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Thread: The US post WWII economy - cliff noted to keep it simple

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    Default The US post WWII economy - cliff noted to keep it simple

    1945-50: WWII ends with the US as the Global Manufacturing power - US dollar becomes world reserve currency, US runs a TRADE SURPLUS with the world. The rest of the world is devastated by war and the US is the world's manifucturing giant and exports all over the world. The US is strong and a CREDITOR nation.

    The GI Bill creates a strong US middle class, it guarantees free university studies for returning soldiers and cheap loans to buy a house. WWII veterans find it easy to get a good free education, a cheap house and they start families like crazy. (I know, the GI Bill is shockingly socialistic).

    However: US Industry and economy remains Militarized. The foundation of the MIC (Military Industrial Complex is laid)

    1950's Korea war

    1960's
    Cold War
    Vietnam war begins

    1970's

    TURNING POINT - US GOES FROM CREDITOR NATION TO
    DEBTOR NATION

    Now how did this happen? Four things occur in the beginning of the 1970's that forever alter the US economic system.

    1. The US loses the war in Vietnam and the cost of it bankrupts the US. The US starts the system of PRINTING FIAT DOLLARS to cover it's debts.

    President Nixon (without a democratic debate) is forced to abandon the gold standard and start the fiat dollar system. If he hadn't done that the US would have lost all it's gold in Fort Knox to foreign creditors (France and Germany et al).

    2. The US reaches Peak Oil. From now on the US is reliant on importing oil to meet it's consumption.

    OPEC becomes a major international player. This consides with the Yom Kippur war 1973, and in protest against US support of Isreal OPEC declares an oil embargo on the US. In 1979 the US supported Shah is overthrown in Iran and panicked markets drive the oil price up to extreme levels.

    3. Inflation strikes.

    Wars are extremely inflationary to any economy and the inflation from the war in Vietnam, and other economic mismanagement, returns with a vengence.

    4. The US gets used to cheap imports of foreign products (mainly from Japan and Germany at first - later China ofc.)

    1981-2 critical inflation stopped by Fed Chairman Volker at interest rates close to 20 % - the Fed was able to pay such interest ONLY because the US was not yet deeply into debt. Today such interest rates are utterly impossible.

    1985 Plaza Accord - The US forces Japan and Germany (the main exporting nations to the US at the time) to accept a devaluation of the dollar. In effect exporting economic depression to both nations.

    1987 Stock market crashes - a lot of inflation is swept away when world wide bubble pops. The effects of endless printing of dollars sent overseas is shown.

    1990s - Outsourcing and offshoring begins in ernest

    Gulf War I
    Global economic contraction - Bush I loses to "It's the economy stupid" Bill Clinton.

    Clinton
    deregulates markets and repeals Glass Steagall Act (a law from the 1930s depression put in place to stop Trusts - thereby setting up for new round of Wall Street looting/speculating). NAFTA comes into effect. Dot.com bubble forms amply inflated by Greenspan Fed policies.

    1995 Plaza Accord 2

    Wall Street loots Jeltsin Russia to the tune of hundreds of billions of dollars. The collapse of Russia and the looting by the oligarchs ensures very cheap oil during the 1990's.

    1999 Dot.com bubble bursts.

    2000s - US becomes a service economy in the jobsector and financial economy instead of a manufacturing power.

    2001
    global contraction. GW Bush enters the White House

    9/11 attack minor blip on economy

    2001 - to present: Eternal War on Muslims begins (wars are extremely inflationary)

    2003 Gulf War 2 - Invasion of Iraq. GW Bush encourages Housing Bubble by his policies and further deregulations of laws. The Fed/Greenspan stokes more inflation into the US economy to keep the wheels churning helping blow up the housing bubble.

    2006 "Helicopter" Ben Bernanke is appointed new chairman of the Fed. He is so named because he promises to flood the markets with dollars incase there is a problem. And so he will.

    2007
    Japanese Carry trade collapses - this is the precursor the collapse of the US economy. Due to the near Zero Rate Interest Policy (ZIRP) investors had been taking dollar loans (Japan has a mountain of dollars from trade with the US) and invested them in the US and in commodity markets. Enormous bubbles were formed. When these popped in July/August 2007 Wall Street was doomed to crash soon after.

    TURNING POINT 2

    2007- US Banks bankrupted. US Housing market collapses. Fed prints money to save Wall Street banks from liquidation (Quantitative Easing 1 and 2, TARP etc - leaving taxpayers with a $ 2Trillion+ dollar bill).


    Fannie Mae and Freddie Mac bankrupted and socialized into the US government, leaving taxpayers with the bill.


    It's a great system. Ideally the US:

    1. Imports tangible goods by sending paper overseas
    2. Exports inflation and depressions
    3. Uses inflation to limit real payment for dollar investments to foreigners
    4. Uses the US Fed to inflate with more dollars whenever possible, or by keeping the interest rate below the level of inflation.

    But this system is now fatally broken.
    INFp

    If your sea chart does not match reality, go with reality (Old mariner saying)



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    Quote Originally Posted by Wittmont View Post
    But this system is now fatally broken.
    What is your economic prognosis for the next decade?
    It is easier for the eye of a camel to pass through a rich man than for a needle to enter the kingdom of heaven.

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    Quote Originally Posted by Rick View Post
    What is your economic prognosis for the next decade?
    See Japan. See Detroit. See California.

    Unless the debt that has been papered over (bankrupt banks) is cleared there will be no recovery. At this point in time the US is in a genuine Depression but this is largely hidden (papered over) by the Feds money printing. The problem the US refuses to face is that of clearing the debt WILL crash the economy since a lot of the major banks will cease to exist without the Fed funneling money into their accounts. But clearing the bad debt is a necessity - only then can the US start over on a genuine solid footing.

    The US will sink deeper and deeper into debt and any recovery will be nonexsitent for the majority of Americans while the money men at the top will make out like bandits (again see Japan where the families owning the exporting giants are profiting extremely while the middle class and working class are squeezed by a near three decade long Depression). The average American will get poorer and poorer as all policies are aimed at ensuring the elite gets record profits.

    Since the start of the Bush Presidency the US has increased it's debt and government spending by 100%, but the economy has only grown 40%. That is a debt bubble and it will pop. The US must at some point pay it's bills. The problem is that the US is in a debt bubble at the same time it is in a depression. That cannot end well.

    However, the rich don't care, they have their hands on the printing presses and are funneling all profits to themselves and all losses on the taxpayer bill. They are investing taxpayer dollars in hot markets overseas (see Asia and China) where there are still profits to be reaped. Taxpayer dollars (Fed printing) end up in private pockets... They will keep doing this until they are stopped, and they cannot be stopped until the US taxpayer gets enough and put the crooks in jail (there are lots of laws prohibiting what is currently going on).

    The US is being actively looted and Americans are just standing by watching... Look what Enron did to California in the 1990's early 2000's. Look at where California is today economically. Enron was just a trial balloon, what has followed is Enron on a national scale by far larger entities doing the looting (read the Top Wall Street banks). (Today California has had to resort to the printing of IOUs since it cannot meet it's debt payments in US dollars anymore). That is the future of the US... these IOUs are not accepted by many large banks today. The analogy is clear, without dollars the US will not be able to pay it's debts and foreigners will not accept phony IOUs.



    These deficits mean that the US is unable to pay its debts or meet its obligations to its own citizens.

    Medicare, Medicaid, related programs, Welfare and Social Security will face cuts - meaning the service levels for middle class and working Americans will get worse, people will be unable to afford basic medicines and consequently live shorter lives. The above policies have been mismanaged and looted by the elite and now the remaining time is very limited. SS, eg, will go bankrupt in about two decades. A lot of Americans will go to their graves instead of enjoying their retirement years. And the retirement age will be increased anyway.

    The Military Budget has to be cut at a time the US is at war (wars they already are struggling in).

    There is not enough money in the US to pay off the debt through taxation alone. The US WILL have to cut it's budget severely, and already a lot of States are on the brink of bankruptcy (see California et al).

    And so on. The only real option is for Americans to face facts and stop the looting and restart the system anew based on reality instead of inflated and twisted numbers. But that means the US will shrink by A LOT and the egos of Americans is not mature enough to take that. Instead people prefer to rely on magical thinking and pretend there will be a recovery and the giant on clay feet will be able to walk on. And so the rich will be able to continue to loot the system, enrich themselves, and feed debt to the masses.
    INFp

    If your sea chart does not match reality, go with reality (Old mariner saying)



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    I agree. My sense is that this view is becoming more and more mainstream, if it isn't already. Just a year ago I would not have said so. It has been mainstream for several years among American expats living abroad.

    So basically, either we face up to our debt and fix things, sacrificing a big chunk of our GDP in the process, or we wait a few more years until the GDP drops due to default, etc.

    The Argentinian experience may be instructive:

    http://en.wikipedia.org/wiki/Argenti...9%E2%80%932002)
    Last edited by Rick; 11-15-2010 at 01:52 PM.
    It is easier for the eye of a camel to pass through a rich man than for a needle to enter the kingdom of heaven.

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    Quote Originally Posted by Rick View Post
    I agree. My sense is that this view is becoming more and more mainstream, if it isn't already. Just a year ago I would not have said so. It has been mainstream for several years among American expats living abroad.
    I have followed the US for over two decades now. What is striking to me is how much the attitude has changed in Americans in the last couple of years. In 2003 a small minority was "awake" and indpendent thinkers - today more and more Americans realize how profoundly they are being manipulated.

    It is almost impossible to have a sane political discussion in the US today. All the basic words and terms have been twisted and poisoned beyond recognition (thanks to think tanks and propaganda megaphones like Limbaugh). This destruction of the political discourse has been done intentionally. Expat Americans see this.
    INFp

    If your sea chart does not match reality, go with reality (Old mariner saying)



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    Quote Originally Posted by Rick View Post
    I agree. My sense is that this view is becoming more and more mainstream, if it isn't already. Just a year ago I would not have said so. It has been mainstream for several years among American expats living abroad.

    So basically, either we face up to our debt and fix things, sacrificing a big chunk of our GDP in the process, or we wait a few more years until the GDP drops due to default, etc.

    The Argentinian experience may be instructive:

    http://en.wikipedia.org/wiki/Argentine_economic_crisis_(1999%E2%80%932002)
    Yep, but Argentina is a lilliput compared to the US. A US default will shock the world many times over while Argentina was no big deal.

    But, yes, ultimately the US must stop looting other nations and pay the debts they have been papering over for three decades.
    INFp

    If your sea chart does not match reality, go with reality (Old mariner saying)



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    In your view, what is the best way for individual Americans to ride this out? (asks one who is living overseas)
    It is easier for the eye of a camel to pass through a rich man than for a needle to enter the kingdom of heaven.

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    Quote Originally Posted by Rick View Post
    In your view, what is the best way for individual Americans to ride this out? (asks one who is living overseas)
    There IS no "riding this out".

    The people must take charge again.

    The only other option is a slide into some fascistic police state (the way things are heading now). The US already IS a surveillance state but you can still change it through legal means but ever since Bush II took charge US freedoms have been taken away.

    Already the Executive branch can deem any US citizen a "domestic extremist" and then that person has no rights or protections under the US Constitution anymore. In effect the US Constitution is dead.

    What is being done to Muslims today will be done to US citizens tomorrow. The President can use his new extrajudicial powers to disappear any US citizen into some dark hole to be tortured forever and nobody, NOBODY, can do anything about it. This system has been approved by the US Supreme Court.

    Americans have to vote for people who will clean out the system and put these crooks in jail and repeal the bs from the last 10 years (Patriot Acts, Extrajudicial powers, Wall Street Economic Fraud, Zionists etc).

    If people buy guns and ammo and hunker down in their panic rooms and let things slide they will slowly be squeezed economically and politically and socially. They will have less money, fewer services, nobody to vote for and face social chaos.
    INFp

    If your sea chart does not match reality, go with reality (Old mariner saying)



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    Ti centric krieger's Avatar
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    I've been trying to find out how much interest is being paid on these debts on average and how much pressure there is on debtors to repay them. Without these two variables it's hard to estimate how severe the private/public debt problem really is.

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    Quote Originally Posted by labcoat View Post


    I've been trying to find out how much interest is being paid on these debts on average and how much pressure there is on debtors to repay them. Without these two variables it's hard to estimate how severe the private/public debt problem really is.
    Of course it is severe. It is money needed for basic human services in the near future. 1 % interest on $53TRILLION dollar is 530 billion dollars. The point is that this debt is debt the US has no cover for. It means that the US government is broke. There is no possible way for the American people to create $53 trillion dollars MORE than they already are producing, especially at a time when without dollar printing the US GDP would actually shrink.

    A lot of this debt is debt to the US people, money they will never see. It is money for education, pensions, health care, veterans etc. Money that the US public has voted for, but has been stolen by the elite. But truth to tell a lot of this money has never existed and will never exist. The US public has been shafted the way the Greece public was shafted.

    From the 2007 US Government Accountability Office (GAO) report:
    http://www.gao.gov/financial/fy2007/cgstatement.pdf

    The federal government did not maintain effective internal control over financial reporting (including safeguarding assets) and compliance with significant laws and regulations as of September 30, 2007.
    In other words, the US government cannot pass an audit even from their own accountants.

    Considering this projected gap in social insurance, in addition to reported liabilities (e.g., debt held by the public and federal employee and veterans benefits payable) and other implicit commitments and contingencies that the federal government has pledged to support, the federal government’s fiscal exposures totaled approximately $53 trillion as
    of September 30, 2007, up more than $2 trillion from September 30, 2006, and an increase of more than $32 trillion from about $20 trillion as of September 30, 2000.7 This translates into a current burden of about $175,000 per American or approximately $455,000 per American household.
    So a baby born today in the US is born into $175,000 debt, what a winning ticket. In actuality, with the cost of the Wars in Iraq, Afghanistan and Pakistan (and future wars) severly underreported this sum is even larger.
    INFp

    If your sea chart does not match reality, go with reality (Old mariner saying)



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    America has seen 2 world wars, a couple of depressions, oil crisis etc.

    And it has always come up as a winner. Why would this time be different?

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    Quote Originally Posted by Jarno View Post
    America has seen 2 world wars, a couple of depressions, oil crisis etc.

    And it has always come up as a winner. Why would this time be different?
    Because America has seriously hit the shitter in the last ten years. The population is so dumb I will be surprised if we are capable of anything beyond push button labor in 15 years. And with so much increased globalization, the people in the very small capital class owe us nothing, and can cut and run and completely abandon us at will, for greater profits elsewhere. I mean, why the fuck would you want to pay the dumbest people in the developed world(read: high labor costs) for work you can get at better exploitation elsewhere?
    asd

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    Quote Originally Posted by Wittmont View Post
    Of course it is severe. It is money needed for basic human services in the near future. 1 % interest on $53TRILLION dollar is 530 billion dollars. The point is that this debt is debt the US has no cover for. It means that the US government is broke. There is no possible way for the American people to create $53 trillion dollars MORE than they already are producing, especially at a time when without dollar printing the US GDP would actually shrink.

    A lot of this debt is debt to the US people, money they will never see. It is money for education, pensions, health care, veterans etc. Money that the US public has voted for, but has been stolen by the elite. But truth to tell a lot of this money has never existed and will never exist. The US public has been shafted the way the Greece public was shafted.

    From the 2007 US Government Accountability Office (GAO) report:
    http://www.gao.gov/financial/fy2007/cgstatement.pdf



    In other words, the US government cannot pass an audit even from their own accountants.



    So a baby born today in the US is born into $175,000 debt, what a winning ticket. In actuality, with the cost of the Wars in Iraq, Afghanistan and Pakistan (and future wars) severly underreported this sum is even larger.
    Greece is weak and so couldn't do anything to cover its debt. America has enormous physical resources, a gigantic population, and technical superiority. It's also the most powerful nation that is actually trusted by the other MDCs. If anyone tries to fuck with us they will learn how fickle American justice is when our country is threatened.

    Just ask al Qaeda....

    Also Greece had absurd social policy. Retirement at 55? Maybe for blue collar laborers, but I don't see it for white collar workers. The other MDCs can't point fingers at America like they do at Greece... unless we don't raise our taxes like they have. Americans generally agree that taxes on the wealthy need to go up, just look at the polls.

    Whitmont some magical thinking is necessary to face the day. Reality in its most brutal form is too tough for our emotions to handle. But I agree with you that greed is killing this country.

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    The thing about these debts is that they don't need to be paid off. They just need to be reduced or at least stagnated relative to nationwide GDP.

    Also, I don't agree with this talk about the US being a degenerated country in any general sense. It is the country with the best educational institutions and highest GDP per capita among any set of areas of a comparable scale. Europe doesn't come close to competing in either department. Where most countries are struggling for their survival, the US has mainly it's unprecedentedly high standard of living to lose. As for China, it is showing tons of danger signals and a lot of experts are saying it is plainly in a growth bubble. It is a highly export dependent country that overstretches itself by enforcing a government dictate on it's market:


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    Quote Originally Posted by aixelsyd View Post
    What redeeming values the U.S. had back then to get itself back on foot are pretty much gone, imo. Let's face it, the country is rotting from the top down and you reap what you sow. I really don't believe there is a light at the end of the tunnel in this one. I sincerely hope I am wrong, but I don't see it. With the level of corruption, delusion, the debt, and so forth, I don't see why my country will rise above this or why it should unless the collective attitude changes because collectively, there is a lot of arrogance, foolishness, waste, and just a lot of good being squandered. Not to sound like a moralizing wind-bag, but I really don't see things getting better unless some huge changes occur, those changes starting with the general American population.
    at the end of this is the exact point when uncle sam puts a cheeseburger in your hand and gently taps you on the butt.
    asd

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    The overall trend over most of history shows China as one of the world's foremost superpowers (if not THE foremost). The "bubble" is Western European expansion over the last 250 years.
    It was in the reign of George III that the aforesaid personages lived and quarrelled; good or bad, handsome or ugly, rich or poor, they are all equal now.

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    I had been wondering what would happen to China if the US and also Europe greatly reduced consumption of their exports...but then I just figured that there are many other potential consumers out there.

    I think the real issues where China is concerned is how long it will be able to stable, whether the limitations it places on its citizens will impede its progress relativve to other countries, and whether the overexploitation of its water supplies will have an effect.

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    Quote Originally Posted by Jarno View Post
    America has seen 2 world wars, a couple of depressions, oil crisis etc.

    And it has always come up as a winner. Why would this time be different?
    You didn't absorb the cliffnoties did you?

    Very simply, because past performance doesn't guarantee future success.

    Everything is different this time. After WWI and WWII Asia and Europe were exhausted and the US, who had used the wars to grow it's industry and banking sectors, could ride a great wave of manufacturing and the dollar world reserve currency to great success.

    Back then the US had CAPITAL, ie it had MONEY, it was a CREDITOR nation. Today the US has DEBT and negative deficits like the trade deficit that is bleeding the US dry of jobs and profits... If you don't understand that difference you understand nothing.

    The Great Depression was a result of the European Empires going bankrupt due to WWI debts more than anything else, they couldn't pay back the debt they owed US banks... (England and France ganged up on Germany to pay war reparations so they could pay back what they owed the US... Only the debt was far more than Germany could ever repay, so Germany defaulted and went Nazi...).

    Yes the Depression hit the US hard but it wasn't a US problem at it's core. Today things are different. The Depression today has it's epicenter in the US. The bubbles in Greece, Ireland, Iceland, Spain etc had it's base in easy credit originating from dollar printing in the US. When the US bubble popped those bubbles popped too causing great distress in the Eurozone.

    Those days are long gone, the US has sank too deep into debt and exhausted the dollar (there are simply too many dollars worldwide and too many promises made).

    The US is a giant bubble, the largest ever, and it WILL pop sooner or later. What we are seeing today is that the bubble has popped but the US is trying to reinflate for dear life only they cannot keep doing that forever. The US WILL have to make cuts and shrink, only everything in the US economy is geared towards eternal growth and a deflating cycle will take a large part of the economy with it, it is that fact the US is trying to avoid at all costs. But it will happen anyway.
    INFp

    If your sea chart does not match reality, go with reality (Old mariner saying)



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    Quote Originally Posted by labcoat View Post
    The thing about these debts is that they don't need to be paid off. They just need to be reduced or at least stagnated relative to nationwide GDP.
    Duh... of course the US needs to get it's debts UNDER CONTROL. That is the whole problem, the US is too deep in debt and cannot meet it's debt obligations.

    In other words, the US has to shrink. Duh, again.

    Quote Originally Posted by labcoat View Post
    Also, I don't agree with this talk about the US being a degenerated country in any general sense. It is the country with the best educational institutions and highest GDP per capita among any set of areas of a comparable scale. Europe doesn't come close to competing in either department. Where most countries are struggling for their survival, the US has mainly it's unprecedentedly high standard of living to lose. As for China, it is showing tons of danger signals and a lot of experts are saying it is plainly in a growth bubble. It is a highly export dependent country that overstretches itself by enforcing a government dictate on it's market:

    YouTube - China is the biggest Bubble in History
    China may well be the biggest bubble in History, if you overlook the US...

    Is that some kind of weird perverted comfort for the US to think "wohoo they (China) are in the shitter too?"

    The US is feeding the bubble in China like crazy, the Quantitative Easing programs are flowing dollars directly from the Feds printing presses through the Wall Street banks into GROWTH markets OVERSEAS, ie nations where the return is higher than in the US ZIRP economy (China)... Do you see why foreigners are so pissed off with the US Fed?

    One in eight (15%) of Americans face STARVATION without US government food programs. The "unprecedented" high living standard of the US is largely because the rich elite is hugging unfathomable wealth and it is very distorted thanks to the dollar system. In other words...

    The GDP per capita is a bubble figure blown up by the US dollar hegemony. Remove that bubble support and look at the figure is sober daylight.
    INFp

    If your sea chart does not match reality, go with reality (Old mariner saying)



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    Quote Originally Posted by Wittmont View Post
    Everything is different this time.
    The 4 most costly words in history are: "this time it's different"

    - John Templeton


    America has been a winner sinds 1725.
    Betting against america has always been proven to be a losing bet.

    - Warren Buffet


    @ wittmont: what I'm trying to say is that in history, every time people said, this time it's different, when it was not. Like every decade there is a bunch of people who kill themselves because they say that the end of the earth is near. It never happens.

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    Quote Originally Posted by Jarno View Post
    The 4 most costly words in history are: "this time it's different"

    - John Templeton


    America has been a winner sinds 1725.
    Betting against america has always been proven to be a losing bet.

    - Warren Buffet


    @ wittmont: what I'm trying to say is that in history, every time people said, this time it's different, when it was not. Like every decade there is a bunch of people who kill themselves because they say that the end of the earth is near. It never happens.
    Heh, that is what they said when they were blowing the housing bubble too... Everything is different this time, this bubble will never pop...

    But of course it did. All bubbles must, by definition, pop. And the fact that the US is in a bubble this time cannot be denied. Now we can talk about how far the US will shrink, but shrink it must.

    Buffet is one of the winners on this game. He is one of the elite that has turned the US into a Banana Republic to put all other Banana Republics to shame. He is part of the 1 % that controls 24% of American income (2007 figures), that owns 34 % of American's private net worth... (the bottom 90 % owns just 29 %)... the top 10 % that owns 70 % of the US' total net worth. No Latin American country can brag about such Banana figures. It didn't use to be this bad, not until "trickle-down" economics and Globalization began in the 1980's...

    http://www.stateofworkingamerica.org..._05_Wealth.pdf

    To see this oligarch as some sort of a role model or hero is perverse, of course he is going to brag about the system that enriches him like crazy, on behalf of most Americans.

    What is different this time, is that the US elite has started to cannibalize it's own people, eating it's own middle and working classes to preserve the illusion of perpetual growth. The housing bubble has so far taken $8 Trillion worth of equity, siphoning it to the top through the Fed and the Wall Street banks. When the US leadership is eating it's own nation how can things improve? The only thing that "trickles down" is debt and Police State laws.
    Last edited by Wittmont; 11-19-2010 at 11:53 PM.
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    CPI index data for this quarter are just in... 0.6% core inflation relative to last year, lowest it's been since some time in the fifties... A diminutive 1.2% inflation when including the volatile commodity prices that randomly help your case (they definitely don't help your case when a 2.5 year benchmark is used). This is after the bulk of all QE produced money is already circulating in the economy. Looks like your silly "Hyperinflation Now" prediction crashes and burns.

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    Quote Originally Posted by Jarno View Post
    America has been a winner sinds 1725.
    Betting against america has always been proven to be a losing bet.

    - Warren Buffet
    Rome has been a winner since 508 BC.
    Betting against Rome has always been proven to be a losing bet.

    - Romulus Augustus
    It is easier for the eye of a camel to pass through a rich man than for a needle to enter the kingdom of heaven.

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    Quote Originally Posted by Jarno View Post
    The 4 most costly words in history are: "this time it's different"

    - John Templeton


    America has been a winner sinds 1725.
    Betting against america has always been proven to be a losing bet.

    - Warren Buffet
    Large nations, kingdoms and empires have been rising and falling since they first emerged. Why would it be different for America? Or why would it be different this time?

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    Quote Originally Posted by labcoat View Post
    CPI index data for this quarter are just in... 0.6% core inflation relative to last year, lowest it's been since some time in the fifties... A diminutive 1.2% inflation when including the volatile commodity prices that randomly help your case (they definitely don't help your case when a 2.5 year benchmark is used). This is after the bulk of all QE produced money is already circulating in the economy. Looks like your silly "Hyperinflation Now" prediction crashes and burns.
    Nothing random about it.

    According to the CPI Energy commodities have increased 9.9 %
    Fuel oil 14.5 %

    Here is a good graph that gives an overall picture how the oil dollar price has changed dramatically. We are again going towards a new, similar spike to the one that caused the previous crash. Note how the price was very stable up until the beginning of the 2000's when the US started funny money games under Dubya.

    Crude Oil (petroleum) - Monthly Price - Commodity Prices

    The reason for this is largely the new Dollar Carry Trade. US corporations invest overseas looking for more return to get out of the Zero Interest environment at home...(from a recent article in Bloomberg:

    “You’re seeing leakage from quantitative easing,” said Stephen Wood, chief market strategist for Russell Investments in New York, which has $140 billion under management. “That leakage is going into emerging markets, commodity-based economies, commodities themselves and non-U.S. opportunities.

    U.S. corporations have issued more than $1.07 trillion in debt so far this year, according to data compiled by Bloomberg.
    ...

    Fisher said “far too many” large corporations told him that “the most effective way to deploy cheap money [read: freshly printed dollars - my comment] raised in the current bond markets or in the form of loans from banks, beyond buying in stock or expanding dividends, is to invest it abroad.”

    Bernanke's `Cheap Money' Stimulus Spurs Corporate Investment Outside U.S. - Bloomberg
    So in effect the same forces that caused the last Commodity Bubble in 2007 are at play (ie Wall Street and large coorporation money games). Of course when US companies invest overseas instead of domestically it is hard to see how the US money printing is going to help Americans find jobs.

    And so, again, the rich elite make more profits for themselves, while saddling the American people with more debt... and more debt... and more debt... pushing the existing debt into the future and adding new debt on top of the old debt.
    Last edited by Wittmont; 11-21-2010 at 12:29 AM.
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    Quote Originally Posted by Rick View Post
    Rome has been a winner since 508 BC.
    Betting against Rome has always been proven to be a losing bet.

    - Romulus Augustus
    I agree that america will likely fall down at some point in the future.

    The problem with people is, they always think it will be in their decade that it happens.

    99% of those decades it wasn't the case...

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    China has started a strategy of cutting out the dollar in it's international trade deals.

    Turkey and Russia have recently signed deals to trade with China in their own currencies.

    Turkey, China Shun the Dollar in Conducting Trade - WSJ.com

    China, Russia quit dollar in trade settlement - People's Daily Online

    Baibai dollar hegemony. Each such deal shrinks the US dollar economy and cuts at it's world reserve currency status. The days of an easy free ride for the US is fast coming to an end.
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    Quote Originally Posted by Wittmont View Post
    China has started a strategy of cutting out the dollar in it's international trade deals.

    Turkey and Russia have recently signed deals to trade with China in their own currencies.

    Turkey, China Shun the Dollar in Conducting Trade - WSJ.com

    China, Russia quit dollar in trade settlement - People's Daily Online

    Baibai dollar hegemony. Each such deal shrinks the US dollar economy and cuts at it's world reserve currency status. The days of an easy free ride for the US is fast coming to an end.
    you can read such a horror story everyday about every country if you want.

    Fact is, economy is very hard to predict. Thinking you can derive any certainty out of those stories is naieve, though most people do it.

    Next to that, most events that really matter are random/unpredictable events, (911 etc) the predictable events you read in the news paper usually don't make much of a difference.

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    Quote Originally Posted by Jarno View Post
    you can read such a horror story everyday about every country if you want.

    Fact is, economy is very hard to predict. Thinking you can derive any certainty out of those stories is naieve, though most people do it.

    Next to that, most events that really matter are random/unpredictable events, (911 etc) the predictable events you read in the news paper usually don't make much of a difference.
    Not really.

    In 2007/2008 the US had an epic crash in their economy, nothing like it, apart from the Great Depression, has ever happened in it's history. That is a historical fact. It is also fact that this last crash signalled the end of the current world economic model which has helped keep the US as the number 1 economy for close to a century.

    It is also a fact that China is projected to overtake the US economy within two or three decades (or sooner) as the world's largest economy.

    It is a historical fact that such changes usually are very very turbulent matters in world history. WWI started the moment Germany became more powerful economically than Imperial Britain, WWII was a result of the resounding economic shockwaves of that clash, which, through the Great Depression and subsequent economic ruin of Germany, Britain, France, Russia, Japan and China in WWII made the US the undisputed economic and industrial leader of the world.

    Today China is the undisputed industrial leader of the world, and just like the US after WWII, China is rapidly gaining in power world wide diplomatically and economically. Already today China is a more important customer to Germany and Japan than the US is.

    It is very easy to follow such momentums and it has nothing to do with naivety but with observation and knowledge of basic historical facts. There were a LOT of people that predicted the 2007/8 crash, but most people who only read the main stream media had no clue.

    Similarily, it is not hard to say with certainty that if the US (and parts of Europe) do not clean out the bad debts and bankrupt banks, there will be no economic recovery - and the day China takes over as the number one economy may be drastically put forward.

    Atm, instead of fixing it's own economy, the US is trying to crash the Chinese (and other exporter economies), now what will happen there is harder to say, but my bet is that the US will come up short again and find itself deeper in the hole. Trying to crash everybody else to keep oneself at the top even as one is crashing is not a very endearing strategy.
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    Quote Originally Posted by Wittmont View Post
    Not really.

    In 2007/2008 the US had an epic crash in their economy, nothing like it, apart from the Great Depression, has ever happened in it's history. That is a historical fact. It is also fact that this last crash signalled the end of the current world economic model which has helped keep the US as the number 1 economy for close to a century.

    It is also a fact that China is projected to overtake the US economy within two or three decades (or sooner) as the world's largest economy.

    It is a historical fact that such changes usually are very very turbulent matters in world history. WWI started the moment Germany became more powerful economically than Imperial Britain, WWII was a result of the resounding economic shockwaves of that clash, which, through the Great Depression and subsequent economic ruin of Germany, Britain, France, Russia, Japan and China in WWII made the US the undisputed economic and industrial leader of the world.

    Today China is the undisputed industrial leader of the world, and just like the US after WWII, China is rapidly gaining in power world wide diplomatically and economically. Already today China is a more important customer to Germany and Japan than the US is.

    It is very easy to follow such momentums and it has nothing to do with naivety but with observation and knowledge of basic historical facts. There were a LOT of people that predicted the 2007/8 crash, but most people who only read the main stream media had no clue.

    Similarily, it is not hard to say with certainty that if the US (and parts of Europe) do not clean out the bad debts and bankrupt banks, there will be no economic recovery - and the day China takes over as the number one economy may be drastically put forward.

    Atm, instead of fixing it's own economy, the US is trying to crash the Chinese (and other exporter economies), now what will happen there is harder to say, but my bet is that the US will come up short again and find itself deeper in the hole. Trying to crash everybody else to keep oneself at the top even as one is crashing is not a very endearing strategy.
    You seem to use the word fact a lot, also in conjunction with future events. Those are rather speculatives than facts. You seem to predict a lot, but every economist knows it's almost impossible to say anything sane even about next years economy. Often the reason that some people 'predicted' things right in the past, is that they predicted a crash every year. And as the saying goes, a non working watch will be perfectly right once during the day.

    But if you are a quite certain of what you read and say, you might consider 'shorting' the US stockmarket (speculating on downward momentum) and become a rich man.

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    But if you are a quite certain of what you read and say, you might consider 'shorting' the US stockmarket (speculating on downward momentum) and become a rich man.
    S/he's predicting hyperinflation. I'm assuming s/he doesn't think the DOW will go down in terms of Weimar dollars (in which case shorting is completely useless cause there'd be no bank/broker left to receive your gains from). A bet on inflation means buying commodities or equities, but betting on a simultaneous decrease in industrial/economic activity means you'd be safer in precious metals than in anything else. Betting on societal collapse also means you're best off buying goods physically rather than just the paper that entitles you to it.

    If high inflation is really on the way (I personally think some more deleveraging comes first, but that aside), I think silver is the best thing to invest in. It's an extremely interesting metal for several reasons. It's one of the rarest elements on earth and is projected to go "extinct" in the coming 10 years. There is less of the stuff above ground than there is gold. It's an industrial metal, meaning it is being consumed (rapidly) rather than hoarded. It's price is also rumored to be being manipulated downward by J.P. Morgan and most of the trading being done in ETFs is rumored to be completely fictional (i.e. there is not real silver to claim with the paper). On top of all this, it's an inflation hedge.

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    Quote Originally Posted by labcoat View Post
    S/he's predicting hyperinflation. I'm assuming s/he doesn't think the DOW will go down in terms of Weimar dollars (in which case shorting is completely useless cause there'd be no bank/broker left to receive your gains from). A bet on inflation means buying commodities or equities, but betting on a simultaneous decrease in industrial/economic activity means you'd be safer in precious metals than in anything else. Betting on societal collapse also means you're best off buying goods physically rather than just the paper that entitles you to it.

    If high inflation is really on the way (I personally think some more deleveraging comes first, but that aside), I think silver is the best thing to invest in. It's an extremely interesting metal for several reasons. It's one of the rarest elements on earth and is projected to go "extinct" in the coming 10 years. There is less of the stuff above ground than there is gold. It's an industrial metal, meaning it is being consumed (rapidly) rather than hoarded. It's price is also rumored to be being manipulated downward by J.P. Morgan and most of the trading being done in ETFs is rumored to be completely fictional (i.e. there is not real silver to claim with the paper). On top of all this, it's an inflation hedge.
    Are there any subjects that you don't know anything about?

    But yeah, the hyperinflation is not really an issue. USA is scared about deflation. That's probably why they even like it when inflation goes up somewhat.

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    thanks for making this thread. it gives me a lot to look into.

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    Quote Originally Posted by Ryu View Post
    thanks for making this thread. it gives me a lot to look into.
    Share your opinion when ready.

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    Quote Originally Posted by Jarno View Post
    You seem to use the word fact a lot, also in conjunction with future events. Those are rather speculatives than facts. You seem to predict a lot, but every economist knows it's almost impossible to say anything sane even about next years economy. Often the reason that some people 'predicted' things right in the past, is that they predicted a crash every year. And as the saying goes, a non working watch will be perfectly right once during the day.

    But if you are a quite certain of what you read and say, you might consider 'shorting' the US stockmarket (speculating on downward momentum) and become a rich man.
    The Fed and the big Wall Street investment banks play the Stock market like a fiddle. I am nowhere near good enough, or well connected enough, to know the ins and outs of stock trading.

    I am not speculating so much as pointing out trends and momentums. Just like there was a geosociologist that predicted the collapse of the Soviet Union accurately based on demographics it is possible to predict the struggle of the US economy based on economic basics and fundamentals.

    If a nation is deep in debt and sinking deeper into debt unable to extract itself it is not hard to see it is in trouble long term and even short term in this case. The fundamental mechanisms the US has used to propel it's economy up until this point no longer work and there is no alternative in sight. What conclusion do you draw based on that?

    To pretend everything will be ok is magical thinking... If you look at historical precedents to the position the US finds itself in today then EVERY SINGLE ONE OF THEM points to a very rough ride ahead for the US. NO NATION EVER has managed to do what the US is trying to do.
    INFp

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