voted for what we got, for better of for worse. Americans as a whole are paying down debt only to be saddled with negative equity in their homes (thank you very much Freddie MAC/Fannie MAE and your Wall Street band) and govt debt. The govt substituting our debt with its own is also a fallacy, as it is in fact our debt (it's our industry, down the to individual who'll have to cover it). It's also a fallacy that they'll dilute the debt by monetizing it and creating inflation. We'll still pay through devaluation (forced) of dollar denominated assets (such as a US govt bond, LOL). You know, the kind of investments pension funds like to buy. Amazing. Oh, and they're already looking for new ways to tax. Again, we'll pay. You know of course the situation is absurd. The same govt. who'll point the finger at private industry for not holding to its promises in such things as pensions has actually forced pension funds (and 401k's etc) to absorb the costs (i.e. take a loss) on the car company and AIG deals. It's an astonishing thing to watch.
 
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 Quote:
The root cause according to Schiff is the shift from a production economy to a service economy.
Hmmm ..our first technically correcting administration ..who also had a housing bubble and also accumulated (at the time) massive debt while giving tax cuts and engaging in upramped military spending (same tune, or so it seems) ..comforted us by saying: DON'T WORRY! There will be plenty of service jobs to make up for those lost in manufacturing. Benefit will "trickle down" I guess it worked even better the second time around Now what's digitalstimulatingsniper saying about having a domestic manufacturing base?
 

digitalSniperX1

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Heck, I'll buy one....you first. http://www.youtube.com/watch?v=rAqPMJFaEdY It's funny that you bring that up though. Intel was fined by the EU 1.5e9 euros because AMD whined. You seemed fine with that. Intel is investing 7 billion dollars in US fabs. AMD $0 for the same. AMD is however building fabs in Europe, LOL. Hint: Fabs in the US employ Americans. Fabs in Germany employ Germans.
 
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What's that got to do with brokering off our manufacturing to other nations? Specifically nations that aren't yet up to par with our standard of living? Japan was allowed to raid our markets. They bloated themselves and now have all the issues of a mature first class industrial society. China will be a much bigger pill to swallow, but I think we managed to give them as good a foot hold as needed to accomplish the required strategic economic evolutions in future avoided costs. France, Germany, Japan, Korea, the rest of western Europe ..and a few others, are under our global defensive umbrella and in one form or another refill the coffers with changes in ownership and investments in terms of "balancing books". Again, in the global commercial tap dancing, there are the same war profiteers involved. We don't get to share in the war booty or peril on an equitable level compared to our level of personal sacrifice.
 

digitalSniperX1

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Well, the current administration doesn't see fining Intel as a assault on our manufacturing capability. I guess you don't either. I however do. Intel will be "persuaded" to build their plants elsewhere. AMD's decision to build plants in Germany are a manipulation. The cost of doing business is much higher in Germany than here (I'm not accounting for any special "incentives" they may've received). There are many ways to "broker" off our manufacturing capability. Europe fines successful American companies into submission. China simply steals our stuff as Japan once did. Other countries steal our intellectual property in health care related industry claiming a moral right to do so. What moral right does Ranbaxy have to copy Viagra and Cialis, LOL..then ship it to the Fuji Islands and then have Canadian online pharmacies (you know, they care about your health, don't you) ship it to you in the US making obscene profits off US derived IP?
 
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 Quote:
What moral right does Ranbaxy have to copy Viagra and Cialis, LOL..then ship it to the Fuji Islands and then have Canadian online pharmacies (you know, they care about your health, don't you) ship it to you in the US making obscene profits off US derived IP?
I guess that's the peril of the free market If you're motivated and clever enough you'll prevail. I read that here. Logic dictates that if anyone really deserves something ..they'll have it ..or get it. Seek justice for these inequities. If you're worthy, you'll manage to succeed. If not ..well ..then I really reassess your rightful station in life ..or perhaps your company's. Trade must be free!!! At least for us ..even if it isn't for anyone else.
 

digitalSniperX1

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Well fella free markets aren't free when there are no morals. And free people will loose their freedom just the same. And as you said trade must be free..but including everyone else and including the costs our manufacturers are burdened with. It's plain hypocrisy when we ship our jobs to China imposing higher costs to produce, i.e. environment etc. and then watch them stink up the place while they manufacture things we need.
 
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 Originally Posted By: Billy007
One of the fixes is simple but not politically popular with both parties. Raise the tax receipts and lower the spending. Which also goes against the teaching of Keynesian economics that has been the fixture in Washington.
Diluting currency has exactly this effect, with a progressive income tax system in place. Inflation reduces real spending and moves everyone into a higher tax bracket.
 
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 Quote:
Well fella free markets aren't free when there are no morals.
I agree. How can we instill a sense of ethics and moral conduct?
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And free people will loose their freedom just the same.
In a land where your freedom to exercise your liberties is defined by your economic clout. I also agree.
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And as you said trade must be free..but including everyone else and including the costs our manufacturers are burdened with.
..and how do we manage that?
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It's plain hypocrisy when we ship our jobs to China imposing higher costs to produce, i.e. environment etc. and then watch them stink up the place while they manufacture things we need.
I agree. Shall we bring it back and stink it up here, or pay more to clean it up and produce it here? Well, now that we're on the same page ..we can stop allowing jobs to exit the nation ..it may require some odd things to keep some manufacturing interest afloat ..but ...
 

digitalSniperX1

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Outright protectionism is not the answer. The solution is complicated. It would possibly materialize without intervention if the current "intervention" (namely currency manipulation) would stop. But the hole may be too deep now. We may not see it because consumer items are made in other countries but the USA is still a major manufacturer (still #1 I believe) and a major exporter (#3).
 
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I somewhat agree. Outright protectionism will have it's own set of unintended consequences. I also agree that this is a complex situtation and, due to how long we've used the assured loss methods (growth at a loss), hard to overhaul. I'd let the internal economy figure its own way out and merely limite the trade deficits. This will have "investors" screaming that you're limiting their success, but what you would really be limiting is the nation's decline and stabilizing internal costs (taxes, etc.). Free fall is fine when you've got a very short distance to fall ..as we found out with Japan. Their economy was small fry compared to our total output. The purge and technical correction, although painful, worked itself out after the whole deck reshuffled. Dollars have a hard time being integrated into terms of human capital. We're not machines ..nor, as much as some appear to regard us, cattle or domestic feeding stock. At some point one WILL have to pause and ponder just what is the goal here and just what we're willing to trade off for the sake of slips of green paper.
 
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 Originally Posted By: Billy007
You might benefit from reading Crash Proof by Peter D. Schiff. The stuff they are talking about has been happening for decades regardless of who is in charge. Don't blame the current administration, they are just trying to fix a mess created by previous administrations and irresponsible consumers.
How is tripling the budget deficit 'fixing the mess'????? Congress passes the budget not the 'administration'.
 
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