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Worried about the future of the U.S....
Old 08-22-2008, 01:39 PM   #1
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Worried about the future of the U.S....

I'm a economics noob - sorry if my comments make no sense (engineering major).

I can't stop but wonder Where do all the money is coming from? Govt/Fed is paying to help: failed banks, financial institutions, bad mortgages, national debt, failing auto-industry, stimulus checks

Can I get a hold of the machine the govt/fed is using? they seem to be just pumping out money like there is no tomorrow - why not just give us all a billion bucks?

so much for the gold-standard...

I wonder if our 100 bills will become toilet paper in the near future with all this inflation.
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Old 08-22-2008, 01:41 PM   #2
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Easy question to answer: part of the machine that makes money for the fed is YOU.

The other part is inflation. Which erodes YOUR money.

Works pretty well as long as everyone keeps working and handing half their money over, and inflation doesnt get TOO out of hand.

By the way, on the other end of this system are hordes of guys-in-ties who screwed the whole mess up, received their $50M salaries anyhow, and then got paid $100M to go away.
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Old 08-22-2008, 02:34 PM   #3
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Naaah, other nations & multinationals have too much to lose if the US goes down.
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Old 08-22-2008, 11:33 PM   #4
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By the way, on the other end of this system are hordes of guys-in-ties who screwed the whole mess up, received their $50M salaries anyhow, and then got paid $100M to go away.
"NIce economy yiz got there.. be a shame if I was ta keep breakin' it."

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Naaah, other nations & multinationals have too much to lose if the US goes down.
Uhm, and what exactly is their power to do anything about it? Those Sovereign Wealth Funds have been pumping money into US banks with little result...
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Old 08-23-2008, 01:15 AM   #5
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My IRA equities are 50/50 US/foreign. I have a small foreign bond holding now.

What else can be done?
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Old 08-23-2008, 11:57 AM   #6
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Naaah, other nations & multinationals have too much to lose if the US goes down.
It is easy to destroy liquidity and even a financial structure, but capital endures. Would there be any fewer houses if they all went through serial bankruptcies until they were priced at a market clearing price?

Ysterday I was walking down the street noticing all the cranes on almost every block. How could prices fall? This stuff is expensive to build. The answer is bankruptcy destroys price structure and resets the price of everything-land, buildings, the whole thing. Some physical capital wold be destroyed too- in that some buildings would sit around half finished for too long to be of any use.

Of course this is massively de-stabilizing and if it ever went into full mode we would almost certainly get something more even more radical than Barack and Joe.

Ha
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Old 08-23-2008, 12:56 PM   #7
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Of course this is massively de-stabilizing and if it ever went into full mode we would almost certainly get something more even more radical than Barack and Joe.

Ha
Like FDR perhaps?
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Old 08-23-2008, 01:14 PM   #8
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Like FDR perhaps?
My thought is that today social realities are such that a 30s appropriate response would not be where the nation would turn.

If it ever happens, we shall see! Also, in what sense was the 30s still democratic or representative government? Looking at the assumption of power by the president during peace time one wonders how this should be classified.

Ha
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Old 08-23-2008, 03:44 PM   #9
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Where do all the money is coming from?
click on ladelfina's "money as debt" link found here:

The Lifting of the Veil

ok, so that explains how money appears out of thin air, but what i don't understand about money is where does it all go? aren't there some laws of conservation of money? does it just vanish back into thin air? doesn't seem much substance in the stuff. odd thing to build a society on, huh?
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Old 08-23-2008, 04:19 PM   #10
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failed banks, financial institutions, bad mortgages, national debt, failing auto-industry, stimulus checks
Without this stuff (and a lot more) finance/investing/financial planning would be a bigger bore that it already is. These items are great motivators to get the short term investors and speculators off their a## and do some trading/market timing while others (including me) sit back and wait for the markets to continue to do their dance as thy always have.
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why we are in trouble
Old 08-24-2008, 08:19 PM   #11
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why we are in trouble

Hi,

There is a huge manipulation market going on here. The chinese have a lot of the money caught up by buying treasuries. They are basically manipulating the rate .

The issue is that gold needs to be bought back and created scarce of rather than paper money . The US has finally realized this and has stopped minting the gold coin and hopefully they can recover.

The issue is that a lot of people got used to living on fancy credit like -- credit cards with balance transfers , reverse mortgages.

There is no control on the salary of the top executives where John Thain etc dont really know a lot without the people surrounding him and he gets a 37% increase and the rest a squeeze in their pay check.

No CEO deserves more than 4M a year and that is mighty compensation. If they limit this then we can see a huge improvement in the economy with a lot of people not loosing their jobs.

This is just my opinion.

thanks
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Old 09-05-2008, 09:40 AM   #12
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The money is coming from the US selling its assets to foreign nations. You can't just print off money or you get hyper inflation. The US dollar is backed by the combination of present and future US assets. The US is selling the farm and mortgaging the future to emerging markets such as Saudi Arabia, Dubai, Korea, and China. That's why they are so willing to take positions in you banks, ports, and major corporations at discount pricing. They are smart enough not to take majority stakes, just a whole lot of minority positions that are adding up. Same is going on up here in Canada, but it's a different set of countries. When all our high paying manufacturing jobs have been contracted to third world countries we will be left with engineering and infrastructure corporations, financial and service industries. The engine of the west will be hollowed out and emerging markets, (specifically India and China) will take our technology and replace our corporations with a home grown product.
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Old 09-05-2008, 09:58 AM   #13
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The money is coming from the US selling its assets to foreign nations. You can't just print off money or you get hyper inflation. The US dollar is backed by the combination of present and future US assets. The US is selling the farm and mortgaging the future to emerging markets such as Saudi Arabia, Dubai, Korea, and China. That's why they are so willing to take positions in you banks, ports, and major corporations at discount pricing. They are smart enough not to take majority stakes, just a whole lot of minority positions that are adding up. Same is going on up here in Canada, but it's a different set of countries. When all our high paying manufacturing jobs have been contracted to third world countries we will be left with engineering and infrastructure corporations, financial and service industries. The engine of the west will be hollowed out and emerging markets, (specifically India and China) will take our technology and replace our corporations with a home grown product.
I agree with you. This is the trend. China is well guided and focused in this regard IMHO.
Trends can and do change so there is hope.
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Old 09-05-2008, 10:33 AM   #14
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The Chinese think and plan in terms of generations.

Americans think and plan in terms of the next quarter, or the brighter ones a few years.

The outlook is bright for the Chinese. Not so bright for Americans.

Inevitably, the piper will be paid.
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Old 09-05-2008, 04:19 PM   #15
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The Chinese think and plan in terms of generations.

Americans think and plan in terms of the next quarter, or the brighter ones a few years.

The outlook is bright for the Chinese. Not so bright for Americans.

Inevitably, the piper will be paid.
The Chinese are smart and hard working, but they too have problems.
Americans are smart and hard working, and we know that we have problems.

I think if we can some moderately intelligent changes we might do fine for a very long time.

Somehow people are going to have to figure out that incessant arguing about who gets what part of the pie is a lot less important than being sure we are good at baking pies, and selling pies, and saving some pie ingredients for tomorrow.
We may have to endure a Democratic Administration or two before this sinks in once again.

Ha
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Old 09-05-2008, 06:49 PM   #16
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Two things that we in the US have been singularly poor at over the years are

1. Making sensible choices among demands for limited resources. For so many years, we have lived in such abundance that no choices were necessary. e.g. -- We want to have big powerful cars AND cheap gas AND pristine offshore waters. Times are changing and we are approaching the choices that need to be made on an ad hoc, irrational basis.

2. Properly evaluating risk. We irrationally fear things that have very low risk, which leads us to spend obscene amounts of money to obtain imperceptible reductions in said risks. Conversely, we tolerate some incredibly risky activities without a second thought.

I see these two traits as major stumbling blocks to improvement.
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Old 09-05-2008, 10:45 PM   #17
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Two things that we in the US have been singularly poor at over the years are

1. Making sensible choices among demands for limited resources. For so many years, we have lived in such abundance that no choices were necessary. e.g. -- We want to have big powerful cars AND cheap gas AND pristine offshore waters. Times are changing and we are approaching the choices that need to be made on an ad hoc, irrational basis.

2. Properly evaluating risk. We irrationally fear things that have very low risk, which lead us to spend obscene amounts of money to obtain impercitible reductions in said risks. Conversely, we tolerate some incredibly risky activities without a second thought.

I see these two traits as major stumbling blocks to improvement.
Two very interesting and cogent thoughts.

Re #1: I very much agree. It's been interesting to see the changes in the culture that have come about in the last 6 months or so due to the economic turmoil and the need for many to finally start living within their means.

Re #2: an interesting point that's not been made enough lately. It's quite amazing the amount of resources we've been dedicating to try to extinguish the small risks while many still create extraordinary risks (excessive speed and recklessness on the roads as one example) and while our infrastructure, etc. erodes.
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Old 09-06-2008, 08:49 AM   #18
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The Chinese think and plan in terms of generations.
Horseknuckles. If that were true, then why are they going through serial bubbles and busts? (Stocks, real estate, now gold...)

The same used to be said of the Japanese. Haven't heard it lately for some reason.
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Old 09-06-2008, 09:21 AM   #19
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Japan, a nation of about 125 million, is the second largest economy in the world. Granted, they've had some bad years, but they've still done pretty well for themselves. They're smart, hardworking people, and they're not out of the game yet.

Tom
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Old 09-06-2008, 10:51 AM   #20
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excessive speed and recklessness on the roads
This kills me. More americans are killed on our roads every year than died in the vietnam war.

I dont drive that much, since everything is nearby...but every day I see a dozen people do ridiculously dangerous things with no net benefit or gain to themselves.

People drive like they're flying a plane in Top Gun. Their downside is maybe getting a ticket for a couple of hundred bucks every few years.
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