Prices of everything going up, uP, UP

[javacontour]

Originally Posted By: eljefino
Originally Posted By: Spyder7


Interest rates were kept artificially low to attract investors by dipping into the then self-sustaining social security fund. Now the first of the boomers are about to begin retiring, and every year that number will increase, creating another massive drain that will likely be floated by increased borrowing.

Sooner or later someone will have to admit SS was never tapped with borrowing... but rather raiding, just to cover daily expenses. I don't mind this as much as the cane-shaking geezers; may be my youthful distrust of the government. SS payroll tax is flat (up to the income level where they stop collecting it) and has few exemptions, something the "regular" income tax can model after.
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There have already been measures proposed at reigning it in, but there is no will to do it as it requires more than just fiscal restraint, but the elimination of existing tax cuts and either a new tax or a significant increase in existing taxes.


They need to immediately start shafting the retirees. They have a golden standard of living, particularly medical care, that they did not pay fully for. Yes they paid for retirees in the 1960s and 70s but THOSE retirees got nowhere near the benefits of the current crop. Will it happen? Doubtful. I know by the time I retire in 30+ years I'll get shafted, so I'd just like to spread the pain along to those who will be or already are doing it to me.


It was their generation that was in charge when the choices were made. They expect follow on generations to pick up the tab for their spending while in charge and failing to invest their contributions to earn enough to pay for the even bigger benefit plans they chose for themselves.

So they should no be shocked when follow on generations balk at paying the costs and expect them to live with the consequences of their choices to spend it all today and worry about the bill tomorrow.

The only "right" to these benefits, the only "promise" is a promise they made, expecting others to pay it.

I didn't promise to provide entitlements, so why would anyone in their right mind expect me to keep a promise THEY made?

 

[PandaBear]

Originally Posted By: Volvo_ST1
Well, gold has some neat properties that make it very desirable. It's malleable, resists corrosion, is a great conductor, can be pounded into gold leaf. It is used not only in electronic components, but in medicine and dentistry (still the longest lasting and best sealing material for crowns, plus it has antibacterial properties), in chemistry as a catalyst, and gold is used in nanotechnology. For example gold is used for nanorods that enable breast cancer detection. Gold is also used as a pigment.


But is this reflected in its market value? Look at the price between Gold and Palladium. Palladium is a much more used catalyst and not as a treasure trove, how much in price difference between the 2? How much on top of the current gold value is its "precious" value rather than the "industrial" value?

Originally Posted By: eljefino
They need to immediately start shafting the retirees. They have a golden standard of living, particularly medical care, that they did not pay fully for. Yes they paid for retirees in the 1960s and 70s but THOSE retirees got nowhere near the benefits of the current crop. Will it happen? Doubtful. I know by the time I retire in 30+ years I'll get shafted, so I'd just like to spread the pain along to those who will be or already are doing it to me.


As a late gen-x-er, I'd benefit from this move but as Tempest mentioned back in the old offsite political forum, the current baby boomer would kill any politician dare to pull this out of his/her hat. Everyone, even those who cry against entitlement, would want this entitlement to continue as he/she is already deep into the hierarchy of a pyramid scam.

Originally Posted By: javacontour
The tipping point for us may be sooner, not because of our activity, but because so many in the world are invested in US debt. I suspect given the relative importance of our financial health to the world economy, the tipping point is sooner.

If folks start pulling out, or demanding higher rates on our debt, then what happens? As has been suggested, it's a downward spiral.


There was a saying that if you owe the bank 100 dollars, it is your problem, but if you owe the bank 100 million dollars, it is the bank's problem.

So no matter what happen, the T bill's foreign owners and domestic owners would want some sort of a bail out bill or restructuring to avoid the scenario.

This balancing has already occurred in the devaluation of USD. China has already taken a big hit by dropping their holding of our USD value and "forgiven" our value. They are caught in between losing a customer and not able to collect the overdue payment from this customer.

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However, I tend to believe the solution is more spending cuts than it is more taxation. As the problem looming is more about the exponential growth in entitlement liabilities than it is tax cuts.


We are ahead of China but behind Europe and Japan when heading to the cliff of no return of this liability. China started realizing this problem and start hiring new public employees with reduced benefit. Likewise Japan keep about 30% of the nations employee as temp workers to avoid paying into the benefit or tenure for life without layout.

 

[Tempest]

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If your line of reasoning were true, countries all over the world that are on the fiat system would be experiencing problems such as currency devaluation. They're not.

Really?
http://www.swissinfo.ch/eng/specials/swi...ml?cid=28504670
Global money supply has doubled in the last 6 years. Prices will be going up. China is fighting inflation, so is India, Russia, Venezuela, Brazil....

And the US had a rather nasty dealing with printed money before there was a US:
http://www.associatedcontent.com/article/289149/the_continental_americas_first_paper.html?cat=37

 

[Spyder7]

Originally Posted By: Tempest
Quote:
If your line of reasoning were true, countries all over the world that are on the fiat system would be experiencing problems such as currency devaluation. They're not.

Really?
http://www.swissinfo.ch/eng/specials/swi...ml?cid=28504670
Global money supply has doubled in the last 6 years. Prices will be going up. China is fighting inflation, so is India, Russia, Venezuela, Brazil....

And the US had a rather nasty dealing with printed money before there was a US:
http://www.associatedcontent.com/article/289149/the_continental_americas_first_paper.html?cat=37


You are mistaking cause and effect. That's the problem with reductionist arguments that attempt to isolate one variable and make overly simplistic generalizations from it that are - surprise! - consequently deeply flawed.

Or do you not realize that in lumping Venezuela, the US, and China - countries that are so completely dissimilar from each other that they have very little in common - into the same bucket, that any conclusion you draw from the comparison must be faulty?

You're looking at the surface of the pond and reaching conclusions that can't be reached without a much deeper exploration that you don't make because you're so convinced of your own certitude you feel there is no need to look any further.

This is the same kind of reasoning that persisted for centuries in stating that the earth was flat even after it had been demonstrably been proven otherwise. The flat earth crowd were so convinced of the "proof" to their conviction that they refused to examine or consider the evidence to the contrary.

The problem with the worldview you subscribe to Tempest, is that its come to its own internal contradiction where it cannot logically reconcile the increased tax cuts its in favor of when the consequence is increased borrowing to service the debt and a further feeding of the snowball effect we are seeing symptoms of this century, while that debt has nearly double in size in a mere 11 years.

So it casts about for a convenient scapegoat and puts the blame on present monetary expansion, ignoring the fact that monetary expansion is normal during recession, and that it subsequently contracts as the economy improves and interest rates are increased.

The Fed has already stated that there are no further plans to continue expanding the money supply and that for now, they will also hold interest rates low as the economy is showing the desired signs of recovery (however slow and weak it is) that increasing the money supply, along with the stimulus package that injected into the economy, is showing that the desired effect - as it has in the past - is being realized.

The larger dilemma is what to do as the US nears the point where the national debt exceeds and surpassed GDP and the economic slowdown arrives and becomes a structural component of it. Economists have already demonstrated that as a country's national debt nears its annual GDP, there is a subsequent slowdown in economic growth that will remain until the trend is reversed.

There-in lies the catch-22. At that point, due to the structural economic slowdown built in, it is then that much harder to reverse the trend while still maintaining even the lower level of economic growth. And that's when the economy is on the tipping point as its only one catastrophe of sufficient magnitude away from crossing the invisible line from solvency to insolvency.

If that tipping point is ever reached - or when if nothing is done to address it before the US gets there - it'll make the economic collapse of the former USSR look like a minor recession in Bermuda. This owes to the economic ripple effect that will come with it. Up here we'll face the brunt of the ripple effect, and even if our debt is eliminated - as promised by 2015 - we'll still go down with you guys anyway.

And even though its in no one's interest, as far as the rest of the world goes, the nations best positioned and most willing to help prevent that collapse are facing so many problems of their own right now that they may be powerless to provide the amount of needed aid should that day after come.

FTR, I'm not using a reductionist argument of my own that seeks to simply point the finger at the national debt as root cause. I mostly bring it up because its being conveniently ignored even as the consequences of that debt are already begin to very subtly be realized. Its both a symptom of deeper problems, and a problem in and of itself in that it creates new ones and worsens existing ones.

The sad reality is that its now so epic that the needed measures to address it entail severe consequences for whoever dares to put it on the table. Its more expedient to ignore it, downplay it, and pass the buck until the day finally comes when it can no longer be passed onto someone else to ignore. That doesn't make it go away. It just makes the inevitable day of reckoning a much bleaker one when it finally comes.

-Spyder