new lows as the U.S. attacks its currency

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Peter Schiff; December 17th, 2008

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The United States Government runs its own balance sheet based on the Ponzi principal as well. Our national debt always grows and never shrinks. As existing debt matures, proceeds are repaid by issuing new debt. Interest payments on existing debt are also made by selling new debt to investors. The whole scheme depends on an ever growing supply of new lenders, or the willingness of existing lenders, to continue to roll over maturing notes. Of course, as was the case with Madoff, if enough of our creditors want their money back, the music stops playing.

In Madoff’s case, the rug pulling was provided by the huge financial losses suffered by some of his clients in other non-Madoff investments. When enough of these clients looked to sell some of their apparently well-performing Madoff assets to help offset such losses, the scam collapsed. The same thing could befall the United States Government. Now that China and our other creditors are looking to spend some of their U.S. Treasury holdings to stimulate their own economies, look for a similar outcome with even more dire implications.

I hope he's wrong on this one.
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He's not wrong.

But hey, isn't a good idea to continue to spend and print money (debt) as fast as we can in order to "stimulate" our economy??

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rather than looking to jail Madoff, xxxx should consider making him our new Treasury secretary. If not that, at least make him the czar of something!

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Let's not forget that Social Security and Medicare work on the same principle.
 
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"If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them, will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered." - Thomas Jefferson

That quote hits home more every day.
 
Great quote. The whole thing:

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If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered...I believe that banking institutions are more dangerous to our liberties than standing armies... The issuing power should be taken from the banks and restored to the people, to whom it properly belongs


So to the people should mean all of us, via.....the Congress?? AFAIK the banks aren't really "private". No it's the usual. Gov/Bus donkey hump.

http://www.snopes.com/quotes/jefferson/banks.asp

I'm trying to be nice here.
 
Originally Posted By: buster


We should be raising interest rates right now and cutting payroll taxes IMO.

"The Case for a Payroll Tax Cut"
http://gregmankiw.blogspot.com/



So here’s our plan: First, expand the Earned Income Tax Credit by $20 billion a year (retroactive to January 1, 2001). That means an additional $1,800 of income for a working family at the bottom and $500 for one in the lower middle. Second, eliminate all Social Security payroll taxes on the first $7,000 of personal income. One of the best-kept secrets in America is that most lower-income taxpayers pay more in payroll taxes than they do in federal income taxes. Shielding the first $7,000 of income would reduce their tax burden $500 to $1,000 a year. Remove the ceiling on Social Security payroll taxes and the net payroll tax cut is about $15 billion a year.

Robert Reich, Jan 2001


This might be your new policy.
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Dollar fall and mass inflation soon to follow....according to Schiff. I mention this guy all the time because he is one of the few that called this crisis.
 
If all this non-sense works, the fed is going to have to be on the ball BIGTIME to start responsibly raising rates and not create the next big bubble. I think that's what Mr. Greenspan's downfall was.
 
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Deflation is what took hold in Japan, lengthening its recession for many years. This was even though the authorities did the right things but, unfortunately, were much too late, suggests Charmaine Buskas, senior economics strategist at TD Securities.

The lesson: If inflation is harmful to economic activity, deflation is near-fatal and it's worth preventing it at nearly any cost. That's why Bernanke is being very aggressive, very quickly.

http://www.financialpost.com/story.html?id=1088785&p=2
 
Originally Posted By: buster
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We need a growing role for government. But will we be able to afford it? Will a growing government cause inflation? Won't government spending crowd-out investment? What about government solvency? Isn't government subject to a budget constraint just like those faced by households and firms? These are questions for my next post.


http://tpmcafe.talkingpointsmemo.com/2008/12/17/why_did_we_have_a_golden_age/#more


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It is clear that what we need now is job creation, growth of income (especially wages), and debt relief--all of which will put household finances on better footing. We need public infrastructure investment--not private investment--as well as more (and better) public services. Virtually all economists now favor a bigger role for government, however, most see this as a temporary fix. What I am arguing here is that we need a big and growing government--the ratchet--to generate a sustainable growth path.

This is EXACTLY the thinking that led to the lengthening and deepening of the Great Depression in the US by nearly a DECADE by FDR.
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Originally Posted By: BrianWC
Originally Posted By: buster


We should be raising interest rates right now and cutting payroll taxes IMO.

"The Case for a Payroll Tax Cut"
http://gregmankiw.blogspot.com/



So here’s our plan: First, expand the Earned Income Tax Credit by $20 billion a year (retroactive to January 1, 2001). That means an additional $1,800 of income for a working family at the bottom and $500 for one in the lower middle. Second, eliminate all Social Security payroll taxes on the first $7,000 of personal income. One of the best-kept secrets in America is that most lower-income taxpayers pay more in payroll taxes than they do in federal income taxes. Shielding the first $7,000 of income would reduce their tax burden $500 to $1,000 a year. Remove the ceiling on Social Security payroll taxes and the net payroll tax cut is about $15 billion a year.

Robert Reich, Jan 2001

Otherwise known as income redistribution.
 
Originally Posted By: buster
Dollar fall and mass inflation soon to follow....according to Schiff. I mention this guy all the time because he is one of the few that called this crisis.

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Markets News Afternoon; Dollar in record daily fall against Euro; Pound falls to record low of £0.93 per Euro

The US dollar fell the most against the euro since its launch in 1999 debut and dropped to a 13-year low versus the yen after the Federal Reserve cut its target lending rate to as low as zero.

The pound fell to a record against the euro after a report showed that the UK lost 75,700 jobs in November - - the fastest pace since 1991.

The dollar fell as much as 3 percent to $1.4437 per euro from $1.4002 yesterday, before falling back to $1.4388. The dollar traded at ¥87.95. The euro plunged to almost £0.93 - - a new record.

http://www.finfacts.ie/irishfinancenews/article_1015560.shtml
Sorry, I see Drew posted the info already.
 
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The final public policy shoe to fall early next year will probably be massive public works programs (infrastructure spending) to create "jobs." The President-elect Obama economic team and economist Paul Krugman have already gone on record as favoring such a proposal. They also seem to support another, bigger, round of so-called "stimulus" spending by consumers funded by tax rebates.

But will any of this shorten the recession? A decent argument can be made that all of these public policy responses will only make things worse and prolong the slump.

The longest recession in modern times is the one that began in 1929. It lasted a full 43 months and was quickly followed by the 1937 recession that lasted another 13 months. Almost one half of the months between 1929 and 1939 were recessionary. And between 1929 and 1939, the average yearly unemployment rate in the U.S. was a staggering 16.9%.

Though Presidents Hoover and FDR unbalanced the federal budget, created the Reconstruction Finance Corporation (to bail out banks and businesses), enacted the National Industrial Recovery Act, engaged in massive public works projects (WPA), and inflated the money supply sharply after 1934, nothing really worked. After 10 years of political and economic unrest and uncertainty, the unemployment rate was still 17.2% on the eve of our entry into WW2.

Laissez-faire economic ideas (deregulation, tax cuts) are currently out of favor but the fact remains that the Krugman and Keynesian policies of bailouts, deficit financing, and public works have never really worked. They didn't work in the U. S. in the 1930's; they didn't work in the 1990's in Japan.

They don't work because they prop up unsustainable investments in the private sector rather than clear the way for new entrepreneurship. And they don't work because government central planning is hopelessly naïve (they even have trouble mailing out rebate checks). Sometimes in economics (as in medicine) doing "nothing" (allowing the system to heal itself) works better than drugs with nasty side effects or bureaucratic attempts at reconstructive surgery.

http://www.lewrockwell.com/armentano-d/armentano15.html
This is change we can look forward to...
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Originally Posted By: Drew99GT
"If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them, will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered." - Thomas Jefferson

That quote hits home more every day.


Whether or not TJ actually wrote (or said) it is open to question.

http://wiki.monticello.org/mediawiki/index.php/Private_Banks_(Quotation)
 
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