January 25, 2008
Stimulus: Good, Bad, and Ugly
From the meeting of the world’s elites in Davos, Switzerland to working American voters and their politicians, the economic stimulus plan having passed the House is creating a very positive stir as Americans look forward to getting some cash back from their taxes. Stock markets around the globe rebounded. The hope is Americans will rush out and buy American made products and American based services, and businesses will apply their kickback to hiring more employees. Sounds Good! But, is it?
The Bad! - This was an immensely compromised proposal. Economists from Bernanke to college professors were in almost unanimous agreement as a result of previous research, that economic stimulus is most effective when injected into the population which will have the greatest propensity to spend it all on consumables and services. The reasoning being that such a massive expenditure will create demand for business products and services, and in turn prevent rising unemployment, which would slow the economy and consumption down, even further.
The 2001 tax rebates didn't have the all the oomph! in stimulus politicians had hoped for. The reason is that many of the Middle Class instead of going shopping, used the funds to pay down their credit cards. No stimulus effect for employment or business from that. But, here, the politicians are agreeing to make the same mistake. Part of the compromise was that Democrats would drop their call for increases in food stamps and unemployment benefits.
There is no question, food stamp recipients and the unemployed would have been the most likely group to go shopping with the funds of the stimulus package. It's not clear why Republicans insisted these people be dropped from the stimulus, but, a few guesses are readily available. Increasing food stamps would increase eating, and poor people are already the most likely to be obese. And the unemployed would be less motivated to seek reemployment, if their unemployment benefits were extended. Clearly however, such rationales, even if true, undermine the express purpose of the stimulus idea, to stimulate consumer activity in a slowing growth economy.
Democrats in turn accepted Republicans offer to drop their demand for businesses to be refunded taxes previously paid. Which is rational, since the economic slowdown is not a result of business not having enough profits or capital to continue operating. Their problem is they don't have enough customers putting in orders. Yet, this seriously compromised bill passed by the House, instead provides businesses with $50 billion in accelerated depreciation (tax deductions they wouldn't have been able to claim until later years) with the hope that the tax savings will cause businesses to invest those savings in new plants and equipment. Whether they do, or not, is debatable.
What is clear is that the government is reducing its revenues yet again, increasing the deficit back up to more than a quarter trillion dollars with this $150 billion, hopefully partially effective, economy stimulus plan. Ardent fiscal conservatives might argue it would be warranted if the entire $150 billion were dedicated to stimulating the economy with maximum efficiency, but that is clearly not the case. As much as $80 billion of the package could have no stimulative effect at all on the economy because of credit card pay downs and businesses increasing profit margins instead of productive capacity and employees. That would be $80 billion wasted on purposes never held out to the public as justification for increasing the national debt.
The Ugly! - The ugly truth about this angelic bi-partisan fever that swept over the House of Representatives is that they are all facing reelection in November and they are all attempting to buy votes from their constituents back home. This accounts for the compromises, and the targeting of who will benefit, and who won't. The very poor in this country don't generally vote.
So, politicians could exclude the poorest, and did; despite the fact that they, more than any other group of Americans, would have used the money for the greatest stimulative effect upon the economy, buying food, medicines, doctor visits, and other American based products and services as opposed to imported conveniences and plastic gadgets from China. (Congress refused to require labels on foods imports insuring consumers can't tell if they are buying American or Chinese, when buying Swiss Cheese.)
The Senate has yet to debate and deal with this package. Only about 1/3 of the Senate is up for reelection this year, which means 2/3 won't be as pressured by the election year to rubber stamp the House version of the Bill. Additionally, the Senate tends to be the more deliberative half of the Congress and therefore, more likely to debate the merits and weaknesses of the House proposal as discussed in this article.
Should there be sufficient Democratic and Republican Senators objecting to the weaknesses, so as to avoid public reaction against one party over the other, the potential exists for a better version of the Bill with more stimulative impact and insurance being produced. It would then be up to the Conference Committee to resolve the differences between the two versions of the Bill. And then up to the President to sign or veto it. (Political hint: Anyone believe Bush would veto any version of this Bill which would rescue the economy given the short time he has to create some kind of positive legacy?)
There are a number of potential political twists and turns ahead for this proposal. But, they remain only potential, and hardly guaranteed; as the 800 lb. gorilla pushing this bill through is the election cycle well underway. This was in evidence in last night's Republican debate in which the candidates agreed the stimulus package was a needed start but, that it didn't go near far enough to cut taxes and increase the national debt even further.
One has to wonder why the presidential hopefuls still don't get why the tax cut mantra isn't carrying the public opinion like it used to? They are for the stimulus increased spending but insist on cutting taxes further. Did they not go to public schools with basic arithmetic classes? Apparently not, considering the 3.67 Trillion dollar addition to our children's national debt over the last 7 years.
Posted by David R. Remer at January 25, 2008 11:36 AMDavid:
Thank you for the great post and timely topic. I hate to be a fly in the ointment of this rush to judgment about whether there are weapons of mass destruction, ooops I’m sorry a recessio approaching, but I think before we all launch our invasion, we need to allow some inspectors to do their work. I know the media train has already left and a recession “talk” is a done deal but I have some reservations. That doesn’t mean we wont find a recession but let me give you a few facts to chew on.
1. New unemployment claims are down. Some economist are pointing to figures that could be as high as 75,000 jobs created in january.
2. Inventories are low.
3. Profits are coming in at or above expectatiions. Look at this quote this morning from Jeremy Seigal
Most importantly, although fourth quarter earnings are expected to post a 21.2% decline from 4th quarter of last year because of the debacle in the financial sector, the other nine sectors are expected to report an extraordinary 11.6% earnings gain. There is still much to be optimistic about going forward.
4. Wednesday the head of CBO predicted no recession.
5. Bernanke predicts no recession.
I say these things to bring a context to your well written argument.
There are serious problems in Iraq. The dictator there is very poor on human rights and has proven to invade neighbors. There are reports of WWD that we need to review. Before we commit American troops we are going to allow the UN inspectors to complete their work.
I’m sorry wrong topic. There are serious issues in the economy. There are very serious credit issues that need to be addressed. There are many economists in the media that have said that there are WWD (oops) is a recession pending. (keep slipping).
Before we jump to conclusions we will learn from our experience in Iraq, and withhold judgment until the inspectors have done their work.
Craig:
You mean with Bush pushing this “package”, like he pushed Iraq?
Interesting.
Posted by: womanmarine at January 25, 2008 02:17 PMCraig said: “New unemployment claims are down. Some economist are pointing to figures that could be as high as 75,000 jobs created in january.”
Accurate, but, doesn’t mean hiring will keep pace with layoffs going forward. We will have to wait and see. Certainly, if consumers continue to rein in spending, unemployment will have to go up for domestic customer based enterprises.
“Inventories are low.”
Not in the housing market, nor the Home Depots and the like. Plus, inventories at retailers at the very high end increased in December. Consumption curtailment was across all income classes. Inventories are an after the fact indicator. They may rise, or not, depending on the efficiency of our on-time supply chain management systems.
“Profits are coming in at or above expectatiions.”
This is a most disturbing fact. And demands an answer from politicians, especially Republicans, as to why they are raising the deficit yet again in the name of business when business appears to be doing just fine in terms of profits across most sectors. If they have profits, they have reinvestment capital.
“Wednesday the head of CBO predicted no recession.”
Given the Fed’s dramatic actions and now the stimulus deficit spending, voters had better INSIST there be no recession going forward. Else, what was the point of all this?
“Bernanke predicts no recession.”
Bernanke could not say otherwise, regardless. Spooking the markets is not in his job description. Quite the opposite, in fact.
The gaping flaw in your analogy to Iraq, Craig, is that there is no way of validating a coming recession before it has arrived. It takes 6 months after a recession has begun to have enough data to declaratively state that a recession did in fact occur. Hence, regarding recessions, preemptory actions are generally called for when leading indicators point to a possible recession. Which is what the Fed did and House did.
Posted by: David R. Remer at January 25, 2008 02:35 PMwomanmarine, both parties pushed this, it is afterall, and election year, and each side figured they could score points with their constituents given this shared awareness of an election year by both parties. The Congress would have acted on this with, or without Bush. Bush is along for the ride because if the economy tanks, the last vestige of any positive legacy is gone.
Posted by: David R. Remer at January 25, 2008 02:37 PMAh, but GW “veto” Bush doesn’t have to go along with any of it. He has pushed for this and went the unprecedented mile of negotiating. Something he has rarely done.
David:
The gaping flaw in your analogy to Iraq, Craig, is that there is no way of validating a coming recession before it has arrived. It takes 6 months after a recession has begun to have enough data to declaratively state that a recession did in fact occur. Hence, regarding recessions, preemptory actions are generally called for when leading indicators point to a possible recession. Which is what the Fed did and House did.
I don’t disagree with your comments here. My concern is that the media is not expressing itself at all like you are here. Most americans believe we are in a recession.
I have no problem with a stitch in time saves nine. It is the panic and emotion of fear that I am trying to address.
This actually is a small problem. I think you will probably agree with me at least in part. The problem of the United States financially isn’t what is happening now it’s the future. It’s not the age wave, and it’s not entitlements, but rather it’s health care. Well I’m not saying the other issues are not problems to deal with, I’m saying that the small standing next to health care.
So we are in a routine slowdown, and the fed, congress and the president are on top of it, and their solution is imperfect but in the end it will work. In terms of a threat to our country, it looks like the powers that be have a good handle on things.
As you have done so well so many times, quickly we need to turn attention back to the issue that is a threat. We need to keep the focus on solving the health care crisis. A recession/slowdown isn’t a crisis (unless you are the one layed off). At least it’s not a crisis for the country as a whole. Health care is a clear crisis. It is real and it is daunting.
Your and my disagreement is that I think our government institutions will prevail and solve the issues. You are for a more dramatic approach of removing incombants. Either way, I suppose it doesn’t much matter, as long as the issue gets resolved. $150 billion is peanuts compared with some of the numbers you have brought to all our attention.
Your post is well written and timely. I hope it’s a short lived topic so you can refocus us back on the gorrilla in the room.
What is fascinating is how the larger issue, one of the best kept secrets in America, continues to be hush-hush.
Isn’t anyone a little bit curious why the economists who said the $140 Billion economic stimulus package won’t help if the people don’t spend it, and use it to pay down debt instead?
Why not?
THE GOOD PART: The proposed $140 Billion economic stimulus plan, if people spend it, in the short-term, will buy a little more time, because a time-lag is the only thing preventing a collapse of the PYRAMID scheme.
THE BAD PART: The proposed $140 Billion economic stimulus plan, in the long-term, is like trying to put out a fire by throwing gasoline on it.
The fire is actually growing bigger, and will be harder to put out later.
It is also unlikely that the out-of-control Congress will also cut spending, and the debt will grow ever larger to nightmare proportions, and inflation will increase.
Our monetary system is a PYRAMID scheme, which all collapse eventually.
It is a mathematical certainty.
In year 1950, the M3 Money Supply was $135 Billion.
By 2005, the M3 Money Supply grew to $10.15 Trillion (75.2 times more money in existence).
But, did we all become 75.2 times wealthier? No.
The problem is a result of a fractional banking system in which 90% of every new loan is new money created out of thin air.
But a LOAN = PRINCIPAL + INTEREST
But all money in existence is only PRINCIPAL.
So, where does the INTEREST come from?
The government will try to buy more time via nefarious methods.
One or more of the following must happen:
- (01) create more new money to delay the collapse of the PYRAMID (such as the recent government $140 Billion economic stimulus package in JAN-2008). However, that creates more inflation. Between year 1950 and 2005, the M3 Money Supply increased from $135 billion to $10.15 trillion (that’s 75.2 times more money).
- (02) those with money must spend more money to allow more new money to be created out of thin air (but peraonal nationwide debt is already over $20 Trillion).
- (03) more National Debt (already $9.2 Trillion)
- (04) plunder Social Security (e.g. $12.8 Trillion borrowed and spent out of Social Security)
- (05) plunder pensions (PGBC is $450 Billion in the hole)
- (06) increased productivity.
- (07) increased products and/or natural resources (e.g. oil, steel, etc.) to sell to other nations to bring money back.
- (08) the wealthy share their wealth (not likely to any significant extent).
- (09) increases taxes on the wealthy (but tax the wealthy too much, and they might up and move their wealth and businesses to another country).
- (10) increased productivity via increased population.
- (11) increased productivity via illegal immigration (cheap labor).
- (12) more bank fees (i.e. to increase reserves for more loans),
- (13) reduce taxes to encourage more spending.
- (14) reduce interest rates to encourage more spending (but this creates more debt).
- (15) foreclosures.
- (16) the PYRAMID finally collapses when there is finally too much debt and inflation to delay the inevitable collapse.
- (17) some day, to avoid the inevitable collapse, the government nationalizes the banking system, and the government can then print the money it needs (interest free), and use taxes to remove excessive money (inflation), and use spending to control deflation. And if there is too much of either, the voters will know exactly who to hold accountable. Also, change the lawful 10% usury limits to 0%. For example:
- “The government should create, issue, and circulate all the currency and credits needed to satisfy the spending power of the Government and the buying power of consumers. By the adoption of these principles, the tax payers will be saved immense sums of interest. The privilege of creating and issuing money is not only the supreme prerogative of government, but it is the government’s greatest creative opportunity. - Abraham Lincoln, assassinated President of the U.S.
With the current PYRAMID monetary system, eventually, the debt and inflation will become impossible to deal with (as with any PYRAMID scheme).
We will not be able to create more debt to create more money.
We will not be able to spend our way out of the collapse.
We will not be able to print (money) our way out of the collapse (due to inflation).
We will not be able to immigrate our way out of the collapse.
We will not be able to procreate our way out of the collapse.
We will not be able to increase productivity enough to avoid the collapse.
We will not be able to tax the wealthy enough to avoid the collapse.
We will not be able to untax our way out of the collapse.
We will not be able to maintain exponential growth.
None of this is likely to change as long as too many voters continue to repeatedly reward corrupt, FOR-SALE politicians with 95% re-election rates.
At any rate, the voters will get their education one way or another, and have the government that they deserve.
womanmarine:
Craig:You mean with Bush pushing this “package”, like he pushed Iraq?
Interesting.
Actually, not quite. More accurately, I think the current hysteria over a possible recession illustrates to all of us a part of how Iraq happened.
The actual data about the imminant future is mixed. you cannot have low initial claims of unemployment and recession. can’t happen. In addition, you can’t have low inventories and believe a recession is near. It is very hard. At the same time there is of course all of the negative news that is real from the financial companies. The information is like it was before we went into Iraq. (mixed).
Look at the media!! the obvious impression from the media is that we are in recession. In addition there is pressure to conform. There is a rush to judgment just like Iraq.
We need to learn to hold our fire a bit longer. We need to not get on the train so quickly and “let the inspectors do their job”.
Bush is not pushing recession right now, so that part is different. I am saying that the current hysteria over a possible recession gives us a clue into why our nation was led into Iraq. We are seeing a process that is not unlike the war build up.
We may enter a recession. I’m not getting on the first train out of town. I’m going to let the inspectors do their job.
Posted by: Craig Holmes at January 25, 2008 04:14 PMSupposedly it will be “good” if people go out and spend it…every poll I’ve seen puts 47-50% of people putting the “rebate” into their savings account…up to 40% of others will be using it to pay bills that have already been accrued by purchases…doesn’t look like there will be any consumers providing economic stimulation…
My “rebate” is going straight into the bank.
Posted by: Rachel at January 25, 2008 05:06 PMRachel:
Good for you!!!! I would expect the economy to be doing better by then anyway.
I think the main benefit to this stimulus package is a confidence builder than the fed, congress and the pres can work together.
Look for an unexpected positive surprise. The current emotion doesn’t match the facts. It will take a clear postive fact to get people out of their herd mentality and thinking again.
It might be the jobs report due out in a couple of weeks. there is every indication that we should get a good job report for January.
Posted by: Craig Holmes at January 25, 2008 05:49 PM“My “rebate” is going straight into the bank”
Wise move, you’re going to need it, and a whole lot more, to help offset the enormous taxes you will be paying in the very near future.
Posted by: kctim at January 25, 2008 05:54 PMSince tax season is already upon us wont a lot of us be getting tax refunds between February and May? The current plan for the “rebate”(which I guess is for the ‘07 tax year) is to start mailing them between May and August. Seems they could wait on the whole plan until mid year without to much problem or mail the rebates out with the refund checks.
Posted by: j2t2 at January 25, 2008 07:00 PMWise move, you’re going to need it, and a whole lot more, to help offset the enormous taxes you will be paying in the very near future.Yes, a whole lot more.
Maybe not this year, or next year, but eventually, when we can’t borrow, spend, tax, immigrate, procreate, and tax our way out of the the eventual collapse of this pyramid scheme.
Yet, President Woodrow Wilson destroyed that with the Federal Reserve Act in 1913, which put the international banking cartel in charge of creating the United States’ money. Later, Woodrow Wilson stated:
Isn’t there something strange about the President and many economists telling us to spend, borrow, spend, borrow, and spend some more?
I just heard one economist say a very smart thing (paraphrased) a few minutes ago: “Perhaps we should take the recession now, rather make the problem bigger later” ?
Hmmmmm … that’s liable to make some bankers and government flunkies angry, such as the likes of David Rockefeller who stated:
Craig Holmes wrote: It might be the jobs report due out in a couple of weeks. there is every indication that we should get a good job report for January.
Never mind that the replacement jobs pay less than the previous jobs. Several companies are reporting that they are planning job cuts.
And this states unemployment in the United States rose sharply last month (DEC-2007) and government figures released late Friday show the number of new jobs was at its lowest level in four years.
Still, one or two statistics doesn’t tell the whole story.
Posted by: d.a.n at January 25, 2008 07:45 PMCraig said: “I have no problem with a stitch in time saves nine. It is the panic and emotion of fear that I am trying to address.”
Well, the panic was in no small part brought on by the Fed. Reserve’s 3/4% interest rate cut, not seen in more than a quarter century. And done in an emergency meeting, no less. And that meeting was called because some crook stole 7.2 billion dollars from a European Bank, making it appear to the FED, that the global central banking system was far worse off as a result of the sub-prime mortgage spill over into the banking sectors. (Actually, when you think about it, the banking system is still shy 7.2 billion, the reason changed is all.)
“This actually is a small problem. I think you will probably agree with me at least in part.”
I will tell you whether I agree or not in 6 months. This could have been a catastrophe headed off by the prompt and steep actions, or it the data may show this was not an economic earthquake, just a heavy laden Wal-Mart semi rolling by.
“Bush is not pushing recession right now, so that part is different. “
Yes, I loved Bush’s speech. ‘The economy is strong, that is why we need emergency stimulus and the sooner the better.’ Typical illogical, thoughtless Bushism.
“I’m not getting on the first train out of town. I’m going to let the inspectors do their job.”
I am with you. And the stimulus, for the diluted effect it is going to have, could have cost half as much if politics had not gotten into the formula. The economic impact of 1 extra food stamp dollar was $1.73 in new economic activity. The economic impact of 1 dollar of business incentive, a whopping $0.23 of additional economic activity generated, perhaps, at best, $0.32.
Posted by: David R. Remer at January 25, 2008 08:51 PMCraig, I agree the long term structural threat to our economy is unfunded entitlement mandates.
Dramatic drops in GDP growth however, which may portend recession is a real threat. Recessions have a natural tendency to become vicious downward spiraling cycles. Recessions are to be avoided, or made very short lived, so that they do not create other long term structural threats like years of deficits fighting them.
I also agree, this sub-prime mortgage bubble should not be allowed to become a recession, or pop the credit card industry bubble, so that we can indeed get on with addressing the long term structural economic threat to both economy and 10’s of millions of American’s quality of living.
Posted by: David R. Remer at January 25, 2008 08:59 PMDan:
I understand your point. We did have one month of weak data. We had the same thing in September. It was revises away. Data goes through several revisions until they get all of the data in.
One months data needs to be confirmed with other data. Right now the other data is making those numbers look like an anomaly. Initial jobless claims going down is inconsistent with the figures you site.
To this data there is no evidence of a recessionary trend in the employment data.
The trend which are more like three month numbers show a slowdown.
Posted by: Craig Holmes at January 25, 2008 09:01 PMkctim said to rachel: ‘Wise move, you’re going to need it, and a whole lot more, to help offset the enormous taxes you will be paying in the very near future.”
I don’t think rachel is one of the wealthiest 1 or 5% who need to fear higher taxes from Democrats, kctim. Or, are you doing the Republican scare tactic again? Sorry, but it has all the spook of the Dumb little Casper the Friendly Ghost, these days. That wolf cry recording has been heard hundreds of times too often to be taken seriously anymore.
Posted by: David R. Remer at January 25, 2008 09:08 PMd.a.n, in a very real sense, the instant one introduces a non-commodity based currency, a pyramid standing on its apex is created. The reason our pyramid doesn’t fall over is because the right and left bases of our pyramid are resting point to point against the inverted pyramids of China and Saudi Arabia, India, and Japan. Which in turn have their bases resting against the bases of Russia, Malaysia, Taiwan, Indonesia, and Australia. Which in turn are building inverted pyramids in Eastern Europe, Africa, and S. America.
The interesting twist to this house of cards is that America’s pyramid may be the first to fall, but, we are so packed together that none of our neighbor’s pyramids will crash to their side like ours, they will only tilt and lean on ours laying on its side. Ours may be the only one to fall over completely for many decades. China, India, Russia, and Japan may just be able to keep the rest of the world’s pyramids fairly balanced on their apex. We’ll have to wait and see.
Posted by: David R. Remer at January 25, 2008 09:18 PMAnd the likes of China will make sure to take advantage of our resources to help prop their economy back up again. Just without the rights and freedom…
Posted by: Rhinehold at January 25, 2008 09:20 PMCraig, something may be amiss with the data. The housing sector has been constricting employment for more than a half year now. It was followed by no new hiring in the after market housing markets Lowe’s and Home Depot and hardwares. Now, financial institutions are laying off in ever larger numbers, and globally as well. Mortgage companies have been laying off. Realtors are finding other lower income jobs and part time jobs.
It may be that manufacturing exports are creating enough jobs to offset these other losses. But, given the GDP drop in China, that may not continue to be the case. As you say, we will have to wait and see what the revised numbers and trends show in April for Nov. thru Jan. I wouldn’t lay any bets one way or the other.
Our government has been caught too many times massaging the data to fit its political ends. A very, very dangerous activity for us all.
Posted by: David R. Remer at January 25, 2008 09:26 PM$1,200 bucks (me and my wife)? I’m thinkin Vegas Baby…..
There’s no such thing as a bad tax cut. Or a bad tax rebate for that matter. Can I have my check now?
Seriously, if they don’t give the money to me they’ll just blow it on something else. If you believe Ron Paul this stimulus might stop the invasion of Iran. At least I’ll tip the dealers and no speed boats will be harmed.
Resulting deficits will be an effective—I would go so far as to say, the only effective—restraint on the spending propensities of the executive branch and the legislature. The public reaction will make that restraint effective.
-Milton Friedman
Craig Holmes wrote: The trend which are more like three month numbers show a slowdown.Short term trends, forward or backward, don’t tell the whole story.
The long-term trend is what is important.
The more serious and long-term trends of the last 30 years are what are truly revealing … a number of things that did not all come about by mere coincidence; a number of things that are becoming increasingly obvious even to some of the most blinded.
Short-term, a $140 Billion economic stimulus may buy a little more time-lag to avoid a collapse, keeping the money supply growth slightly ahead of the debt growth, but that can’t last forever, and the eventual collapse of the pyramid money-system comes closer and closer every day. And, ironically, the $140 Billion stimulus package will bring it closer. A few economists are acknowledging this, but they are always careful to avoid acknowledgement that this has been a long time coming.
David wrote: d.a.n, in a very real sense, the instant one introduces a non-commodity based currency, a pyramid standing on its apex is created.Yes, but only if it is controlled by private banks that charge interest.
The problem with interest is that it requires more and more money to be created.
Imagine a large circle that represents all money in existence.
Now, imagine (inside the large circle) a small circle representing interest for someone loaning money and charging interest.
Before long, that interest circle becomes larger than the money in existence.
That creates the pressure to create more money, since each LOAN = PRINCIPAL + INTEREST
If the money system is controlled by the government only, and does not allow usury, the money supply becomes stable, and inflation can be controlled by eliminating some money, and deflation can be controlled by creating some money, but a stable amount of money can be achieved that is not a pyramid-scheme requiring exponential growth to avoid collapse.
The money system is now one of the nation’s major problems, thanks to President Woodrow Wilson who signed the Federal Reserve Act in 1913, giving the privately owned international banking cartel the power to create the United States money. Later, Woodrow Wilson stated:
- “I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the civilized world, no longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men.” - Woodrow Wilson, President of the U.S. 1913-1921.
The only long-term way out of this mess is what President Abraham Lincoln recommended, and William Lyon MacKenzie King, former Prime Minister of Canada, recommended. The government must control the money system, and it must eliminate usury. Usury has not only moral problems, but practical problems.
David wrote: The reason our pyramid doesn’t fall over …That’s temporary, only as long as they are loaning the U.S. more and more money to buy their low cost goods built with their cheap labor.
That’s not protection or immunity for them or us. It’s a bad thing for everyone. That will simply make the collapse worse globally (later).
We may also see foreign investors buying out troubled corporations and organizations in the U.S.
Then, the ultimate sell-out will be complete when our nation no longer belongs to us.
It’s only a matter of time.
The inevitable can be delayed a long time perhaps, and that fools a lot of people, but we’re seeing the many costs and effects, and perpetual accelarating growth can not be sustained, unless major reforms are successful.
David wrote: … is because the right and left bases of our pyramid are resting point to point against the inverted pyramids of China and Saudi Arabia, India, and Japan.Yes, as long as they continue to loan us more money to buy their products made with cheaper labor (more productivity), and we squeeze out a bit more here and there with illegal immigration, more borrowing, more money printing, more debt, and a stable flow of oil. Interrupt one or two things, and we may not be able to delay the inevitable collapse any longer.
Also, if China can’t keep sustain their exponential growth, which will not be possible for ever, they will be in a very bad way too.
That is, 3% of growth this year is more than the 3% of last year, since 3% of this year is larger than 3% of the previous year.
That’s exponential growth.
That’s accelerating growth.
Perpetual, exponential, accelerating growth and pyramid money systems are not sustainable.
What ever happened to sustainability?
What ever happened to ZERO growth?
What ever happened to ZERO population growth?
Perpetual accelerating growth and sustainability are not compatible.
That is why we see more National Debt, more nation-wide personal debt, more corporate debt, more borrowing, more spending, more money-printing, pressures to increase productivity, pressure to increase illegal imigration (cheap labor), pressures to lower interest rates to make credit easier to get for people already in debt up to their eyeballs, more pressures to plunder pensions (e.g. PBGC $450 Billion in the hole) and Social Security Surpluses ($12.8 Trillion borrowed and spent from Social Security), resulting in increased foreclosures, inflation, unemployment, and now a $140 Billion economic stimulus package.
David wrote: Which in turn have their bases resting against the bases of Russia, Malaysia, Taiwan, Indonesia, and Australia. Which in turn are building inverted pyramids in Eastern Europe, Africa, and S. America.That’s a bad thing. That will simply make the collapse global and worse, since all of these nations have pyramid money systems too, and tinker with their currencies for an advantage. However, the U.S. has more debt, massive entitlements, energy vulnerabilities, and a U.S. Dollar that is already falling drastically against all of those other currencies.
David wrote: The interesting twist to this house of cards is that America’s pyramid may be the first to fall, …Maybe. I predict the U.S. will be first, but it is not far fetched that it could happen in China first.
David wrote: … but, we are so packed together that none of our neighbor’s pyramids will crash to their side like ours, they will only tilt and lean on ours laying on its side.Perhaps, since none of the other nations have the long list of problems we have. But they have loaned us a lot of money (e.g. China has over a Trillion). If the U.S. collapses, economies world-wide will be affected, as we are witnessing of late.
David wrote: Ours may be the only one to fall over completely for many decades. China, India, Russia, and Japan may just be able to keep the rest of the world’s pyramids fairly balanced on their apex. We’ll have to wait and see.Perhaps. China’s predicament is serious due to a massive population of 1.3 Billion. China’s CO2 emissions may exceed the U.S.’s by 2010. Japan has massive national debt (as a percentage of GDP) and limited natural resources.
But they are all on the same doomed course if they continue with pyramid money systems based on usury.
These pyramids can not avoid collapsing since they rely on unsustainable exponential growth.
QUESTION # 1: Why do governments choose to borrow money from private international banks and pay huge sums of interest, when the government could create interest free money, itself?
QUESTION # 2: Why create money as debt? Why not create a stable amount of money?
QUESTION # 3: How can any pyramid money system depend on perpetual accelerating growth to sustain it? It can’t. All pyramid systems eventually collapse.
QUESTION # 4: What needs to be done? Why and who will oppose it? What is the obvious problems with usury?
Some may be saying this is all pie-in-the-sky, or unnecessary, but it may very well be the only thing that avoids a major collapse of our current pyramid money system.
Posted by: d.a.n at January 26, 2008 12:56 AMWith all this serious conjecture, I just wanted to inject a little lighter note.
A funny post I saw somewhere made note of how people will spend their refunds at Walmart buying Chinese goods, while Washington borrows money from China to fund the refund…..
I’ve always wondered about the name pyramid scheme, shouldn’t it be inverted pyramid scheme? I mean the pyramids have lasted for eons…. and are the epitome of stability.
The only problem with calling currency a pyramuid scheme, is when you print your own currency, why would you need more and more investors to pay off? Isn’t a growing GDP more investors? Isn’t a growing GDP what we want? Gee…maybe it works!!!!
Seriously, this rebate seems more like a two party pay off to voters than an economic stimulus, but then maybe that’s the psychology needed. Wheeeee!!!
George in SC said: “There’s no such thing as a bad tax cut. Or a bad tax rebate for that matter.”
Except when the cost of them destroys your children’s future in your country.
There is a fundamental rule about our American system that Republicans and Libertarians just don’t get. Really basic.
It is the role of the the American people to dictate to government representatives what they want their tax dollars spent on. This is fundamentally built into our system.
It is politician’s responsibility in government to insure the people get the bill for what they ask government to spend, and to insure the people’s demands do not exceed the people’s ability to pass on a balanced budget and low or non-existent debt to the next generation. This is also fundamental to our system and at least Libertarians get this part, rhetorically.
But, Republicans simply can’t stand this part of our system because it stands between them and pandering through both increased spending and tax cuts, to become the majority party and keep it. Thus they abdicate this fundamental responsibility the instant they get majority status. The proof is everywhere evident in the last 7 years.
As the minority party, Republicans exert fiscal responsibility pressures through rhetoric on government rather well. But in power, especially since Nixon, they just don’t have the political will to cut spending as the options to do so are all so dislikable and threatening to reelection.
“While President Nixon talked a tough line on the need to curb spending, “discussions of ways to cut expenditures…came to no conclusion, partly because the options were all unpleasant…”9 The President blamed the move to deficit financing on the weakening economy. It also was in 1970, that he told reporter Howard K. Smith, “Now I am a Keynesian in economics.” It is sentiments like this that perhaps explain the emphasis on spending enhancement during the modern era.?”
Quote is from the Joint Economic Committee Study on Budget Surpluses, Deficits and Government Spending. Virtually all Republicans wining office will quietly and secretly become a Keynesian (liberal) in economics after being elected, because cutting spending is diametrically opposed to the goal of getting reelected.
So take Romney’s, Giuliani’s, McCain’s, and Huckabee’s rhetoric with a grain of salt, they will all follow Nixon’s path, though perhaps not so confessingly. Take Ron Paul seriously, but, don’t count on his having ANY support from Congress for ANY of his radical economic approaches. There is nothing like a reelection reality to make the staunchest fiscal conservative turn Nixon, with that old enduring rationalization, “I can’t do any good if I am not reelected”. And the capitulation on conservative principles cascades to failure from there.
This is why fiscal discipline, if it is to come to America, will have to come as a mandate from the people, ready and willing to forgive their politicians the hardships of spending cuts. That scenario, so far, eludes reality. But, voting out incumbents who don’t proceed toward that end is how fantasy can grow into reality.
Posted by: David R. Remer at January 26, 2008 04:23 AMd.a.n, interest is not required for tribal societies of hunter gatherer’s. But, it is essential to modern societies as works are required to support huge population nations which no single entity can afford to build or maintain. Ergo, credit and interest, are essential. Interest reflects not just risk in lending, but, future value of present dollars loaned and opportunity cost of having giving up one’s money in lending to another. Interest is a fundamental reality of justice, fairness, and necessity of modern societies, dating back several thousands of years.
The trick is to manage it responsibly as our forebears of the early 19th century did with wisdoms like: “Neither a borrower nor lender be (if avoidable)”. Everyone said it right through the 1950’s and it acted as a psychological inducement toward responsible lending and borrowing, and the 19th century achieved the industrial age on borrowing, interest and lending of capital, and responsibly overall until monopolism and industrial barons came to dominate the economy and government.
d.a.n said: “Perhaps, since none of the other nations have the long list of problems we have. But they have loaned us a lot of money (e.g. China has over a Trillion). If the U.S. collapses, economies world-wide will be affected, as we are witnessing of late.”
But, it is important to note that China and India are emerging economies, like ours was in the 1940’s and 1950’s. It is precisely that vast untapped productive potential of their large but, checked population numbers that positions them to endure an American economic collapse, much as we endured and prospered out of the Depression, the Dust Bowl, and WWII unprecedented national debt.
China and India are investing in education of their people on a massive scale and move millions more each year into productive paying jobs competing in the global interdependent exchange of goods and services. They may experience declines in GDP growth resulting from America’s treasury bond ratings dropping from AAA status. But, they will continue to grow on the strength of their domestic economy and new relationships with other nations in the world not so invested in the U.S. economy and government solvency.
In a nutshell, it may be bad, but, not the end. Collapse here won’t be the end of Americans, either. It will be excruciatingly painfully transformational. And questionable whether would ever be able to recapture our former economic strength after having defaulted on international obligations or defaulted on the domestic unfunded mandates, which may, I say may, lead to civil conflict and, or Revolution.
Posted by: David R. Remer at January 26, 2008 04:53 AMI find it quite interesting at how high the inequality figure is for the US…even more interesting to see with which countries the US shares a high disparity in income…and who has a much higher equality of income.
Inequality of income according to country
Posted by: Rachel at January 26, 2008 09:42 AMgooglumpugus wrote: A funny post I saw somewhere made note of how people will spend their refunds at Walmart buying Chinese goods, while Washington borrows money from China to fund the refund…..Yes, this should be telling us something.
googlumpugus wrote: I’ve always wondered about the name pyramid scheme, shouldn’t it be inverted pyramid scheme? I mean the pyramids have lasted for eons…. and are the epitome of stability. The only problem with calling currency a pyramuid scheme, is when you print your own currency, why would you need more and more investors to pay off?It is doomed to collapse, LOAN = PRINCIPAL + INTEREST, and total INTEREST is constantly bumping up against total money in existence, creating pressure to create more money out of thin air, and pressure to do other nefarious things too. But printing more money causes more inflation, economic instability, bubbles, recessions, and depressions. It is doomed because it is fundamentally flawed.
googlumpugus wrote: Isn’t a growing GDP more investors? Isn’t a growing GDP what we want? Gee…maybe it works!!!!That is what one of the things needed to avoid the DEBT from finally catching up to the amount of money in existence.
But 3% growth of GDP from this year is actually more than 3% growth of last year, and so on.
That is exponential growth, which is unsustainable.
Perpetual accelerated growth can not last forever in a world with finite resources.
googlumpugus wrote: Seriously, this rebate seems more like a two party pay off to voters than an economic stimulus, but then maybe that’s the psychology needed. Wheeeee!!!It is a delay tactic to increase the lag-time between DEBT and more money created out of thin air to keep the pyramid scheme from collapsing.
For those that want to truly understand the truth so simple that it repells the mind, see this 47 minute video (Note: slow start up takes a few seconds).
David R. Remer wrote: d.a.n, interest … it is essential to modern societies as works are required to support huge population nations which no single entity can afford to build or maintain. Ergo, credit and interest, are essential.We’ll have to agree to disagree on that.
Usury is what makes the money system a pyramid scheme (or, upside-down pyramid scheme, as pointed out by googlumpugus) that is doomed.
Usury (interest on debt) is what dooms any money system to eventual collapse.
The eventual collapse is a mathematical certainty.
It may take decades or centuries, but it is inevitable.
Here is why (the reason is so simple, people are incredulous).
- “Only small secrets need to be protected. The big ones are kept secret by public incredulity.” - Marshall McLuhan, media “guru”
Imagine a large circle that represents all money in existence (PRINCIPAL).
Without INTEREST, the amount of PRINCIPAL is stable.
Now, introduce usury (loaning money and charging INTEREST).
However, LOAN = PRINCIPAL + INTEREST.
Therefore, imagine (inside the large circle) a small (and growing) circle representing INTEREST (which is debt).
Why? Because the INTEREST to pay off the LOAN must come from the existing PRINCIPAL.
Before long, without adding more money created out of thin air, the INTEREST and DEBT will exceed the PRINCIPAL.
That creates the pressure to create more money out of thin air, since each LOAN = PRINCIPAL + INTEREST
It is a doomed system.
It is an upside-down pyramid.
These other side-effects we see (GDP growth, more productivity, illegal immigration, lower interest rates, etc.) result from pressures to keep the debt from exceeding the money in existence.
Consider the Federal Reserve’s (a privately owned bank) that is allowed by law to loan 9 times more PRINCIPLA than in their existing reserves.
The banks charge INTEREST on each LOAN, and LOAN = PRINCIPAL + INTEREST
But it gets worse.
For each dollar re-deposited back into the the fractional (9:1 ratio) bank system (a closed loop monopoly bank system), it can be used to create 9 times more new money out of thin air.
Depending on the size of each loan, that PYRAMID scheme can continue until 90 times more money has been created out of thin air.
For example, let’s say the Federal Reserve bank has $1111.11 in reserves.
That means it can make a loan of 9 times that, which is $10,000.00 .
90% of each deposit (the 9:1 ratio of the Federal Reserve) can then be used for another loan of money created out of thin air …
(001) 90% of that $10,000.00 (when deposited again) can be loaned out again, to create a new loan of $9,000.00 of money created out of thin air.
(002) 90% of that $9,000.00 (when deposited again) can be loaned out again, to create a new loan of $8,100.00 of money created out of thin air.
: … . : … . : … . : … . : … . : … . : … . :
(088) 90% of that $1.16 (when deposited back again) can be loaned out again, to create a new loan of $1.045 of money created out of thin air.
: … . : … . : … . : … . : … . : … . : … . :
(132) 90% of that $0.011 (when deposited back again) can be loaned out again, to create a new loan of $0.01 of money created out of thin air.
_________________________
TOTAL SUM of new PRINCIPAL = $99,888.89 (of money created out of thin air from initial $1111.11 in reserves).
But where does the INTEREST come from, since LOAN = PRINCIPAL + INTEREST , and the bank creates only the PRINCIPAL for each new loan?
One more more things must happen to delay the inevitable collapse (in which total DEBT catches up with total money in existence):
- (01) create more new money (such as the recent $140 Billion economic stimulus package in JAN-2008). However, this creates more inflation. Between year 1950 and 2005, the M3 Money Supply increased from $135 billion to $10.15 trillion (that’s 75.2 times more money).
- (02) those with money must spend more.
- (03) increased productivity, increased products and/or natural resources (e.g. oil, steel, etc.) to sell to other nations to bring money back.
- (04) increase taxes on the wealthy.
- (05) increase productivity via increased population.
- (06) increase productivity via increased illegal immigration (cheap labor).
- (07) reduce interest rates to encourage more borrowing and spending (but this creates more debt).
- (08) plunder pensions and other systems (e.g. $12.8 Trillion borrowed and spent from Social Security surpluses).
- (09) the PYRAMID finally collapses, foreclosures, bankruptcies, unemployment, shrinking middle-income classs, learn the hard way.
Finally, when the bank forecloses on someone, they have converted money out of thin air into real property and assets. The rich get richer, and everyone else gets poorer (by design).
David R. Remer wrote: Interest reflects not just risk in lending, but, future value of present dollars loaned and opportunity cost of having giving up one’s money in lending to another.That is the classic argument for rationalizing usury.
However, the moral argument is really trumped by the practical argument. All pyramid schemes collapse.
Exponential growth is unsustainable.
Sustainability and perpetual accelerated growth are incompatible.
David R. Remer wrote: … interest reflects not just risk in lending, but, future value of present dollars loaned and opportunity cost of having giving up one’s money in lending to another.Some courts already make personal loans in excess of 10% illegal because it is call usury.
So, why is a little usury OK?
But, again, the moral issue is only half of it. There is still the mathematical certainty that usury is an unsustainable pyramid system.
David R. Remer wrote: Interest is a fundamental reality of justice, fairness, and necessity of modern societies, dating back several thousands of years.Yes, sadly, it is our current reality, but it is not one of justice, fairness, and necessity.
Also, thousands of years ago, usury was considered parasitic and immoral, and is still considered today as immoral in a few nations.
Unfortunately, today, in many nations, most people dream of making all the money they need from the money they have, without doing any work.
Americans spend too much time playing with money; constantly trying to manipulate it to get an advantage on someone else.
I understand the reality that this is not likely to change … that is, not until it becomes too painful … when the inevitable collapse occurs.
It may take a long time, but it will happen unless it is changed to a sustainable model, in which usury is not allowed, the money supply is nearly constant, and government creates money (NOT private banks charging usurious interest that is always struggling to create more money to stay ahead of the ever growing DEBT).
David R. Remer wrote: The trick is to manage it responsibly as our forebears of the early 19th century did with wisdoms like: “Neither a borrower nor lender be (if avoidable)”.Yes. Don’t borrow, and don’t loan.
That is exactly the model some economists are recommending.
It could be accomplished by doing what Canada did: Nationalize the banks. Eliminate usury. Government creates a stabile money supply that targets ZERO inflation.
Usury, however slow and controlled, will still lead to the same inevitable result (collapse).
It takes a long time, depending on the size of the economy, which fools people, but the end result will always be the same. And we have seen historical examples of it.
David R. Remer wrote: Everyone said it right through the 1950’s and it acted as a psychological inducement toward responsible lending and borrowing, and the 19th century achieved the industrial age on borrowing, interest and lending of capital, and responsibly overall until monopolism and industrial barons came to dominate the economy and government.The Great Depression was (partly only) due to the collapse of the pyramid money system. After World War II, massive debt existed. Therefore, from 1945 to 1976, massive (double-digit) inflation resulted from excessive money printing. After 1976, other systems began to be plundered (e.g. Social Security), and nation-wide debt started to grow. The pressues from the pyramid scheme began to fuel many other problems and behaviors to delay the collapse of the pyramid scheme.
David R. Remer wrote:Yes, but China has a huge population and fewer resources.d.a.n said: “Perhaps, since none of the other nations have the long list of problems we have. But they have loaned us a lot of money (e.g. China has over a Trillion). If the U.S. collapses, economies world-wide will be affected, as we are witnessing of late.”But, it is important to note that China and India are emerging economies, like ours was in the 1940’s and 1950’s. It is precisely that vast untapped productive potential of their large but, checked population numbers that positions them to endure an American economic collapse, much as we endured and prospered out of the Depression, the Dust Bowl, and WWII unprecedented national debt.
The Great Depression (which started before the stock market crash of 1929) was the collapse of the pyramid scheme, which started in year 1913 (thanks to Woodrow Wilson who later regretted it).
It took a LONG time for things to get better, but the cycle was simply restarted. We are now starting to see the signs of the end of that same cycle. We may delay end of the cycle, but we will not escape it. Eventually, the DEBT will exceed the capacity to create any more DEBT, and all of the other mechanims (e.g. natural resources, productivity, illegal immigration, etc.) will not be sufficient to prevent it. It may take many years (or decades), but the cycle exists, and reason and logic can not allow it to be ignored or refuted. The math is not that complicated. We should all ask ourselves about the need for more and more (exponential) growth, and WHY it is necessary. The answer is simple. That is part of what is preventing the DEBT from catching up to the money in existence. China, Japan, Germany, and other investors in U.S. debt are actually helping to bring about the collapse in the U.S. by borrowing trillions from the U.S. That is helping grow the monster ever larger.
David R. Remer wrote: China and India are investing in education of their people on a massive scale and move millions more each year into productive paying jobs competing in the global interdependent exchange of goods and services. They may experience declines in GDP growth resulting from America’s treasury bond ratings dropping from AAA status. But, they will continue to grow on the strength of their domestic economy and new relationships with other nations in the world not so invested in the U.S. economy and government solvency.Sure, but how long can that exponential accelerated growth be sustained?
Sure, we are consuming China’s and India’s resources (from their cheap labor), but how long can that last?
Here is an analogy.
There are 5 people stranded on an island, and they all had a job.
One Chinese person who fishes.
One Eastern Indian who hunts meat.
One Asian who gathers firewood.
One Japanese who gathers fruit and vegatables.
One American who eats and consumes, but leaves a few crumbs for the rest.
Obviously, the Chinese, Eastern Indian, Asian, and Japanese would be wise to throw the American off the island.
How long before Chinese, Eastern Indian, Asian, Japanese, and other investors in the astronomical U.S. Debt realize they’ll never get repaid?
David R. Remer wrote: In a nutshell, it may be bad, but, not the end. Collapse here won’t be the end of Americans, either.Yes, it will be bad.
It is a cycle. Recovery may take a long time. What is sad is that we learn nothing from it and the pyramid scheme will probably start all over again, just like it started over after the Great Depression.
Again, the problem is usury. Not just a moral issue, but a practical problem that can easily be proven mathematically to be doomed.
David R. Remer wrote: It will be excruciatingly painfully transformational. And questionable whether would ever be able to recapture our former economic strength after having defaulted on international obligations or defaulted on the domestic unfunded mandates, which may, I say may, lead to civil conflict and, or Revolution.Recovery may not be possible for a long, long time.
- “U.S.A.’s balance of payments deficits is so strong and irreversible, that we must accept that at some future date there will be a run against the U.S. Dollar. Probably the kind of disorderly run that precipitates a global financial crisis.” - Dr. Paul A. Samuelson, Nobel Prize Winner in Economics, year 2005.
Today, the U.S.A. is borrowing $3 Billion per day.
Trade deficits represent borrowed money leaving the country.
Other nations should be wondering if their investments in our debt are a wise investment.
It’s a simple math problem.
We will eventually exceed our capacity to sustain more debt, create more growth, become more productive, and repay our loans.
The question is not IF.
The question is WHEN.
Could the U.S. Dollar crash ?
The problem has been growing for some time (not really just the last 8 years, but actually since the bottom of the last collapse in the 1920s).
We should discourage this $140 Billion stimulus package, and start getting some fiscal sanity.
Unfortunately, that isn’t likely to happen by repeatedly rewarding incumbent politicians with 95% re-election rates, and many voters are already making plans for their rebate checks.
Perhaps enough voters will agree when they are jobless, homeless, and hungry?
d.a.n.,
While I’m not quite sure I agree with the idea that interest is evil, I will agree that usury may well be. The difference being that usury is unfair compensation. Fair compensation is what capitalism is all about.
Money is a fiction. While tying it to a precious metal may be alluring to some, I think that would be disasterous.
What really matters is trust in economic stability. If I invest money, will I lose it? Do I have any realistic hope of fair return? Those are the critical questions. Money doesn’t do anything. You can’t eat it, and you can’t live inside it. GDP may be measured in dollars, but it involves labor and products, not paper or coins
(unless you operate a mint).
I’m not sure the mathematical certainty you speak of is there, d.a.n.. This isn’t physics. Money is an artifice. Even if a monetary system collapses, life will go on. The wealthy do fine, everyone else struggles and many will die, but people will still eat, grow food, and buy and sell items, perhaps through barter.
Hopefully there are enough realists out there to recognize the idiocy of the 30’s and not repeat it. But alas, there are no guarantees. We sure as hell haven’t been able to stop war. That’s the real economic disaster I fear. Idealology is simply the propoganda through which people obtain power in hopes of controling and creating wealth and resources. WWII was Germany’s answer to the poverty created in WWI, as well as Japan’s attempts to grab resources.
Moving away from oil is our best defense against both a World War and economic collapse.
Entitlements are something we CAN pay for. They must be allocated properly and attitudes toward what is fair may need adjustment, but they ARE within our means.
Posted by: googlumpugus at January 26, 2008 07:07 PMgooglumpugus wrote: d.a.n., While I’m not quite sure I agree with the idea that interest is evil, I will agree that usury may well be. The difference being that usury is unfair compensation. Fair compensation is what capitalism is all about.The moral issue is not as important as the practical issue.
The Federal Reserve creates PRINCIPAL and charges INTEREST.
Where does the INTEREST come from?
To keep the pyramid from collapsing, more money must be created.
There are other nefarious sources (e.g. productivity from illegal immigration, etc.), but none will resolve the problem.
googlumpugus wrote: Money is a fiction.Money is a tool. The monetary system can be abused like most any system. And itiis. It is a pyramid scheme. It’s not hard to prove.
googlumpugus wrote: While tying it to a precious metal may be alluring to some, I think that would be disasterous.That isn’t necessary, and has some obvious problems. All commodity backed currencies have some problems too. That is not that solution.
The problem is usury (i.e. charging INTEREST), which means the money supply must increase exponentially to create more money to pay the INTEREST + PRINCIPAL.
The existing money supply must continue to increase, or the pyramid collapses.
See the circle inside a circle example above, or see this page.
googlumpugus wrote: What really matters is trust in economic stability. If I invest money, will I lose it?If only it were that simple.
Usury will always fail, because it is a pyramid system. It is mathematically impossible to sustain indefinitely.
Here are a few clues to the problem.
Notice all the talk about GDP growth?
Notice the illegal immigration to increase productivity?
Notice the incessant obsession with interest rates?
Unfortunately, few economists will come right out and tell you the facts.
The monetary system is a pyramid scheme, and the period between the cycles depends on the magnitude of abuses.
We’ve been very abusive for the past 30 years, and it has accelerated us closer to the inevitable collapse.
googlumpugus wrote: Do I have any realistic hope of fair return? Those are the critical questions. Money doesn’t do anything. You can’t eat it, and you can’t live inside it. GDP may be measured in dollars, but it involves labor and products, not paper or coins (unless you operate a mint).To answer your questions, take a look at this 47 minute video. This is what most Americans do not understand, but suspected something wasn’t quite right for a long, long time. Unfortunately, monetary theory is not taught in public schools and it has not inspired any blockbuster movies.
googlumpugus wrote: I’m not sure the mathematical certainty you speak of is there, d.a.n..I am. I have a minor in math and major in electrical engineering. But neither is required to understand the problem. David R. Remer understands that it is an upside-down pyramid scheme. He believes we need it. I don’t. I think it will result in anohter inevitable depression. He doesn’t. Either way, there is a cycle. How severe each is depends on many variables. But sooner or later, we’ll have to pay the piper.
googlumpugus wrote: This isn’t physics. Money is an artifice. Even if a monetary system collapses, life will go on.No, it is simple math.
Sadly, there will be increased death, poverty, and crime. Crime is already rising.
googlumpugus wrote: The wealthy do fine,The wealthy almost always do fine.
googlumpugus wrote: … everyone else struggles and many will die, but people will still eat, grow food, and buy and sell items, perhaps through barter.Hmmmmm … you seem to be describing a depression? That is not far fetched.
googlumpugus wrote: Hopefully there are enough realists out there to recognize the idiocy of the 30’s and not repeat it.I hope so, but doubt it due to the rampant delusional and blind loyalty to the two-party duopoly.
googlumpugus wrote: But alas, there are no guarantees. We sure as hell haven’t been able to stop war.No, we haven’t. We have had 7 wars in 90 years.
Worse, the Iraq war was based on a web of lies and exaggerations.
googlumpugus wrote: That’s the real economic disaster I fear. Idealology is simply the propoganda through which people obtain power in hopes of controling and creating wealth and resources. WWII was Germany’s answer to the poverty created in WWI, as well as Japan’s attempts to grab resources.Exactly.
googlumpugus wrote: Moving away from oil is our best defense against both a World War and economic collapse.Your intuitions are correct.
googlumpugus wrote: Entitlements are something we CAN pay for. They must be allocated properly and attitudes toward what is fair may need adjustment, but they ARE within our means.I don’t think so, becasuse of the $12.8 Trillion borrowed and spent from Social Security, an approaching 77 million baby boomer bubble, and dozens of other pressing problems. Also, Medicare is in worse shape. And the revenues all come from taxes ONLY on those making less than $97,500 (i.e. these caps are regerssive).
Please see this comment in the RED column.
Posted by: d.a.n at January 26, 2008 07:45 PMDavid:
Craig, something may be amiss with the data. The housing sector has been constricting employment for more than a half year now. It was followed by no new hiring in the after market housing markets Lowe’s and Home Depot and hardwares. Now, financial institutions are laying off in ever larger numbers, and globally as well. Mortgage companies have been laying off. Realtors are finding other lower income jobs and part time jobs.It may be that manufacturing exports are creating enough jobs to offset these other losses. But, given the GDP drop in China, that may not continue to be the case. As you say, we will have to wait and see what the revised numbers and trends show in April for Nov. thru Jan. I wouldn’t lay any bets one way or the other.
Look at this quote from Jeremy Siegel
Most importantly, although fourth quarter earnings are expected to post a 21.2% decline from 4th quarter of last year because of the debacle in the financial sector, the other nine sectors are expected to report an extraordinary 11.6% earnings gain. There is still much to be optimistic about going forward.
There is no doubt that housing and financial sectors are in a recession, and a serious one. On the whole however the numbers are encouraging as far as corporate profits.
If we look at the employment data, it definitely is pointing to a slowdown. Sept - December are low, just not recessionary. If we speak from data that has confirmation, it points to a slowdown.
However, slowdowns of course can lead to recessions.
Posted by: Craig Holmes at January 26, 2008 08:03 PMRachel:
I find it quite interesting at how high the inequality figure is for the US…even more interesting to see with which countries the US shares a high disparity in income…and who has a much higher equality of income.
That is an interesting piece you put up there. What I also find interesting is that the countries at the top are among the most socialistic on the planet. They have the highest amount of federal spending (near 50% of gdp) and are slow growing countries.
Craig:
Good for you!!!! I would expect the economy to be doing better by then anyway.
You mean my house that’s been up for sale for an entire year, price lowered 4 times in a market where the value of housing has done nothing but fall for 2 years will be sold by then????
Posted by: Rachel at January 26, 2008 10:30 PMWhat I also find interesting is that the countries at the top are among the most socialistic on the planet. They have the highest amount of federal spending (near 50% of gdp) and are slow growing countries.
What does it profit a country if it has mega-economic growth and loses its soul, starves its people, lets them die without medical care, lets people remain uneducated because they can’t afford tuition….
We really need to decide if our people exist only to serve economic “growth” or if economics should exist to serve the people! Growth cannot be sustained throughout the entire world all the time by everyone…so our choice had better be the latter.
Posted by: Rachel at January 26, 2008 10:35 PMRachel:
You mean my house that’s been up for sale for an entire year, price lowered 4 times in a market where the value of housing has done nothing but fall for 2 years will be sold by then????
When did you buy your house?
What does it profit a country if it has mega-economic growth and loses its soul, starves its people, lets them die without medical care, lets people remain uneducated because they can’t afford tuition….
What does it profit a country if you decline and become weak because of socialism? There is a balance here. Shoot, lets just become communist and then inequality will be solved.
We really need to decide if our people exist only to serve economic “growth” or if economics should exist to serve the people! Growth cannot be sustained throughout the entire world all the time by everyone…so our choice had better be the latter.
We decided that with the civil war. Of course we don’t want economic growth at all cost. It’s a balance thing.
I agree with you that economic inequality is a serious and real issue by the way. I just don’t want to solve it the way the top countries on your list have solved it. There must be another way short of a doubling of our federal government.
Posted by: Craig Holmes at January 26, 2008 10:53 PMd.a.n said: “Usury (interest on debt) is what dooms any money system to eventual collapse.”
I don’t think this comment indicates any understanding of money at all, d.a.n.
Money is nothing more than a scorecard. You can have a lot of scorecards or just one scorecard, it doesn’t alter the game, the players, or the outcome.
Money once was a large rock with a hole in it. No intrinsic value. Later, money became sea shells. No intrinsic value. Just counters. Then money came to be made of precious war weapon making metals. At this point, money has some intrinsic value for its ability to be melted down and reshaped into weapons. But, still no intrinsic value other than what the buyer and seller agreed upon. Then came paper money, no intrinsic value, just a scorecard of who owes who how much in basic labor/time units, approximately agreed upon.
Again, it doesn’t matter how much money supply there is, except as the players of the barter agree or disagree on. Money is still just a scorecard. Cheat at the scorekeeping, and you will make enemies. Keep a fair score (transparent and accurate for parties to see), and enemies will have to be made for other reasons.
Interest is payment for opportunity cost. I loan you money, I can’t invest my money I loan you elsewhere to earn 5%, so I ask you for interest on my loan approximating the opportunity cost of my foregone 5% plus 1 or 2% for having selected you and not someone else to loan my money to. You agree to the 6 or 7% because you can’t or won’t find a better deal elsewhere to meet your need to borrow.
When all is said and done, it is just a scorecard. Which is to say, for the entire history of mankind money has always been intrinsically worthless, except for the scorecard value humans agree to impose upon their rocks, sea shells, or colored paper.
What is intrinsically valuable is human labor hours and skills. Human labor hours and skills can directly provide life as in food, water, shelter, hygiene, health care. What your comment appears to fail to grasp is that if the money system collapsed tomorrow at Noon, by 12:01 P.M., one minute later, economies all around the world would continue. What would change is the scorecards and scorekeepers. That’s all. And the new scorecards would be human labor symbolized by some other currency item, perhaps coins, perhaps diamonds, perhaps units of wheat.
And the new scorekeepers would be the ones with the power to defend against challengers for the job of scorekeeper. Therein lies, btw, the historical link between money and war. But, farmers would still farm, those who own their land outright, metal workers would still make metal though for less consumers of it, and shoe makers would still make shoes though fewer of them for fewer people who could afford them. And farmers would continue to farm to buy the metal farming implements needed to continue to grow wheat, and the metal workers would continue to make metal to trade with the shoe makers to protect their feet from splattering liquid metal, and the shoe makers would continue to take the metal in exchange for shoes to give to the farmers in exchange for wheat. That is an economy, with, or without money.
Therefore, a collapse of the money system would not spell the end of the human race or economies. It would spell the end of wealth for a vast number of people in the world, and grotesque privations as those who used to be money changers, are forced to learn a new skill or die for lack of basic resources. The overpopulated world would not be overpopulated anymore. But, human societies, economies, and cultures would continue, very likely in better balance with their environment and each other after a 45% or so reduction in the world’s human population.
This is fundamental economics. So fundamental, many an economics course doesn’t even cover this. So fundamental, many economics instructors have never thought of it, or questioned it. Too bad for students. But, then our education systems have been for crap for a number of decades now.
So, if your concerns regarding interest and money are hitched to the fear of inhumane depopulation of the world to reasonable levels, then I will agree with you. But, understanding what money and interest are and why they are, negates the idea that if this money system collapses, it is the end of the world. That is simply not true. If this money system collapses, another will immediately take its place, complete with scorekeeping tokens, interest, debits and credits, and a very few controlling the value of the tokens in order to insure trade, transparent bookkeeping, and collectability on debts and payment of debts with precision to insure fair trade instead of war.
googlumpus said: “While I’m not quite sure I agree with the idea that interest is evil, I will agree that usury may well be. The difference being that usury is unfair compensation.”
You are right, interest is not good or evil, interest is an agreed upon price to be paid for opportunity cost. I loan you my money, I lose the opportunity to buy things with it for myself, and you pay me interest at an agreed upon rate or price, as compensation for my opportunity cost.
However, then you said: “Fair compensation is what capitalism is all about.”
Wrong! Capitalism works best with the least losses in efficiency when fair compensation is exercised and enforced. But, it is NOT what capitalism is all about. Capitalism is all about maximizing profitability with the available resources at hand to trade. Which can be summarized by the following golden rule of capitalism: Extract the highest selling price the buyers are willing to pay, while holding the costs of providing the good or service to the absolute minimum, and in so doing one maximizes the reward for one’s time and effort. That is what capitalism is all about. The implications of that golden rule of capitalism have filled volumes, but, you would be hard pressed to find conflicting volumes about the golden rule of capitalism which is obvious to all successful entrepreneurs, managers, and graduates of business and economics.
The heart and soul of capitalism is best illustrated in any book on managerial accounting. Which is all about accounting for the value/cost of time and motion to produce a product or service, and determining the highest possible price market to target for sales of one’s product or service. Capitalism is all about the difference between the cost to produce and the price obtained as sale.
Posted by: David R. Remer at January 27, 2008 01:42 AMd.a.n said: “David R. Remer understands that it is an upside-down pyramid scheme. He believes we need it. I don’t.
As I explained in my previous reply, if it fails, it will be resurrected. Perhaps with different rules, but, money and interest are absolutely necessary to trade beyond the inefficiencies of the barter system.
“I think it will result in anohter inevitable depression. He doesn’t.”
Incorrect. As I have written many, many times in this column, I believe America’s economic system is indeed headed for a devastating depression and reorganization if the voters do not take control of their politicians and keep them to their Constitutional purposes. But, it is also clear, that the world’s economy is no longer as dependent upon ours as was the case 30 years ago. Many nation’s economies will slow if America’s goes down, but, theirs will not go down with ours.
China for example, may see its GDP drop from 11% to 3% if our economy goes under. 3% of course is regarded as healthy in America. In fact, if China can’t get a handle on runaway inflation, America’s economy going down could be just the prescription they would be looking for. Something our own politicians should, but are too blind to consider.
Posted by: David R. Remer at January 27, 2008 01:50 AMCraig said: “There is no doubt that housing and financial sectors are in a recession, and a serious one. On the whole however the numbers are encouraging as far as corporate profits.”
There are two dimensions to a health economy. Healthy producers/suppliers, and healthy consumers. Our current situation reflects, as you say, healthy producers/suppliers. The date too, as you imply, point to not so healthy consumers. If consumers do not return to health quickly, their lack of consumption will affect the health of producers/suppliers to our domestic economy. Hence, the rationale for the stimulus aimed at consumers. And hence, the need for that stimulus to actually have its intended effect.
My concern is, it may not for both conceptual reasons of the stimulus package itself, as well as the credit card bubble portending the other foot dropping. Bank of America, writing down massive amounts on its balance sheets just sent me letters indicating their intent to raise my credit card rates to 29%. Reason: their balance sheet. My credit situation has only improved over the years I have had their credit card. There is no other rational explanation.
Their official reason is entirely bogus. They cite Trans Union without an explanation. My Trans Union report indicates that while my overall debt level has gone down, my debt level with Bank of America has increased.
Bank of America offers me generous short terms to increase my debt, and when I take them up on their offer, they cite my debt load as justification for raising my interest rates to near 30%. My credit and payment records are exemplary otherwise. Needless to say, I am rejecting their terms and closing the accounts. But, millions of other Americans are not in a position to do that.
I think you can see how the credit card companies are creating a self-fulfilling prophecy for massive credit card defaults by raising the interest on their card holders to usurious levels in the attempt to keep their shareholders happy. It is a self fulfilling economic bubble burst in the making.
Posted by: David R. Remer at January 27, 2008 02:01 AMDavid,
Perhaps what I should have said was properly functioning capitalism is about fair valuations. Distortions do occur, but in theory at least, the market will correct these.
Posted by: googlumpugus at January 27, 2008 03:31 AMgooglumpugus said: “Distortions do occur, but in theory at least, the market will correct these.”
Yes, in theory and practice unregulated capitalism will inevitably lead to corrections with immense human suffering and costs as the price, as in the Great Depression, or the horrid privations of Charles Dickens’ world in England during its period of free unfettered capitalism.
Of course, socialist systems can have corrections occur as well with great human suffering as the cost. Which is why there are no pure socialist nor capitalist economies in the world today. All the productive and stable economies have government oversight and intervention as needed in place to mitigate the effects of blind greed, the kind which fails to see it is killing the goose that lays the golden eggs. Regardless of whether that blind greed emanates from the people up, or the capitalists down.
The very definition of economics is the study of how finite resources are distributed amidst infinite demand. Government’s should incorporate economic systems which foster the least civil unrest and threat of revolution while promoting the greatest prosperity for the people of the nation presently, and in the future.
When you think about it, it is one helluva dynamic balancing act under the most optimal circumstances. Which is why one cannot realistically discuss economics without lengthy discussion of political systems as well, and vice versa. They are inextricably interdependent in modern stable societies.
d.a.n wrote: “Usury (interest on debt) is what dooms any money system to eventual collapse.”Not true, and I will try to prove it below.David R. Remer wrote:I don’t think this comment indicates any understanding of money at all, d.a.n.
I understand the monetary system much better than most people, and provide the PROOFs below, and invite anyone to dispute the facts or conclusions (below).
It is actually a simple math problem.
PROOF # 01: USURY:
LOAN = PRINCIPAL + INTEREST
LOAN = DEBT
PRINCIPAL = MONEY_IN_EXISTENCE
The Federal Reserve creates the PRINCIPAL from thin air which is 9 times more new money than its reserves.
That is, each new LOAN = 9 x SOME_MONEY_ALREADY_IN_EXISTENCE.
Or worse, new money is often created without being based on SOME_MONEY_ALREADY_IN_EXISTENCE, which increases the MONEY SUPPLY.
However, the INTEREST for each new LOAN does not yet exist.
QUESTION: Where does the INTEREST come from?
ANSWER: either from MONEY_IN_EXISTENCE, or more money must be created out of thin air.
Imagine a home loan. The INTEREST can be 2 or 3 times the PRINCIPAL.
Imagine a large circle representing all MONEY_IN_EXISTENCE.
Imagine a small circle inside the larger circle representing INTEREST.
If people make a LOAN and charge INTEREST, the INTEREST must come:
- (a) from MONEY_IN_EXISTENCE
- (b) OR new money created out of thin air.
So, to avoid the collapse, the Federal Reserve creates more money out of thin air, and the game continues.
But the game can not continue indefinitely.
Why?
Because eventually, like playing the game of Monopoly in which one person can print all the money they want, they will eventually own everything, and everyone else is broke, or hopelessly deep in debt.
And that is the cruel truth of this pyramid scheme. It is about using and exploiting others.
It not only is a moral issue, but simple mathematics is a practical issue.
Unfortunately, too many Americans like to play with money to make money, rather than create value to make money.
PROOF # 02: MONEY SUPPLY:
In year 1950, there was $135 Billion of M3 Money Supply in existence.
By year 2005, there was $10.15 Trillion of M3 Money Supply in existence.
That is an increase by a factor of 75.2 (e.g. $10.15 Trillion / $135 Billion).
Did the U.S. become 75.2 times wealthier?
Especially since the population also doubled since year 1950?
No. What happened was massive amounts of new money were created out of thin air.
For every dollar in existence, it permits 9 times more to be created out of thin air for each new individual loan.
PROOF # 03: INFLATION:
In year 1950, one U.S. Dollar bought more things.
In year 2008, one U.S. Dollar is worth about one-ninth as much (about 11 cents).
____INFLATION_______
CPI (CPI=100 for year 1967)
650 + - - - - - - - - -X
600 + - - - - - - - - -X
550 + - - - - - - - - -X
500 + - - - - - - - - X
450 + - - - - - - - - X
400 + - - - - - - - - X
350 + - - - - - - - -X
300 + - - - - - - - X
250 + - - - - - - - X
200 + - - - - - - -X
150 + - - - - - - -X
100 + - - - - - -X
050 +XXXXXXXX
000 +_______________YEAR
1 1 1 1 1 1 1 1 1 1 2 2
8 8 8 8 8 9 9 9 9 9 0 0
0 2 4 6 8 0 2 4 6 8 0 2
0 0 0 0 0 0 0 0 0 0 0 0
PROOF # 04: HISTORY OF MONEY:
Please watch this well-made 47 minute video, and then try to explain how any part of it is false.
PROOF # 05: WEALTH DISTRIBUTION:
Incessant inflation and the pyramid scheme money system is one of the major reasons for the growing disparity.
How can it be that most of the people that work and create value are all in debt to the banks that receive the INTEREST on LOANs created out of thin air?
In year 1980, 1% of the U.S. population owned 20% of all wealth.
By year 2008, 1% of the U.S. population owned 40% of all wealth.
Rest assured, that the design of the fractional banking was not a mere coincidence, and neither were these other 10+ abused systems that have been hammering Americans since the cycle restarted after the Great Depression.
PROOF # 06: FAMOUS QUOTES throughout HISTORY:
Please see these famous quotes.
Then try to find quotes that praise usury and fiat money systems.
NOTE # 01: Returning to a commodity, gold, or silver currency is not required.
NOTE # 02: The problem is INTEREST, which is Usury. Usury presents not only a moral issue, but a mathematical problem (i.e. a practical issue).
NOTE # 03: I doubt, any time soon, most people in the world will understand the problem and demand monetary reform. Unfortunately, monetary theory is not taught in public schools and has not inspired any blockbuster movies. It won’t change until people finally understand the moral and mathematical problem that makes the pyramid scheme unsustainable (by design, for those that benefit from it).
Unless all of those simple proofs can be disproved, they must be accepted as true.
After all, David, you also already wrote in response to my statement …
d.a.n wrote: “The fractional banking system (i.e. Federal Reserve, a privately owned bank) actually is little more than a pyramid scheme.”
David wrote: Not true. It is a pyramid scheme, but also much more, a somewhat independent regulatory body for the economy, and as current events demonstrate, a needed regulatory body. Though not always competent.
To say it is “also much more” is not proof.
To say it is “an independent regulatory body” is not proof.
To say it is “a needed regulatory body” is not proof.
Those are all conclusions. Not proofs.
The problem is provable, and what is provable is that all pyramid schemes eventually collapse (and possibly restart).
Pyramid schemes always collapse eventually.
Then the cycle can begin again, as it did after the Great Depression.
David wrote: Money is nothing more than a scorecard. You can have a lot of scorecards or just one scorecard, it doesn’t alter the game, the players, or the outcome.Coin and paper itself are merely inanimate objects. They are not the problem.
Coin and paper are not evil, but that does not mean they can’t be abused.
Pencilz dont misspell wordz. People do.
Spoons don’t make people fat. People do.
Guns don’t kill people. People do.
Money doesn’t make people greedy. People do.
Thus, the problem is not the object (or system), but the PEOPLE that abuse the object (or system).
A money system is more than a mere scorecard.
A money system can be used to exploit other people.
It has rules, and those rules can be abused to cheat some players. People do that.
One obvious way to cheat is predatory lending or usurious INTEREST rates.
The Federal Reserve Banks clever fractional lending and money creation system is ingenious.
It’s no wonder they like it.
Another way to cheat is the banks receiving INTEREST from money created out of thin air.
Another way to cheat is to simply create money out of thin air (which causes inflation).
David wrote: Again, it doesn’t matter how much money supply there is, except as the players of the barter agree or disagree on.Not true. As the money supply increases, it creates inflation.
Thus, to prove your statement true, you must prove that inflation does not matter, is good, and does not create economic instability.
David wrote: Money is still just a scorecard. Cheat at the scorekeeping, and you will make enemies. Keep a fair score (transparent and accurate for parties to see), and enemies will have to be made for other reasons.Now you are on the right track.
Cheating is problem. People cheat people. Creating too much money out of thin air is cheating, and creates inflation.
David wrote: Interest is payment for opportunity cost. I loan you money, I can’t invest my money I loan you elsewhere to earn 5%, so I ask you for interest on my loan approximating the opportunity cost of my foregone 5% plus 1 or 2% for having selected you and not someone else to loan my money to. You agree to the 6 or 7% because you can’t or won’t find a better deal elsewhere to meet your need to borrow.INTEREST is not only usury, but it creates a mathematical problem. See PROOF # 01 above.
David wrote: When all is said and done, it is just a scorecard. Which is to say, for the entire history of mankind money has always been intrinsically worthless, except for the scorecard value humans agree to impose upon their rocks, sea shells, or colored paper.The problem is the erosion of value, and the people that don’t understand why it happens, and who benefits from it.
Again, it is like playing Monopoly in which one person (banker) can print all the money they want. Before long, the banker owns everything, and everyone else broke or deep into debt. All the Federal Reserve (and other fiat-funny-money systems) have to do is keep inflation growing enough every year to avoid the collapse of the pyramid scheme.
David wrote: What is intrinsically valuable is human labor hours and skills. Human labor hours and skills can directly provide life as in food, water, shelter, hygiene, health care.Yes, money from value is good. Money from money is problematic, and creates a pyramid that will collapse.
David wrote: What your comment appears to fail to grasp is that if the money system collapsed tomorrow at Noon, by 12:01 P.M., one minute later, economies all around the world would continue. What would change is the scorecards and scorekeepers. That’s all. And the new scorecards would be human labor symbolized by some other currency item, perhaps coins, perhaps diamonds, perhaps units of wheat.Sadly, the cycle would restart.
So? Just because we learn nothing from it does not justify it, nor prove there is not a better way than a doomed pyramid scheme.
There is a better way.
David wrote: And the new scorekeepers would be the ones with the power to defend against challengers for the job of scorekeeper.Yes, if we don’t learn from it, and we simply restart the pyramid cycle.
David wrote: Therein lies, btw, the historical link between money and war.True. You are making my case for me. The problem is not money, but the abuse of money systems by some PEOPLE to use and exploit other PEOPLE.
David wrote: But, farmers would still farm, those who own their land outright, metal workers would still make metal though for less consumers of it, and shoe makers would still make shoes though fewer of them for fewer people who could afford them. And farmers would continue to farm to buy the metal farming implements needed to continue to grow wheat, and the metal workers would continue to make metal to trade with the shoe makers to protect their feet from splattering liquid metal, and the shoe makers would continue to take the metal in exchange for shoes to give to the farmers in exchange for wheat. That is an economy, with, or without money.Again, you are making my case for me, because bartering is completely different from a money system with usury, where the bank is debasing the value of your assets by excessive money printing.
David wrote: Therefore, a collapse of the money system would not spell the end of the human race or economies. It would spell the end of wealth for a vast number of people in the world, and grotesque privations as those who used to be money changers, are forced to learn a new skill or die for lack of basic resources. The overpopulated world would not be overpopulated anymore. But, human societies, economies, and cultures would continue, very likely in better balance with their environment and each other after a 45% or so reduction in the world’s human population.True, and I never asserted that the inevitable cyclic collapse of the Banks’ fractional money pyramids would result in the end of the human race.
The issue is will we learn from it, and restart the same cycle, as we did after the Great Depression, or understand the problem and resolve it?
David wrote: This is fundamental economics. So fundamental, many an economics course doesn’t even cover this. So fundamental, many economics instructors have never thought of it, or questioned it. Too bad for students. But, then our education systems have been for crap for a number of decades now.Yes, as I’ve written before, you won’t learn about the pyramid nature of the banks fractional banking and fiat money system (a system now used world-wide) in public schools, and no one has made a blockbuster movie about it.
However, I am a bit confused by your statements.
First, (1) you admit that the money system “is” a pyramid system,
(2) but you then rationalize (or merely accept?) the need for the Federal Reserve, and interest (usury),
(3) but end by using an example of bartering (which is not usury).
David wrote: So, if your concerns regarding interest and money are hitched to the fear of inhumane depopulation of the world to reasonable levels, then I will agree with you.Well, that could be (e.g. war) the result of economic collapse. Crime was very high during the Great Depression. Wars could result.
However, the issue is simply that the Federal Reserve Bank’s (and most other foreign banks) fiat money and fractional banking schemes are an upside-down pyramid scheme that is:
- (1) morally flawed,
- (2) and mathematically flawed and doomed to collapse, restart, collapse, restart (until we finally learn from the painful consequences)
David wrote: But, understanding what money and interest are and why they are, negates the idea that if this money system collapses, it is the end of the world. That is simply not true.No, I have never asserted anywhere that it was the end of the world, so that’s not the issue at all.
The issue is quite simply that the fiat money systems and charging of interest (usury) are (1)morally and (2)mathematically flawed, and the proofs are laid out above.
What tricks a lot of people is quite simply how long it takes for the collapse to occur.
But the wealthy banker and their wealthy friends don’t care, because they have assets. 1% of the U.S. population now owns 40% of all wealth (up from 20% in year 1980).
Yes, it will be difficult to change, and it is difficult for many to accept the fact that we’ve all been victims of an ingenious pyramid scheme for almost 100 years; but it is true.
Peoples’ minds are repelled by the simple truth, and refuse to believe it, no matter how much evidence is provided.
And that very human trait is what the cheaters in the world rely on.
- “Only small secrets need to be protected. The big ones are kept secret by public incredulity.” - Marshall McLuhan, media “guru”
David wrote: If this money system collapses, another will immediately take its place, complete with scorekeeping tokens, interest, debits and credits, and a very few controlling the value of the tokens in order to insure trade, transparent bookkeeping, and collectability on debts and payment of debts with precision to insure fair trade instead of war.Yes, but what type of money system?
Why does it have to be the same thing (with INTEREST and usury)?
Why restart the same cycle again, like we did after the Great Depression?
d.a.n wrote: David R. Remer understands that it is an upside-down pyramid scheme. He believes we need it. I don’t.Yes, hopefully with different rules.David wrote:As I explained in my previous reply, if it fails, it will be resurrected. Perhaps with different rules, but, money and interest are absolutely necessary to trade beyond the inefficiencies of the barter system.
However, I do not believe INTEREST (usury) is necessary. And the lack of usury does not require bartering.
d.a.n wrote: “I think it will result in another inevitable depression. He doesn’t.”Usury and the money system that is a pyramid scheme … you do agree that it will lead to an inevitable collapse and depression?David wrote: Incorrect. As I have written many, many times in this column, I believe America’s economic system is indeed headed for a devastating depression and reorganization if the voters do not take control of their politicians and keep them to their Constitutional purposes.
My assertion is that the pyramid-scheme-type money system and usury will be the major contributing factor (among others), and I don’t think you believe that. Right? Since you are saying we need the Federal Reserve and INTEREST (usury).
That is, you don’t see the issue of usury (i.e. INTEREST) as a major contributing factor to the depression cycle? And I do.
David wrote: China for example, may see its GDP drop from 11% to 3% if our economy goes under. 3% of course is regarded as healthy in America. In fact, if China can’t get a handle on runaway inflation, America’s economy going down could be just the prescription they would be looking for. Something our own politicians should, but are too blind to consider.Inflation and debt is a problem for all nations that bought into the pyramid-scheme (with usury and fractional lending) money systems.
The U.S. Dollar has fallen faster than the Chinese YUAN for several years (among all other major international currencies).
The solution to this problem is simple in theory, but will be difficult since a few with vast wealth and power control it, and will oppose it.
SOLUTION:
- (1) Make usury illegal. Courts make INTEREST rates for personal loans over 10% illegal. So, if a lot of INTEREST is bad, how can a little INTEREST be good? If inflation is bad, how is a little inflation good?
- (2) The government must nationalize the banks and control the currency. It should create the money it needs, INTEREST FREE.
- (3) If inflation is too high, some money in circulation can be removed. If there is deflation, the government can create and spend some money. If they do a bad job of it, the voters know EXACTLY who to hold accountable. Currently, the Federal Reserve is a privately owned bank, and the voters have little (if no) control over it.
By the way, here is an organization (kiva.org) that loans money (INTEREST FREE).
The rate of default is 0.1% for $3,710,535 in ended loans.
Why would people do this?
Because helping others helps all of us, helps people help themselves, helps people off of welfare, helps people be less needy, etc.
At any rate, we will get our education one way or another, and we will have the government that we deserve.
d.a.n said: “As the money supply increases, it creates inflation.”
And decreases recessionary pressures, and feeds hungry people, and shelters homeless people, and builds infrastructure to improve quality of life.
Your looking at it in a remarkably one sided slant. Here you are talking about the politics of money management: Weighing the benefits and risks of increasing or decreasing “inanimate objects’ called money. But, you talk of it as evil on the one hand, while on the other saying it is not money which is evil but, the the people wielding its power.
I’m sorry, but, in this real world, the Fed’s decision to cut interest rates last week is going to buy beneficial time for 100’s of thousands of employees to remain employed. That is a good thing, is it not?
d.a.n said: “Again, you are making my case for me, because bartering is completely different from a money system with usury, where the bank is debasing the value of your assets by excessive money printing.”
Hardly. Barter is not possible nor efficient for trade of the magnitude required by our current population numbers. It is why the Ancient Greeks had to replace barter and create insurance collectives, money, and interest.
The point is, if this system collapses, it will be replaced with another system with all the same fundamentals as this one. Form will follow function. You appear to be trying to make a case for another monetary system which can promote the growth and development and innovation and international trade we have seen over the last 100 years. But, you don’t seem able to define what that might be.
I contend that you can’t define another system because the current system is patterned after human activity and the human brain, which places enormous constraints on breaking out of the current monetary model, which has been developing on the concept of money to replace barter inefficiencies for thousands of years, and on the monetary regulatory system for centuries.
Can you please define a society in which money is created, and which can sustain itself without a monetary regulatory system in place to control the supply of money insuring its symbolic value on the one hand - while protecting its efficacy against counterfeit, and promoting maximum human and social benefit through its exchange on the other hand?
More money means more exchange for more people. Less money means a higher value on the money in a given exchange. This bipolar societal valuation of money is inescapable, d.a.n. And maximization of the utility of and benefit of money while avoiding excesses toward one pole or the other, is precisely why monetary regulatory systems like ours are intrinsic to the development of a money system in any society. Brazil had to learn this the hard way in the 1970’s through to much debt and the abandonment of all constraints on printing money to meet those debt obligations.
The world finally stepped in, recognizing their Brazilian debt paper was now worthless anyway, forgave the debt with the stipulation that Brazil begin burning its money back to agreed upon parity levels with other currencies, and thus, the world opened the door to renewed commerce with a country rich in needed natural resources.
You are right to point out that a monetary system is only optimal if the people controlling it are optimal in education, philosophy, and purpose. The fact that humans are fallible however, is not an argument against monetary regulatory systems. In fact, I fail to see how societies can have money systems without monetary regulatory organizations overseeing and adjusting money to prevent excesses and abuses while attempting to maximize money’s distribution for the widest possible exchange of goods and services amongst the largest possible number of persons with needs.
Posted by: David R. Remer at January 27, 2008 03:19 PMDavid:
There are two dimensions to a health economy. Healthy producers/suppliers, and healthy consumers. Our current situation reflects, as you say, healthy producers/suppliers. The date too, as you imply, point to not so healthy consumers. If consumers do not return to health quickly, their lack of consumption will affect the health of producers/suppliers to our domestic economy. Hence, the rationale for the stimulus aimed at consumers. And hence, the need for that stimulus to actually have its intended effect.
This is a bulleye comment. As the American Consumer goes so goes the economy. Housing and finance are really small compared to the consumer. That is why the jobs numbers are so critical. You can almost watch initial jobless claims as THEE statistic to watch going forward. Second would be job numbers released each first friday of the month.
Reread your comment above and imagine what happens with an economy that is still adding jobs, and has low initial jobless claims. Adding jobs means added consumer spending.
Posted by: Craig Holmes at January 27, 2008 04:27 PMDavid:
Save this link:
http://www.dol.gov/opa/media/press/eta/ui/current.htm
Check it every Thursday. Watch initial jobless claims. I believe it will be the first indicator to “rollover” if the economy is to tumble into recession.
Posted by: Craig Holmes at January 27, 2008 04:40 PMd.a.n wrote: As the money supply increases, it creates inflation.True. But that is not really the issue.David R. Remer wrote: And decreases recessionary pressures, and feeds hungry people, and shelters homeless people, and builds infrastructure to improve quality of life.
The issue is the inevitable collapse.
The issue is what happens long term, and now the long term is more sensitive to short-term actions that hasten the inevitable collapse.
The issue is with a flawed pyramid system, the money supply increases carry forward exponentially, and only have a short-term effect to avoid the immediate collapse. It won’t eliminate the debt monster that continues to grow exponentially.
In a pyramid system, it is best to not play the trump card until absolutely necessary.
In the long-term, growing the money supply makes things worse, creates more debt and inflation.
The problem with the pyramid system is quite simply that inflation is NECESSARY to prevent the collapse of the system.
And inflation is economically destabilizing.
David R. Remer wrote: Your looking at it in a remarkably one sided slant. Here you are talking about the politics of money management: Weighing the benefits and risks of increasing or decreasing “inanimate objects’ called money.Not true. I’ve looked at it at great length for many years.
I recognize that changes are unlikely until the current pyramid collapses, but I still hope. Just like hoping that people will stop rewarding bad politicians with 95% re-election rates.
David R. Remer wrote: But, you talk of it as evil on the one hand, while on the other saying it is not money which is evil but, the people wielding its power.Not true.
I never wrote money was evil.
In fact, above, I wrote:
- Coin and paper are not evil, but that does not mean they can’t be abused.
- Pencilz dont misspell wordz. People do.
- Spoons don’t make people fat. People do.
- Guns don’t kill people. People do.
- Money doesn’t make people greedy. People do.
Also, people having money is not evil. What is a moral and practical issue is usury (interest).
In addition, if the government controlled the money supply (responsibly), it could spend more in deflationary periods and remove currency in deflationary periods.
David R. Remer wrote: I’m sorry, but, in this real world, the Fed’s decision to cut interest rates last week is going to buy beneficial time for 100’s of thousands of employees to remain employed. That is a good thing, is it not?No, it is not. Not in our current pyramid system, in which it simply creates more debt, and makes the problem bigger (later).
The current system will collapse, and printing up some more money and creating more debt is just bringing us closer to the collapse.
However, it would be OK in a system where there is no usury, and the DEBT and money supply are not being increased exponentially to stave off the inevitable collapse.
d.a.n said: “Again, you are making my case for me, because bartering is completely different from a money system with usury, where the bank is debasing the value of your assets by excessive money printing.”I never asserted that bartering was necessary or preferred.David R. Remer wrote: Hardly. Barter is not possible nor efficient for trade of the magnitude required by our current population numbers. It is why the Ancient Greeks had to replace barter and create insurance collectives, money, and interest.
The issue about bartering was in response to the following.
David wrote:
Again, it doesn’t matter how much money supply there is, except as the players of the barter agree or disagree on.
The money supply does matter.
Create too much money, and there is inflation.
Create too little, and there is deflation.
And worse, create a pyramid system that grows debt and the money supply exponentially, and there will eventually be collapse, as occurred in the Great Depression, and will occur again. The debt monster will finally win, and the wealthy will own everything, because that is what happens one group of people can print all the money they want; they will eventually own everything, and most everyone else will be broke, or hopelessly deep in debt. It is one of the major reasons for the growing wealth disparity since year 1976.
And, again, the issue about bartering was in response to the following too:
David wrote:
But, farmers would still farm, those who own their land outright, metal workers would still make metal though for less consumers of it, and shoe makers would still make shoes though fewer of them for fewer people who could afford them. And farmers would continue to farm to buy the metal farming implements needed to continue to grow wheat, and the metal workers would continue to make metal to trade with the shoe makers to protect their feet from splattering liquid metal, and the shoe makers would continue to [barter] take the metal in exchange for shoes to give to the farmers in exchange for wheat. That is an economy, with, or without money.
Yes, bartering is an economy, with, or without money.
However, bartering is completely different from a money system with usury and INTEREST, where the bank is debasing the value of your assets by excessive money printing.
David wrote: The point is, if this system collapses, it will be replaced with another system with all the same fundamentals as this one.If you are right, and you may be, then it will be doomed too like the cycle before it, and we will have learned nothing.
With usury, the need for INTEREST will drive the need for more money than exists, which fuels excessive money-printing, which creates incessant inflation, which creates economic instability.
A better system would be one without usury.
Courts make loan rates over 10% illegal, and call it usury.
If a lot of usury is bad, how is a little usury good?
David wrote: Form will follow function. You appear to be trying to make a case for another monetary system which can promote the growth and development and innovation and international trade we have seen over the last 100 years. But, you don’t seem able to define what that might be.Not true.
I have provided PROOFs and specifics.
The solution is also simple in theory, but (admittedly) will be difficult since a few with vast wealth and power will oppose it.
SOLUTION:
- (1) Make usury illegal. Courts make INTEREST rates for personal loans over 10% illegal. So, if a lot of INTEREST is bad, how can a little INTEREST be good? If inflation is bad, how is a little inflation good?
- (2) The government must nationalize the banks and control the currency. It should create the money it needs, INTEREST FREE.
- (3) If inflation is too high, some money in circulation can be removed. If there is deflation, the government can create and spend some money. If they do a bad job of it, the voters know EXACTLY who to hold accountable. Currently, the Federal Reserve is a privately owned bank, and the voters have little (if no) control over it.
Government can make interest free loans too.
Government can create the money it needs.
There would really be no need for taxes, because higher levels of government spending would cause inflation, which would be effectively a FLAT income tax.
However, if the government prints too much money, it will have to answer to the voters.
Currently, what control do voters have over the privately owned Federal Reserve?
David wrote: I contend that you can’t define another system because the current system is patterned after human activity and the human brain, which places enormous constraints on breaking out of the current monetary model, which has been developing on the concept of money to replace barter inefficiencies for thousands of years, and on the monetary regulatory system for centuries.I just did (above). And bartering isn’t required.
- QUESTION # 1: Why do governments choose to borrow money from private international banks and pay huge sums of interest, when the government could create interest free money, itself?
- QUESTION # 2: Why create money as debt? Why not create a stable amount of money?
- QUESTION # 3: How can any pyramid money system depend on perpetual accelerating growth to sustain it? It can’t. All pyramid systems eventually collapse.
- QUESTION # 4: What needs to be done? Why and who will oppose it? What are the obvious moral and mathematical problems with usury?
David wrote: Can you please define a society in which money is created, and which can sustain itself without a monetary regulatory system in place to control the supply of money insuring its symbolic value on the one hand - while protecting its efficacy against counterfeit, and promoting maximum human and social benefit through its exchange on the other hand?I did above (BTW, counterfeiting is a separate issue that plagues all money systems).
In fact, the system I proposed is superior, stable, and sustainable.
It offers many advantages:
- (01) the money supply is stable.
- (02) the government creates and spends the interest-free money it needs without paying interest to the Federal Reserve bank that creates money out of thin air.
- (03) no usury; people should make money from creating value; not making money by playing with money;
- (04) the debt monster is gone, since INTEREST doesn’t exist to require more and more and more money to be created.
- (05) there is no need for private banks, who receive interest using our hard earned money to create 9 times more new money out of thin air.
- (06) it eliminates the pressures to create more growth (GDP) to compensate for the growing nation-wide debt
- (07) it eliminates the pressures to create more productivity by growing the population and illegal immigration to create more growth to compensate for the growing nation-wide debt
- (08) it eliminates the unsustainable exponential growth needed to compensate for the growing nation-wide debt
- (09) it avoids the obvious problems with commodity, gold, or silver backed currencies
- (10) it eliminates the inevitable collapse of the pyramid cycle, that is doomed before it began
- (11) money is not created as debt.
- (12) eliminates the need for incessant inflation to stave of collapse of a pyramid scheme.
- (13) there would be NO National Debt.
- (14) short term actions don’t carry forward exponentially.
- (15) the currency system and government banks belongs to the government, and therefore, the people.
- (16) why would people borrow from a bank (with INTEREST) when they can borrow from the government, INTEREST FREE?
- (17) there would be NO usury.
- (18) since government controls the money supply, the politicians that create too much inflation or deflation can now be held accountable by the voters; voters currently have no control over the privately owned Federal Reserve Bank.
Now, please explain how the current system, which you already acknowledged is a pyramid scheme, can do that?
David wrote: More money means more exchange for more people. Less money means a higher value on the money in a given exchange.No where did I say the money supply (of a monetary system without usury) was constant and could not be varied (for good reasons).
I acknowledge the benefits of doing that (for good reasons).
However, in the current pyramid money system, it has more dire consequences, and it simply hastens the cycle, grows more debt, and brings the inevitable collapse closer. Our current situation is evidence of it.
David wrote: This bipolar societal valuation of money is inescapable, d.a.n. And maximization of the utility of and benefit of money while avoiding excesses toward one pole or the other, is precisely why monetary regulatory systems like ours are intrinsic to the development of a money system in any society.Again, I acknowledged that ability to control the money supply above (to spend more in deflationary times, and to remove or slow spending to reduce inflation).
In all of my posts above, it asserts several times with a monetary system (without usury), the government can still control the money supply. The best part is, it is interest free.
QUESTION: Why should we all be making bankers rich earning INTEREST on money they don’t own, but printed out of thin air?
David wrote: Brazil had to learn this the hard way in the 1970’s through to much debt and the abandonment of all constraints on printing money to meet those debt obligations.True. Their pyramid money system collapsed, as will ours, eventually.
David wrote: The world finally stepped in, recognizing their Brazilian debt paper was now worthless anyway, forgave the debt with the stipulation that Brazil begin burning its money back to agreed upon parity levels with other currencies, and thus, the world opened the door to renewed commerce with a country rich in needed natural resources.That was an ideal time for Brazil (and other nations whose pyramid collapsed) to adopt a new system without usury and controlled by the government (i.e. the people).
David wrote: You are right to point out that a monetary system is only optimal if the people controlling it are optimal in education, philosophy, and purpose. The fact that humans are fallible however, is not an argument against monetary regulatory systems.I have never argued against monetary regulation. That would still need to exist and the money supply would still need to be competently managed.
David wrote: In fact, I fail to see how societies can have money systems without monetary regulatory organizations overseeing and adjusting money to prevent excesses and abuses while attempting to maximize money’s distribution for the widest possible exchange of goods and services amongst the largest possible number of persons with needs.On that, we agree completely.
Where we differ is that you think a privately owned Federal Reserve bank should do it.
I think the government should do it, and have 100% control of its own currency.
I think you misunderstood some parts of what I wrote above.
The new system is well defined and explained above.
It is actually a simplification of the existing system in that it removes one greedy, usurious, unnecessary parasite: the Federal Reserve
It solves a moral problem AND a mathematical problem.
Did you watch the 47 minute video?
It is highly recommended.
And I hope, when our pyramid collapses (if not sooner), we learn from it, and not merely restart the same cycle in which it is mathematically and morally doomed by usury.
And that is truly the Good, the Bad, and the Ugly.
I know it repells the mind.
But that is often true about the truth.
d.a.n said: “The issue is the inevitable collapse.”
Only in the mind of a small minority. Our economic situation is of our own creation, and is not a Frankenstein monster. It can be managed to avert disaster, or it can be managed to insure disaster.
Speaking for myself only, if I truly believed that economic collapse in the USA was inevitable, I would not remain here to suffer it. I believe it is avoidable through education and information and feedback through our political system. It would be utterly illogical to remain for an inevitable collapse for which there is no hope of averting.
“And [money supply] decreases recessionary pressures, and feeds hungry people, and shelters homeless people, and builds infrastructure to improve quality of life.”
That is precisely the issue. It is a tool like a hammer. It can be used to build a home or crush a human skull. But, hammers are inevitable to human societies, and have been since the stone tool hominids. Like hammers, monetary systems are a natural product of human evolution. It cannot be denied anymore than hammers could be removed from all market places. It would be pointless. If people could not buy a hammer, they would pick up a rock or some other hard heavy swingable object to use as a hammer. There is no escaping the inevitability of hammers and monetary systems in human societies.
d.a.n said: “No, it is not. Not in our current pyramid system, in which it simply creates more debt,”
Adjusting interest rates downward does not create more debt, d.a.n, it decreases debt over time. Pyramids are the most stable structure created by humans, which is why the pyramids of Egypt are the longest lasting structures of their size in the world. Doesn’t mean a pyramid can’t be demolished, it can. But, its intrinsic design capacities make it quite stable.
The pyramid scheme you use as analogy is a fraud which promises returns to all who participate despite the reality that only a few will walk away with the money, leaving all others high and dry. You may be proved right, but, only time will tell that, because interest on borrowed money is future repayment for present opportunity lost through lending. It is a fair and just compensation in theory. In practice, there is a difference between fair value of interest and usury. The goal of fair interest is fair repayment in future value of opportunity foregone today and tomorrow until the loan is repaid. Usury does not seek repayment of the loan, instead it seeks perpetual principal balance as legal claim while sustaining perpetual interest payments. In other words, usury seeks a for of indentured servitude to the lender by the borrowers.
This is obvious when one looks at 30 year fixed mortgage rates established by fair market valuations of present opportunity cost. As compared to credit card interest rates of 30% which are designed to insure the debt is never repaid, but, instead a constant stream of interest revenue. Many, most credit card lenders seek to profit by interest rates that deprive the borrower of the future opportunity to ever amass the sum needed to pay off the loan. This form of usury however, is about to come to an end one way or another. By 2010, there will no longer be 30% interest rates on credit cards creating the debt bubble and defaults which are now underway and will increase to the bursting point.
Either Democrats will legislate against this usury which has flourished under Republican rule, or, the credit card bubble will burst, and Congress will seek to assist the bankrupt borrowers as they are now seeking to assist homeowners being foreclosed upon. Thus, in part, preventing and averting the collapse you insist is inevitable.
The collapse of our economic system which we face is not a result of interest rates or monetary policy, but, of fiscal policy and and legislated unfunded mandates falling $44 trillion short of projected and sustainable revenues from taxation.
The Sun will one day engulf the Earth. On that day, you will be right, our monetary system will collapse. Many other scenarios may cause it to collapse before then, including mismanagement of it. In the absence of fraudulent or incompetent mismanagement however, in a world of emerging middle classes, demand, and productivity, I just don’t see a house of cards globally failing because of monetary design. As long as our dollar rises or falls in value as a result of interest rates on the international exchanges, there is a self correcting balancing taking place.
Just as the lower cost of imports are offsetting domestic inflationary pricing. There is an extent to which such offsetting will fail, and we are getting close to it, but, that is precisely why the stimulus package was voted for, to push off that day of reckoning into the future. Allowing the potential for this broken government to repair itself through the election process.
Posted by: David R. Remer at January 27, 2008 06:40 PMd.a.n said: “Where we differ is that you think a privately owned Federal Reserve bank should do it.”
The alternative d.a.n, is a politically and ideologically biased bank run under public political auspices. That, d.a.n is no alternative at all. That spells doom and in a very damn quick hurry. The Federal Reserve is neither private, nor public. It is a hybrid, working in tandem with the Treasury Dep’t. of the government, through the private banking system, and the transparency of oversight by the people’s representatives in Congress.
I fail, I must admit, to see a more politically insulated system possible, capable of greater neutrality and objectivity than the current system.
Posted by: David R. Remer at January 27, 2008 06:46 PMd.a.n said: “True. Their pyramid money system collapsed, as will ours, eventually.”
Only, when and if foreign underwriters of our debt find better returns at less risk in other nation’s treasury borrowing. And yes, I agree, that the potential of China and, or Saudi’s finding better risk at comparable rates of return in other economies, is a very real potential as our nation seeks 20 trillion federal debt levels to underwrite the entitlement obligations. That depends on a plethora of variables unknowable at this point in time, such as how the E.U. resolves its own boomer retirement demographic and whether it can provide a significantly less risky return on borrowing than we can.
The Federal Reserve IS a privately owned bank. The only control the government has is to appoint one person (e.g. Bernanke, Greenspan) to the board. That’s it. And I don’t think they’re doing a very good job, since we’ve had constant, sustained, incessant inflation since 1955.
But then, that’s the problem with pyramid schemes. It is necessary to keep growing the money supply and the debt monster, until no more debt can be created, and the pyramid money system finally collapses.
Then, why not privatize Social Security?
Why have a middleman charging the government and everyone else interest (usury) on money created out of thin air?
I guess you realize, the world is making a very small group of people rich who receive interest on money created out of thin air.
I have presented many convincing arguments, reasons, and proofs.
You’re sole argument appears to be that the government won’t manage the regulation correctly? Yet, you don’t trust Social Security to be trusted to privatization?
I can see that neither of our arguments are convincing the other.
No hard feelings I hope, but we will have to agree to disagree.
Sorry, d.a.n, but, all seven members of the Board of Governors are nominated by the President of the United States and confirmed by the U.S. Senate. If all Governors serve full terms, a President would be able to appoint only two Governors during a four-year presidential term.
That is a fair amount of control and insulation from the preponderance of political ideologies.
In addition, by law, the appointments must yield a “fair representation of the financial, agricultural, industrial, and commercial interests and geographical divisions of the country,”
Governors are subject to term limits: the full term of a Governor is fourteen years; appointments are staggered so that one term expires on January 31 of each even-numbered year. Even more government control.
Congress sets the salaries of the Board members. For 2006, the Chairman’s annual salary is $186,600. The annual salary of the other Board members (including the Vice Chairman) is $168,000. More government control of this organization. It simply is not factual that the FED is entirely private and apart from government control.
Lastly, by law, Board employees, and their spouses and minor children, are NOT allowed to own or trade stock in depository institutions or affiliates of such institutions. Also, employees who have ongoing access to the most sensitive Federal Open Market Committee information, and their spouses and minor children, may not own stock in primary government securities dealers or their affiliates, and they are restricted as to when they may buy and sell securities.
In light of these facts, d.a.n, I have to disagree with your statement: “The only control the government has is to appoint one person (e.g. Bernanke, Greenspan) to the board. That’s it.”
Posted by: David R. Remer at January 27, 2008 07:52 PM
I stand correted on the appointees.
However, that more significant question is still:
QUESTION: Why have a middleman charging the government and everyone else interest (usury) on money created out of thin air?
OBSERVATION: I guess you realize, the world is making a very small group of people rich who receive interest on money created out of thin air.
Posted by: d.a.n at January 27, 2008 08:04 PM
And, it IS a private bank system, which you deny.
Posted by: d.a.n at January 27, 2008 08:06 PMAnd how about the constant, sustained, incessant inflation since 1955?
Posted by: d.a.n at January 27, 2008 08:08 PMCongress sets the salaries of the Board members. For 2006, the Chairman’s annual salary is $186,600. The annual salary of the other Board members (including the Vice Chairman) is $168,000. More government control of this organization. It simply is not factual that the FED is entirely private and apart from government control.Mere puppets.
Look at what is happening in America.
Rampant debt.
Easy Credit.
1% that owned 20% of all wealth is now 40%.
At any rate, these debates are constructive.
Now I know there are several appointees to the board of the Federal Reseve. I have egg on my face.
But it does not change the MAJORITY of my case.
Posted by: d.a.n at January 27, 2008 08:16 PMOK, let’s say it is QUASI government controlled (with 7 appointed board members), and QUASI privately owned (the bank owners receive the interest on money created out of thin air).
Personally, I don’t see the 7 government appointed board members of the Federal Reserve as much benefit, since the owners of the bank receive the interest on each loan, of which 90% of each loan is money created out of thin air?
Why should the banks receive the interest on money created out of thin air?
Why should the government pay interest on the money it spends?
Why make a very small group of bank owners rich?
But it is actually much worse that that, because when the loan are foreclosed, the owners of the bank confiscate the real property, which essentially converts money printed out of thin air into real assets and property. Cha-Ching!
And the 7 board members of the Federal Reserve don’t seem to be doing a good job with, with:
- millions of foreclosures,
- bankruptcies;
- personal nationwide debt of $20 Trillion (and growing);
- National Debt of $9.2 Trillion (and growing);
- the M3 Money supply has increased by a factor of 75.2 between year 1950 and year 2005 (and continues to grow);
- long term, sustaing, incessant inflation a 1950 U.S. Dollar is now worth 11 cents;
- rising unemployment;
- ecnonomic instability;
- falling household incomes (when workers per household and National Debt are factored-in);
- usury, predatory lending, fraud;
- volatile interest rates;
- and the U.S. Dollar is falling against all foreign currencies.
Won’t lowering interest rates make credit easier to afford, which will make it easier to grow the nationwide debt ever larger?
Isn’t that part of the problem?
We’re being told to spend more, consume more, and borrow more?
And when we get our rebate checks from the $150 Billion stimulus package, they don’t want people using it to pay down debt, and say the stimulus package won’t help anything if the rebates are used to pay down debt?
These (above) are good questions which can not be so easily ignored and rationalized by the mere position that a QUASI government controlled (with 7 appointed board members), and primarily privately owned Federal Reserve is necessary.
d.a.n wrote: “The fractional banking system (i.e. Federal Reserve, a privately owned bank) actually is little more than a pyramid scheme.”David wrote: Not true. It is a pyramid scheme, but also much more, a somewhat independent regulatory body for the economy, and as current events demonstrate, a needed regulatory body. Though not always competent.
How can a mere 7 government appointees to the federal reserve board (who apparently aren’t doing a very good job) outweigh these many advantages (below) of a non-pyramid type monetary system that does not have to pay interest to a privately owned bank:
In fact, the system I proposed is superior, stable, and sustainable.
It offers many advantages:
- (01) The money supply is stable. Fluctuations are small, instead of relying on accelerated and unsustainable growth.
- (02) The government creates and spends the interest-free money it needs without paying interest to the Federal Reserve bank that creates money out of thin air.
- (03) No usury; no predatory lending; people should make money from creating value; not making money by playing with money; government spending should not be enriching a very few bank owners;
- (04) The debt monster is gone, since INTEREST doesn’t exist to require more and more and more money to be created.
- (05) There is no need for private banks, who receive interest using our hard earned money to create 9 times more new money out of thin air.
- (06) It eliminates the pressures to create more growth (GDP) to compensate for the growing nation-wide debt
- (07) It eliminates the pressures to create more productivity by growing the population and illegal immigration to create more growth to compensate for the growing nation-wide debt
- (08) It eliminates the unsustainable exponential growth needed to compensate for the growing nation-wide debt
- (09) It avoids the obvious problems with commodity, gold, or silver backed currencies
- (10) It eliminates the inevitable collapse of the pyramid cycle, that is doomed before it began
- (11) Money is not created as debt.
- (12) Eliminates the need for incessant inflation to stave of collapse of a pyramid scheme.
- (13) There would be NO National Debt.
- (14) Short term actions don’t carry forward exponentially.
- (15) The currency system and government banks belongs to the government, and therefore, the people.
- (16) Why would people borrow from a bank (with INTEREST) when they can borrow from the government, INTEREST FREE?
- (17) There would be NO usury.
- (18) Since government controls the money supply, the politicians that create too much inflation or deflation can now be held directly accountable by the voters; voters currently have no control over the privately owned Federal Reserve Bank.
Lastly, in your article above (“Stimulus: Good, Bad, and Ugly”), you acknowledge the “Ugly” part is …
David R. Remer wrote: The Ugly! - The ugly truth about this angelic bi-partisan fever that swept over the House of Representatives is that they are all facing reelection in November and they are all attempting to buy votes from their constituents back home. This accounts for the compromises, and the targeting of who will benefit, and who won’t. The very poor in this country don’t generally vote.
So, how has the QUASI government controlled Federal Reserve (with a mere 7 government appointed board members) provided the following:
David R. Remer wrote: That [7 board members] is a fair amount of control and insulation from the preponderance of political ideologies.
If government control is the goal, why not have total control?
If partial privatization is required, why not partially privatize Social Security and other government programs?
On 22-DEC-1913, Republican Representative Charles Lindbergh Sr. stated: “The worst legislative crime of the ages is perpetrated by this banking bill…The banks have been granted the special privilege of distributing the money, and they charge as much as they wish…This is the strangest, most dangerous advantage ever placed in the hands of a special privilege class by any Government that ever existed. The system is private…There should be no legal tender other than that issued by the government…The People are the Government. Therefore the Government should, as the Constitution provides, regulate the value of money.” (Congressional Record, 1913-12-22)
The same day, Congressman Victor Murdock told Congress on that same day: “I do not blind myself to the fact that this measure will not be effectual as a remedy for a great national evil – the concentrated control of credit…The Money Trust has not [died]…He will not cease fighting…at some half-baked enactment…You struck a weak half-blow, and time will show that you have lost. You could have struck a full blow and you would have won.” (Congressional Record, 12/22/1913)
Ironically, in October of 1913, two months before the enactment of the Federal Reserve Act signed by Woodrow Wilson (who strongly regretted doing so later), Frank Vanderlip proposed before the Senate Banking Committee his own competing plan to the Federal Reserve System, one with a single central bank controlled by the Federal government, which almost derailed the legislation then being considered and already passed by the U.S. House of Representatives.
I think it is encouraging that a few political candidates are finally getting the courage to bring up the subject of the Federal Reserve.
The problem with the monetary system subject is few people really understand that it is, as you stated:
David wrote: It is a pyramid scheme, but also …
Education is part of the solution, and just its mere mention is a start.
Either way, we’re going to get our education, and we will have the government that we deserve.
Posted by: d.a.n at January 28, 2008 11:25 AM
“I don’t think rachel is one of the wealthiest 1 or 5% who need to fear higher taxes from Democrats, kctim. Or, are you doing the Republican scare tactic again? Sorry, but it has all the spook of the Dumb little Casper the Friendly Ghost, these days. That wolf cry recording has been heard hundreds of times too often to be taken seriously anymore”
Yes David, the fact that taxes will be raised because our country has enormous debt that has to be paid off, is nothing more than “Republican scare tactics.”
I do love how you assume I am using evil Republican scare tactics while at the same time you spread the “only the rich will pay” liberal BS.
If you would read what is said, rather than assume what is said, you would see that I made no mention of politics.
If you want to bullsh*t Rachel and tell her that her taxes won’t rise if she votes Democrat, then go ahead and lie.
I won’t.
kctim, then it is your contention that Democrats will NOT be raising taxes on the wealthy and corporations? If so, you have not been listening to the Democratic Congress nor their presidential candidates.
Posted by: David R. Remer at January 28, 2008 04:19 PMDavid:
The information I am getting is to expect GDP growth in the fourth quarter to be at about 1%, and job growth to be somewhere between 70-90,000.
We will see!!
Posted by: Craig Holmes at January 28, 2008 04:41 PMDavid, our taxes are going to be raised no matter who wins.
The Dems can claim they will only raise taxes on the wealthy and the corps all they want, but they will eventually raise them for us all. And the Reps can play “read my lips, no new taxes” all they want, but they too will have to do something.
It does not matter who is “leading” the nation, our dependency is too great and our debt is too huge and it has to be paid off.
I intentionally did not say “elect hillary and pay more taxes,” because I honestly don’t believe it will matter one bit who is elected.
We are screwed and people better start stashing cash.
d.a.n, regarding the remarks:
So, how has the QUASI government controlled Federal Reserve (with a mere 7 government appointed board members) provided the following:
David R. Remer wrote: That [7 board members] is a fair amount of control and insulation from the preponderance of political ideologies.
First, there are 7 governors. There are 1,800 or so employees on staff at the Federal Reserve. So, its not like 7 people control the whole ball of wax.
“If government control is the goal, why not have total control?”
Government control is not the goal. Who said it was? Government oversight as well as insulation from partisan politics were/are the goals of the design.
Lastly, a government run central bank would almost immediately become a political party run banking system. The greatest virtue of the current system is that it is largely insulated from political winds of elections and electoral trends, favoring neither party’s primary campaign donors, but, the monetary needs of all the nation’s people as best it can with the limited tools at its disposal, interest rates and liquidity.
d.a.n said: “OK, let’s say it is QUASI government controlled (with 7 appointed board members), and QUASI privately owned (the bank owners receive the interest on money created out of thin air).”
All money is created out of thin air. The Yuan, the Euro, and the US Dollar. Well, not thin air, paper, fabric, ink, etc. But, you get the point. As I said, money is nothing more than a scorecord of who owes whom how much in the trade of goods and services. And it is the Treasury, the Government, that prints money, not the Federal Reserve, though the Federal Reserve works hand in hand with the Treasury in deciding when and how much money to print. The FED primarily controls access to available money supply via raising or lowering interest rates.
The FED has never, to my knowledge, ever engaged in usury, defined as unfairly high rates of interest for personal gain and to the detriment of the borrower. Credit card companies, mortgage lending companies are guilty of usury, and Congress is guilty for not constraining it. But, the FED’s role is not to profit, but, to regulate toward the dual goal of mitigating inflation and maintaining moderate and as stable as possible GDP growth.
One of you complaints appears to be the amount of the aggregate money supply exceeding the value of goods and services extant, in the society or world. But, that is the nature of IOU’s, a promissory note for goods or services one does not yet have. This is what leads economists to the belief that GDP growth must consistently trend above zero to catch up to the difference between extant goods and services and the total of the IOU’s (money supply).
Can such a system collapse? Of course it can, and has in the past. But, only to be resurrected from the ashes of depression or runaway inflation, civil war, or revolution. Reason: such a system is integral to human evolution as language is when the population numbers and complexity of trade reach industrial international levels. There simply is no substitute.
Posted by: David R. Remer at January 28, 2008 04:45 PMkctim
I intentionally did not say “elect hillary and pay more taxes,” because I honestly don’t believe it will matter one bit who is elected. We are screwed and people better start stashing cash.
Rolling my eyes. Wow lets just all drink koolaid and be done with it!!
First of all taxes are going up. They always go up because of indexing. So when there is no tax increase taxes go up as a % of GDP over time. They are predicted to rise to 20% of GDP over the next several years if congress does nothing.
Look at the Reagan years. Look at tax rates now!! Taxes right now are well within the normal range of the last 40 years.
Second. It is wrong to assume away spending cuts. With entitlements, let the top half pay their own medicare. Why should the most affluent people in the world be subsidized?
There is not a snowballs chance in your know where that I am for tax hikes UNTIL we have stopped subsizing the well off. Have the affluent pay for their own medical and watch a solution appear.
I am 52 which is right in the middle of baby boomers. Let me pay for my own medicare/prescriptions before you raise my taxes.
If we need to raise taxes, raise them but not before we cut entitlements on the well off.
Posted by: Craig Holmes at January 28, 2008 05:39 PMUm, which kool-aid am I supposed to be drinking this time Craig?
The lefts kool-aid which says its “Bushs” fault we have to raise taxes or the rights kool-aid which says Dems always raise taxes to support their feel-good programs?
Snowballs chance? I’m sorry, where did I even mention that I thought I knew where you were on tax hikes?
I simply said taxes are going to go up to pay for our debt, no matter who is in charge.
“Let me pay for my own medicare/prescriptions before you raise my taxes”
Do you really think I would object to that? Um, no. In fact, where you advocate cutting entitlements on the well off, I actually advocate cutting entitlements for everybody.
Posted by: kctim at January 28, 2008 05:51 PMkctim:
I am reacting to this:
We are screwed and people better start stashing cash.
And no we do not have to raise taxes to pay off the debt. We don’t have to pay off the debt at all. As long as debt grows no faster than nominal GDP we are fine. It is better if debt grows slower than nominal gdp.
What we may need to increase taxes for is future entitlement spending. I am for reforming entitlements first. When that has happened then I think taxes may need to be looked at. Assuming taxes will go up is very dangerous because that means they will without restructuring things and we will basically be in the same place as now only at a different level. It is very important to fight increases in taxation until there is a change in DC behavior.
Posted by: Craig Holmes at January 28, 2008 06:07 PMDavid R. Remer wrote: The FED has never, to my knowledge, ever engaged in usury,…Well, technically, the Federal Reserve Bank, a privately owned bank (with some government oversight), receives interest on loans, and by some (not all) definitions, charging interest is usury. After all, the Federal Reserve does not make interest-free loans.
David R. Remer wrote: There are 1,800 or so employees on staff at the Federal ReserveBut those are not government paid employees, are they?
Yes, I was aware that the U.S. Mint creates the physical coin and paper currency.
The Federal Reserve creates the money, and 90% of every new loan (9:1 fractional system) is new money created out of thin air. Yes, that is true for all fiat money systems, and that is not really the problem. The problem is the usury (interest) that turns it into a pyramid system in which the debt must grow to avoid collapse. That pyramid system creates other pressues (e.g. illegal immigration, falling incomes, growing wealth distribution, etc.).
David R. Remer wrote: One of your complaints appears to be the amount of the aggregate money supply exceeding the value of goods and services extant, in the society or world. But, that is the nature of IOU’s, a promissory note for goods or services one does not yet have. This is what leads economists to the belief that GDP growth must consistently trend above zero to catch up to the difference between extant goods and services and the total of the IOU’s (money supply).The complaint is usury (interest) and fractional lending creates a pyramid (a mathematical problem), not to mention the moral problem.
David R. Remer wrote: Can such a system collapse? Of course it can, and has in the past.Not can. Will.
That can be said with confidence, because it is the harsh reality of the math.
It’s not a matter of IF. It is a matter of WHEN.
The cycle will end when there capacity for the people to bear more debt is finally exceeded.
David R. Remer wrote: But, only to be resurrected from the ashes of depression or runaway inflation, civil war, or revolution.Maybe, but it does not have to be that way.
If we learn from our mistakes, we will create a monetary system that isn’t doomed to the same pyramid cycle.
A government controlled monetary system without usury may have other unforseen problems, but at least it is not mathematically doomed from the very beginning to the collapse (as is the current system).
David R. Remer wrote: Reason: such a system is integral to human evolution as language is when the population numbers and complexity of trade reach industrial international levels. There simply is no substitute.The “system” with usury is integral to human evolution?
Hmmmmm … sounds good.
But it isn’t proof that a government bank without usury can not work.
Already, in some places, usury is prohobited, and those nations have have international commerce.
As for international trade and commerce, there would be little change as far as foreign banks, organizations, business, and exchange rates are concerned.
But there would be many improvements and benefits that outweigh the concern over the political pressures (which already exist no on the Federal Reserve too).
For one thing, the government would not need to borrow money from the rest of the world.
Thus, the government would not need to pay interest.
Thus, there would be no National Debt.
It’s a more simple system, that doesn’t have the mathematical problem and moral problem releated to usury.
It is actually amazing how such a simple change can have so many benefits.
There would be many benefits:
In fact, the system I proposed is superior, stable, and sustainable.
It offers many advantages:
- (01) The money supply is stable. Fluctuations are small, instead of relying on accelerated and unsustainable growth.
- (02) The government creates and spends the interest-free money it needs without paying interest to the Federal Reserve bank that creates money out of thin air.
- (03) No usury; no predatory lending; people should make money from creating value; not making money by playing with money; government spending should not be enriching a very few bank owners;
- (04) No usury in which the bank, via foreclosure, confiscates real property, which is the conversion of money printed out of thin air into real property and assets.
- (05) The debt monster is gone, since INTEREST doesn’t exist to require more and more and more money to be created.
- (06) There is no need for private banks, who receive interest using our hard earned money to create 9 times more new money out of thin air.
- (07) It eliminates the pressures to create more unsustainable, exponential growth (GDP), to compensate for the growing nation-wide debt
- (08) It eliminates the pressures to create more productivity by growing the population and illegal immigration to create more growth to compensate for the growing nation-wide debt
- (09) It avoids the obvious problems with commodity, gold, or silver backed currencies
- (10) It eliminates the inevitable collapse of the pyramid cycle, that is doomed before it began
- (11) Money is not created as debt.
- (12) Eliminates the need for incessant inflation to stave off collapse of a pyramid scheme.
- (13) There would be NO National Debt.
- (14) Short term actions don’t carry forward exponentially.
- (15) The currency system and government banks belongs to the government, and therefore, the people.
- (16) Why would people borrow from a bank (with INTEREST) when they can borrow from the government, INTEREST FREE?
- (17) There would be NO usury.
- (18) Since government controls the money supply, the politicians that create too much inflation or deflation can now be held directly accountable by the voters; voters currently have no control over the privately owned Federal Reserve Bank.
So, I’m still not clear why that can not work?
There are people that will resist it.
There seems to only be the private vs. government control issue.
But there appears to be many advantages.
Then perhaps, we would not have so much of the bad and ugly?
Think about it.
All that is needed sometimes is for a tipping point … enough people to support a good idea.
This is not a new idea. It was recommended almost one hundred years ago and almost derailed the vote for the current pyramid system.
Posted by: d.a.n at January 28, 2008 06:18 PMd.a.n asked: “But those are not government paid employees, are they?”
I don’t know, same as you. My guess is, if the government pays the governor’s salaries, it also pays the staff’s salaries, but, like I said, I don’t know for sure. Who do you think buys this labor?
Interest is not Usury, d.a.n, even by your own definition’s link which states: “interest… especially at an exorbitant or illegally high rate. - An excessive or illegally high rate of interest charged on borrowed money.”
The FED does not charge usurious rates, unless you insist on returning to the biblical definition and exaggeration of the principle by Shakespeare in Merchant of Venice, where a pound of flesh defines usury.
d.a.n said: “The Federal Reserve creates the money, and 90% of every new loan (9:1 fractional system) is new money created out of thin air.”
The facts don’t support this statement. The FED makes loans from existing money supply. Perhaps it would be a benefit to research the depository function of member banks, from which money is borrowed by member banks, and the FED’s intermediary role in member banks lending other member banks money in overnight transactions which reconcile the public’s credit and debit transactions each day?
The treasury creates money. The FED sets rates for the member bank transactions amongst themselves. The treasury operates as agents of the people. The FED operates as agent for the banks. The two work hand in hand with each other sometimes even checking and balancing each other by the exercise of authority of the other.
It is far from the arbitrary system your comment implies regarding creating money out of thin air. I do recommend some research into the operations and definitions of authority of the Treasury and the FED. I know it is complex, and relatively foreign to common sense awareness, but, if one is going to debate for or against the system, it is helpful to have a broader working knowledge of the facts about these institutions.
One thing is intuitively clear. If it were not for the world’s central banks keeping the scorecards of nation’s and corporations international transactions honest and transparent, nations would be in perpetual states of war over accusations of such accounts cheating other nations out of their due. The virtual absence of such warfare stands as a testament to the fact that those with trillions to gain or lose, rely on this system and have confidence in it.
Doesn’t mean it won’t fail one day. But, people generally keep tabs on their money pretty well, and those with MA’s and Ph.D’s in accounting, do it with extreme levels of expertise and repetitive checks for errors and inconsistencies so the accounts can be resolved accurately and fairly by agreed upon rules, before war like accusations can be fomented.
Posted by: David R. Remer at January 28, 2008 08:20 PMd.a.n said: “But it isn’t proof that a government bank without usury can not work.”
The proof you seek is in the future value of time and energy expended today and opportunity cost in lending money. Both have value to those expending the effort and time for future return and those who give up purchase rights to their money to give others purchase rights with their money.
As long as I value the money I lend and the lost opportunity to use my money to earn more elsewhere, I will demand that the borrower of my money compensate me for the earnings I could have generated with my money by lending it to someone else instead. That is the definition of interest in its most concrete terms.
If you don’t value your money in this way, by all means, I will be happy to take out a zero interest loan from you on my car with the title as collateral. Upon repayment of the principle, you give me back the title. If that arrangement suits you, it will tickle me pink?
Banks handle other people’s money. Banks have an obligation to insure their client’s ALSO earn interest on their deposits as their agents. The banks loan those deposits to others, permitting the banks to pay a dividend interest on savings back to their clients, plus overhead, and return on investment to shareholders lending their money for the bank’s expansion and competitive development.
End interest, and you end trade, development, and innovation. End interest, and you end humanitarian efforts, charitable foundations, and the acquisition of working capital for start up organizations non-profit and for profit.
We should end usury which seeks to cripple others for personal benefit, not fair and equitable interest on borrowed funds which liberate others to create better futures and quality of life for themselves and their dependents.
Posted by: David R. Remer at January 28, 2008 08:33 PMCraig
“What we may need to increase taxes for is future entitlement spending. I am for reforming entitlements first”
That won’t happen until after they have tried raising taxes and it proves to not be enough.
The people are too dependent on their govt “freebies” and will only want more of them in the future, which govt will happily provide.
I like your optimism and always enjoy seeing your level headed economic posts Craig, but I just don’t see how our taxes won’t be going through the roof in order to pay on the debt and to pay for all these “freebies” that are being pushed onto all of us.
Posted by: kctim at January 29, 2008 09:21 AMkctim, the Interstate Hwy system was pushed onto you. The vast American public library system with the National Library of Congress was pushed onto you. The space exploration program was pushed onto you. The largest and most expensive military industrial complex in the world, entirely supported by tax dollars, was pushed onto you. The Katrina rescue and restoration costs were pushed onto you. These and thousands more spending programs were pushed onto you, all in the exactly the same manner, through our political process.
So, which do wish to do first, dump our democratically elected representative political process, or sell all those assets and programs pushed onto you to the Chinese and Saudi’s.
The government from the its very inception was designed to serve the people of the United States. I get so tired sometimes hearing bellyachers complain about the government serving the people’s interests at their expense.
You want to change it? Vote out your incumbents.
One truth is indisputable, voting the same incumbents back in again and again is not going to change the status quo in government. As Republicans just proved, changing parties doesn’t change the status quo. After you have voted out your incumbent, put your money where your mouth is and donate or support an organization that will get other people to vote out their incumbents too, and replace them with challengers who have not yet been corrupted by the status quo!
When you have done all that, I will gladly read some more bellyaching comments, and respond appropriately. :-)
Posted by: David R. Remer at January 29, 2008 10:11 AMkctim
I like your optimism and always enjoy seeing your level headed economic posts Craig, but I just don’t see how our taxes won’t be going through the roof in order to pay on the debt and to pay for all these “freebies” that are being pushed onto all of us.
Thank you. If I can divide your comments into two parts.
1. We don’t need to raise taxes to pay on the debt as long as debt rises no faster than the nominal rate on the economy.
2. Entitlements are not in crisis because of the age wave, they are in crisis because of health care.
What this all boils down to (Well no all but most) is that we need to reform health care. You can safely isolate most of our future fiscal crisis around the concept of providing health care at a more reasonable cost.
Dan is great at showing huge numbers of debt that we “owe”. These are all present value numbers of future costs assuming medicare/medicaid continute to grow at 2% over nominal gdp. That is huge over a 50 year period. Assuming medicare/medicaid grows at the same rate as nominal gdp and the future is much brighter.
By the way, this week is huge for economic data. It could either confirm a recession is on the way, or blow conventional wisdom out the window.
Economists I am reading are showing fourth quarter gdp at about 1% and job growth at 70-90,000. If initial unemployment claims due out on thursday are another non event, and the fed drops interest rates again, and we get a decent job numbers the recession talk could be greatly reduced next week. It will be interesting.
Posted by: Craig Holmes at January 29, 2008 10:54 AMDavid/Dan/kctim:
I am beginning to question whether there is need of a stimulus package.
Posted by: Craig Holmes at January 29, 2008 12:46 PMAnd all that has exactly what to do with the fact that our taxes will rise to pay off our debt? You know, what you and I were talking about.
I have already accepted the fact that you believe in the socialist democracy our country has become and not what it was founded on, David. That is why I was concentrating on the debt in my post to you.
You don’t like it when people disagree with your views, fine. But no need to call it “bellyaching” and refusing to respond when it was directed to Craig.
Craig, you are wise to do so.
There was a stimulus package that would have been largely beneficial, but, the compromise between the WH and Democrats in the House, AIN’T IT!
First of all, it is a $150 billion package that will add 200 billion to the deficit. The $50 billion for business will cost roughly $100 billion, since it foregoes $50 billion in tax revenues from business and adds $50 billion to the deficit for a net loss of $100 billion.
Since, this recession is NOT supply driven, but, declining demand driven, the business stimulus will do virtually nothing to stimulate the economy. And since, the individual tax rebates are targeted to the middle class, only between 20 to 50% of the $100 billion will actually be used for domestic consumption right away, the rest being saved or to buy down personal debt, neither of which will stimulate economic activity.
So, at best, for a $200 billion addition to the deficit, we will see an actual economic stimulus of only between $20 to $50 billion dollars. In a what, $4 trillion dollar economy, that is like a mosquito trying to stimulate an elephant.
The only potential real benefits from this package are 1) psychological, and 2) if the psychological benefit is realized, then political, because politicians will crow how they saved the failing economy from being worse than it would have been in November.
Adding another 1/5 of a trillion to the national debt however for psychological potential benefit, is penny wise and pound foolish, in the extreme. And compounded by the fire sale underway in which foreign investors are buying up American assets at bargain basement prices with a depressed market, capital asset prices, and the very low U.S. Dollar value.
Some will argue Japan’s buying up of American capital assets didn’t hurt us. But, it is the Arabs and Chinese buying into our fire sale today. And they have never been conquered into alliance by the U.S. as the Japanese were. Galactic difference which needs to be taken into account from a future foreign policy and national security risk assessment.
The leverage they garner by buying up American assets to threaten a fire sale of those assets themselves someday in the future, is potentially very, very powerful influence over US Politicians of tomorrow.
Posted by: David R. Remer at January 29, 2008 01:04 PMDavid:
I think we are simply rushing to judgment again. The “inspectors” should have their work done by the end of the week. By friday afternoon our perception of the recession issue will be very different one way or the other.
December durable goods orders were a positive surprise. Watch for more positive surprises this week.
Posted by: Craig Holmes at January 29, 2008 01:17 PMkctim said: “I have already accepted the fact that you believe in the socialist democracy our country has become and not what it was founded on, David. “
Your words only demonstrate to me how little you understand, kctim. Your comment reflects a black and white approach to unfettered capitalism and individual freedom from government vs. government weighing and balancing the needs of a very diverse set of factions all clamoring demands, while preserving the union and integrity of the nation, or what you call socialist democracy.
Your fact is not a fact at all. As my writings and philosophy over years demonstrate, I believe in and support a mixed economic and political approach which seeks maximum benefit from relatively free but regulated and overseen enterprise which is prone to greed and fraud, and maximum protection of individual citizen’s rights both constitutional, and their right to be treated fairly, when the actions of the wealthy and powerful negatively affect the unwealthy and unpowerful.
I do believe the government has an obligation to assist homeowners taken advantage of by the sub-prime lenders. I believe their is a need for sub-prime lenders, but, not without regulation and oversight as we have learned the hard way our banks and savings and loans required to insure the greatest prosperity for all persons transacting under their auspices.
Taxes are the cost of that maintaining this mixed economic and political approach. Taxes MUST go higher or, as you say, our children will suffer intensely from a lack of financial and economic options we ourselves enjoyed.
I do believe each generation has an obligation to pay for its own national success, and not pass that cost to the next generation. America is enjoying the greatest wealth and highest elevation of quality of life for more of its citizens than at any time in its history. You don’t get here for free. There were enormous costs attached to arriving here. And those costs need to be paid by us, the beneficiaries of this peak in American history.
And it should be a shared cost, either proportional to one’s wealth, (flat tax) or progressive (those enjoying the greatest benefits pay the most for those benefits of living wealthy in this America). It is both fair, and just that we should raise our own taxes in payment for our own success, and leave our children with a future unburdened by our refusal to pay for our own benefits.
Posted by: David R. Remer at January 29, 2008 01:23 PMCraig, the durable goods orders just exacerbate the mixed good news/bad news data, making it that much harder for the FED or Congress to act definitively.
I don’t think we will have any clarity on our economic situation until March at the earliest. Prudence dictates the FED only cut 25 points tomorrow. But, the newfound economic populism backed by popular 401K’s and mutual funds, is demanding 50 points, inflation be damned 1 year from now.
One thing is for sure, the FED will be assaulted regardless of what it does. Which actually makes their decision process a bit easier in the balance of things. With so many Americans vested in the markets, the FED can no longer ignore the market data for economic and inflation data. The equity markets have become an integral aspect of the economic data.
Which is to say, our economic condition has changed and requires new models to predict and assess the future with. Even if those new models are being used, there is the task of reeducating the public and investors to these new paradigm model shifts. It is not going to be easy, nor pretty. Larry Kudlow is a perfect example of the kind of resistance that is to be overcome.
I agree with you though. The durable goods numbers were very welcome, especially because they weren’t bloated with airplane orders. Meaning the number reflects more washing machines and refrigerators and furnishings.
Posted by: David R. Remer at January 29, 2008 01:32 PMd.a.n asked: “But those are not government paid employees, are they?”No, employees of the Federal Reserve Banks are not government employees. They are paid as part of the expenses of their employing Reserve Bank.David R. Remer wrote: I don’t know, same as you. My guess is, if the government pays the governor’s salaries, it also pays the staff’s salaries, but, like I said, I don’t know for sure. Who do you think buys this labor?
David R. Remer wrote: Interest is not Usury, d.a.n, even by your own definition’s link which states: “interest… especially at an exorbitant or illegally high rate. - An excessive or illegally high rate of interest charged on borrowed money.”Well, that’s debatable. Does “Especially” mean none?
And who defines “excessive” or “exorbitant”?
At one time, usury was ANY amount of interest charged:
- Usury (noun)
- 1. The practice of lending money and charging the borrower interest, especially at an exorbitant or illegally high rate.
- 2. An excessive or illegally high rate of interest charged on borrowed money.
- 3. Archaic Interest charged or paid on a loan.
In America today, a 30 year loan on a home means interest may be 2 or 3 times the principal.
Is that usurious?
How many people have those?
I had one, but paid it off in 5 years, reducing the total interest to 20% of the principal instead of 250% of the principal.
It is interesting how, over time, a change in moral values has also attempted to change the definition of usury from interest into exorbitant or excessive interest.
Usury (both minimal and exorbitant) is rampant in America, and world-wide (except in some middle eastern countries where it is still considered immoral).
Still, the moral problem is only half the problem.
There is still the mathematical problem (the pyramid scheme which will collapse unless more and more money is created).
The Federal Reserve creates money out of thin air (9 times the reserves) for PRINCIPAL.
That is why the M3 Money Supply increased by over 75 times between year 1950 and year 2005.
That is also why inflation has eroded a 1950 dollar to less than 11 cents today.
The mathematical and practical issue is enough reason to question the pyramid scheme.
David R. Remer wrote: The FED does not charge usurious rates, unless you insist on returning to the biblical definition and exaggeration of the principle by Shakespeare in Merchant of Venice, where a pound of flesh defines usury.It charges interest.
The current Fed Rate was 4.25%, and recently lowered to 3.5%, and may be lowered again this week (28-JAN-2008) to 3.0%.
But the real question is:
And the Federal Reserve charges interest to other member banks.
There are 12 Federal Reserve Banks:
- 1st District—Boston
- 2nd District-New York
- 3rd District-Philadelphia
- 4th District-Cleveland
- 5th District-Richmond
- 6th District-Atlanta
- 7th District-Chicago
- 8th District-St. Louis
- 9th District-Minneapolis
- 10th District-Kansas City
- 11th District-Dallas
- 12th District-San Francisco
Those 12 Federal Reserve Banks:
- hold the reserves
- and make loans on those reserves to member banks, and charges interest on those loans
- issues and redeems government securities (e.g. bonds).
- distributes currency (coin and paper) to depository institutions (other reserve and member banks)
- process checks, wire transfers, etc.
- but, most importantly, set monetary policy.
d.a.n wrote: The Federal Reserve creates the money, and 90% of every new loan (9:1 fractional system) is new money created out of thin air.The facts don’t support this statement. The FED makes loans from existing money supply. Not true.David R. Remer wrote:
That is easy to prove as a fact.
The Federal Reserve is currently a 9:1 fractional loan system.
While the U.S. Mint (government) creates coins and paper, the money the Federal Reserve loans is created out of thin air (on a computer) at a 9-to-1 ratio (i.e. upto 90% of each loan is new money created out of thin air). The proof is the money supply. It has increased drastically since 1950 (M3 Money Supply increase over 75 times between 1950 and 2005).
That means the Federal Reserve bank can make a loan that is 9 times the amount in reserves. Hence, the current 9:1 ratio.
Today, in the United States, the minimum fraction of 10% is required in reserves.
For example, let’s say the Federal Reserve Bank has $1111.11 in reserves.
That means the bank can make a loan of 9 times the $1111.11 in reserves (which is a loan of $10,000.00).
David R. Remer wrote: Perhaps it would be a benefit to research the depository function of member banks, from which money is borrowed by member banks, and the FED’s intermediary role in member banks lending other member banks money in overnight transactions which reconcile the public’s credit and debit transactions each day?I did. In addition to that (above), the member banks can charge more interest on the loans from the money created out of thin air. The member banks also receive interest on money created out of thin air.
Not only that, when a debtor fails to repay the loan (defaults), the bank confiscates the real property, which converts the money printed out of thin air into real property and assets. Cha Ching!
David R. Remer wrote: The treasury creates money. The FED sets rates for the member bank transactions amongst themselves. The treasury operates as agents of the people. The FED operates as agent for the banks. The two work hand in hand with each other sometimes even checking and balancing each other by the exercise of authority of the other.The two all work hand-in-hand to fleece America with a pyramid scheme that is doomed to collapse.
David R. Remer wrote: It is far from the arbitrary system your comment implies regarding creating money out of thin air.True. There was nothing arbitrary about it.
It is a cleverly designed to exploit other, and pretend to be doing them a favor.
The money is created out of thin air, and the Federal Reserve and member banks receive interest on money created out of thin air (up to 9 times the money in reserves).
But it is really far worse than that.
Remember the interest that the Federal Reserve is receiving?
That increases their reserves to create more money at a ratio of 9-to-1.
The end result is the money supply continues to grow and grow, as evidenced by the M3 Money Supply that increased by a factor of 75 between 1950 and 2005.
And that causes inflation, which is why a 1950 Dollar has eroded to less than 11 cents.
And if anyone defaults, they bank confiscates the property, converting the money created out of thin air into real property and assets.
David R. Remer wrote: I do recommend some research into the operations and definitions of authority of the Treasury and the FED.I am. But it has not changed anything. In fact, it reinforces what I already believed (aside from the number of board members).
David R. Remer wrote: I know it is complex, and relatively foreign to common sense awareness, but, if one is going to debate for or against the system, it is helpful to have a broader working knowledge of the facts about these institutions.Yes, it is complex.
Keeping a pyramid scheme from collapse is a tough job.
I guess you realize some in the Federal Rerserve know this too, but choose to never speak of it.
Despite my mistake on the number of board members, I am not unaware of the way money is created, the fractional lending ratio (9:1), the banks receiving interest on money created out of thin air, and the conversion of money created out of thin air into real property by confiscation of real property and assets.
David R. Remer wrote: One thing is intuitively clear. If it were not for the world’s central banks keeping the scorecards of nation’s and corporations international transactions honest and transparent, nations would be in perpetual states of war over accusations of such accounts cheating other nations out of their due. The virtual absence of such warfare stands as a testament to the fact that those with trillions to gain or lose, rely on this system and have confidence in it.Of course, those that stand to gain have confidence in it (e.g. especially bankers).
Most people do not, because most people do not understand how they are being used and exploited.
They also do not understand the pain that will come from the inevitable collapse of the pyramid.
David R. Remer wrote: Doesn’t mean it won’t fail one day.It will. It may take a long time, but it will collapse when the debt pyramid is so big, the debt can never be repaid.
David R. Remer wrote: But, people generally keep tabs on their money pretty well, and those with MA’s and Ph.D’s in accounting, do it with extreme levels of expertise and repetitive checks for errors and inconsistencies so the accounts can be resolved accurately and fairly by agreed upon rules, before war like accusations can be fomented.MA’s and Ph.D’s don’t prove anything.
Especially when monetary theory is not taught in public schools.
The bankers don’t want the people to know their monetary system is a pyramid scheme.
The math is not complicated.
It isn’t hard to see that it is a pyramd scheme, and deserves our disdain:
- “We are grateful to the Washington Post, the New York Times, Time Magazine, and other great publications whose directors have attended our meetings and respected the promises of discretion for almost forty years. It would have been impossible for us to develop our plan for the world if we had been subject to the bright lights of publicity during those years. But the world is now more sophisticated and prepared to march towards a world-government. The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the National auto-determination practiced in past centuries.” - David Rockefeller, in an address to the Trilateral Commission meeting, 1991.
Even Woodrow Wilson, President of the U.S. was fooled by it:
- In 1913, the struggle for a better monetary system was lost when President Woodrow Wilson signed the Federal Reserve Act, giving the privately owned international banking cartel the power to create the United States money. Later, Woodrow Wilson stated: “I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the civilized world, no longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men. - Woodrow Wilson, President of the U.S. 1913-1921.
d.a.n wrote: But it isn’t proof that a government bank without usury can not work.That’s not proof.David R. Remer wrote: The proof you seek is in the future value of time and energy expended today and opportunity cost in lending money.
“Opportunity cost in lending money”?
Wouldn’t it be nice if all of us could create $9 out of thin air (9 times our $1 reserve), loan out that total of $10, and then receive interest on that money (90% of it created out of thin air).
Just because it takes a long time to collapse, it doesn’t justify the insanity of it.
It is doomed to collapse again.
The Federal Reserve was one of the major contributing factors of the Great Depression.
David R. Remer wrote: Both have value to those expending the effort and time for future return and those who give up purchase rights to their money to give others purchase rights with their money.Regardless of the moral problem, that still does not explain away the mathematical problem.
Also, there would be no loss if the money was repaid in full, and incessant inflation in the pyramid scheme was not constantly eroding the money.
Also, there are other benefits to loaning without usury, such as helping others help themselves, stay off of welfare, which comes out of all our pockets.
David R. Remer wrote: As long as I value the money I lend and the lost opportunity to use my money to earn more elsewhere, I will demand that the borrower of my money compensate me for the earnings I could have generated with my money by lending it to someone else instead. That is the definition of interest in its most concrete terms.Again, that wouldn’t be an issue if money wasn’t eroding every second, causing everyone to run around like chickens with their head cut-off looking for someplace to invest money to protect it from erosion from incessant inflation. It would also reduce speculation, currency exchange games, etc.
David R. Remer wrote: If you don’t value your money in this way, by all means, I will be happy to take out a zero interest loan from you on my car with the title as collateral. Upon repayment of the principle, you give me back the title. If that arrangement suits you, it will tickle me pink?Sure, that would be fine except that the money loaned is eroding in value every second, due since it is a pyramid scheme and causes inflation.
If it were not for that, a zero interest loan would make sense (provided you are also prepared to put up some collateral; your house and land for example).
David R. Remer wrote: Banks handle other people’s money. Banks have an obligation to insure their client’s ALSO earn interest on their deposits as their agents. The banks loan those deposits to others, permitting the banks to pay a dividend interest on savings back to their clients, plus overhead, and return on investment to shareholders lending their money for the bank’s expansion and competitive development.True, but it is largely because the money loaned is eroding in value every second, due since it is a pyramid scheme and causes inflation. So everyone is running around like a chicken with its head cut-off looking for someplace to invest money to protect it from erosion from incessant inflation.
David R. Remer wrote: End interest, and you end trade, development, and innovation. End interest, and you end humanitarian efforts, charitable foundations, and the acquisition of working capital for start up organizations non-profit and for profit.Not true.
Lots of charity asks for nothing in return.
Did you not see KIVA.ORG
Lots of good people loan money at ZERO interest.
Banks could learn something valuable from those people.
When we help others, we help ourselves, our society, and help them stay off of welfare too.
Also, a government monetary system without interest (purely non-profit) does not mean loans can not be made. It simply takes the usury out of it.
David R. Remer wrote: We should end usury which seeks to cripple others for personal benefit, not fair and equitable interest on borrowed funds which liberate others to create better futures and quality of life for themselves and their dependents.We should end usury because:
- (01) It eliminates pyramid scheme; it eliminates the mathematical problem that requires a pyramid monetary system to continually create more money for interest to avoid the collapse.
- (02) The money supply is stable. Fluctuations are small, instead of relying on accelerated and unsustainable exponential growth that dooms the pyramid scheme.
- (03) It is moral and eliminates usury. It eliminates the practice in which the bank (via foreclosure or default) confiscates real property, which is the conversion of money printed out of thin air into real property and assets.
- (04) The government creates and spends the interest-free money it needs without paying interest to the Federal Reserve bank that creates money out of thin air.
- (05) No usury; no predatory lending; people should make money from creating value; not making money by playing with money; government spending should not be enriching a very few bank owners;
- (05) The debt monster is gone, since INTEREST doesn’t exist to require more and more and more money to be created.
- (06) There is no need for private banks, who receive interest using our hard earned money to create 9 times more new money out of thin air.
- (07) It eliminates the pressures to create more unsustainable, exponential growth (GDP), to compensate for the growing nation-wide debt
- (08) It eliminates the pressures to create more productivity by growing the population and illegal immigration to create more growth to compensate for the growing nation-wide debt
- (09) It avoids the obvious problems with commodity, gold, or silver backed currencies
- (10) It eliminates the inevitable collapse of the pyramid cycle, that is doomed before it began
- (11) Money is not created as debt.
- (12) Eliminates the need for incessant inflation to stave off collapse of a pyramid scheme.
- (13) There would be NO National Debt.
- (14) Short term actions don’t carry forward exponentially.
- (15) The currency system and government banks belongs to the government, and therefore, the people.
- (16) Why would people borrow from a bank (with INTEREST) when they can borrow from the government, INTEREST FREE?
- (17) There would be NO usury.
- (18) Since government controls the money supply, the politicians that create too much inflation or deflation can now be held directly accountable by the voters; voters currently have no control over the privately owned Federal Reserve Bank.
Those are a lot of good reasons, and appear to far outweigh any benefits of the current pyramid money system that is doomed to collapse, exploits millions of people, and converts money printed out of thin air into real property by confiscation of real property and assets via foreclosure and default.
There is a better way. It could be done with a few simplifications (not new over-complications).
You are arguing for the current system by insisting interest is necessary. It is only necessary in a pyramid system. But that does not make it a good system. Especially since it is doomed to the mathematical certainty of collapse.
I am arguing that interest creates an unsustainable pyramid, and therefore is doomed (as you already admitted to the pyramid structure of the system in which money is created).
Of course, I realize powerful bankers and their flunkies in Congress will never let this happen … at least, not until it becomes too painful … which may be when it finally collapses. That would be a good time to change the system, rather that restart the same doomed cycle.
The current monetary system is:
- (1) a pyramid scheme that exploits people via usury and predatory practices, and it is a mathematical certainty that it is doomed to collapse eventually when no more debt can be created to create more money;
- (2) uses a 9:1 fractional system that allows the Federal Reserve to create money out of thin air where upto 90% of each new loan is new money (which is why M3 Money Supply increased by a factor of 75.2 between year 1950 and year 2005); Cha Ching again! Let’s make some money!
- (3) allows the banks to receive the interest on the money created out of thin air; Cha Ching!
- (4) breeds usury, predatory lending, usurious rates via adjustable mortgage rates, etc.
- (5) and foreclosures and defaults are not necessarily bad, since the banks essentially convert the money printed out of thin air into real property by the banks’ confiscation of real property and assets ; Cha Ching again!
… and that is a system that deserves our disdain. Posted by: d.a.n at January 29, 2008 03:59 PM
David:
I don’t think we will have any clarity on our economic situation until March at the earliest.
I think by Friday we will have clarity that January was an over reaction.
I also think that by march the sun should be peaking through the clouds.
Posted by: Craig Holmes at January 29, 2008 04:52 PMCraig, you may be right.
But, long term, the debt will catch up to us.
Craig Holmes wrote: David/d.a.n/kctim: I am beginning to question whether there is need of a stimulus package.Yes and no.
Since this $150 Billion economic stimulus package will increase debt (because Congress can’t control spending):
- It is good if you want to smooth the ride now onto the way to eventual collapse.
- But it is bad in the sense that it brings the collapse closer, since it grows the debt closer and closer to the inevitable day when the debt can not grow any larger. That could take decades or centuries, but it won’t be easy staying a few steps ahead of the total collapse.
The next shoe to drop will be higher unemployment.
Citigroup is thinking of laying off 23,000 people.
Lots of financials aren’t lookin too pretty … especially at Citi.
Yahoo is laying off.
Home sales are down a record 8.4%.
Market volatility is a clear sign of economic instability.
Nation-wide debt has been growing significant for decades.
Credit card debt is at record levels.
1 in 4 people have made a late credit card payment.
Foreclosures are in the millions and expected to continue into 2009.
The U.S. dollar is falling fast (eroding savings).
Unfortunately, there is no good way (long-term) out of this mess, and will probably lead to more inflation.
Government tell us the solution is to spend more money.
But that requires the government to give them some money to spend.
And the economists don’t want people using their rebates to pay down debt, because that won’t stimulate the economy.
Strange that the supposed solution is to go out and spend some more?
How do we get off this merry-go-round? (or more appropriately, scary-go-round).
Hmmmmm … what’s wrong with this picture?
What we are seeing are the inherent problems of the pyramd-scheme monetary system (and the massive naiton-wide debt).
The Debt monster is catching up with us.
The result will probably be the continued widening of wealth distribution, as banks convert money printed out of thin air into real assets and property (via foreclosures and defaults).
d.a.n said: ” * It is good if you want to smooth the ride now onto the way to eventual collapse.
* But it is bad in the sense that it brings the collapse closer, since it grows the debt closer and closer to the inevitable day when the debt can not grow any larger. That could take decades or centuries, but it won’t be easy staying a few steps ahead of the total collapse.”
Absolutely man damned right. The road to Hell is paved with good intentions, a saying goes. The stimulus plan is another 150 billion red bricks laid into that road.
Posted by: David R. Remer at January 29, 2008 09:48 PMDan:
Redo your numbers with health care expenses growing at the same rate as GDP.
Posted by: Craig Holmes at January 30, 2008 12:29 AMCraig Holmes wrote: d.a.n: Redo your numbers with health care expenses growing at the same rate as GDP.Which numbers?
I’m not sure what your point is?
Dan:
When you say we are $100 Trillion in debt, (or whatever) those numbers are present value of future commitments promised to americans based on assumptions.
One of the assumptions is that medicare will growth at about 2% greater than GDP.
I don’t recall ever writing that there was $100 Trillion in current debt.
Current National Debt is $9.2 Trillion (not future debt, which would many times more).
$12.8 Trillion was borrowed and spent from Social Security (and the liabilities for the coming decades is will be more).
The PBGC is $450 Billion in the hole now.
Current personal nation-wide debt is about $20 Trillion.
Altogether, that’s about $43 Trillion (the government and personal debt). Is there more current debt? Where did you get the $100 Trillion figure? Some other peoples’ estimates place it higher at about $48 Trillion.
One of the assumptions is that medicare will growth at about 2% greater than GDP.OK. That’s not good is it?
The future debt on only the $9.2 Trillion alone could exceed $62 Trillion (see chart #1). It all depends on whether it is ever paid down (or off), and how long it takes.
The future debt on the combined federal debt of $22 Trillion (i.e. $9.2T National Debt + $12.8T S.S. + $450B PBGC debt) could exceed $198 Trillion (see chart #2).
At any rate, the debt problem is out of control.
1 out of 4 people have missed a credit card payment.
Foreclosures are in the millions.
It does not matter much if GDP is growing, and the nation as a whole is growing wealthier, if the majority of people are growing poorer, their incomes are falling, and they getting deeper and deeper into debt … all largely a result of a monetary system that is a pyramid scheme, where exponential growth is needed to avoid the collapse of the debt pyramid.
We’ll probably muddle through several more recessions, but eventually, the debt will catch up to us, when we finally have no more capacity to take on more debt.
Posted by: d.a.n at January 30, 2008 04:04 PMThanks to all for the input, a great read.
Posted by: googlumpugus at January 30, 2008 11:50 PMDan:
The next shoe to drop will be higher unemployment. Citigroup is thinking of laying off 23,000 people. Lots of financials aren’t lookin too pretty … especially at Citi. Yahoo is laying off.
Unless you have more insight then anyone else, it is not possible to know that.
Yesterday it was reported that our economy created over 130,000 jobs, but today it was reported that initial jobless claims jumped last week. However the trend line (four week average) is neutral.
Tomorrow there will be another job report that is expect to be positive.
We may be in a situation where the growth in jobs does not keep up with the growth of the labor market. That is not recessionary but not fun either as the unemployment rate increases.
Unemployment may rise modestly but is still very low in that it is lower than the average of the 1970’s, 80’s and 90’s. For unemployment to tick up from these very low levels is not a crisis.
Craig and d.a.n, I think you are both right and wrong about employment. It could go either way and there is no way to know. The falling dollar is spurring export activity, creating jobs. The slowing GDP growth and financial sector is causing layoffs. Which side, positive or negative, employment figures end up on, is not knowable at this point.
Add the fire sale to foreign investors of Ameican capital assets to rescue American firms, job growth could remain firm. On the other hand, if consumers hoard cash and stem credit sales, they could fall apart faster than exports can generate jobs.
It is just too soon to know. Which is very likely what is prompting the FED to commit 1.25% interest rate cuts in less than 10 days, a move not seen since in 25 years. The potential for stagflation has not been this high in a very long time. Let’s hope we avert that nightmare for modest and low income Americans.
Posted by: David R. Remer at January 31, 2008 02:49 PMd.a.n wrote:> The next shoe to drop will be higher unemployment. Citigroup is thinking of laying off 23,000 people. Lots of financials aren’t lookin too pretty … especially at Citi. Yahoo is laying off.The “next shoe to drop” means it has not yet happened.Craig Holmes wrote: Unless you have more insight then anyone else, it is not possible to know that.
That is my prediction for the coming year.
However, another serious problem, one that has been growing worse for years, is that the replacement jobs pay less than the previous jobs.
That in itself can lead to unemployment, when it is more profitable to collect unemployment and welfare.
Combine that with rising debt, and it’s not a pretty picture.
Actually, these things are likely to continue to get worse for many years to come.
Craig Holmes wrote: Tomorrow there will be another job report that is expect to be positive.We would REALLY be worried if it was anything else but positive. : )
Maybe. The long term picture is the real issue. Month to month isn’t ever likely to change much.
Craig Holmes wrote:
We may be in a situation where the growth in jobs does not keep up with the growth of the labor market.
Think so? That will be good news for illegal aliens and H-1B and H-2B visa workers.
Craig Holmes wrote: That is not recessionary but not fun either as the unemployment rate increases.Huh? Unemployment rising with more jobs than can be filled?
Craig Holmes wrote: Unemployment may rise modestly but is still very low in that it is lower than the average of the 1970’s, 80’s and 90’s. For unemployment to tick up from these very low levels is not a crisis.Everything is normal?
Never mind these things growing worse for 30+ years.
David R. Remer wrote: Craig and d.a.n, I think you are both right and wrong about employment. It could go either way and there is no way to know. The falling dollar is spurring export activity, creating jobs. The slowing GDP growth and financial sector is causing layoffs. Which side, positive or negative, employment figures end up on, is not knowable at this point.Maybe. Still, the replacement jobs are paying less and less than the previous jobs, which is why median household incomes have been falling for over 30 years (that is especially true when you consider more workers per household, the national debt, growing wealth disparity, and incessant inflation).
David R. Remer wrote: Add the fire sale to foreign investors of Ameican capital assets to rescue American firms, job growth could remain firm. On the other hand, if consumers hoard cash and stem credit sales, they could fall apart faster than exports can generate jobs.Damned if you do, and damned if you don’t.
It’s not easy keeping this merry-go-round going.
It’s all very precarious.
David R. Remer wrote: It is just too soon to know. Which is very likely what is prompting the FED to commit 1.25% interest rate cuts in less than 10 days, a move not seen since in 25 years. The potential for stagflation has not been this high in a very long time. Let’s hope we avert that nightmare for modest and low income Americans.Interesting isn’t it?
Yes, these emergency actions might stave off a recession.
Very short term events are hard to predict.
But it is probably only a short reprieve.
Debt and inflation are still there and growing, and the stimulus packages will probably increase both.
And all of the abuses causing the gradual decline of the U.S. are still there, chipping away every day, widening the wealth disparity gap ever larger.
And those abuses did not come about by mere coincidence.
They are all manifestations of unchecked greed, apathy, and complacency.
As history shows us, it isn’t likely to change until it becomes too painful.
Why should we believe anything different, when that is what has been happening for more than 30 years?
That is the primary reason for me to predict this year will be difficult.
Perhaps the rough ride will be smoothed out after a few million more foreclosures (where banks convert money printed out of thin air into real assets and property), defaults, bankruptcies, and the Congress passes it’s shamenset BILL to import more illegal cheap labor, and some more excessive money printing, to keep barely ahead of the collapse of the pyramid scheme?
But the long term picture is not encouraging until some of those 10+ abuses hammering most Americans are adequately addressed.
d.a.n, quite right, America’s long term economic prospect gets dimmer with each passing year that our government and voters don’t force a plan to deal with its challenges which stands at an intersection of public welfare concerns maximized withing immutable economic and financial constraints.
Conservatives know we are overstepping the economic and financial constraints for a sound future, and insist human loss and suffering are a secondary consideration, as the overstepping guarantees even more dire human loss and suffering.
Liberals know there will be public losses and hardships regardless of how our future challenges are overcome, but, don’t want to prioritize when and who will have to suffer from the belt tightening necessary to go forward within our means.
Time is running out for these adversaries to come together and hammer out a path to successfully overcome the challenges ahead. And the challenges loom more devastating with each passing year of failure to act decisively.
Romney, the idiot, said today that he will make sure America does not address global warming until the rest of the world’s nations act on it first. His kind of thinking which seeks a world leader and positions for America to follow, is but one example of major failings so far in the political party’s selection of candidates to face this future.
The good news is, the challenges going forward are finally being elevated in the consciousness of the America public. That will be good for motivating our government toward action on some of them. But, the order and magnitude of their efforts I fear will horribly disappoint my daughter’s generation.
Posted by: David R. Remer at January 31, 2008 04:08 PMDan:
Everything is normal?
Of course. These cycles have been going on for the whole history of our country.
Posted by: Craig Holmes at January 31, 2008 04:43 PMDan:
Craig Holmes wrote: Tomorrow there will be another job report that is expect to be positive.
We would REALLY be worried if it was anything else but positive. : )
Remember Dan, we are currently setting new records every month for consecutive months of increases in employment. Tomorrow which is expected to be positive will be another new record for our country.
When that record breaks and we loose jobs in a particular month is not a crisis.
Posted by: Craig Holmes at January 31, 2008 04:58 PMCraig Holmes wrote: Remember Dan, we are currently setting new records every month for consecutive months of increases in employment.Not true.
Unemployment has been increasing for 10 months (since March, 2007):
%Unemployment MAR-2007 to DEC-2007 (Source: U.S. Department of Labor: Bureau of Labor Statistics):
5.0% | _ _ _ _ _ _ _ _ _ X
4.9% | _ _ _ _ _ _ _ _ _ _
4.8% | _ _ _ _ _ _ _ X _ _
4.7% | _ _ _ _ X X X _ X _
4.6% | _ _ _ X _ _ _ _ _ _
4.5% | _ X X _ _ _ _ _ _ _
4.4% | X _ _ _ _ _ _ _ _ _
——-+———————————>DATE
… .2_2_2_2_2_2_2_2_2_2
… .0_0_0_0_0_0_0_0_0_0
… .0_0_0_0_0_0_0_0_0_0
… .7_7_7_7_7_7_7_7_7_7
… M_A_M_J_J_A_S_O_N_D
… A_P_A_U_U_U_E_C_O_E
… R_R_Y_N_L_G_P_T_V_C
d.a.n wrote: Everything is normal?Again, small month-to-month fluctuations and cherry picked statistics don’t mean much.Craig Holmes wrote: Of course. These cycles have been going on for the whole history of our country.
Again, the big picture is the issue, and the big picture is not normal with when these 10+ ABUSES during the past 30+ years is things are getting worse.
Craig Holmes wrote: Craig Holmes wrote: Tomorrow there will be another job report that is expected to be positive.I doubt it. I’m predicting unemployment remains at 5.0% or increases to 5.1% .
Either way, there is still a general rise in unemployment for the last 11 months (since March, 2007).
Craig Holmes wrote: When that record breaks and we loose jobs in a particular month is not a crisis.True. It’s not the end of the world.
It’s just more of the same.
Again, a few cherry picked statistics don’t mean much.
The big picture is the issue.
The big picture is not looking good, due to these 10+ abuses that have been hammering Americans for over 30 years.
David R. Remer wrote: That will be good for motivating our government toward action on some of them. But, the order and magnitude of their efforts I fear will horribly disappoint my daughter’s generation.And my son and his family too, and all younger Americans.
The issue, and I think you agree, we are going backwards.
Things are getting worse.
68% of Americans believe we are going in the wrong direction.
And it won’t change as long as mot most voters repeatedly reward incumbent politicians in Do-Nothing Congress with 96.5% re-election rates (on average since 1980).
P.S. I heard Ralph Nader is considering running. Hope so. Otherwise, I wasn’t likely to vote for any of the presidential candidates.
As for Congress, I won’t be voting for any incumbent politicians.
Dan:
Yes it is true. You and I are looking at different statistics. You are looking at the unemployed, I am looking at the employed. The number of people employed has risen for consecutive months that is record.
Unemployment can rise in good times if there are more people added to the labor force than job growth. The reverse is true as well. The unemployment rate can go down in bad times if people leave the work force faster than the job market declines.
Expect the economy to have added jobs in january. In predicting a recession it is hard to have a recession while jobs are being added, regardless of whether the unemployment rate is going up or down.
Posted by: Craig Holmes at January 31, 2008 08:21 PMCraig Holmes wrote: d.a.n: Yes it is true. You and I are looking at different statistics.That’s nice to know. So you have taken cherry pickin’ the data to a new level.
Craig Holmes wrote: You are looking at the unemployed, I am looking at the employed.Ohhhhh … right. I forgot to include the illegal aliens. So sorry.
Craig Holmes wrote: The number of people employed has risen for consecutive months that is record.bullshit !.
Craig Holmes wrote: Unemployment can rise in good times if there are more people added to the labor force than job growth. The reverse is true as well. The unemployment rate can go down in bad times if people leave the work force faster than the job market declines.Blah, blah, blah. What total B.S. Unemployment has been rising for 10 months.
Craig Holmes wrote: Expect the economy to have added jobs in january. In predicting a recession it is hard to have a recession while jobs are being added, regardless of whether the unemployment rate is going up or down.Pure nonsense. All that is required is to put on your rose-colored glasses and ignore all of this.
The sad thing is, I wish you were correct.
Posted by: d.a.n at January 31, 2008 09:32 PMDan:
You can blah blah all you want.
Here is the link:
The last month that our economy did not grow in job numbers was August of 2003. That string of four plus years is a new record for the American economy.
Posted by: Craig Holmes at January 31, 2008 10:02 PMDan:
Again the reason why our economy is adding jobs and the unemployment rate is going up is that this is for now at least a slowdown not a recession. Our country is adding workers faster than the economy is putting them to work.
Posted by: Craig Holmes at January 31, 2008 10:06 PMCraig Holmes wrote: Here is the link: data.bls.gov/PDQ/servlet/SurveyOutputServlet?data_tool=latest_numbers&series_id=CES0000000001&output_view=net_1mthIt displays: The database from the Employment, Hours, and Earnings from the Current Employment Statistics survey (National) program is currently unavailable.
Craig Holmes wrote: The last month that our economy did not grow in job numbers was August of 2003. That string of four plus years is a new record for the American economy.So what?
That is largerly because the U.S. population is growing by 5 Million per year (1 Million of which are legal immigrants). That doesn’t even include the 4 million per year of illegal aliens lured here by greedy illegal employers and politicians that refuse to enforce existing laws. And that does not include hundreds of thousands of H-1B and H-2B VISAs to get more cheap labor.
So now you want to deal with raw numbers, instead of percentages?
You expressed a disdain for the raw numbers (e.g. $9.2 Trillion National Debt) because you preferred to look at the Debt-to-GDP ratio.
But now, you want to talk about jobs added, and ignore the unemployment rate of 5% as of DEC-2007 ?
Sorry, but cherry picking and spinning the data in every way possible to hide the real truth isn’t fooling me, and doesn’t explain away these 10+ ABUSES hammering most Americans … all increasing manifestations of unchecked greed, apathy, complacency, delusion, and blind loyalty.
Craig Holmes wrote: Again the reason why our economy is adding jobs and the unemployment rate is going up is that this is for now at least a slowdown not a recession. Our country is adding workers faster than the economy is putting them to work.QUESTION: And what causes these pressures to:
- keep growing the population,
- increase legal immigration to 1 Million when there is already an inflow of over 4 Million illegal aliens per year,
- more cheap labor via H-1B & H-2B Visas,
- more delays to secure the borders,
- more delays to enforcing existing immigratio laws,
- more refusal to enforce existing laws and more despicable pitting American citizens and illegal aliens against each other,
- more pressures to grow GDP exponentially (i.e. 3% this year is more than 3% last year, and so on),
- more inflation due to more money created out of thin air (e.g. M3 Money Supply in 1950: $135 Billion ; in year 2005: $10.15 Trillion), and the banks receive interest on the money created out of thin air.
- more debt,
- more borrowing,
- more borrowing and spending Social Security surpluses ($12.8 Trillion) making it now, pay-as-you-go,
- lower interest rates to encourage more borrowing and spending,
- more bubbles, market volatility, economic instability, foreclosures and bankruptcies (allowing the banks to convert money printed out of thin air into real property and assets),
- shrinking household incomes,
- the disappearing 40 hour work week,
- pressures on the heatlhcare system; increasingly unaffordable and deadly healthcare (195,000 deaths per year by avoidable medical mistakes), hundreds of hospitals closing because they are being overrun by illegal aliens (84 in California alone)
- more burdens being shifted to middle-income Americans due to illegal immigration (burdens on eduacation systems, healthcare, hospitals, ERs, welfare, Medicaid, MediCAL, (32% of illegal aliens receive welfare), Social Security, border patrol, law enforcement, prison systems (29% of all incarcerated are illegal aliens), insurance, millions of jobs displaced, voter fraud, disease, crime, and thousands of people murdered annually by illegal aliens),
- more squeezing out more productivity,
- more urban sprawl which is literally killing people every day,
- more unfair regressive taxation,
- more pressures to raise property taxes higher and higher (partly because of illegal immigration), which in many cases are REGRESSIVE (as income decreases, the property tax increases), and property taxes are double, triple, quadruple, quintuple, … , N-tuple taxation because it is repeated every year! … exacerbated by urban sprawl,
- more lies, more wars, more war profiteering,
- more erosion of the U.S. dollar, falling drastically against all major international currencies, now worth less than the Canadian Dollar,
- more erosion of the public education system (politicians don’t want an educated electorate; such as not teaching monetary theory in public schools),
- more greedy CEOs with multi-million dollar salaries and golden parachutes, cheating investors out of $billions (e.g. Ken Lay (ENRON), Bernard Ebbers (WorldCOM), David Myers (WorldCOM), Dennis Kozlowski (Tyco), Mark H. Swartz (Tyco), John Rigas (Aldelphia), Timothy Rigas (Aldelphia), Scott Sullivan (WorldCOM), Burford Yates (WolrdCOM), Jeff Skilling (ENRON), Andrew Fastow (ENRON), Lea Fastow (ENRON), Samuel D. Waksal (ImClone Systems), David Duncan (Arthur Andersen), E. Kirk Shelton (Cendant), Ben Glisan Jr. (ENRON), Dan Boyle (ENRON), Weston Smith (HealthSouth), Aaron Beam (HealthSouth)),
- more Main Stream Media disinformation, lies, and spin,
- more bloated, do-nothing, costly, wasteful, corrupt, and incompetent government,
- more flagrant violations of the Constitution and other laws,
- more crime and rising crime rates (after falling for many years),
- more, more, more?
ANSWER: The debt/inflation monster resulting from the pyramid scheme created by the Federal Reserve monetary system is why (along with these other 10+ ABUSES and exploitations).
Exponential GDP growth, population growth, Money Supply growth are not compatible with sustainability.
This merry-go-round is for one purpose: to make the wealthy wealthier, which is making most Americans poorer.
(1) Anyone who can’t see what is going on, needs to take OFF their rose-colored glasses, or partisan blinders, open their eyes, and see the big picture and the worsening abuses (above).
(2) Next, stop repeatedly rewarding corrupt, irresponsible, incompetent incumbent politicians with 96.5% re-election rates.
The sooner, the better, because the delay will mean more pain and misery later for most Americans.
Other than that, everything is rosy!
Posted by: d.a.n at February 1, 2008 09:45 AMCraig said: “Our country is adding workers faster than the economy is putting them to work.”
Yeah, can’t have 20 million illegal aliens standing around doing nothing, can we? That might invite mischief. :-)
Posted by: David R. Remer at February 1, 2008 03:43 PMDan:
So now you want to deal with raw numbers, instead of percentages? You expressed a disdain for the raw numbers (e.g. $9.2 Trillion National Debt) because you preferred to look at the Debt-to-GDP ratio. But now, you want to talk about jobs added, and ignore the unemployment rate of 5% as of DEC-2007 ?
It depends on what we are discussing. If the question is whether or not the economy is growing or in a recession then the raw numbers are better because adding jobs implies a growing economy. It is a more “right now” figure.
The unemployement number is good as it gives us a general feel of how plentiful jobs are for the work force. Right now historically speaking we have a low unemployment number.
You were the one that asked me why I would not sign on the the “recession” language. I have made a pretty good case that data is currently pointing to a slowdown instead of a slowdown. (Although that could change).
You asked the question “So what?” Here is the answer. Unemployment rising does not in and of itself mean a recession is imminent, as I have said above, it can mearly mean that the work force is growing faster than the economy.
However, negative job growth is very serious. It almost always is recessionary. It is very difficult to imagine a healthy economy with negative job growth.
Todays numbers if held true would be the first decline in some four years. The problem is that the labor numbers are nonconfirmed by several other data, and labor employment numbers are usually revised. For instance Decembers numbers were revised up substantially today.
Even so the labor market is without question weak. The part that is clear and confirmed is that the economy has been producing less jobs. Substantially less jobs.
David:
If we give them jobs we will just have 20,000,000 more.
CH
This sure is an interesting complex problem. Especially when you add the political calculations to it. I had all but written off Republican chances in the fall. But now with McCain doing well, and Obama getting the award of being our most liberal senator, added with Bill Clinton not being able to keep his mouth shut, and I think our chances are improving!!
Posted by: Craig Holmes at February 1, 2008 06:22 PMCraig, Again, take OFF the rose-colored glasses and see the big picture.
I’m beginning to think a 10 mile wide asteroid could hit Earth, and you would say it is normal.
Craig wrote: I had all but written off Republican chances in the fall… . and I think our chances are improving!!Whose chances?
Maybe in your world.
Posted by: d.a.n at February 1, 2008 07:18 PMDan:
My glasses only look rose colored because of your doomsday approach. You are the keeper of the list of problems. That is your choice in life.
Your big picture is really a small picture. You never include the positives. Life is a combination of positive and negatives. Your small picture is to include only negatives.
McCain’s chances.
Posted by: Craig Holmes at February 1, 2008 08:42 PMCraig said: “Our country is adding workers faster than the economy is putting them to work.”
Not according to Friday’s statistics. You lose this one hands down, Craig, based on the numbers.
Now come back and say those numbers don’t mean much, they will be revised, which will prove the foundation for your assessments is like quicksand, shifting as suits your need for the debate.
Posted by: David R. Remer at February 2, 2008 12:22 AMCraig Holmes wrote: d.a.n: My glasses only look rose colored because of your doomsday approach. You are the keeper of the list of problems. That is your choice in life.Never mind the list is growing in number and severity, causing a decline for most people in America (for the last 30+ years).
That is the point.
You don’t like that list, because it is true.
It is an inconvenient truth.
It gets in the way of a rosier-than-reality view of the world, dagnabit!
It undermines the lame argument the assertions …
Craig Holmes wrote: America as a whole has never been this rich, and it’s getting richer all the time.
Funny how there is no attempts to refute or address the numerous items on the list, growing dangerously in number and severity.
All we see is a constant disdain for the list in general.
Please explain how all the positive things over-shadow the bad things?
That is the point.
Tell us how “Power corrupts, and absolute power corrupts absolutely” is no longer true.
Tell us about how we should all be grateful for falling household incomes since 1967 (especially considering the $9.2 Trillion National Debt, more workers per household, and the disappearing 40 hour work week for those that can find a job, and replacement jobs that pay less and less than the previous jobs).
Craig Holmes wrote: Your big picture is really a small picture. You never include the positives. Life is a combination of positive and negatives. Your small picture is to include only negatives.Yes, there are good things, but the problem is that the bad things are overtaking the good things, which is causing a decline for most people in America (for the last 30+ years).
That is the point.
Do you want to compare lists?
What ever list you come up with, how will it explain away the fact that most Americans are going backwards?
How will it explain away these 10+ abuses that are getting worse for most Americans?
Not better.
That is the point.
Craig Holmes wrote: McCain’s chances.McCain won’t get my vote. He’s flip-flopping on border security and illegal immigration just to get votes. He previously voted to give illegal aliens Social Security. He also wants to stay in Iraq for 100 years. He says there will be more wars. He’s possibly worse than Bush. He has more compassion for illegal aliens than these Americans. Also, John McCain was once for the 30% Sales Tax/Rebate BILL BILL HR-25 & S-1025. Now he is not? That’s good. Also, we have McCain and Fiengold to thank for campaign finance that allows our FOR-SALE congress to be more bought-and-paid-for than ever before, in which 99.85% of all 200 million eligible voters are VASTLY out-spent by a very tiny 0.15% of all eligible voters that make 83% of all federal campaign donations (of $200 or more). Cha-Ching! Still, he’s one more flip-flopping war-monger that will never get my vote.
Craig Holmes wrote: Our country is adding workers faster than the economy is putting them to work.That’s right: 17,000 jobs lost.David R. Remer wrote: Not according to Friday’s statistics. You lose this one hands down, Craig, based on the numbers.
Craig Holmes wrote: Now come back and say those numbers don’t mean much, they will be revised, which will prove the foundation for your assessments is like quicksand, shifting as suits your need for the debate.Of course.
It is all “within historical norms” and …
Craig Holmes wrote: America as a whole has never been this rich, and it’s getting richer all the time.
Never mind that even Bush says it is a “serious issue”.
Craig was predicting a rosy jobs report.
Guess it wasn’t as rosy as predicted, eh?
I am going to make a PREDICTION: Craig will say it is still within “historical norms” and …
Craig Holmes wrote: America as a whole has never been this rich, and it’s getting richer all the time. It’s a great time to be an AmericanYes, the top 1% are getting richer.
In year 1980, the wealthiest 1% owned 20% of all wealth.
In year 2008, the wealthiest 1% now own 40% of all wealth.
Cha-Ching!
Craig Holmes wrote: America as a whole has never been this rich, and it’s getting richer all the time.Forgive me for asking, who is “getting richer all the time”?
1 in 10 people own 70% of all wealth in the nation, and the disparity gap has never been worse since the Great Depression.
Are we talking about the same America on the planet Earth?
What about the fact that things are getting worse for most Americans? Not better.
How can those things be so cavalierly trivialized, dismissed, or considered normal?
Craig Holmes wrote: America … it’s getting richer all the time.Sure, if you are one of the 1 in 10 that own 70% of all wealth in the U.S.
40% of Americans have essentially ZERO net worth.
20% of Americans have negative net worth (i.e. DEBT).
80% of the U.S. population has a mere 17% of all wealth in the U.S.
Perhaps your viewpoint is because you are one of those 1 in 10 that own 70% of all wealth in the U.S.?
Yes, we are supposed to believe that the rich getting richer while everyone else gets poorer (for the last 30 years) is “a great time to be an American”.
It’s easy. Just don’t let the facts and reality get in the way.
Posted by: d.a.n at February 2, 2008 11:13 AMDavid:
Now come back and say those numbers don’t mean much, they will be revised, which will prove the foundation for your assessments is like quicksand, shifting as suits your need for the debate.
But lets say the numbers stand. How do I then loose when unemployment drops? If someone is debating with me saying “unemployment is rising, which is a sign of recession”, and then I say, “no because we are adding jobs as unemployment rises”. Explain to me how I “loose” when the jobs report says that unemployment fell?
Actually we both know that the numbers will be revised.
Secondly, one months data is still only one months data. Don’t over read one months data. One months data doesn’t mean anything.
What the data clearly shows is that the economy is slowing.
Posted by: Craig Holmes at February 2, 2008 02:19 PMDan:
You don’t like that list, because it is true. It is an inconvenient truth. It gets in the way of a rosier-than-reality view of the world, dagnabit! It undermines the lame argument the assertions …
I don’t mind the list. It’s just incomplete. You choose to name all of the negative things in the world. That is your choice. I don’t disagree with your list. It’s just a list of incomplete data and conclusions.
Funny how there is no attempts to refute or address the numerous items on the list, growing dangerously in number and severity. All we see is a constant disdain for the list in general. Please explain how all the positive things over-shadow the bad things?
Why refute it? You don’t even admit that good positive things exist.
Would it help you if I created a positive list that is twice as long as your negative list?
You have made the decision to be the keeper of the negative list. That is fine, but in terms of being a part of a solution for our country, you marginalize yourself out of the debate.
Solution people weigh strengths and weaknesses in balance, making trade offs to come up with a strategy. From your vantage point (there is no positives that exist), suicide is the logical conclusion. There is no hope, no reason to proceed. You want me to become miserable like you. Not going to happen.
I believe in our country. I believe in our system. I believe our system will find solutions to our problems. I believe our children are going to have a good life. There is a reason we are the wealthiest country in the history of the world, it’s our system of government.
What you are doing is just showing the list of issue our system needs to deal with.
Why would I choose to live in the depression that is in your writings? I see all those problems, but I also see solutions to them all!!!
There is a much better way to live. You don’t have to live in hopelessness.
Ok Dan:
Here is a list of postives:
1. We have fought a war and recession at the same time and the federal debt as a percentage of gdp has only marginally moved up.
2. Inflation is below our 40 year average.
3. Unemployment is below the average of the 1970’s, 80’s, and 90’s.
4. Longevity is increasing. We are living longer.
5. Disability among the elderly is declining. The elderly are in better shape than any prevous generation.
6. Most Baby boomers want to continue to work pastg retirement.
7. Recessions are becoming less and less frequent.
8. The standard deviation of the economy is declining, meaning we have a more stable economy that previous generations.
9. Interest rates are low. Lower than they have been in a generation.
10. Productivity of our workforce is high and getting higher.
11. We are in far greater shape for the coming agewave than our european and Japenese trading partners.
12. We have lower expenses that Europe as far as federal expenditures go.
13. We lead the world in technological advances.
14. We lead the world in Nobel Prizes for most sciences including medicine.
15. Democracy is spreading. There are more democratic countries now than at any time in history.
16. The number of wars are decreasing. We are having fewer and fewer wars in our world. And few people are dying in wars today.
17. The world’s birthrate is declining and heading towards a time when the earths human population will stablize and posibly decline.
18. World literacy is increasing.
19. World trade is expanding.
20. The world GDP has expanded faster than at anytime in the last three decades recently.
21. Corporate profits are extemely high as a percentage of GDP.
22. Our exports are increasing at double digit rates.
23. Fewer people are dying in Iraq. The surge is working.
24. We are having one of the best political debates at the presidential level in my life time. That should result in a better informed electoriate for the next administration.
25. The economy is growing.
That is 25. If you want 25 more just ask.
Posted by: Craig Holmes at February 2, 2008 03:20 PM
Dan:
ooops I forgot.
26. The budget deficit is below our 40 year average.
27. Many of the items we need are in a disinflationary cycle. These include most all appliances, TV’s, computers, cars, clothing. This of course means more junk.
28. SAT math scores are rising.
29. Leadership is becoming more diversified. this year we have a woman, a black man, and old man, a mormon a preacher etc all as contenders for the presidency.
30. Household wealth is at an all time high.
31. Viewership of the latest democratic debate set a new record.
Give me time. I will catch up with you!!!!
Posted by: Craig Holmes at February 2, 2008 04:16 PMCraig, your glass half full approach has no predictive value. And your prediction about employment was invalidated by the numbers released on Friday. Whether one wants to argue half full or half empty, the credibility of the argument has to be based on pertinent data, trends, historically established correlations and cause and effect for as many relevant variables as are known and available.
CNN Money reports:
The number of Americans out of work for at least six months is rising - reaching levels more typically seen deep into a recession or period of job contraction, not at the beginning.
And while some economists believe that the drop in jobs reported in January might later be revised away to show a narrow gain, it’s clear that the rise in long-term unemployment is a far more established trend and one economists say isn’t going away anytime soon.
The number of long-term unemployed stood at a seasonally-adjusted 1.4 million in January, up about 21% from year-earlier levels and up 3% from the previous month. The full-year average for 2007 was 1.2 million long-term unemployed, nearly double the reading for 2000 - just before the last recession.
And while the unemployment rate dropped to 4.9% in January from 5% in December, the latest reading showed 18.3% of the unemployed have now been out of work for at least six months.
As the article notes, 5% unemployment today is worse than 5% 10 or 15 years ago especially when the unemployment beyond 6 months is growing. This portends using up life savings, running out of unemployment benefits, and dropping out of the consumer pool - and more than a million people dropping out of the consumer pool during economic contraction is an exacerbating factor.
These longer term unemployed are left with no choice when funds run out but to take underground economy or lower wage jobs than those they left. Which also portends a drop in consumption by depressed wages when they do return the job rolls. Combined with the replacement of lost manufacturing jobs at higher wages and benefits with lower wage service jobs with less benefits, even more contraction in consumer motivation and strength is evident.
Posted by: David R. Remer at February 2, 2008 04:51 PMCraig, that is a list of some positive, and some positive sounding, factors.
Household wealth, for example, is far from being elevated for the whole of American society. It is dropping modestly for increasing numbers of Americans, while increasing dramatically for a much smaller number at the other end of the income spectrum. Employment and housing data indicate this will continue at least through the rest of this year.
One can make rat poison sound appealing to a potential murder victim, but its arsenic ingredient is not altered by its sales pitch. A lot of folks know that statistics are used to lie. What fewer folks know is, that statistics and probability are the math engine this country has run on with great veracity and predictability for more than 60 years now. Those educated in statistics and probability and the field to which they are applied can tell the difference between telling the truth and telling a lie with statistics. Often the lies are promulgated not out of a desire to deceive, but, out of a lack of comprehensive understanding of the data field to which they derive. Household wealth being one example.
Your statement fails to take into account the distribution numbers inherent within the statistic. And as Household Wealth relates to economic contraction or recession, those distribution numbers within are vitally important to represent the truth of the situation.
Posted by: David R. Remer at February 2, 2008 05:04 PMCraig Holmes wrote: Why refute it? You don’t even admit that good positive things exist.Not true.
I wrote above …
d.a.n wrote: Yes, there are good things, but the problem is that the bad things are overtaking the good things, which is causing a decline for most people in America (for the last 30+ years).
Again, you’re missing the point, which is that most Americans are going backwards.
Craig Holmes wrote: Would it help you if I created a positive list that is twice as long as your negative list?No, not unless you can prove that most Americans are not going backwards.
That is the point.
Craig Holmes wrote: You have made the decision to be the keeper of the negative list. That is fine, but in terms of being a part of a solution for our country, you marginalize yourself out of the debate.Think so? Why?
I want better government.
What is wrong with that?
Better government is not going to happen by telling them they are doing a good job when they clearly are not.
Did you see anything on this list get addressed since the last election on 7-Nov-2006 ?
By the way, if you’ve watch Lou Dobbs or Jack Cafferty or a number of pundits on any news station, they are corroborating the my list. Some are even starting to question the Federal Reserve, which is essentially a pyramid scheme that has us all running in circles like chickens with our heads cut off.
The seat-retention rate in the last 7-Nov-2006 election fell to 93.1% .
Do you think that was lost on all politicians in Congress?
I suspect we’ll see some more anti-incumbent voting in the next election.
After all, repeatedly rewarding corrupt politicians with 93%-to-99% re-election rates isn’t working is it
So, I rest my case. Your statement has no credibility.
Craig Holmes wrote: Solution people weigh strengths and weaknesses in balance, making trade offs to come up with a strategy. From your vantage point (there is no positives that exist), suicide is the logical conclusion.“Suicide”? And you hope to gain credibility with asinine statements such as that?
I do have strategies. Unlike most people that complain, I offer MANY detailed solutions for taxes, immigration, monetary system reform, various amendments, healthcare, etc.
- one-simple-idea.com/ (see many solutions here)
- one-simple-idea.com/TaxSystemReform.htm (tax system solutions)
- one-simple-idea.com/DebtAndMoney.htm#Solution (monetary system solutions)
- one-simple-idea.com/BorderSecurity.htm#Solution (border security solutions)
- one-simple-idea.com/HealthCareSolutions.htm (healthcare solutions)
- one-simple-idea.com/ProsCons.htm#VotingGuidelines (voting solutions)
- one-simple-idea.com/WhatAllVotersShouldDo1.htm (voting solutions)
- one-simple-idea.com/BiofuelsAndEthanol.htm (energy solutions)
- one-simple-idea.com/BenefitsAndReasons.htm (voting solutions)
- one-simple-idea.com/Biometics.htm (IDentification solutions)
- one-simple-idea.com/NinePointPlan.htm (government reform solutions)
Yet you wrote …
Craig Holmes wrote:
There is no hope, no reason to proceed. You want me to become miserable like you. Not going to happen.
Thus, your statement and personal attack has no credibility, since I just provide ample proof of proposed solutions too.
Before you can propose solutions, you need to understand the problems.
So, education is part of the solution too.
Craig Holmes wrote: I believe in our country. I believe in our system.I want improvements too.
I want my son and his family to have a bright future too.
You should be thanking me for caring and proposing solutions.
Instead, the problems I present are constantly trivialized, minimized, rationalized, and criticized.
Craig Holmes wrote: I believe our system will find solutions to our problems.It ain’t gonna happen by sticking one’s head in the sand.
Craig Holmes wrote: I believe our children are going to have a good life.Believing isn’t enough.
It takes action.
So why are you so opposed to some of us addressing and working for solutions?
You have no idea how much money and time I spend to further goals to help this nation.
Yet all I get is criticism for it?
Why?
Just because it tarnishes the rosier-than-reality view of the world?
Strange.
Craig Holmes wrote: There is a reason we are the wealthiest country in the history of the world, it’s our system of government.Sure, if you are one of the 1 in 10 people that own 70% of all wealth in the nation.
You have already previously acknowledged the wealth disparity gap.
1% of the U.S. population owned 20% of all wealth in year 1980.
1% of the U.S. population now owns 40% of all wealth in year 2008.
Why do you choose to ignore the fact the most Americans are not sharing in the wealth from their hard work and productivity?
Why can you not see that these 10+ abuses have been hammering Americans for over 30 years?
Why does it bother you so much that someone would propose solutions to these abuses?
Craig Holmes wrote: What you are doing is just showing the list of issue our system needs to deal with.False.
Have you not seen the myriad of solutions too?
Funny how some people only see what they want to see.
Craig Holmes wrote: Why would I choose to live in the depression that is in your writings?Whose says I do, or have to?
Nobody is twisting your arm.
Don’t read it if you don’t want to.
But don’t expect us to give your statements any credibility simply because it isn’t rosier than reality.
Craig Holmes wrote: I see all those problems, but I also see solutions to them all!!!Really? What?
As many as I have?
I have dozens of web-pages and many web-sites dedicated to finding solutions and providing education, not to mention the dozens of other organizations that I support monetarily and/or with my time and talents.
Craig Holmes wrote: You don’t have to live in hopelessness.Yes, things can be much better.
That is the point.
Craig Holmes wrote: You don’t have to live in hopelessness.Of course not.
If that is a conclusion about me personally, then your conclusion is as flawed and lacking in credibility as many of your other statements.
You assume because I work on problems and solutions that I am hopeless.
But true hopelessness is not trying to find solutions.
As already demonstrated, that’s not me.
So, why do you try to portray me that way?
You acknowledge the problems, so you should be happy that someone is working on them.
Yet, all I get is criticism and disdain for working on problems?
BTW, my life is good.
I own two homes, free and clear, including a 30 acre vacation home in the mountains of New Mexico.
My wife and I are both engineers.
My son and his wife have a college education.
I have wealth, assets, good health, and a fine and loving family.
But MOST Americans can not achieve this, because of many abusive systems (see above).
Things are good for me, but I can’t stick my head in the sand and pretend it is good for most Americans.
Yet, you somehow want to portray me as something else.
Intersting.
Why do you do that?
Craig Holmes wrote: Ok Dan: Here is a list of postives: 1. We have fought a war and recession at the same time and the federal debt as a percentage of gdp has only marginally moved up.Not true.
Not if you include the $12.8 Trillion borrowed and spent from Social Security, and the $450 Billion of PBGC pension debt.
Craig Holmes wrote: 2. Inflation is below our 40 year average.So what?
The ever present inflation is a result of a pyramid scheme called the Federal Reserve, that creates money out of thin air.
Nationwide personal debt has never been higher.
The total federal debt has never been higher.
What is good about incessant inflation?
Why not reform the monetary system and eliminate incessant inflation?
Craig Holmes wrote: 3. Unemployment is below the average of the 1970’s, 80’s, and 90’s.True. No one ever said Americans were lazy.
But they are getting squeezed. Their incomes are falling, and they are being despicably pitted against illegal aliens, so some wealthy people can increase their profits, or get votes.
Craig Holmes wrote: 4. Longevity is increasing. We are living longer.That’s good. However, our medical system is killing 195,000 people per year due to avoidable medical mistakes. Compare that to the 4000 Americans killed in Iraq or 57,000 killed in Vietnam.
Craig Holmes wrote: 5. Disability among the elderly is declining. The elderly are in better shape than any prevous generation.See the previous response.
Craig Holmes wrote: 6. Most Baby boomers want to continue to work pastg retirement.Want? More like “have to”. Do you seriously think people sit around saying, boy, I wish I had spent more of my life working instead of taking a vacation or spending time with family and friends. A few workaholics like to work, but most people, if possible, don’t want to work more. Your statement is delusional and/or wishful thinking (regardless of whatever poll you cherry picked to come up with that conclusion).
Craig Holmes wrote: 7. Recessions are becoming less and less frequent.Not true.
Recessions occur every 2 to 11 years for the past 46 years.
Also, with so much debt, fiscal irresponsibility, 2 wars, etc., future recessions are likely to get worse.
Also, incomes have been decreasing for over 30 years (especially when you include the national debt, and more workers per household).
Craig Holmes wrote: 8. The standard deviation of the economy is declining, meaning we have a more stable economy that previous generations.Not true.
This pyramid scheme economy is in trouble. It is a mathematical certainty. All pyramid schemes eventually collapse. That was the major cause of the Great Depression. Unfortunately, we started the cycle again without learning anything from it. The monetary system exploits they majority to enrich a few (by design). Like playing Monopoly in which one person can print all of the money they want … before long, they (banks) own everything, and everyone else is broke or deep in debt. How is it that everyone that produces is in debt to banks that create money out of thin air?
Craig Holmes wrote: 9. Interest rates are low. Lower than they have been in a generation.Of course. The banks can’t make money unless they can loan it out.
For every new loan, up to 90% of each loan is new money created out of thin air.
This pyramid scheme can not last forever.
Craig Holmes wrote: 10. Productivity of our workforce is high and getting higher.Of course. People are working hard, but they are still going backward.
Craig Holmes wrote: 11. We are in far greater shape for the coming agewave than our european and Japenese trading partners.Not true.
Those countries are all smaller and more nimble in many ways.
Besides, they all have the same problem we have: a pyramid scheme monetary system.
Craig Holmes wrote: 12. We have lower expenses that Europe as far as federal expenditures go.Not much (if at all).
Not when you include all taxes.
Craig Holmes wrote: 13. We lead the world in technological advances.That’s questionable, when only 1% of China’s top college graduates in science, engineering, and technology out-number our top 20%.
And our education system is declining in quality while rising in cost.
Eduation is just one of many things unraveling in the U.S. due to the many abuses (see above) that are getting worse; not better.
Craig Holmes wrote: 14. We lead the world in Nobel Prizes for most sciences including medicine.And we lead in the number of patients (195,000 per year) killed by accidental medical mistakes.
Craig Holmes wrote: 15. Democracy is spreading. There are more democratic countries now than at any time in history.True. Maybe even Iraq, even if it bankrupts us and kills hundreds of thousands, eh?
Craig Holmes wrote: 16. The number of wars are decreasing. We are having fewer and fewer wars in our world. And few people are dying in wars today.We have had 7 wars in the last 90 years.
And the U.S., for the first time ever, started a pre-emptive war, based on exaggerations and a complex web of lies.
Craig Holmes wrote: 17. The world’s birthrate is declining and heading towards a time when the earths human population will stablize and posibly decline.Not very comforting when the world population is still growing by 211,000 per day!
We are no where near ZERO population growth.
And the U.S. population is growing faster than almost all other nations (over 5 Million per year).
Not to mention 4 Million per year that come illegally.
Craig Holmes wrote: 18. World literacy is increasing.That’s good.
Craig Holmes wrote: 19. World trade is expanding.That’s good.
Craig Holmes wrote: 20. The world GDP has expanded faster than at anytime in the last three decades recently.That’s not all good.
Like the U.S., the rich are not sharing it. The wealth disparity is growing worse world-wide.
Craig Holmes wrote: 21. Corporate profits are extemely high as a percentage of GDP.So? I’m sure most Americans going backwards will be happy to hear that, along with the greedy CEOs and their multi-million dollar salaries, bonuses, stock-options, and golden parachutes.
Craig Holmes wrote: 22. Our exports are increasing at double digit rates.Have you not seen the trade deficits?
Our one-sided trade policies are screwing Americans
Craig Holmes wrote: 23. Fewer people are dying in Iraq. The surge is working.Maybe. But it in no way diminishes the loss of life, cost, blunders, incompetence, and exaggerations and lies that caused all of it.
It in no way diminishes the additional loss of life, and cost before we leave Iraq (if ever; McCain says we may be there for 100 years).
Craig Holmes wrote: 24. We are having one of the best political debates at the presidential level in my life time. That should result in a better informed electoriate for the next administration.Maybe. But the MSM will (as usual) decide the winners.
And the voters will continue to repeatedly reward irresponsible incumbent politicians in Do-Nothing Congress with 93% to 99% re-election rates.
Craig Holmes wrote: 25. The economy is growing.Maybe. But what good is it if the wealthy get most of it, while most Americans are going backwards? ! ?
Again, that is the point.
Craig Holmes wrote: 26. The budget deficit is below our 40 year average.The total federal debt is a joke. That deficit does not include the $12.8 Trillion already borrowed and spent out of Social Security. It also does not include the $450 Billion PBGC pension debt.
Craig Holmes wrote: 27. Many of the items we need are in a disinflationary cycle. These include most all appliances, TV’s, computers, cars, clothing. This of course means more junk.Wonderful. The thing for a nation in debt up to its eyeballs is to borrow and spend some more?
Craig Holmes wrote: 28. SAT math scores are rising.Good. We still are woefully behind in math, science, and technology with many other nations (who spend a lot less per student).
Craig Holmes wrote: 29. Leadership is becoming more diversified. this year we have a woman, a black man, and old man, a mormon a preacher etc all as contenders for the presidency.Whooopppppeeeee. American spend too much time concentrating and emphasizing such differences. And too often, the emphasis is on those differences, rather than the common ground.
Craig Holmes wrote: 30. Household wealth is at an all time high.Maybe, but only if you include the top 1% of the population that own 40% of all wealth (up from 20% in year 1980).
That is not true for MOST Americans, but it is clever how you worded it.
How can that be when household incomes have been falling for decades?
How can that be when nationwide debt is a record highs ($20 Trillion)?
How can that be when the National Debt is $9.2 Trillion?
How can that be with millions of foreclosures for years?
Craig Holmes wrote: 31. Viewership of the latest democratic debate set a new record.So what?
That’s probably a bad thing, and may increase the seat-retention rates in Do-Nothing Congress.
Craig Holmes wrote: Give me time. I will catch up with you!!!!Good try, but I think your list got pretty much trounced.
Only a few of your positive were really positives.
Your list is no more credible than your inference that I “choose to live in the depression”.
Again, the point is this: For most Americans, things are getting worse. Not better.
Try to prove otherwise.
Good luck.
Removal of rose-colored glasses won’t help change reality.
Dan:
That is great you agree that there are some positives.
That is wonderful. Wow, I never thought I would live to see that day.
Springtime is here!!! Contrats!!
Craig
Posted by: Craig Holmes at February 2, 2008 07:02 PMCraig Holmes wrote: Dan: That is great you agree that there are some positives.Hmmmmmmmmmmmm … where did that come from.
Oh wait. Let me put my rose-colored glasses on.
Craig Holmes wrote: That is wonderful. Wow, I never thought I would live to see that day.Really?
Hmmmmmm … that statement is more delusional than I even ever predicted.
Craig Holmes wrote: Springtime is here!!! Contrats!!
Craig
Yeah boy!
You decide.
Pay no attention to the FORCES screwing you over every day.
Posted by: d.a.n at February 2, 2008 07:21 PMDan:
Pay no attention to the FORCES screwing you over every day
That is a good list. You have listed many of the forces that have been with our human race for all time. The come in different forms, but they are always there.
Many of them are written about in the Bible!! Most are as old as civilization.
I think our choice is how we decide to interact with them. All of us have choices about what we are going to do about the negative issues of society.
Dan:
Again, the point is this: For most Americans, things are getting worse. Not better.Try to prove otherwise.
Good luck.
Removal of rose-colored glasses won’t help change reality.
That is not a bad challenge.
I will start with this.
The poverty rate in the United states is currently 12.3%, lower than the average of the 1980’s and the 1990’s.
How is that for starters???
How can America be getting worse when poverty is lower this decade that the average of the two previous?
Dan:
If point number one was that poverty rates are lower than the average of the 1980’s and 1990’s, here is point nubmer two:
Home ownership rates were higher in the fourth quarter of 2007 than the averages of the 1960’s, 70’s, 80’s and 90’s.
More people today are able to own their own homes even with the recent problems in the housing market.
Posted by: Craig Holmes at February 3, 2008 12:03 AMDan:
Point number three:
More people own computers!!!
Personal ownership of technology is increasingly commonplace these days - especially when it comes to owning a computer.
In late 2007, the Pew Research Center released a study called the Global Attitudes Project that noted computer ownership is on the increase across the nation.Posted by: Craig Holmes at February 3, 2008 12:06 AMAccording to the survey, 76 percent of adults in the U.S. own a computer, compared to 70 percent in 2002.
Dan:
Cell phone ownership showed a dramatic increase globally, Wike said. In 2007, 81 percent of the U.S. population owned a cell phone, a 20 percent increase compared to 2002. Russia and Nigeria saw dramatic 57 percent and 56 percent increases, respectively, in cell phone ownership in 2007 compared to 2002.
Cell phones for everyone!!!
Craig Holmes wrote: How can America be getting worse when poverty is lower this decade that the average of the two previous?That’s debatable.
Where is your proof of a decline?
That is not what this article says.
Nor this one.
There were some improvements in the 1990’s, but those gains have quite likely been lost.
Let’s take Oregon, for example:
YEAR _ POVERTY RATE __ TOTAL IN POVERTY
2000 _ 11.6% _________ 388,740
1990 _ 12.4% _________ 344,867
1980 _ 10.7% _________ 274,141
The percentages are about the same, if not higer if you consider the people bankrupted by outrageous medical expenses and ridiculously high medical insurance premiums, millions are being foreclosed on, predatory lending is rampant, and household incomes have been declining for decades (especially when you consider the $9.2 Trillion National Debt, $12.8 Trillion borrowed and spent from Social Security, the PBGC pensions are $450 Billion in the hole, and there are now more workers per household). Add to that declining quality and rising cost of public education, many other factors, and your assertion is questionable.
Also, with a 77 Million baby boomer bubble on the way, I fear many of those millions will fall into poverty and be bankrupted by astronomical medical expenses.
Also, crime rates are increasing. Thousands of people are murdered or maimed each year by illegal aliens (voiac.org).
Besides, haven’t you heard John Edwards talk about poverty? : )
Of course, he is a hypocrite, since he charges $55,000 for a speech at University of California at Davis about how to avoid poverty. That’s how much the 2008 Democratic presidential candidate negotiated for his fee to speak to 1,787 people at the taxpayer-funded school in January 2006, about fighting poverty according to financial disclosures.
One way to avoid poverty is to not get $300 for haircuts.
Craig Holmes wrote: More people today are able to own their own homes even with the recent problems in the housing market.Not true.
They don’t own them until they are paid for in full.
Also, the real estate bubble is due in part to the collapse of the stock market bubble in 1999/2000.
Now the real estate bubble is collapsing, and property values are falling, and many people owe more than their home is worth.
Foreclosures are in the millions per year, which is the sinister method in which banks convert money printed out of thin air into real assets and property. Cha-Ching!
And these bubbles are primarily caused by our pyramid-scheme monetary system.
The wealthy are doing fine, as usual, but for most Americans, things are NOT getting better.
Craig Holmes wrote: More people own computers!!!That’s good. Thanks to cheap labor in China, India, Tiawan, etc.
We used to lead in the manufacture of computers and many things. Not any more.
Craig Holmes wrote: Cell phone ownership showed a dramatic increase globally, … Cell phones for everyone!!!You think that is a good thing?
Now people are shackled to their jobs more than ever (via cell phones).
Many corporations require employees to have cell phones and home computers so they can be reached 24/7.
It goes to show you how some things can be abused to squeeze more work and time out of people.
Hence, the disappearing 40 hour work week.
The cell phone has some advantages (e.g. especially for emergencies which can save lives), but it is also a curse in many ways.
And how many people have been injured or killed while talking or text-messaging on cell phones?
Not all technological advances are purely beneficial.
Yes, there are good things too.
But the point is that these abuses have been getting worse for 30 years. Not better.
And what is worse, those abuses did not all come about by mere coincidence.
But only seeing the rosy side, while ignoring the negative, the obvious abuses, and other numerous manifestations of unchecked greed, is not surprising.
Posted by: d.a.n at February 3, 2008 06:01 AMDan:
Where is your proof of a decline? That is not what this article says. Nor this one. There were some improvements in the 1990’s, but those gains have quite likely been lost.
My proof is from the united states census bureau.
Your articles are from the end of the last recession and are taking short term snapshots. You need to look at longer term trends.
And you own a home as soon as it closes and the check clears under the law.
Poverty took a predictible gain after the 2001 recession and is now declining. It is still below the average of the 1980’s and 1990’s.
Posted by: Craig Holmes at February 3, 2008 12:47 PMThe poverty level has been increasing since 7 years ago, and since 34 years ago:
YEAR __ POVERTY LEVEL
2006 __ 12.3%
2005 __ 12.3%
2004 __ 12.6%
2003 __ 12.7%
2002 __ 12.1%
2001 __ 11.7%
2000 __ 11.3%
1999 __ 11.8%
1990 __ 13.5%
1980 __ 13.0%
1973 __ 11.1%
And the data for 2007, when available, will probably be worse than 2006.
So why is it that 1 in 8 people in the U.S. live below the poverty level?
Didn’t you say this is the richest nation in the world?
HHMMMmmmmm … perhaps, if you are one of the 1 in 8 people that owns 75% of all wealth in the nation.
20% of Americans have negative net worth (i.e. debt).
40% of Americans, on average, have ZERO net worth.
Again, the rich are getting richer and some are are doing via usury, exploitation, and these 10+ abuses over the past 30 years.
That means 37.5 million Americans live below poverty level, and many of them are working poor.
Perhaps so much poverty would not exist if there wasn’t so many abuses hammering, exploiting, and cheating Americans?
I don’t think most Americans want hand outs.
I think most of them simply want a level playing field.
Besides, that doesn’t show the falling incomes for most Americans (for over 30 years; especially when considering the $9.2 Trillion National debt, more workers per household, and replacement jobs paying less than previous jobs).
Exacerbating all of this is a dishonest and abused monetary system that keeps moving the target via incessant inflation, usury, and the economic instability it creates.
But, the voters bear some responsibility for that too, since most voters, for some strange reason, repeatedly reward irresponsible, corrupt, FOR-SALE incumbent politicians in the two-party duopoly in Do-Nothing Congress with 93%-to-99% re-election rates.
Posted by: d.a.n at February 3, 2008 01:36 PMCraig Holmes wrote: And you own a home as soon as it closes and the check clears under the law.More grasphing at straws.
Want to split hairs on the definition of owning a home?
Your definition: You own your home only as long as you can avoid foreclosure (which is now happening to millions of people), or forced to sell, and force to move out.
The Real Definition: You really own your home when it is paid-off in-full, and can longer be foreclosed on.
There’s a BIG difference.
The real-estate bubble is bursting and a lot of people now own a house that is worth less than the balance on the loan. Yeah boy … Whoooooppppeeeee for home ownership (by your definition).
Posted by: d.a.n at February 3, 2008 03:57 PMDan:
The Real Definition: You really own your home when it is paid-off in-full, and can longer be foreclosed on.
Wrong. you can still be foreclosed on for none payment of taxes. Taxes!!
Here is a website where you can do just that!!
There are other types of liens as well.
by Dan’s definition of ownership one never really owns a home at all. there is no difference between being current on a mortgage and being current on taxes.
Try not paying your taxes and the same thing will happen to you as what happens to those who do not pay their mortgage.
Your point that most americans are worse off is wrong because home ownership is up.
My point stands, Americans are better off because home ownership is up.
Craig Holmes,
Craig Holmes wrote: by Dan’s definition of ownership one never really owns a home at all. there is no difference between being current on a mortgage and being current on taxes.Nonsense.
Now you are grasping at straws.
The tax issue is very weak, because property taxes are usually only a few percent of the home’s total value, and anyone who can not pay the taxes, and has very little equity in their home, is unlikely to be able to pay the monthly mortgage payment.
But someone who has a lot of equity in their home can borrow against it to pay the taxes.
Craig Holmes wrote: My point stands, Americans are better off because home ownership is up.Home ownership has increased only for the wealthy, which drove up the overall percentages for some years.
Since year 2006, home ownership has fallen for low-income and middle-income people.
Currently, home ownership is in a record plunge, and the 4th quarter of 2007 saw biggest one-year drop (1.1%) since tracking began in year 1965, as current mortgage problems and rising foreclosures take their toll.
Craig, You do that a lot; i.e. providing cherry-picked statistics that try to ignore the fact that the overall numbers look better when the very wealthy are also included, with no regard for the fact that 1% of the U.S. population owns more wealth than 95% of all 305 Million Americans. Why? To simply win an argument? Or the desire to disbelieve anything anti-rosy?
While overall home ownership may have risen slightly, home ownership for low and middle-income people has declined; more proof that the wealth disparity is widening in America.
The study in the article above found that only 59.6% of working class families owned their homes in year 2003, despite the overall rate of 68.3 in year 2003.
Home ownership has been in the 62% to 69% range for over a decade, and has fallen since year 2004 due to millions of foreclosures per year, and millions more predicted through to year 2009:
YEAR: ____ 1978_ 1996_ 1997_ 1998_ 1999_ 2000_ 2001_ 2002_ 2003_ 2004_ 2005_ 2006_ 2007_ 2008
OVERALL-
OWNERSHIP: 62.5% 65.4% 65.7% 66.3% 66.8% 67.4% 67.8% 67.9% 68.3% 69.0% 68.9% 69.1% 68.2% ??.?%
Again, those numbers do NOT reflect homes that are paid-off in full, and it does not reveal the fact that the home ownership rate has fallen for low-income and middle-income people.
Also, it ignores the fact that more people are now in more debt too.
It is funny that you first assert that you own your home the minute you sign the mortgage, and then try to refute my assertion that you don’t really own a home until you have it paid-off in full, but then use the tax issue to assert that you still don’t own it? That’s some funny, circular logic.
Regarding that www.rivers1.com web-site, I think it’s kind of sleazy. But that’s what happens in economic hard-times. The wealthy pick up more property cheap. And the banks convert money created out of thin air into real assets and property via confiscation on foreclosures and defaults.
Still, as far as I am concerned, you don’t really own your home until you have paid for it in-full. You can have equity, and the more, the better.
Yes, if you don’t pay your property taxes, you property can still be confiscated, but that is unlikely since a home that is paid-off has equity and can be used to borrow the money for taxes for many decades.
And again, with the real estate bubble now bursting. many people are not fighting foreclosure, because they now owe more than the home is worth.
These bubbles are in large part due to the economic instability caused by our pyramid-scheme monetary system, incessant inflation, predatory banks, usurious interest rates, and fraud.
Dan:
Now you are grasping at straws. The tax issue is very weak, because property taxes are usually only a few percent of the home’s total value, and anyone who can not pay the taxes, and has very little equity in their home, is unlikely to be able to pay the monthly mortgage payment.
You are making the case that things are getting worse for most folks.
I am saying that no, they are not getting worse for most folks because home ownserhsip is going up to the high sizties in terms of percentage of homeownership.
You rebute by saying according to your definition of home owndership, you don’t really own a home until there is no debt because a home can be foreclosed.
you rebute that by saying that is a weak argument not because it is wrong but because it is unlikely.
guess what? forclosure is unlikely as well. Only a very small number of homes are forclosed on. So the same argument you made to me, I make back to you. YOu have a weak argument because it is unlikely most americans will face foreclosure.
Since year 2006, home ownership has fallen for low-income and middle-income people
Of course, housing is in a recession.
Posted by: Craig Holmes at February 4, 2008 08:57 PMDan:
Still, as far as I am concerned, you don’t really own your home until you have paid for it in-full.
That is just an opinion. Of course you are free to have your opinion. Of course that carries little wait in a debate.
Craig, You do that a lot; i.e. providing cherry-picked statistics that try to ignore the fact that the overall numbers look better when the very wealthy are also included, with no regard for the fact that 1% of the U.S. population owns more wealth than 95% of all 305 Million Americans. Why? To simply win an argument? Or the desire to disbelieve anything anti-rosy?
No not at all. You made an incorrect assertion. Most Americans are doing fine.
While overall home ownership may have risen slightly, home ownership for low and middle-income people has declined; more proof that the wealth disparity is widening in America.
We are not debating low and middle income people. You asked me to disprove
Again, the point is this: For most Americans, things are getting worse. Not better. Try to prove otherwise.
I am focusing on “most Americans”. For most Americans things are not getting worse. Home ownserhip is up, Poverty is down. Most forks are doing just fine.
If you wnat to talk about the poor I would be happy to discus that issue. I have poor in my family. They have more stuff too!! I moved one into a apartment, complete with airconditioning, (not a necessity in this climate, we don’t have it), and a microwave etc etc. That is the poor.
Craig Holmes wrote: If you wnat to talk about the poor I would be happy to discus that issue.Who said anything about the poor ONLY?
That is yet another lame tactic to obscure the facts, change the subject, and cloud the issue.
I’m not talking about the poor only.
You obviously didn’t read the post above.
NOTE (above and below several times) the words low-income AND milddle-income ?
NOTE: 59.6% of working class families owned their homes in year 2003, despite the overall rate of 68.3 in year 2003.
Home ownership has increased only for the wealthy, and it has decreased for EVERYONE else. And 2007 and 2008 statistics are likely to drive home ownership percentages for low-income AND milddle-income lower yet.
For example, since year 2006, home ownership has fallen for low-income and middle-income people.
Currently, home ownership is in a record plunge, and the 4th quarter of 2007 saw the biggest one-year drop (1.1%) since tracking began in year 1965, as current mortgage problems and rising foreclosures take their toll.
Craig Holmes wrote: I am focusing on “most Americans”. For most Americans things are not getting worse. Home ownserhip is up, Poverty is down. Most forks are doing just fine.Things have been getting worse because of these 10+ abuses. Just because you have a microwave means nothing, and is a dumb argument. Especially if they have less and less income to pay for the skyrocketing electric bill to run it and the food to cook in it.
Also, by your definition of home ownership, it is not a good measure by itself; especially when they are only a few paychecks away from foreclosure.
Craig Holmes wrote: I am focusing on “most Americans”. For most Americans things are not getting worse. Home ownserhip is up, Poverty is down. Most forks are doing just fine.Not true.
As show above, home ownership decreased for the middle-income and lower-income people.
Home ownership increased ONLY for the wealthy.
And the poverty level has increased since the year 2000 and 1973 (and 2007, and 2008 are likely to drive the poverty levels higher):
YEAR __ POVERTY LEVEL
2007 __ ??.?%
2006 __ 12.3%
2005 __ 12.3%
2004 __ 12.6%
2003 __ 12.7%
2002 __ 12.1%
2001 __ 11.7%
2000 __ 11.3%
1999 __ 11.8%
1973 __ 11.1%
So why is it that 1 in 8 people in the U.S. live below the poverty level?
Didn’t you say this is the richest nation in the world?
HHMMMmmmmm … perhaps, if you are one of the 1 in 10 people that owns 70% of all wealth in the nation.
And, just because many people are not in poverty does not mean they are advancing.
Again, the rich are getting richer, while most people are not.
And some wealthy are doing it via usury, exploitation (see 10+ abuses link above), and it has been getting worse for 30 years.
That 12.3% poverty level means 37.5 million Americans live below poverty level, and many of them are working poor.
Craig Holmes wrote: Only a very small number of homes are forclosed on.The current 2 million foreclosures per year is small?
Tell it to those 2 million families being foreclosed on.
And tell it to the people with homes now worth far less than they owe on them.
Home foreclosures will remain at the rate of 2 million per year well into 2008.
Before the crisis is over, 3 million more families, homeowners, and renters may have been kicked out of their homes, and often lose everything in the process.
People from every part of the country, of every age, income level, race and ethnicity, are losing their homes.
Low-income families, particularly African Americans and Latinos and senior citizens, are most likely to be victims of this crisis.
And unemployment increased in January, 2008.
Yet, you say …
Craig Holmes wrote:
Most folks are doing just fine.
That is a nebulous statement and doesn’t change the fact that most people are going backwards.
Cherry-picking a few statistics here and there doesn’t disprove the fact that things are getting worse and have been for 30 years due to the 10+ abuses (see link above).
- Home ownership by itself doesn’t prove anything unless the owners have a lot of equity (which most do not). In fact, a lot of people now owe more on their homes than the homes are worth due to the bubble bursting; bubbles caused by enonomic instability caused by a dishonest pyramid-scheme monetary system.
- And poverty levels by itself doesn’t prove anything, if most people are still going backwards, but still above the poverty level.
- Jobs are leaving the country in droves, and replacement jobs are paying less and less than the previous jobs.
- Trade deficits are huge.
- Nation wide personal debt is over $20 Trillion.
- The $9.2 Trillion National Debt is almost as large as all U.S. Dollars in existence. Where will the interest on that debt come from?
- Incessant inflation is decreasing wages and increasing prices, and hammers the average American.
- Taxation is regressive.
- Illegal immigration is out of control.
- Two wars rage on, and the war in Iraq was started pre-emptively based on lies.
- Astronomical healthcare costs are bankrupting people … even many that HAVE medical insurance.
- 195,000 people are killed each year by preventable medical mistakes.
- Predatory lending and usury is rampant. Lawlessness and constitutional violations are increasing. Crime rates are increasing.
Yet, you write:
Craig Holmes wrote: Most folks are doing just fine.
Sure, one may be “doing fine” if they are one of the 1 in 50 people that owns more than 98% of all Americans.
Or the one of the 1 in 10 people that own 70% of all wealth.
“doing just fine” depends on how you define “just fine”.
I don’t see anything “just fine” about the 10+ abuses hammering most Americans.
Your statistics and statements are not convincing, nor support the conclusion that “Most folks are doing just fine”.
Most will disagree with you, so go tell it to them.
Other than that, everything is rosy!
Posted by: d.a.n at February 5, 2008 07:50 AMDan:
Like I said, you asked me to show how most americans are not doing worse.
My first point is that the current poverty rates is below the average of the 1980’s and 1990’s. That means the poverty rate is relatively low.
My second point is that Homeownership is high and trending higher. Owning homes is a sign of doing well.
You are looking at 10 abuses which is a long term issue, and I am looking at numbers that are long term trends.
You are now changing trying to focus on the short term issues with the slowdown.
The trend for most Americans is positive. We are healthier, have longer lifespans, own more homes, more cars, more computers, more cell phones, are better educated, than previous generations.
We may have less spendable income, that’s because we own more things!!
Posted by: Craig Holmes at February 5, 2008 05:05 PMCraig Holmes wrote: Like I said, you asked me to show how most americans are not doing worse.
The question was:
d.a.n wrote:
For most Americans, things are getting worse. Not better.
Try to prove otherwise.
Craig Holmes wrote: My first point is that the current poverty rates is below the average of the 1980’s and 1990’s. That means the poverty rate is relatively low.True, that was a bump upward, but that is not very convincing, nor the whole pictured for several reasons:
- (1) First of all, the bump upward did not last, and poverty rates have risen over the past 7 years, and 2007 and 2008 are likely to be worse.
YEAR __ POVERTY LEVEL
2008 __ ??.?% estimate 13.0
2007 __ ??.?% estimate 13.0
2006 __ 12.3%
2005 __ 12.3%
2004 __ 12.6%
2003 __ 12.7%
2002 __ 12.1%
2001 __ 11.7%
2000 __ 11.3%
1999 __ 11.8%
… … .
1979 __ 11.7%
1978 __ 11.4%
1977 __ 11.6%
1976 __ 11.8%
1975 __ 12.3%
1974 __ 11.2%
1973 __ 11.1% - (2) Second, poverty rates are higher now than 1973 to 1979.
- (3) Third, 12.3% means 37.5 million people (1 in 8 people) live in poverty in the supposed richest nation on Earth. What’s good about that?
- (4) Fourth, poverty rates alone do not disprove most Americans are not going backwards.
Craig Holmes wrote: My second point is that Homeownership is high and trending higher. Owning homes is a sign of doing well.That’s not convincing nor the whole picture for several reasons:
- (01) Home ownership has decreased for the past 4 years.
- (02) Home ownership has increaased ONLY for the wealthy.
- (03) for most people middle-income and lower-income people as has decreased (59.6% in year 2003).
- (04) Since year 2006, home ownership has fallen for middle-income and lower-income people.
- (05) Home ownership is in a record plunge, and the 4th quarter of 2007 saw the biggest one-year drop (1.1%) since tracking began in year 1965, as current mortgage problems and rising foreclosures take their toll.
- (06) in 2007, there were record level 2 million foreclosures.
- (07) in 2008, it is predicted there will be another 2 million foreclosures.
- (08) Home ownership also means debt too, and does not necessarily a good thing.
- (09) Home ownership rates do not reflect homes that are paid-off in full.
- (10) Since the real-estate bubble is bursting, many people now owe more on their homes than their homes are worth (bubbles caused by the dishonest pyramid-scheme monetary system).
Craig Holmes wrote: You are looking at 10 abuses which is a long term issue, and I am looking at numbers that are long term trends.Not true.
Those 10+ abuses are both long-term trends and long-term numbers.
- (01) personal nation-wide debt is hihger ($20 Tillion);
- (02) federal National Debt is over $9.2 Trillion;
- (03) $12.8 Trillion was borrowed and spent from Social Security, leaving it pay-as-you-go with a 77 million baby boomer bubble approaching;
- (04) the PBGC pensions are $450 Billion in the hole;
- (04) home ownership is lower for middle-income and lower-income people;
- (05) poverty rates are rising now, are higher for the past 7 years and higher than the 1973-to-1979;
- (06) we have two wars abroad costing many billions per day;
- (07) lawlessness and crime rates is rising; existing laws are not being enforced;
- (08) illegal immigration is out of control, costing U.S. tax payers $70 Billion to $338 Billion annually;
- (09) thousands of Americans are being murdered annually by illegal aliens;
- (10) eminent domain abuse is rampant (6 new cases per day);
- (11) the monetary system is a pyramid scheme that rewards the rich and punishes the middle-class;
- (12) the tax system is regressive;
- (13) the ratio of total naitonwide debt and nationwide income has been worsening for 30 years;
- (14) the total federal debt ($9.2 Trillion National Debt, $12.8 Trillion borrowed and spent from Social Security, PGBC pensions $450 Billion in the hole) to GDP ratio has never been worse (ever);
- (15) government continues to grow to nightmare proportions; increasingly FOR-SALE, wasteful, and corrupt; rampant corporate welfare, subisdies for EXXON with $44 Billion in profits, pork-barrel;
- (16) election fraud and votes lost by electronic voting machines is a serious problem; especially in close elections;
- (17) healthcare? more like deathdare, with 195,000 people killed annually by preventable medical mistakes, while insurance companies and hospital corporations make huge profits;
- (18) jobs are disappearing and being replaced by lower paying jobs; unfair trade practices and government meddling encourage corporations and jobs to leave the U.S.
- (19) incomes are falling (especially when considering the $9.2 Trillion National Debt and more workers per household);
- (20) the pyramid-scheme monetary system is contributing to incessant inflation, the falling U.S. Dollar against all major international currencies, and falling incomes (especially when considering the $9.2 Trillion National Debt and more workers per household);
Craig Holmes wrote: You are now changing trying to focus on the short term issues with the slowdown.Not true. The 10 abuses have been hammering most Americans for 30 years.
Many things have grown worse in the last 30 years.
Craig Holmes wrote: The trend for most Americans is positive. We are healthier, have longer lifespans, own more homes, more cars, more computers, more cell phones, are better educated, than previous generations.Not true.
Healthier, with epidemic obesity?
A healthcare system that accidentally kills 195,000 people per year due to preventable medical errors?
And 1 in 7 people can’t afford medical insurance (are uninsured).
Cars? Urban sprawl and long commutes kill hundreds of thousands of people each year?
And the home ownership is a red-herring?
Better educated? Maybe in some ways, but not in the most valuable ways. And we’re falling behind many other nations, as the quality of education declines while becoming more expensive too.
More wealthy?
Only for one of the 1 in 10 people that own 70% of all wealth.
The wealthiest 1% of the U.S. population has 40% of all wealth in the U.S. (up from 20% in year 1980; never larger since the Great Depression).
The poorest 20% of the U.S. population has negative net worth (i.e. debt)
80% of the U.S. population has a mere 17% of all wealth in the U.S.
2% of Americans have more wealth than the remaining 98% of all 405 Million Americans.
And that wealth disparity trend, which you have already acknowledged, is getting worse; not better.
Craig Holmes wrote: We may have less spendable income, that’s because we own more things!!Ohhhhh … well.
That’s altogether different.
Yes, by all means … more things changes everything.
Our president and economists want us to take our $150 Billion economic stimulus package and buy more things from China ?
Whhooooopppeeee!
Nation wide debt personal is over $20 Trillion.
The National debt is $9.2 Trillion.
Where is that $150 Billion economic stimulus package coming from, and who will get the bill?
Can’t stop borrowing, spending, and creating debt, eh?
Otherwise, the pyramid-scheme would finally collapse like it did in the Great Depression.
Other than that, everything is rosy!
Posted by: d.a.n at February 5, 2008 07:48 PMDan:
Not true. The 10 abuses have been hammering most Americans for 30 years.
OK, I think you believe that most Americans are worse off than they were 30 years ago in 1978 in Carter’s administration.
The unemployment rate 30 years ago was 6.3%
Inflation was 9.2%
Mortgage rates were over 10% nearly double what they are today.
Are you sure you want to go down this road?
Americans are far better off financially than they were 30 years ago.
Posted by: Craig Holmes at February 5, 2008 08:33 PMCraig Holmes wrote: d.a.n: OK, I think you believe that most Americans are worse off than they were 30 years ago in 1978 in Carter’s administration.Yes.
And it is not hard to prove (after removal of rose-colored glasses).
Most things are worse, due to these 10+ abuses and the many negative ripple effects. For example:
- (01) 1% of all people that owned 20% of all wealth in 1980, now own 40% of all wealth; that is a steady trend since year 1976.
- (02) personal nation-wide debt is higher ($20 Tillion);
- (03) federal National Debt is over $9.2 Trillion;
- (04) state and local government debt is over $8 Trillion;
- (05) $12.8 Trillion was borrowed and spent from Social Security, leaving it pay-as-you-go with a 77 million baby boomer bubble approaching;
- (06) the PBGC pensions are $450 Billion in the hole;
- (07) total nation-wide debt is over $48 Trillion;
- (08) home ownership is lower for middle-income and lower-income people;
- (09) poverty rates are rising now, are higher for the past 7 years;
- (10) we have two wars (Afghanistan and Iraq) abroad costing monetarily many billions per day; about 4000 American troop deaths; tens of thousands of American troops maimed;
- (11) lawlessness and crime rates is rising; existing laws are not being enforced;
- (12) illegal immigration is out of control, costing U.S. tax payers $70 Billion to $338 Billion annually;
- (13) thousands of Americans are being murdered annually by illegal aliens;
- (14) eminent domain abuse is rampant (6 new cases per day);
- (15) the monetary system is a pyramid scheme that rewards the rich and punishes the middle-class;
- (16) the tax system is regressive;
- (17) the ratio of total naitonwide debt and nationwide income has been worsening for 30 years;
- (18) the total federal debt ($9.2 Trillion National Debt, $12.8 Trillion borrowed and spent from Social Security, PGBC pensions $450 Billion in the hole) to GDP ratio has never been worse (ever);
- (19) government continues to grow to nightmare proportions; increasingly FOR-SALE, wasteful, and corrupt; rampant corporate welfare, subisdies for EXXON with $44 Billion in profits, pork-barrel;
- (20) election fraud and votes lost by electronic voting machines is a serious problem; especially in close elections;
- (21) healthcare? more like deathdare, with 195,000 people killed annually by preventable medical mistakes, while insurance companies and hospital corporations make huge profits; health insurance is extremely high; 1 in 7 people are uninsured; medical costs are astronomical resulting in many bankruptcies … even for people that have health insurance;
- (22) jobs are disappearing and being replaced by lower paying jobs; unfair trade practices and government meddling encourage corporations and jobs to leave the U.S.
- (23) incomes are falling (especially when considering the $9.2 Trillion National Debt and more workers per household);
- (24) the pyramid-scheme monetary system is contributing to incessant inflation, the falling U.S. Dollar against all major international currencies, and falling incomes (especially when considering the $9.2 Trillion National Debt and more workers per household);
Craig Holmes wrote:
The unemployment rate 30 years ago was 6.3%
Civilian unemployment in year 1978 was 6.1%
Funny how you picked 1978, when civilian unemployment in year 1979 was 5.8% (close to the average of 5.66% for the 2000’s and 5.75% for the 1990’s).
Civilian unemployment average for in 1970’s was 6.21%
Civilian unemployment average for in 1980’s was 7.27%
Civilian unemployment average for in 1990’s was 5.75%
Civilian unemployment average for in 2000’s was 5.66%
And significantly higher unemployment rates in 2008 is not far fetched.
But again, the problem is the big picture … not a few cherry-picked statistics.
Craig Holmes wrote: Inflation was 9.2%The problem with inflation is not just the spikes, but the fact that it is incessant, year after year after year, since year the 1940, and that is primarily due to the pyramid-scheme monetary system, which creates economically instability. 4% inflation this year is more than 4% of last year, which is more than 4% of the previous year, and so on.
And again, the problem is the big picture … not a few cherry-picked statistics.
Craig Holmes wrote: Mortgage rates were over 10% nearly double what they are today.Yes, interest rates were higher in the late 1970s and early 1980s.
Oddly, that can be a good thing to discourage borrowing and debt.
But the more basic problem (i.e. the pyramid-scheme monetary system which creates economically instability) is one that has been with us since 1913, when when President Woodrow Wilson signed the Federal Reserve Act, giving the privately owned international banking cartel the power to create the United States money. Later, Woodrow Wilson stated:
- “I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the civilized world, no longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men. - Woodrow Wilson, President of the U.S. 1913-1921.
And again, the problem is the big picture … not a few cherry-picked statistics.
Craig Holmes wrote: Are you sure you want to go down this road?Sure. Because cherry-picking the data doen’t disprove the big picture, nor explain away these 10+ abuses, worsening for 30+ years.
And again, the problem is the big picture … not a few cherry-picked statistics.
That can be said with confidence when all factors are considered, and the root causes are understood.
The 10+ abuses explain why most things are worse, and getting worse, and will get worse yet.
The pyramid-scheme monetary system alone, creating massive nation-wided debt of $48 Trillion is a large part of it.
QUESTION # 1: How much money is currently in existence?
ANSWER # 1: In year 1950, M3 Money Supply was $135 Billion.
In year 2005, M3 Money Supply was $10.15 Trillion.
The result of this: economic instability.
A 1950 U.S. Dollar is now only worth 11 cents.
Incomes are shrinking.
Debt is rising.
Where will the money come from to pay the interest on the current principal $48 Trillion of nation-wide debt?
How much interest will there be on the current principal $48 Trillion of nation-wide debt?
Interest on such huge debt (even at 2% or 3%) can far exceed the original principal (such as with a 30 year mortgage).
The interest on $48 Trillion of debt could be hundreds of more trillions.
But that money does not currently exist.
QUESTION # 2: Where will the money for that interest on $48 Trillion come from, when it does not exist yet?
ANSWER # 2: It will be created out of thin air, creating more government and personal debt for most Americans, and the banks and wealthy will receive the interest, and banks will confiscate real property via defaults and foreclosures, converting money created out of thin air into real property and assets. Cha-Ching!
But it gets worse.
Usury and predatory lending isn’t enough for the greedy.
The government debt is passed on to most Americans via regressive taxation that lets the wealthy pay smaller income tax rates.
And that still is not enough.
Thus, corrupt incumbent politicians in the government and a corrupt Supreme Court, in-league with their wealthy puppeteers, use eminent domain to confiscate more property (i.e. legal plunder).
And that still is not enough for these greedy people.
Thus, corrupt incumbent politicians despicably pit American citizens and illegal aliens against each other for profits from cheap labor, votes, and shifts the tax burden via a regressive tax system to the majority of middle-income and low-income Americans.
And that still is not enough for these greedy people.
The incumbent politicians force Americans provide free medical and welfare to those illegal aliens (despite thousands of Americans murdered annaully by illegal aliens; and 29% of all incarcerated in federal prisons are illegal aliens).
And that still is not enough for these greedy people.
The incumbent politicians give illegal aliens drivers licenses, education, and even let them vote in our elections.
And that still is not enough for these greedy people.
So the incumbent politicians try to import more skilled labor to depress wages further, via abused H-1B visas.
Bill Gates, the most wealthy person in the U.S. goes before Congress and tells blatant lies about starting salaries for H-1B workers so that he can get the H-1B Visa limits increased.
And that still is not enough for these greedy people.
The incumbent politicians make unfair trade deals, and trick Americans into training their replacements.
And that still is not enough for these greedy people.
The hyper-weatlhy, a very small 0.15% of all 200 Million elibible voters, vastly out-spend the other 99.85% of all Americans, by making 83% of all federal campaign donations (of $200 or more).
And that still is not enough for these greedy people.
The incumbent politicians, puppets of their wealthy puppeteers, send them billions in pork-barrel, graft, subsidies, and waste.
And that still is not enough for these greedy people.
The incumbent politicians put caps on Social Security.
And that still is not enough for these greedy people.
Those are only a few of the many manifestations of unchecked greed.
And unfortunately, the apathetic, complacent, blindly partisan loyal, lazy, irrationally fearful, and delusional voters repeatedly reward those incumbent politicians with re-election rates of 93%-to-99%.
The pyramid-scheme monetary system is one of the major problems in the nation.
The usury, predatory lending, and the pyramid-scheme monetary system enriches the rich, and cheats everyone else.
Not only is it a dishonest, unethical, manifestation of unchecked greed.
It is mathematically problematic.
All pyramid-schemes are doomed to collapse.
That debt monster always wins, as it did in the Great Depression.
It is like playing the game of Monopoly in which one person (the bank) can print all the money they want … eventually, the bank owns everything, and everyone else is deep in debt or broke.
How can it be that everyone, including the government, are in debt to the banks?
Simple. The banks create money out of thin air, receive the interest on that debt, and then convert money created out of thin air into real property via defaults and foreclosures. Cha-Ching!
The pyramid-scheme requires more and more and more money be created out of thin air, which benefits the wealthy, and cheats everyone else.
Right now, with the current bursting real-estate bubble, banks are confiscating property via millions of foreclosures, and the wealthy are buying up properties cheap.
Exacerbating the problem was usurious interest rates (e.g. ARMs), fees, and predatory lending practices, and fraud.
And again, the problem is the big picture … not a few cherry-picked statistics.
So, it is easy to shoot your assertion that we are “better off financially” full of holes.
Craig Holmes wrote: Americans are far better off financially than they were 30 years ago.Not true.
Being deeper in debt does not equate to “better off financially”.
Falling incomes for the past 30+ years does not equate to “better off financially”.
More regressive taxation does not equate to “better off financially”.
And again, the problem is the big picture … not a few cherry-picked statistics.
So, it isn’t hard at all to argue things are getting worse, and have been for 30+ years.
Those that want to ignore reality, fine. But there will be painful consequences.
Other than that, everything is rosy! (i.e. as long as rose-colored glasses are not removed).
Dan:
Funny how you picked 1978
You picked 1978. That is thirty years ago.
Civilian unemployment average for in 1970’s was 6.21% Civilian unemployment average for in 1980’s was 7.27% Civilian unemployment average for in 1990’s was 5.75% Civilian unemployment average for in 2000’s was 5.66%
And you are using this somehow to make the case that people were better off 30 years ago.
Craig Holmes wrote: Inflation was 9.2%The problem with inflation is not just the spikes, but the fact that it is incessant, year after year after year, since year the 1940, and that is primarily due to the pyramid-scheme monetary system, which creates economically instability. 4% inflation this year is more than 4% of last year, which is more than 4% of the previous year, and so on.
But inflation averaged over 7 % for the whole decade. You think that is better off?
Craig wrote: You picked 1978. That is thirty years ago.Nonsense.
Above, I written above either “30+” 9 times, or “over 30 years” 6 times, and “more than 30 years”, yet you cherry-picked 1978 and then inflated it by two-tenths of a percent (i.e. 6.3% versus 6.1%).
Again, cherry picking the years here are there don’t mean much. The overall trends are what are important.
Your assertion is that most Americans are getting wealthier and are wealthier than about 30 years ago, is not at all convincing.
Not unless you can explain away these:
- these long-term trends (10+ abuses)
- incessant inflation since the 1930s;
- the falling U.S. Dollar;
- massive $9.2 Trillion National Debt; where will the interest for that come from?
- massive $20 Trillion nation-wide personal debt; where will the interest for that come from?
- massive $6 Trillion state and local government debt; where will the interest for that come from?
- massive $12.8 Trillion borrowed and spent from Social Security, making it pay-as-you-go; how will that be paid back (if ever); and there’s a 77 million baby boomer bubble approaching too;
- the PBGC pensions are $450 Billion in the hole;
- massive $48+ Trillion nation-wide debt; where will money come from to pay for that, much less the interest;
- decreasing incomes (especially when you consider the $9.2 Trillion National Debt, more workers per household, and the erosion of the U.S. Dollar)?
- regressive taxation;
- two wars in Afghanistan are Iraq are costing lives and billions per day;
- increasingly unaffordable and dangerous healthcare (killing 195,000 people per year due to medical mistakes);
- out-of-control illegal immigration, costing Americans $70 Billion to $338 Billion in net losses;
- the wealthiest are getting wealthier, and everyone else is getting poorer;
How can most Americans be getting more wealthy when all of the above indicates otherwise?
How can most Americans be more wealthy when the people owe a $9.2 Trillion National Debt?
That’s over $30K of debt per person, and the tax system is regressive.
How can most Americans be wealthier when they owe $48 Trillion in total nation-wide debt?
That’s $157.4K of debt per person.
Your assertion is that most Americans are getting wealthier and are wealthier than about 30 years ago, is not at all convincing.
The massive personal and federal government and state & local government debt alone destroys that myth.
And still, you haven’t answered the question: Where is the money going to come from to pay of the debt, much less the interest?
When more money is created from more debt, what is the obvious end result?
Because of so much debt, the pyramid-scheme is getting closer and closer to collapse.
The only choice will be to create more money out of thin air.
To create more economic stimulus packages (creating more debt).
It’s out of control.
Yet, you say most Americans are getting wealthier?
Not true.
Only a few are getting weatlhy, and converting money created out of thin air into real property and assets via foreclosure and default.
It is bad now, and it is gong to get much worse, eventually.
The pyramid-scheme money system was a major contributing factor for the Great Depression, and it is the cause of the debt monster now that will bring about the next collapse.
That can be said with confidence, because it is a mathematical certainty.
Your assertion is that most Americans are getting wealthier and are wealthier than about 30 years ago, is not at all convincing.
Not with so much crushing debt.
All of your cherry picked data over looks the $48 Trillion of nation wide debt.
Unless all of that $48 Trillion of debt is going to be forgiven, where is the money going to come from?
Thus, the assertion that most Americans are getting wealthier and are wealthier than about 30 years ago is not only unconvincing, but ridiculous.
Other than that, everything is rosy! (i.e. as long as rose-colored glasses are not removed).
Posted by: d.a.n at February 6, 2008 06:10 PMDan:
Many things have grown worse in the last 30 years..
Craig Holmes wrote: d.a.n: OK, I think you believe that most Americans are worse off than they were 30 years ago in 1978 in Carter’s administration.
Yes.
Funny how you picked 1978
Craig wrote: You picked 1978. That is thirty years ago.
Nonsense.
Posted by: Craig Holmes at February 6, 2008 09:04 PMDAn:
Above, I written above either “30+” 9 times, or “over 30 years” 6 times, and “more than 30 years”, yet you cherry-picked 1978 and then inflated it by two-tenths of a percent (i.e. 6.3% versus 6.1%).Again, cherry picking the years here are there don’t mean much. The overall trends are what are important.
30 years came from you not me. You picked the numbers. Cherry picking is hogwash.
Both the topic, (Americans are getting worse off), and the time frame, (30 years) are yours. You believe Americans are far worse off than they were 30 years ago.
NOT TRUE!!!
Dan:
Your assertion is that most Americans are getting wealthier and are wealthier than about 30 years ago, is not at all convincing.
You are the one doing the asserting. You have clearly asserted that Americans are not as well off financially than they were 30 years ago.
I am saying that you are wrong, Americans are actually better off now because they were then.
Now they do not have 10% mortgages,
They do not have 7+ % inflation,
Top tax rates were 70% in the 1970’s. do you want to go back to 70% tax rates?
Posted by: Craig Holmes at February 6, 2008 09:17 PMIt’s simple. Simply provide the proof, as I have, instead of your own unsubstantiated conclusions.
Posted by: d.a.n at February 6, 2008 09:28 PMIf you have the ability and patience, just address this.
Posted by: d.a.n at February 6, 2008 09:31 PMDan:
If you have the ability and patience, just address this.
First of all, why? All you have done is successfully summarized the problems civilizations have had since the beginning of time.
do you wnat me to discuss these issues in Biblical times? The Roman Empire? the middle ages? Colonial USA? the first 100 years? Or current time?
Dan:
You are leading the subject matter on this debate. Before you were asserting that most americans are worse off than they were 30 years ago.
We were not discussing the poor, but most americans. Most Americans are not poor. Most Americans are doing well relative to thirty years ago (1978).
Most Americans are better off because they are living longer, they own more homes, they own more cars, interest rates are lower, inflation is lower, taxes are lower, and we are better educated. Math SAT scores are higher!!
In addition, Americas roads are safer,
You are claiming most americans are worse off because the rich are richer, and they have gotten richer at a faster rate. But that is a world wide issue related to globalization.
Most Americans (back to your definition of this debate), are doing well because of globalization because it has drastically lowered the price of things they want to buy.
That is why, most americans own two cars, have many computers, cell phones, digital cameras, clothes made in china etc etc etc.
Posted by: Craig Holmes at February 6, 2008 10:15 PMDan:
Ok, you want to change subjects from your contnetion that most Americans are worse off than 30 years ago, to a discussion of your 10 issues.
And you also want to discus weatlh disparity.
What causes assets to rise? What causes the items the wealthy own to go up?
Of course demand. Supply and demand.
Here is an economic explaination as to why the rich have done so well. Watch inflation. Go through your thesis and watch how wealth disparity goes the opposite direction as inflation. In other words when inflation peaks wealth distribution is narrow (1970’s), when inflation is low (1920’s and the trend from 1970’s to present) wealth dispartich grows. the poor and the wealthy get farther appart.
there is a very simple reason. Interest rates follow inflation. When inflation goes up, interest rates rise, and fixed assets like stocks bonds and real estate grow at slower rates.
Evidence number one: The US stock market. The Dow peaked at 1000 in the early 1970’s and stayed there unitl 1982. In fact the average return for the dow jones was 1.21%/year during your golden era, (the 1970’s). That is because inflation was increasing, driving up interest rates, and suppressing stock prices.
Since inflation was over 7% and the return on equities was only 1.21%/year, the wealthy saw a negative return of 6% a year in the 1970’s.
The same is true of bonds. Anyone who owned a stock or a bond in the 1970’s got hammered. That is why your wealth disparation numbers look better in the 1970’s, because the wealthy lost their shorts.
The reverse happened from 1980 to present. Inflaton peaked and began to fall which launched a bull market in the bond and stock market. Owners of stocks and bonds made a great deal of money.
There is a direct connection between low interest rates and wealth distribution. low interest rates cause assets to rise.
Posted by: Craig Holmes at February 7, 2008 12:22 AMCraig wrote: Ok, you want to change subjects …Nonsense.
You wrote American were getting wealthier.
That is only true for a small percentage.
For most Americans, their incomes are falling and their debt is rising (especially when you consider the national debt, more workers per household, and inscessant inflation eroding their incomes and savings).
Roads are safer?
Not true.
Like bridges collapsing?
The infrastructure nation wide is crumbling.
The stock market is not proof of anything.
You are still ignoring this, which has been getting worse for 30+ years, and cheats most Americans, and that is why they are not getting wealthier (as you incorrectly assert).
In 1980, 1% in the U.S. owned 20% of all wealth.
In 2008, 1% in the U.S. owned 40% of all wealth.
Every 1 in 10 people owns 70% of all wealth.
This has never been worse since the Great Depression.
Other than that, everything is rosy! (i.e. as long as rose-colored glasses are not removed).
Posted by: d.a.n at February 7, 2008 09:25 AMDan:
Roads are safer? Not true.
http://www.infoplease.com/ipa/A0855866.html
Highways deaths are down about 10,000/year.
Crime peaked in 1980 and has been trending down since then. (lawlessness)
http://www.disastercenter.com/crime/uscrime.htm
So the list keeps getting longer of positives over the last 30 years.
1. We are living longer
2. Math SAT’s are at all time highs
3. Traffic deaths are down.
4. crime is lower.
5. Inflation is about half what it was in the 70’s.
6. We are having positive real returns in investments in both bonds and stocks verses negative real returns (after inflation) for the 70’s.
7. Home ownership is higher today.
8. the majority of Americans own more cars, computers, cell phones, etc etc than ever before.
9. Taxes are lower.
In 1980, 1% in the U.S. owned 20% of all wealth. In 2008, 1% in the U.S. owned 40% of all wealth. Every 1 in 10 people owns 70% of all wealth.
That is because the top 1% own stock and the stock market has been great since then.
From 1960 to 1980 the Dow Jones Industrials averaged 1.51%. since then it has averaged 10.48%.
Take another look at this. CPI from 1960 to 1980 averaged 4.95%. that means that the assets the wealthy owned (stocks) averaged a negative of 3.44% (not accounting for dividends).
On the other hand, since then CPI has averaged 3.62% with a real return of 6.86% (without dividends).
That is huge!! That is why the wealthy are doing better, because the stock market has done so well.
The S&P 500 composite index has averaged over 13% since 1980.
http://www.disastercenter.com/crime/uscrime.htm
Dan:
Let me make this real simple.
In 1980 I paid about $1/gallon for gasoline.
Today I pay $3/gallon.
In 1980 the Dow Industrials was about 1000, today it is over 12,000.
Stocks have gone up 12 times and gasoline has gone up 3 times.
The poor do not own stock the rich do. When the thing you own goes up 4 times faster than gasoline, you are making some serious money.
The reason for the diparity of wealth is that stock prices have done well and the wealthy own stocks.
Posted by: Craig Holmes at February 7, 2008 03:34 PMDan:
I reviewed your chart from here:
http://one-simple-idea.com/DisparityTrend.htm
From the chart that shows wealth disparity going back to the depression and beyond.
From that chart you ocnclude that wealth distribution is at it’s most extreme since the great depression.
I disagree. It is the largest is has been since 1929 at the end of the 1920’s.
According to your chart the depression reduced that wealth gap.
I also note that the wealth gap improved as inflation rose. Infact the “hump” on your graph mirrors inflation almost exactly. (The hump in the 1970’s).
So what is the correlation between the 1930’s and the 1970’s that brought the wealth gap closer? The answer is simply the twin evils of financials. Deflation and high inflation destroy financial markets.
Let me try to explain this with some numbers.
First of all the great depression. In the great deprssion I chose January 1929 to January 1939. During that 19 years period Consumer prices fell at an average rate of 1.98%/year. The dow industrials fell at a rate on average of 7.61%/year. The net decline of stock investors (the wealthy) was 5.63%/year.
Deflation is terrible on stocks.
Second look at the 1970’s. I chose january 1970 to January 1980. CPI averaged 7.49% over that 10 year period, but the dow jones industrials averaged only 1.64%. The difference then is a real decline of 5.85%/year.
INflation is terrible on stocks.
So the comparison is that from 1929 to 1939, and from 1970 to 1980 stock investors saw a decline in their wealth.
The reverse is also true. When inflation declined from the 1970s until now, interest rates declined and finacials have enjoyed a great ride.
That is my explaination for the wealth difference. Wealthy people own stocks, and in bull markets wealth distribution widens, in bear markets wealth distribution narrows.
Craig Holmes wrote: The poor do not own stock the rich do.That’s only a small part of it.
These 10+ abuses, and numerous ripple effects are more significant factors.
The abuses are the many things that not only hold many people now, but cheat people.
Craig Holmes wrote: In addition, Americas roads are safer
- Highway Fatalities:
- 1960: 52,627 (144.2 people killed per day)
- 1970: 51,091 (140.0 people killed per day)
- 1980: 44,599 (122.2 people killed per day)
- 2000: 41,945 (114.9 people killed per day)
- 2004: 42,636 (216.8 people killed per day)
Craig Holmes wrote: Crime peaked in 1980 and has been trending down since then. (lawlessness)Craig, I said crime is rising, and it is (based on homicides). Crime is rising now. Thousands are murdered annually by illegal aliens.
Year _ Population _ Homicides
2004 293,656,842 _ 16,148
2005 296,507,061 _ 16,740
2006 299,398,484 _ 17,034
2007 300,000,000 _ ??,??? (probably higher, since many cities are reporting higher crime rates)
Craig Holmes wrote:And that still does not exceed these 10+ abuses and the many negative ripple effects. For example:
- 1. We are living longer {a few years? big deal}
- 2. Math SAT’s are at all time highs {still woefully low though}
- 3. Traffic deaths are down.{not convincing; and how many more crumbling bridges and structures will we see in the coming years?}
- 4. crime is lower.{it has now been increasing for years}
- 5. Inflation is about half what it was in the 70’s. {but there is more crushing debt now}
- 6. We are having positive real returns in investments in both bonds and stocks verses negative real returns (after inflation) for the 70’s. {only mostly for the rich}
- 7. Home ownership is higher today. {only mostly for the rich}
- 8. the majority of Americans own more cars, computers, cell phones, etc etc than ever before. {So?}
- 9. Taxes are lower. {true, but only for the rich; the tax system is regressive}
- (01) 1% of all people that owned 20% of all wealth in 1980, now own 40% of all wealth; that is a steady trend since year 1976.
- (02) personal nation-wide debt is higher ($20 Tillion);
- (03) federal National Debt is over $9.2 Trillion;
- (04) state and local government debt is over $6 Trillion;
- (05) $12.8 Trillion was borrowed and spent from Social Security, leaving it pay-as-you-go with a 77 million baby boomer bubble approaching;
- (06) the PBGC pensions are $450 Billion in the hole;
- (07) total nation-wide debt is over $48 Trillion;
- (08) home ownership is lower for middle-income and lower-income people;
- (09) poverty rates are rising now, are higher for the past 7 years;
- (10) we have two wars (Afghanistan and Iraq) abroad costing monetarily many billions per day; about 4000 American troop deaths; tens of thousands of American troops maimed;
- (11) lawlessness and crime rates is rising; existing laws are not being enforced;
- (12) illegal immigration is out of control, costing U.S. tax payers $70 Billion to $338 Billion annually;
- (13) thousands of Americans are being murdered annually by illegal aliens;
- (14) eminent domain abuse is rampant (6 new cases per day);
- (15) the monetary system is a pyramid scheme that rewards the rich and punishes the middle-class;
- (16) the tax system is regressive;
- (17) the ratio of total naitonwide debt and nationwide income has been worsening for 30 years;
- (18) the total federal debt ($9.2 Trillion National Debt, $12.8 Trillion borrowed and spent from Social Security, PGBC pensions $450 Billion in the hole) to GDP ratio has never been worse (ever);
- (19) government continues to grow to nightmare proportions; increasingly FOR-SALE, wasteful, and corrupt; rampant corporate welfare, subisdies for EXXON with $44 Billion in profits, pork-barrel;
- (20) election fraud and votes lost by electronic voting machines is a serious problem; especially in close elections;
- (21) healthcare? more like deathdare, with 195,000 people killed annually by preventable medical mistakes, while insurance companies and hospital corporations make huge profits; health insurance is extremely high; 1 in 7 people are uninsured; medical costs are astronomical resulting in many bankruptcies … even for people that have health insurance;
- (22) jobs are disappearing and being replaced by lower paying jobs; unfair trade practices and government meddling encourage corporations and jobs to leave the U.S.
- (23) incomes are falling (especially when considering the $9.2 Trillion National Debt and more workers per household);
- (24) the pyramid-scheme monetary system is contributing to incessant inflation, the falling U.S. Dollar against all major international currencies, and falling incomes (especially when considering the $9.2 Trillion National Debt and more workers per household);
Maybe some day, you may come up with some truly convincing reasons to make most Americans really believe things are getting better.
Posted by: d.a.n at February 7, 2008 07:26 PMDan:
Craig Holmes wrote: In addition, Americas roads are safer Highway Fatalities: 1960: 52,627 (144.2 people killed per day) 1970: 51,091 (140.0 people killed per day) 1980: 44,599 (122.2 people killed per day) 2000: 41,945 (114.9 people killed per day) 2004: 42,636 (216.8 people killed per day)You are trying hard, but that isn’t very convincing
I think you are trying hard. In 2004 you only have drivers driving 200 days. 42,636 divided by 365 is 116 deaths per day. You have the number of days driving declining each year.
Craig Holmes wrote: The poor do not own stock the rich do. That’s only a small part of it. These 10+ abuses, and numerous ripple effects are more significant factors.
Sorry but it accounts for just about all of it. Your 10 abuses have been with us for all time. the increase in wealth is pretty much all do to the increase in the stock market.
If you take your graph with the circle in it, and turn it up side down, it is almost an exact replica to stock returns net of inflation. Take stock returns subtract inflation and you have your graph.
Your ten abuses acount for a very small part of your issue.
You asked me to deal with your 10 issues and I have. They are not at all what causes the increase in wealth redistribution.
As you have said, prove me otherwise. Prove it is not real stock returns that are the largest facter.
Betcha can’t!!
Posted by: Craig Holmes at February 7, 2008 09:44 PMDan:
AllI am saying is that that chart on your website that you got from who knows where, correlates with the stock market.
If you want I will show you very clear evidence that stock prices correlate with the graph.
Posted by: Craig Holmes at February 8, 2008 12:24 AMCraig Holmes wrote: I think you are trying hard. In 2004 you only have drivers driving 200 days. 42,636 divided by 365 is 116 deaths per day. You have the number of days driving declining each year.That was a mere typo. Nothing more.
Craig Holmes wrote: Your 10 abuses have been with us for all time.Not true.
Crushing debt (over $48 Trillion nation-wide) is worse than ever in history, and it is because of the pyramid-scheme money system which is doomed to collapse, in which the wealthy will still be wealthy, and most Americans will suffer.
And those are actually 10 categories, containing dozens of more abuses and ripple effects.
You still have not answered where the $48 Trillion will come from to pay for the debt, much less the interest on that debt, which could be hundreds of more trillions.
The debt alone is sufficient proof that things are getting worse, and the rich are getting rich, and everyone else is getting poorer.
And the reason it is occurring world-wide is the same reason: a pyramid-scheme money system that benefits the rich, and cheats everyone else.
That alone is all the proof that is needed, but I can give you more (see list below).
Craig Holmes wrote: The increase in wealth is pretty much all do to the increase in the stock market.So?
Do you think that makes it OK, or is an accomplishment to be proud of?
Making money from playing with money is something to be proud of?
A few decades ago, the Japanese said Americans spend to much time playing with money, rather than producing value. It’s true. But the Japanese, and most nations are now following in our doomed footsteps.
Today on MSNBC, Jeff Saut said the economy could be in serious trouble if Americans have so much debt that they can not spend more to keep the economy going. Others say the $152-to-$167 Billion economic stimulous package may help, but won’t be received until June or July of 2008. It is interesting that many say there is nothing to worry about. Ironically, the stimulus package will make things worse in the long-term, since Congress will not cut spending somewhere.
So, the debt will get bigger and bigger. Already, nation-wide debt, on average, is $157,377 per person.
Yet, everything is rosy?
You’ve heard the saying: It’s the economy, stupid!
Well, debt is part of it too: It’s the debt, stupid! (NOTE: that is not directed at you; I am not calling you stupid).
But, the $48 Trillion of debt alone is enough reason to make the case that things are getting worse, and going to get a lot worse yet.
Your few cherry-picked statistics don’t hold a candle to the debt, much less these other problems (see below), growing in number and severity.
And those are not problems that have always been with us, since a number of things are now worse than ever, or have never been worse since the Great Depression.
Your case is very weak, unless you can explain away these 10 things getting worse (not better):
- [1] DEBT: total nation-wide debt ($48 trillion); never worse in history; a product of the pyramid-scheme monetary system; the inflation is economically destabilizing and hurts the middle and low income groups much more, by eroding the U.S. Dollar (falling fast for 7 years against all major international currencies), their savings, incomes, and social services benefits;
- [2] wealth disparity; 1% of the wealthiest own 40% of all wealth; never worse since the Great Depression; that percentage has doubled from since 1980 when it was 20%; another product of the pyramid-scheme monetary system;
- [3] the healthcare system isn’t only astronomically more expensive than ever before; it is deadly too; there are a mind boggling 195,000 deaths annually (100,000 of those by adverse drug reactions) by medical mistakes has never been worse; 195,000 deaths by medical errors (per year since year 2000) is more deadly than most wars; that is 1.56 Million people since year 2000; compare it to 4,000 American deaths in Iraq; compare it to 57,000 American deaths in Vietnam; compare it to the 620,000 killed in the Civil war;
- [4] government is more FOR-SALE than ever, in which 99.85% of all 200 million voters are vastly out-spent by a tiny 0.15% of the voters that make 83% of all federal campaign donations (of $200 or more: source: www.opensecrets.org/pressreleases/DonorDemographics02.asp); also a side-effect of the wealth disparity and the pyramid-scheme monetary system;
- [5] taxes are more regressive than ever; Warren Buffet paid 17.7% on 46 Million, and his secretary paid 30% on a $60K salary (source: tusb.stanford.edu/2007/07/warren_buffet_has_a_lower_tax.html);
- [6] illegal immigration (4 million per year) has never been worse; hundreds of overrun hospitals are closing (84 in California alone); it is costing most Americans $70 Billion to $338 Billion per year in net losses, and since the tax system is regressive, the costs are heaped on middle-income and lower-income tax payers; and that does not even include the untold cost of disease and thousand of homicides by illegal aliens per year; also a problem created by pressures to increase productivity to avoid the inevitable collapse of the pyramid-scheme monetary system; Since when was illegal immigration worse than now? Since when did 4 million people come here illegally per year? Since when did the other citizens get stuck with the $70 Billion to $338 Billion in annaul net losses cleverly shifted to them so that the greedy illegal employers could get wealthier by despicably pitting American citizens and illegal aliens against each other?
- [7] real median incomes have been falling since 1967 if you include the increasingly regressive taxation, the $9.2 Trillion National Debt, incessant inflation, other federal debt and obligations, and more workers per household); also a problem created by pressures to increase productivity and profits to avoid the inevitable collapse of the pyramid-scheme monetary system;
- [8] energy vulnerability is worse than ever; and it is probably a primary reason for our continual meddling in the middle east;
- [9] the monetary system is one of the major problems and approaching the most painful part of the pyramid scheme: collapse; the pyramid-scheme was re-started after its first collapse in the Great Depression, and it is a mathematical certainty that it will collapse again; and the wealthy will buy up land and real-estate cheap making the rich richer and everyone else poorer; it is getting worse now as the debt grows and grows; where will the money come from to repay $48 Trillion in debt, much less the interest on that $48 Trillion; it will collapse when most Americans have no more capacity for any more debt; and the wealthy will swoop in and confiscate all of the real property and assets, converting money printed out of thin air into real property and assets via foreclosures and defaults; thus, the wealthy benefit from economic instability, while most other Americans are hurt by it by eroding their savings, incomes, and social services benefits;
- [10] the environment is possibly in more danger and has more potential for devastation than any of the above; the sea level is rising; it’s hard to believe we can pump 25 billion metric tons of CO2 into the atmosphere and believe it has no effect on climate change;
I could go on, but that is ample proof that most things are getting worse (not better), and it’s going to get worse yet.
That can be said with considerable confidence, because all pyramid schemes are mathematically problematic, and always doomed to collapse.
Many of the other manifestations of unchecked greed are related to that usurious and dishonest pyramid-scheme monetary system.
Yet, you point to a handful of cherry picked statistics (e.g. the stock market? questionably safer roads? questionably higher home ownership? questionably higher incomes? cell phones? ) and claim they overshadow those 10 things above? Not even close.
So, please try to explain away those 10 things (it’s not so easy to do without the rose-colored glasses).
Posted by: d.a.n at February 8, 2008 10:05 AMDan:
First of all there is a one to one correlation between the rise and fall of after inflation stock prices and Wealth inequality.
So whatever your ten issues mean they are weaker than stock market trends.
The reason for the wealth distribution spreading is mostly fiancial markets. Lets start there.
Posted by: Craig Holmes at February 8, 2008 06:58 PMNo. There’s no point in starting with “playing with money to make money”.
It is as doomed as the usurious pyramid scheme monetary system.
Let’s start with the monetary system.
It is the reason for the economic stimulus.
It is the reason for many things.
It is the reason for rampant debt.
How about addressing those 10 things above?
Why go off on tangents about questionable home ownership, stock onwership, road saftey, etc.?
Posted by: d.a.n at February 8, 2008 07:15 PMDan:
I am trying to address your conclusion. You are saying “because of the 10 things above most americans are worse off today than they were 30 years ago”.
I am saying, “Most American’s are not worse off than 10 years ago, so your premise is false”.
You also seem to be saying, “Because of these then things, wealth distribution has become more inequatible”.
Although your conlusion is correct, wealth distribution is more extreme that in was 30 years ago, it can be clearly shown that the main cause is the rise and fall of financial assets.
Wealth distribution has risen and fallen before in America. It did so in the 1920’s and 1930’s.
Let’s say you want to address your grievance. I have a way! The great depression narrowed the gap. Even though the poor got poorer, the wealthy came closer to the poor. Deflation can address your issue.
I have another way. Print too much money and cause high inflation. From 1965 to 1980 wealth distribution came together according to your chart. Again that is because the wealth approached the poor as the wealthy’s investments declined when viewed after inflation.
I will be happy to address your ten items. But I will do so in in a context that most Americans are better off today than they were 30 years ago.
Which of the 10 do you want to look at first?
Debt?
Dan:
[1] DEBT: total nation-wide debt ($48 trillion); never worse in history; a product of the pyramid-scheme monetary system; the inflation is economically destabilizing and hurts the middle and low income groups much more, by eroding the U.S. Dollar (falling fast for 7 years against all major international currencies), their savings, incomes, and social services benefits;
America has never had so many assets.
Household assets: $72.7 Trillion
Non Farm Corp Aseets: $26.8 Trillion
Non Farm Non Corp Assets: $10.8 Trillion
Total non government assets:
$110.4 Trillion dollars
In addition Household networth (Assets minus Liabilities has never been higher:
$58.6 Trillion
Americans on the whole have never been this wealthy.
The reason I am putting this data this way is that this is the way you do it above. You say we are $48 Trillion in debt, I’m simply saying we have $110 Trillion in assets an all time high.
Dan:
[2] wealth disparity; 1% of the wealthiest own 40% of all wealth; never worse since the Great Depression; that percentage has doubled from since 1980 when it was 20%; another product of the pyramid-scheme monetary system;
This isn’t true. It was 1929 before the great depression. The great depression solved your problem of wealth disparity.
Posted by: Craig Holmes at February 8, 2008 11:42 PMDan:
3] the healthcare system isn’t only astronomically more expensive than ever before; it is deadly too; there are a mind boggling 195,000 deaths annually (100,000 of those by adverse drug reactions) by medical mistakes has never been worse; 195,000 deaths by medical errors (per year since year 2000) is more deadly than most wars; that is 1.56 Million people since year 2000; compare it to 4,000 American deaths in Iraq; compare it to 57,000 American deaths in Vietnam; compare it to the 620,000 killed in the Civil war;
Longevity is at all time highs. Disability among our elderly is declining rapidly. We dominate in Noble prizes for medicine. America is on the cutting edge of medical research.
Craig,
You continue to stress assets, but cleverly write: “Americans on the whole have never been this wealthy”.
The wealth disparity skews the numbers “on the whole”.
Most Americans are not better off.
Most Americans incomes have fallen.
Most Americans have huge debt.
The total nationwide debt has never been worse.
And the monetary system is doomed to collapse again, as it did in the Great Depression.
QUESTION: You still did not answer where the $48 Trillion was going to come from to pay off that $48 Trillion in debt, not to mention the interest on that $48 Trillion. Care to tackle this simple question?
The pyramid-scheme monetary system is what is being used to cheat most Americans.
Craig Holmes wrote: America has never had so many assets.Nonsense.
That is only true if you are one of the 2 in 100 people that own 50% of all wealth; a trend that has been worsening since the last cyclic collapse of the monetary system, and has never been worse since the Great Depression. Most people in America are in deep debt, which has NEVER been worse (per capita). Assets don’t mean much unless you are one of the 2 in 100 people that have them.
Craig Holmes wrote: Debt?Yes, start there, and work down the list. Debt alone is why things are getting worse (not better), not to mention these 10 things combined:
- [1] DEBT: total nation-wide debt ($48 trillion); never worse in history; a product of the pyramid-scheme monetary system; the inflation is economically destabilizing and hurts the middle and low income groups much more, by eroding the U.S. Dollar, their savings, incomes, and social services benefits;
- [2] Wealth Disparity: 1% of the wealthiest own 40% of all wealth; never worse since the Great Depression; that percentage has doubled from since 1980 when it was 20%; another product of the pyramid-scheme monetary system;
- [3] Healthcare: it isn’t only astronomically more expensive than ever before; it is deadly too; there are a mind boggling 195,000 deaths annually (100,000 of those by adverse drug reactions) by medical mistakes has never been worse; 195,000 deaths by medical errors (per year since year 2000) is more deadly than most wars; that is 1.56 Million people since year 2000; compare it to 4,000 American deaths in Iraq; compare it to 57,000 American deaths in Vietnam; compare it to the 620,000 killed in the Civil war;
- [4] Government is more FOR-SALE: perhap more so than ever, in which 99.85% of all 200 million voters are vastly out-spent by a tiny 0.15% of the voters that make 83% of all federal campaign donations (of $200 or more: source: www.opensecrets.org/pressreleases/DonorDemographics02.asp); also a side-effect of the wealth disparity and the pyramid-scheme monetary system;
- [5] Regressive Taxation: taxes are more regressive than ever; Warren Buffet paid 17.7% income tax on $46 Million, and his secretary paid 30% on a $60K salary (source: tusb.stanford.edu/2007/07/warren_buffet_has_a_lower_tax.html);
- [6] Illegal Immigration (4 million per year) has never been worse; hundreds of overrun hospitals are closing (84 in California alone); it is costing most Americans $70 Billion to $338 Billion per year in net losses, and since the tax system is regressive, the costs are heaped on middle-income and lower-income tax payers; and that does not even include the untold cost of disease and thousand of homicides by illegal aliens per year; also a problem created by pressures to increase productivity to avoid the inevitable collapse of the pyramid-scheme monetary system;
- [7] Falling incomes: real median incomes have been falling since 1967 if you include the increasingly regressive taxation, the $9.2 Trillion National Debt, incessant inflation, other federal debt and obligations, and more workers per household); also a problem created by pressures to increase productivity and profits to avoid the inevitable collapse of the pyramid-scheme monetary system;
- [8] Energy vulnerability: It is probably worse now than ever before; and it is probably a primary reason for our continual meddling in the middle east;
- [9] Monetary system: Our monetary system is one of the major problems and approaching the most painful part of the pyramid scheme cycle: collapse; the pyramid-scheme was re-started after its first collapse in the Great Depression, and it is a mathematical certainty that it will collapse again; and the wealthy will buy up land and real-estate cheap making the rich richer and everyone else poorer; it is getting worse now as the debt grows and grows; where will the money come from to repay $48 Trillion in debt, much less the interest on that $48 Trillion; it will collapse when most Americans have no more capacity for any more debt; and the wealthy will swoop in and confiscate all of the real property and assets, converting money printed out of thin air into real property and assets via foreclosures and defaults; thus, the wealthy benefit from economic instability, while most other Americans are hurt by it by eroding their savings, incomes, and social services benefits;
- [10] The Environment: is possibly in more danger and has more potential for devastation than any of the above; the sea level is rising; it’s hard to believe we can pump 25 billion metric tons of CO2 into the atmosphere and believe it has no effect on climate change;
I will be back later to address your comments above in more detail.
Posted by: d.a.n at February 9, 2008 10:35 AMCraig HolmesLongevity is at all time highs.Unless you are one of the 195,000 killed every year by unnecessary medical errors. Over 100 thousand of those are by Adverse Drug Reactions (ADRs). Nothing like pharmaceuticals making a buck at any expense, eh? Posted by: d.a.n at February 9, 2008 10:37 AM
Dan:
You continue to stress assets, but cleverly write: “Americans on the whole have never been this wealthy”.The wealth disparity skews the numbers “on the whole”.
Most Americans are not better off.
Most Americans incomes have fallen.
Most Americans have huge debt.
The total nationwide debt has never been worse.
And the monetary system is doomed to collapse again, as it did in the Great Depression.
Yes and I will continue to do that in refuting the way you present debt. You present debt as one big number, so I will present Assets as one big number.
QUESTION: You still did not answer where the $48 Trillion was going to come from to pay off that $48 Trillion in debt, not to mention the interest on that $48 Trillion. Care to tackle this simple question?
First give me a reason why the debt needs to be pained off. I see none.
Craig Holmes wrote: America has never had so many assets. Nonsense.
Fact.
That is only true if you are one of the 2 in 100 people that own 50% of all wealth; a trend that has been worsening since the last cyclic collapse of the monetary system, and has never been worse since the Great Depression. Most people in America are in deep debt, which has NEVER been worse (per capita). Assets don’t mean much unless you are one of the 2 in 100 people that have them.
It’s been happening since inflation started to decline and Equity prices started their long bull market.
It’s the stock market that has caused the wealth distribution. The poor don’t own stocks, if they did, the wealth distribution would have remaned constant.
(Bit case for privatizing Social Security. The poor get to invest in government bonds, while the rich invest in stocks.)
In conclusion:
My argument to number on where you say we have $48 Trillion in debt is to say that we have $110 Trillion in assets.
So what do you want to conclude about number one?
I guess my point is so what? Obvously $62 Trillion in net worth is not a bad start. Wealth distribution is another matter, that is number 2.
So what point do you want to make about $48 Trillion in debts and $110 Trillion in assets?
Dan:
Craig HolmesLongevity is at all time highs.Unless you are one of the 195,000 killed every year by unnecessary medical errors. Over 100 thousand of those are by Adverse Drug Reactions (ADRs). Nothing like pharmaceuticals making a buck at any expense, eh?
Aren’t you doing a little cherry picking here? If the general debate is that life for Americans is getting better/worse in the last 30 years, then obvoiusly longevity is the broad picture. Living longer is a true sign in any culture of health.
Dan:
Lets take a look at number 2, distribution of wealth. Look here:
http://www.census.gov/hhes/www/income/histinc/h03ar.html
This is the United States Census. They say that ALL INCOME BRACKETS are earning more money now than they did 30 years ago.
That is probably why we have more cars, more planes, computers, more cell phones etc etc. It’s because Americans make more money.
Craig Holmes wrote: Yes and I will continue to do that in refuting the way you present debt. You present debt as one big number, so I will present Assets as one big number.Craig,
Totals by themselves don’t prove anything.
Especially since:
- a tiny 2% of all Americans own most of the wealth in the U.S. (which has never larger since the Great Depression)
- only 1 in 10 people in the U.S. own 70% of all wealth in the U.S.
- 80% of Americans only own 17% of all wealth.
- since most Americans owe most of the $48 Trillion nation-wide debt (a staggering $157,377 per person).
- since the $9.2 Trillion national debt alone is $30,163 per person.
- the tax system is regeressive.
Craig Holmes wrote: “Americans on the whole have never been this wealthy”.That is not true for most Americans.
Only the wealthiest 2% of Americans that own most of all wealth in the U.S. (a percentage that have never been smaller since the Great Depression).
Cherry-picking the data and a clever choice-of-words (e.g. “Americans on the whole”) isn’t credible at all. It’s desparation.
The wealth disparity trend is a world-wide trend, and it is largely due to the pyramid-scheme, fiat-funny-money monetary systems adopted by most nations.
It certainly still does not explain away these falling incomes and these 10+ abuses that are abusing, exploiting, and cheating most Americans.
Craig Holmes wrote: Aren’t you doing a little cherry picking here? If the general debate is that life for Americans is getting better/worse in the last 30 years, then obvoiusly longevity is the broad picture. Living longer is a true sign in any culture of health.No, it is not cherry-picking, since the 195,000 deaths per year due to preventable medical mistakes (which comes to 1.56 Million people killed since 1999) is significant compared to the 57,000 U.S. troops killed in Vietnam, or the 4000 killed in Iraq, or the 620,000 killed in the Civil War. That’s not cherry-picking when 1.56 Million unnecessary deaths in 8 years exceeds all the U.S. troop deaths in Vietnam, Iraq, and the Civil War combined. You call that cherry-picking? No, cherry-picking is writing things like, “Americans on the whole have never been this wealthy” while omitting the fact that most wealth in the U.S. belongs to a tiny 2% of the U.S. population, and 80% of all Americans only own 17% of all weatlh, not to mention the massive nation-wided debt, and more workers per household, which all together results in falling incomes for most Americans for over 30+ years.
Craig Holmes wrote: Lets take a look at number 2, distribution of wealth. Look here: (www.census.gov/hhes/www/income/histinc/h03ar.html) This is the United States Census. They say that ALL INCOME BRACKETS are earning more money now than they did 30 years ago.Not true.
Again, that is clever, but it is cherry picked.
Real incomes have and are actually falling when you also include the fact that there are:
- more workers per household
- more debt; $9.2 Trillion National Debt and growing fast;
- more debt and liabilities; $12.8 Trillion borrwed and spent from Social Security, making it pay-as-you-go, with 77 Million baby boomer bubble approaching;
- more debt; PBGC pensions $450 Billion in the hole;
- more debt; $6 Trillion state and local government debt;
- more personal debt; $20 Trillion personal nation-wide debt;
- more debt; $48 Trillion Nation-wide debt; Where will the money come from? Where will the interest on that debt come from (which could exceed the principal $48 Trillion itself)?
- regressive taxation, whereby Warren Buffet pays 17.7% income tax rate on $46 Million and his secretary pays 30% on $60K.
- and the wealth disparity has never been worse since the Great Depression, which was also one of the major causal factors of the Great Depression;
Craig Holmes wrote: That is probably why we have more cars, more planes, computers, more cell phones etc etc. It’s because Americans make more money.Not true.
Real incomes have fallen for MOST Americans.
More debt. And as it grows, the pyramid-scheme comes closer and closer to collapse, again, as it did in the Great Depression (in which one of the major causes of the Great Depression was the Federal Reserve and pyramid-scheme monetary system).
Real median household income in year 1967 was $40K.
Real median household income in year 2006 was $43K.
Now add in the massive $48 Trillion nation-wide debt (which is $157,377 of debt per person).
Where’s the money going to come from to pay that debt, much less the interest on that debt.
This is a question which you avoid answering, because you can’t.
Planes? How many people own a plane?
Cars? So more people can spend 60 eight-hour days per year commuting to and from work, literally dying in hundreds of thousands of auto accidents per year?
Computers and Cell phones? So more people are shackled to their jobs 24/7. Clever of corporations, eh?
Do you think these things overshadow these 10+ abuses, growing in number and severity?
Not even close.
Again, a few cherry-picked and spun-just-right statistics do not even come close to explaining away the trend of the past 30 years and those 10+ abuses, growing in number and severity.
Posted by: d.a.n at February 11, 2008 11:57 AMDan:
Totals by themselves don’t prove anything.
You must find a use for them or you would not use them in your first point.
Posted by: Craig Holmes at February 11, 2008 04:28 PMDan:
That is not true for most Americans.Only the wealthiest 2% of Americans that own most of all wealth in the U.S. (a percentage that have never been smaller since the Great Depression).
Cherry-picking the data and a clever choice-of-words (e.g. “Americans on the whole”) isn’t credible at all. It’s desparation.
This rufutes nothing. I am stating that americans as a whole are better off, and you are “cherry picking” a number for the top 2%.
To rufute my statement you need to prove that most americans (51%or more) have lower weathy than the did 30 years ago.
You accuse me of cherry picking, but you are cherry picking.
So are you the only one who is allowed to cherry pick?
Posted by: Craig Holmes at February 11, 2008 04:34 PMDan:
Again, that is clever, but it is cherry picked. Real incomes have and are actually falling when you also include the fact that there are:more workers per household
Of course and that if a very good point. There are two reasons why there are more workers per household. Both related to wealth.
First of all, as people become more affluent they can live independently. Average people per household has declined over the last thirty years by 9%. Few people in each household means that even if incomes stay the same, income per capita goes up by 9% because the income is spread over 9% fewer people.
Second, more people being able to work in a household is a long trend that is good. It used to be that typically the wife had to stay home as it was a full time job just keeping the house up. Now because of wealth and education, more people are able to earn an income, and support the family wealth base.
I am not sure why you chose to apply a positive fact, (more people able to work), in a negative way, but basically with smaller families, higher wealth and more education more members of a household are able to work.
BRAVO!!!
My chart still stands. Incomes per household are higher today than they were thirty years ago.
Far from the lives of Americans getting worse over the last 30 years economically, American households are better off in all wage brackets as measured by income.
Posted by: Craig Holmes at February 11, 2008 05:00 PMCraig Holmes wrote: You must find a use for them or you would not use them in your first point.Not true.
I use the break down, and the numbers and factors that make up the total.
You merely toss out a total of assets and claim …
Craig Holmes wrote:
“Americans on the whole have never been this wealthy”.
Which is a ridiculous statement, since the wealth distribution is very lopsided (which have have already acknowledged previously in other threads).
Craig Holmes wrote: This rufutes nothing. I am stating that americans as a whole are better off, and you are “cherry picking” a number for the top 2%.Wrong again.
I have given a complete break-down (and it also appears on my web-page here, along with MANY factors on that same page) that reveal the ridiculousnous and deceptive nature of the statement …
Craig Holmes wrote:
“Americans on the whole have never been this wealthy”.
Never mind the following:
- A tiny 2% of Americans own most of all wealth in the U.S.
- 5% of Americans own 60% of all wealth in the U.S.
- 10% of Americans own 70% of all wealth in the U.S.
- 20% of Americans own 83% of all wealth in the U.S.
- 80% of Americans own only 17% of all wealth in the U.S.
See? That is more accurate, meaningful, and avoids the deception of the “on the whole” wording.
Craig Holmes wrote: To rufute my statement you need to prove that most americans (51%or more) have lower weathy than the did 30 years ago.And that is EXACTLY what I did, and will do again.
Watch closely (the following is in 2004 dollars, adjusted for inflation).
In year 1967, the median household income was $40K.
In year 2006, the median household income was $43K (and is probably lower now in 2007 and 2008).
However, that does not include debt, or the increased workers per household, or the more regressive taxation, usury, or the incessant inflation and worsening ripple-effects:
- there are now more workers per household;
- the National Debt is now a massive $9.2 Trillion and growing fast ($30,163 per person);
- $12.8 Trillion has been borrowed and spent from Social Security, leaving it pay-as-you-go, with a 77 million baby-boomer bubble approaching;
- the PGBC that is $450 billion in the hole;
- the hundreds of billions of unfunded liabilities for Medicare for then next few months;
- the hundreds of billions of unfunded liabilities for the two wars in Iraq and Afghanistan;
- the $152 to $167 Billion of unfunded liabilities for the economic stimulus package later in year 2008;
- the total $22 Trillion of federal debt (above) has never been higher ever, including as a percentage of GDP (22T debt/13.5T GDP = 163%);
- the $6 Trillion debt at the state, county/parish and local government levels;
- the total federal and government debt of over $28 Trillion ($91,803 of debt per person), which has NEVER been worse since the Great Depression;
- the tax system is now more regressive, making taxes on the middle-income group a much higher percentage of their incomes;
- incessant inflation since year 1954 (or prior)
- usury that cheats people, usurious rates and ARMs, predatory lending, and fraud; nationwide personal debt is at a record $20 Trillion, which has never been worse, including as a percentage of income;
See? When you look at the BIG picture, all factors affecting real-income, it shows that real income for MOST Americans have fallen (not increased).
They don’t teach this in public school.
Likewise with regard to the Federal Reserve’s pyramid-scheme.
Craig Holmes wrote: You accuse me of cherry picking .Yes. The proof of it is above.
Craig Holmes wrote: … but you are cherry picking.Not true.
Again, I provided a break down (see above).
I’m not the one using tricky, deceptive words like this …
Craig Holmes wrote:
“Americans on the whole have never been this wealthy”.
… without regard for all of the factors and a breakdown by population.
Craig Holmes wrote: So are you the only one who is allowed to cherry pick?I don’t cherry pick the data.
I’m not the one using tricky, deceptive words like this …
Craig Holmes wrote:
“Americans on the whole have never been this wealthy”.
… and …
America as a whole has never been this rich, and it’s getting richer all the time. It’s a great time to be an American.
That comment is indicative of someone who is either rich, delusional, or both.
To the best of my knowledge, several others have claimed your statistics are cherry-picked. Not mine.
I look at the big picture and long-term trends.
You refuse to answer questions:
- (1) Where will the $48 Trillion come from to pay down the nation-wide debt?
- (2) Where will the money come from to pay the interest on the principal $48 Trillion of nation-wide debt, much less the principal debt of $48 Trillion ?
- (3) Why do the Federal Reserve and member banks receive interest on money created out of thin air?
- (4) Why do the banks get to convert money created out of thin air into real property and assets from confiscation of property via foreclosures and defaults?
- (5) How can everyone that does the work and produced be in debt to the banks that print money out of thin air?
Posted by: d.a.n at February 11, 2008 05:30 PM
Dan:
Dan:
Wrong again.
I have given a complete break-down (and it also appears on my web-page here, along with MANY factors on that same page) that reveal the ridiculousnous and deceptive nature of the statement …
The chart on your website shows a very nice thirty year trend of increasing income. It refutes your contention!!
Real incomes have risen over the last 30 years by your own website!!
Look at the pattern. Look at the market cycles. It is a normal graph showing increases in income.
You can even see what part of the business cycle income improvements come in.
By your own graph were are were not real incomes higher 30 years ago?
Dan:
As I said above, when you give me a good economic reason to do so.
Posted by: Craig Holmes at February 11, 2008 05:40 PMDan:
On the income arguement, look here:
http://www.census.gov/hhes/www/income/histinc/p01ar.html
per capita income per person has gone up remakably since 1970’s.
That is median per capita income.
That means the average worker is making more money now than 30 years ago. Much more.
So if individual workers are making more money and households are smaller, and the number of workers/household is higher, obvously people are making more money!!!!
Please give me documentation that shows people are making less money than 30 years ago.
Posted by: Craig Holmes at February 11, 2008 06:14 PMCraig Holmes wrote: d.a.n: The chart on your website shows a very nice thirty year trend of increasing income. It refutes your contention!!Wrong again.
Why do you refuse to see the factors that change real income?
The chart shows:
In year 1967, the median household income was $40K (in 2004 dollars)
In year 2006, the median household income was $43K (in 2004 dollars), and is probably lower for 2007 and 2008).
However, that chart which is only $3K higher after 39 years, does not include debt, or the increased workers per household, or the more regressive taxation, usury, or the incessant inflation and worsening ripple-effects, etc.:
- there are now more workers per household;
- the National Debt is now a massive $9.2 Trillion and growing fast ($30,163 per person);
- $12.8 Trillion has been borrowed and spent from Social Security, leaving it pay-as-you-go, with a 77 million baby-boomer bubble approaching;
- the PGBC that is $450 billion in the hole;
- the hundreds of billions of unfunded liabilities for Medicare for then next few months;
- the hundreds of billions of unfunded liabilities for the two wars in Iraq and Afghanistan;
- the $152 to $167 Billion of unfunded liabilities for the economic stimulus package later in year 2008;
- the total $22 Trillion of federal debt (above) has never been higher ever, including as a percentage of GDP (22T debt/13.5T GDP = 163%);
- the $6 Trillion debt at the state, county/parish and local government levels;
- the total federal and government debt of over $28 Trillion ($91,803 of debt per person), which has NEVER been worse since the Great Depression;
- the tax system is now more regressive, making taxes on the middle-income group a much higher percentage of their incomes;
- incessant inflation since year 1954 (or prior)
- usury that cheats people, usurious rates and ARMs, predatory lending, and fraud; nationwide personal debt is at a record $20 Trillion, which has never been worse, including as a percentage of income;
See? When you look at the BIG picture, all factors affecting real-income, it shows that real income for MOST Americans have fallen (not increased).
Craig Holmes wrote: Real incomes have risen over the last 30 years by your own website!!Wrong again.
Read the text under the graph.
The graph alone does not include many other factors that erode real income.
Thus, real income today is below what it was 39 years ago.
Even if the graph was accurate and included the other many factors that reduce real income for the past few decades, a measely $3K increase over 39 years is nothing to brag about.
Craig Holmes wrote: Look at the pattern. Look at the market cycles. It is a normal graph showing increases in income.Not true.
Look at everything. The small $3K increase on the 39 year time period from 1967 to 2006 is nothing to brag about and does not account for massive debt, more regressive taxation, incessant inflation, the approaching end of the cycle of the pyramid-scheme, more workers per household, etc.
Craig Holmes wrote: You can even see what part of the business cycle income improvements come in.All that proves is that it is a bumpy ride, and the economic instability caused by the pryamd-scheme monetary system.
Craig Holmes wrote: By your own graph were not real incomes higher 30 years ago?Yes. Now you get it. Shazaamm!
Incomes were higher in past decades due to:
- (1) much more federal government debt ($22 Trillion)
- (2) more regressive taxation;
- (3) more workers per household;
- (4) more illegal immigration depressing wages and costing middle income American workers $70 Billion to $338 Billion annually in net loses;
Craig Holmes wrote: As I said above, when you give me a good economic reason to do so.Do what? Make ridiculous statements like …
Craig Holmes wrote: “Americans on the whole have never been this wealthy”.… and …
Craig Holmes wrote: America as a whole has never been this rich, and it’s getting richer all the time. It’s a great time to be an American.
Craig Holmes wrote: d.a.n: On the income arguement, look here: www.census.gov/hhes/www/income/histinc/p01ar.html per capita income per person has gone up remakably since 1970’s.That is not real income.
Craig Holmes wrote: That is median per capita income.Again, that is not real-income.
Craig Holmes wrote: That means the average worker is making more money now than 30 years ago. Much more.False.
That is not real income. There’s a difference.
Real income is lower now than it was in 1967 because of other major factors.
You still fail to include:
- (1) much more federal government debt ($22 Trillion; $72,131 per person)
- (2) more regressive taxation;
- (3) more workers per household;
- (4) more illegal immigration depressing wages and costing middle income American workers $70 Billion to $338 Billion annually in net loses;
Craig Holmes wrote: So if individual workers are making more money and households are smaller, …False.
Again, real income has decreased because of:
- (1) much more federal government debt ($22 Trillion $72,131 per person)
- (2) more regressive taxation;
- (3) more workers per household;
- (4) more illegal immigration depressing wages and costing middle income American workers $70 Billion to $338 Billion annually in net loses;
Craig Holmes wrote: So if individual workers are making more money and households are smaller, and the number of workers/household is higher, obvously people are making more money!!!!False again.
That logic is ridiculously flawed, because of:
- (1) much more federal government debt ($22 Trillion $72,131 per person)
- (2) more regressive taxation;
- (3) more workers per household;
- (4) more illegal immigration depressing wages and costing middle income American workers $70 Billion to $338 Billion annually in net loses;
And that does not even include the economic instability caused by the late stages of the pyramid-scheme monetary system.
Craig Holmes wrote: Please give me documentation that shows people are making less money than 30 years ago.I did (please remove rose-colored glasses and look above).
But it is invisible until the rose-colored glasses are removed.
Then it is easy to see reality; that incomes have fallen since 1967, and these trends are getting worse (not better).
And you still refuse to answer these simple questions:
- (1) Where will the $48 Trillion come from to pay down the nation-wide debt?
- (2) Where will the money come from to pay the interest on the principal $48 Trillion of nation-wide debt, much less the principal debt of $48 Trillion ?
- (3) Why do the Federal Reserve and member banks receive interest on money created out of thin air (up to 90% of each loan is new money created out of thin air)?
- (4) Why do the banks get to convert money created out of thin air into real property and assets from confiscation of property via foreclosures and defaults?
- (5) How can everyone that does the work and produces value be in debt to the banks that print money out of thin air?
Dan:
However, that chart which is only $3K higher after 39 years, does not include debt, or the increased workers per household, or the more regressive taxation, usury, or the incessant inflation and worsening ripple-effects, etc.:
Ok, lets go through this again.
I do enjoy this by the way.
Real income per household has risen by your information above by $3000/household.
That means households have more income.
You are bringing other things into the discussion that are not a part of that point.
Debts are a part of expenses. What is happening to the wealthy or who ever is not a part of the fact that income for the median is going up.
It is not at all important how many workers are in the household. Income is still going up. Work is a good thing, not a bad thing.
I think you want to argue that more workers per household is somehow bad. It’s not.
In addition, you do not focus on the fact that households are smaller and trending smaller over the last 30 years.
I think you want to argue that average wages are stagnant but are struggling with how to do that.
I also think you want to argue that because households carry more debts they are worse off. Not neccessarily so. They carry more debt because they own more things. They have more assets. Back to the more houses, more cars, more computers thing. More debt does not equal worse off.
To make the case that a person is worse off because they have more debt, you would need to look at their assets.
That is not real income
I think you mean disposable income. (after all expenses).
Where will the $48 Trillion come from to pay down the nation-wide debt?
For the third time, you haven’t proven your point that it needs to be paid off. You are assuming payoff is needed. Prove that case and I will give you my answer.
Posted by: Craig Holmes at February 11, 2008 08:43 PMDan:
Here is another fact. Households are worth more today than in 1995. He
http://www.census.gov/compendia/statab/2007/tables/07s0702.xls
You mention debts all the time. These figures put it into perspective my looking at assets as well.
In 1995 the networth of an average household was $70,800, in 2004 it was $93,100. A pretty impressive gain. All are in 2004 dollars.
The median household is worth more today than it was in 1995. More good news.
Posted by: Craig Holmes at February 11, 2008 10:28 PMDan:
Craig Holmes wrote: So if individual workers are making more money and households are smaller, and the number of workers/household is higher, obvously people are making more money!!!! False again.
That logic is ridiculously flawed, because of:
(1) much more federal government debt ($22 Trillion $72,131 per person)
(2) more regressive taxation;
(3) more workers per household;
(4) more illegal immigration depressing wages and costing middle income American workers $70 Billion to $338 Billion annually in net loses;
Nothing you list has anything to do with the fact that people are making more money. Households make more money, individuals make more money.
Debt is an expense. I am talking about income. the number of people in the household working doesn’t change the fact that households are making more money.
So here here is a list of things I have provided solid proof of.
1. Household income is up.
2. Households are smaller.
3. median household networth is up.
As I cherry pick things like median individual, and household income, and median networth, which measure the whole of humanity in the united states, it’s a very obvious conclusion, that the majority of Americans are better off financially than they were 30 years ago.
You believe that more debt means going backwards. I believe that lower net worth is going backwards.
I’m right!!
Craig Holmes wrote: Ok, lets go through this again. I do enjoy this by the way. {d.a.n: yes, it can be educational} Real income per household has risen by your information above by $3000/household. That means households have more income.The chart shows a real income increase in 39 years of only $3000.
It too omits MASSIVE government debt, more regressive taxation, and other factors that increase debt and erode net worth.
That chart fails to include many other costs that have grown worse, and when included, decrease real income much more than the mere $3000 increase between year 1967 and year 2006.
That measley $3000 increase is easily obliterated (and them some) by the following costs that have grown worse in the past 30+ years:
- (1) much more federal government debt ($22 Trillion $72,131 per person)
- (2) more regressive taxation, which costs middle-income tax payers more since there is more government debt;
- (3) more workers per household;
- (4) more state and local debt (about $6 Trillion)
- (5) more illegal immigration depressing wages and costing middle income American workers $70 Billion to $338 Billion annually in net loses; not to mention 2.3 or more diplaced jobs; the cost of disease, and the untold cost of crime;
- (6) more usury; credit cards with 24%+ interest rates, predatory lending, usurious interest rates and fees, loan fraud;
- (7) more corpocrisy, corporatism, government FOR-SALE, outsourcing, H-1B and H-2B Visa abuses, and other manifestations of unchecked greed;
Add up all of those things which have grown worse in the last 30+ years, and real incomes have decreased (not increased).
Craig Holmes wrote: You are bringing other things into the discussion that are not a part of that point.That’s because those things have grown worse in the last 30 years, and are cleverly omitted, but affect real income calculations (e.g. illegal immigration, regressive taxation, decreasing savings, more government debt, etc.).
Craig Holmes wrote: Debts are a part of expenses. What is happening to the wealthy or who ever is not a part of the fact that income for the median is going up.When massive government debt is included, the real incomes of people are reduced.
And since the tax system is regressive, the middle income group is hardest hit.
Craig Holmes wrote: It is not at all important how many workers are in the household. Income is still going up. Work is a good thing, not a bad thing.Not true.
How is it the number of workers per household increased, but the income per household barely changed in 39 years?
Craig Holmes wrote: I think you want to argue that more workers per household is somehow bad. It’s not.It is bad when more workers per household end up with less real income, and that is the case when massive government debt, more regressive taxation, and many other hidden costs are included.
Craig Holmes wrote: In addition, you do not focus on the fact that households are smaller and trending smaller over the last 30 years.There are more workers per household, and the only category that changed much was the family size of 5 or more.
__________Year 1970 __ Year 2003
5+ people: 20.9% _______09.8% (decreased)
=4 people: 15.8% _______14.3% (decreased slightly)
=3 people: 17.3% _______16.1% (decreased slightly)
=2 people: 28.9% _______33.3% (increased)
=1 person: 17.1% _______26.4% (increased)
Massive debt and falling incomes are probably the cause of that.
Thus, with smaller households, household income should have increased far more than a measely $3000 in 39 years, eh?
But they did not.
Craig Holmes wrote: I think you want to argue that average wages are stagnant but are struggling with how to do that.Not just stagnant, but falling (when many other hidden factors are included; factors that have worsened in the past 30+ years, such as massive government debt and more regressive taxation, etc.).
Craig Holmes wrote: I also think you want to argue that because households carry more debts they are worse off. Not neccessarily so. They carry more debt because they own more things. They have more assets. Back to the more houses, more cars, more computers thing. More debt does not equal worse off.Families with more debt are not better off.
And more things don’t change that.
Especially cell phones and computers that tether people to their jobs 24/7, or televisions that waste their time, or cars that they spend 60+ eight-hour days per year sitting in traffic.
And their houses are still at risk unless they have a lot of equity (or have them paid-off).
But, people bear some of the responsibility for their irresponsible spending indebtedness too.
More debt is bad, because usury is a form of slavery.
The nation is swimming in debt.
And the net worths you speak of will drastically decrease in value in recessions (or a depression).
But that does not explain away the increasing usury, usurious credit card debt and practices, predetory lending practices, tricky ARMs, and massive government debt being heaped onto middle-income tax payers via more regressive taxation.
Craig Holmes wrote: To make the case that a person is worse off because they have more debt, you would need to look at their assets.I did look at assets.
But not all of those assets are safe; not paid-off yet.
And for most people, their debt exceeds their assets.
40% of Americans (on average) have essentially ZERO net worth.
20% of Americans (on average) have negative net worth.
80% of Americans only own 17% of all wealth in the U.S.
2% of all Americans own more than the remaining 98% of all Americans.
I see your asset figures, but only a very few Americans own most of the nation’s wealth.
Also, unless they have a lot of equity in their homes, many homes are at risk of being lost, and that is what happens in every recession and depression.
And that is how the banks convert money printed out of thin air into real assets, and the wealthy get wealthier via auctioned and discounted foreclosures.
Craig Holmes wrote: That is not real income. I think you mean disposable income. (after all expenses).The definition is complicated by several omitted hidden costs (such as the hidden $70 Billion to $338 Billion in net losses due to illegal immigration, more regresssive taxation combined with more government debt, etc.).
d.a.n asked: Where will the $48 Trillion come from to pay down the nation-wide debt?Ohhh … I see. We should all engage in ENRON accounting and ignore these pyramid schemes until they collapse.Craig Holmes wrote: For the third time, you haven’t proven your point that it needs to be paid off. You are assuming payoff is needed. Prove that case and I will give you my answer.
Craig Holmes wrote: d.a.n: Here is another fact. Households are worth more today than in 1995. He www.census.gov/compendia/statab/2007/tables/07s0702.xlsInteresting, but it is not complete (only goes up to 2004) and not at all convincing. Especially considering the source: the Federal Reserve
What that chart clearly shows:
- (1) the rich are getting richer
- (2) while most peoples incomes have stagnated or fallen (i.e. the middle and lower income levels; i.e. most people),
- (3) savings decreased (and probably much more so after year 2004)
- (4) it still fails to include the massive government debt which falls on the people, and since taxation is regressive, it hammers the middle-class.
Again, many hidden factors were ignored (many that are now worse, especially after year 2004).
What do you think it will look like when you add 2006, 2007, and probably 2008? Not good I suspect. Especially after you add in the record numbers of millions of foreclosures, bankruptcies, and defaults since year 2006. And 2 million more foreclosures are expected in through to 2009. By the time that is all over, your chart will probably show that net worths and savings have drastically decreased.
Craig Holmes wrote: You mention debts all the time. These figures put it into perspective my looking at assets as well.Again, that snapshot is incomplete. And it does not account for the massive government debt.
Show me the same chart with 2005, 2006, and 2007 included.
Craig Holmes wrote: Nothing you list has anything to do with the fact that people are making more money. Households make more money, individuals make more money.Not true.
You have show assets, but those assets failed to include government debt, which is HUGE.
Your charts do not include:
- (1) much more federal government debt ($22 Trillion $72,131 per person)
- (2) more regressive taxation, which costs middle-income tax payers more since there is more government debt;
- (3) more workers per household;
- (4) more state and local debt (about $6 Trillion)
- (5) more illegal immigration depressing wages and costing middle income American workers $70 Billion to $338 Billion annually in net loses; not to mention 2.3 or more diplaced jobs; the cost of disease, and the untold cost of crime;
Craig Holmes wrote: Debt is an expense. I am talking about income. the number of people in the household working doesn’t change the fact that households are making more money.Not true.
With all debt included, net worths have actually decreased.
And with regressive taxation, the middle class is hit the hardest.
Craig Holmes wrote: So here here is a list of things I have provided solid proof of. 1. Household income is up. 2. Households are smaller. 3. median household networth is up.Not true, because you have omitted massive debt, and regressive taxation.
Craig Holmes wrote: As I cherry pick things like median individual, and household income, and median networth, which measure the whole of humanity in the united states, …See? You admit to cherry picking! : )
Craig Holmes wrote: … it’s a very obvious conclusion, that the majority of Americans are better off financially than they were 30 years ago.Not true, because of MUCH more debt (than ever before) being piled on not only current middle class, but future generations too.
That much debt is a recipe for disaster.
The pyramid scheme monetary system will collapse.
Craig Holmes wrote: You believe that more debt means going backwards. I believe that lower net worth is going backwards. I’m right!!No, you are wrong, because you failed to include MASSIVE government debt, massive personal debt, regressive taxation, illegal immigration costs, many other hidden costs, declining savings, and these 10+ abuses.
You have based your net worth argument largely on home ownership, but equities in homes is not meaningful net worth when properties are over valued, and the homes are not paid off yet, and still at risk of foreclosure. And with record level foreclosures now, and millions more forecast well in 2009, your argument and statistics are looking worse and worse.
And recessions (or worse) resulting from the pyramid-scheme monetary system will undo more of that so-called net worth that you speak of.
I suspect because you know as well as I do that this pyramid-scheme monetary system will collapse eventually, and we are probably now in the late stages of the cycle.
You still have avoided answering this question …
QUESTION: Where will the $48 Trillion come from to pay of the debt?
Where will the INTEREST alone on the principal $48 Trillion of debt come from?
So, your case is not convincing because it omitted massive debt.
The Federal Reserve chart you showed above does not include the massive federal debt in those net worth statistics.
That debt must be considered, because it can’t be allowed to grow much larger, because the service on the debt is massive.
The U.S. is currently borrowing $3 Billion per day.
The primary reason for the growing economic instability is the pyramid-scheme monetary system.
You speak of assets, but the total DEBT and the INTEREST on that debt exceeds ALL of the assets you speak of.
Just the INTEREST alone on the principal $48 Trillion could easily exceed the total nationwide assets (which you said was about $110 Trillion?; leaving $110 T assets - $48 T principal debt = $62 T net worth), such as with any long term loan.
That much debt is a recipe for disaster.
And suggesting we don’t have to pay it off is a recipe for letting it get much bigger.
The fact is, that $48 Trillion of debt will never be paid off.
This pyramid-scheme monetary system will collapse first.
That can be said with confidence, because it is a mathematical certainty, it already happened once (the Great Depression), it will happen again, and we are approaching the late stages of that cycle again.
Dan:
Add up all of those things which have grown worse in the last 30+ years, and real incomes have decreased (not increased).
You are still intertwining Income and Expenses. Real income is income after inflation which your figures show is going up and not down.
What you are trying to say is that expenses are going up faster than expenses and so disposable or discressionary income is going down. Real income is going up, period.
You are trying to say that people today are worse off because they have less spending money because their expenses have risen faster than their income.
You have to keep your balance sheet clean. Income is income. So Income, Real Income is rising.
So point one is that most Americans are making more money than they were 30 years ago.
I accept your point that debts have risen as risen more than income, if that is the point your are making. (Don’t want to put words in your mouth).
Here is the reason. WE own more stuff today than 30 years ago.
You still have avoided answering this question … QUESTION: Where will the $48 Trillion come from to pay of the debt?
For the fourth time, when you show me why we need to pay off the debt I will answer your question.
Why are you avoiding answering my question?
Craig,
OK. I stand corrected on terminology: Disposable Income is income after taxes.
But that still does not account for the massive government debt, and other hidden debt.
There are also massive state and local taxes and costs being levied onto the middle and lower income tax groups due to illegal immigration.
Look this over, and this (income).
Your previous chart only covered 1995 to 2004, and it was not convincing at all that things are as you say …
Craig Holmes wrote:
“Americans on the whole have never been this wealthy”.
… and …
Craig Holmes wrote:
America as a whole has never been this rich, and it’s getting richer all the time. It’s a great time to be an American.
If you look at the last 30+ years, many things have got worse (not better).
However, net worth is after you subtract total liabilities, which includes debt.
Government debt is debt on the people.
The National Debt is $9.2 Trillion ($30,164 per person).
But there are other liabilites, such as Medicare, wars in Iraq and Afghanistan, PBGC pensions $450 Billion in the hole, and Social Security which is now pay-as-you-go, since $12.8 Trillion was borrowed and spent from Social Security (liability of $41,967 per person).
So, since the total federal debt is about $22 Trillion, that is $72,131 of debt per person.
So, that shoots the hell out of net worth (assets minus liabilities).
Craig Holmes wrote: For the fourth time, when you show me why we need to pay off the debt I will answer your question.Because we are unable to even pay the INTEREST alone on the principal $48 Trillion, so the debt is growing out of control, and that is why nation-wide debt is growing larger every year.
That’s why.
The nation is approaching the point where it can not pay the debt, and the very few with most of the wealth are not going to pay that debt.
Craig Holmes wrote: Why are you avoiding answering my question?I’m not. I just answered it.
The debt is dangerously out of control, and the U.S. is borrowing $3 Billion per day.
The $48 Trillion will quickly grow out of control.
The people that own most of the $110 Trillion in assets are not going to pay that debt.
They will continue to try to force the middle class to pay it with increasingly regressive taxes, and it won’t work.
Craig Holmes wrote: For the fourth time, when you show me why we need to pay off the debt I will answer your question.Paying it off may be impossible.
Just keeping up with the INTEREST alone may be impossible.
Already, the government is borrowing and printing the money to pay the INTEREST on the $9.2 Trillion debt, which is only part of the total government debt.
The debt is out-of-control.
DEBT + INTEREST of $48 Trillion probably exceeds the total net worth of the nation.
That’s why the debt must be reduced, or perhaps it would be best to let this pyramid scheme collapse and try to start over with a better monetary system that is not mathematically doomed from the beginning to collapse?
Or, do you not see the ethical and mathematical issue with the current monetary system?
Dan:
Paying it off may be impossible. Just keeping up with the INTEREST alone may be impossible. Already, the government is borrowing and printing the money to pay the INTEREST on the $9.2 Trillion debt, which is only part of the total government debt.
Actually no I don’t think it is wise to pay it off. There is no real reason to.
As for the interest on the debt, as a percentage of GDP it is quite modest. Since we are comparing 30 years, (which is fine), Interest expense as a percentage of GDP peaked about 10 years ago.
Two factors to put into your equation:
Interest rates were double thirty years ago. (roughly).
The other is of course to ecnomy is so much larger.
If you look at your chart, debt to GDP was about half 30 years ago as it is today, (depending on what year one looks at). And Interest rates are about half what they were 30 years ago. So basically The way we will pay for the current debt of the government, is the same way we paid for it 30 years ago.
As far as interest expenses on the debt you mentioned we are about the same place as a percentage of GDP.
Posted by: Craig Holmes at February 12, 2008 05:30 PMDan:
The $48 Trillion will quickly grow out of control. The people that own most of the $110 Trillion in assets are not going to pay that debt. They will continue to try to force the middle class to pay it with increasingly regressive taxes, and it won’t work.
So you believe the people who own the $110 Trillion will commit financial suicide?
Posted by: Craig Holmes at February 12, 2008 05:32 PMDan:
I want to give you a piece of information to chew on. Just to mess with your mind a bit.
If you look at your chart of debt to GDP from 1965 to 1980, those look like good years from a debt to gdp point of view as debt to gdp dropped dramatically.
Look at the numbers for interest expense as a percentage of GDP.
1965 1.2%
1970 1.4%
1975 1.5%
1980 1.9%
Even though debt/GDP was declining, interest expense as a percentage of GDP was increasing. That is of course because interest rates were going up.
Do in relative terms, debt was going down, but interest expense was going up. So the defict “cost” more to maintain in 1980 than it did in 1965.
The reverse is true now. We owe about twice as much on relative terms as we did thirty years ago but it cost us about the same in relative terms.
d.a.n wrote: Paying it off may be impossible. Just keeping up with the INTEREST alone may be impossible. Already, the government is borrowing and printing the money to pay the INTEREST on the $9.2 Trillion debt, which is only part of the total government debt.Then the banks will get richer and richer, while everyone else gets poorer and poorer.Craig Holmes wrote: Actually no I don’t think it is wise to pay it off. There is no real reason to.
Try that with a credit card and see what happens.
Before long, the debt will be unmanagable.
Craig Holmes wrote: As for the interest on the debt, as a percentage of GDP it is quite modest.$9.2 Trillion National Debt is not the only federal debt.
$12.8 Trillion was borrowed and spent from Social Security leaving it pay-as-you-go (with an approaching 77 million baby boomer bubble).
The PBGC pensions are $450 Billion in the hole.
Total federal government debt is $22 Trillion.
Craig Holmes wrote: Since we are comparing 30 years, (which is fine), Interest expense as a percentage of GDP peaked about 10 years ago.And the total federal debt was smaller 10 years ago.
Two factors to put into your equation:
Interest rates were double thirty years ago. (roughly).
The other is of course to ecnomy is so much larger.
Craig Holmes wrote: If you look at your chart, debt to GDP was about half 30 years ago as it is today, …Again, you are omitting other federal debt. That’s cherry-picking.
Craig Holmes wrote: So basically The way we will pay for the current debt of the government, is the same way we paid for it 30 years ago.I seriously doubt it.
Congress will continue to spend and borrow until the debt is out of control (which it probably already is).
Craig Holmes wrote: As far as interest expenses on the debt you mentioned we are about the same place as a percentage of GDP.Again, you are omitting other federal debt. That’s cherry-picking.
Total federal Debt-to-GDP is 163% (22T debt/13.5T GDP = 163%).
Since $12.8 Trillion was borrowed from Social Security, it is now pay-as-you-go, and it will have to come out of current tax revenues.
That will make it impossible to repay any debt, unless there is also massive spending cuts somewhere.
That’s the simple math of it.
If the $1+ Billion in INTEREST per day (on only the $9.2 Trillion National Debt) is not met daily, the total debt grows larger every day.
d.a.n wrote: The $48 Trillion will quickly grow out of control. The people that own most of the $110 Trillion in assets are not going to pay that debt. They will continue to try to force the middle class to pay it with increasingly regressive taxes, and it won’t work.No. If taxes were raised to force the wealthy to pay the $22 Trillion of federal debt, the wealthy would simply move somewhere else to avoid taxation.Craig Holmes wrote: So you believe the people who own the $110 Trillion will commit financial suicide?
Also, the politicians are not likely to do that anyway.
Therefore, the end result will be the collapse of the pryamid-scheme monetary system.
It is most likely unavoidable.
It may take years, and perhaps a few more decades, but as the debt grows, the richer the rich will become, the poorer everyone else will become, and government debt will finally be impossible to manage (if it isn’t already).
In my opinion, I believe it is already out of control. The pyramid-scheme monetary system is approaching the late states of collapse, as debt becomes too overwhelming.
The only way to avoid collapse is to reduce the debt which requires massive spending cuts, and Congress does not have the discipline to do it.
Congress is full of idiots, and have no idea how serious the situation really is. In fact, they will probably pass a universal healthcare system that will be probably the last straw.
(a)Total Federal government debt:
- (1) National Debt = $9.2 Trillion
- (2) $12.8 Trillion borrowed and spent from Social Security making it pay-as-you-go (great timing with a 77 million baby boomer bubble approaching)
- (3) $450 Billion PGBC pension debt
- (4) hundreds of billions of unfunded liabilities for the next few months for Medicare
- (5) hundreds of billions of unfunded liabilities for the next few months for the wars in Iraq and Afghanistan
____________________________________
TOTAL federal debt = $22 Trillion
(b)Total personal nation-wide debt:
- $20 Trillion
(c)Total state and local government debt:
- $6 Trillion
____________________________________
TOTAL nation-wide debt = $48 Trillion
But it gets worse. There are other annual expenses being despicably foisted onto the middle-class due to illegal immigration, and a myriad of regressive sales taxes.
And rising energy costs are having a significant impact too.
And to make things worse, jobs are leaving the country.
And home ownership for the middle and lower income groups have been falling.
And savings for middle and lower income groups are lower than ever.
And it requires more workers per household to make the same income of 30+ years ago.
And the ever-present, incessant inflation is destabilizing, creating bubble after bubble, where the rich get richer, and everyone else gets poorer.
QUESTION # 1: Where will ONLY the INTEREST come from to keep that $48 Trillion from growing larger every second?
The interest on the $9.2 Trillion National Debt alone is over 1 billion per day!
Currently, the U.S. is borrowing $3 Billion per day!
Did you not look at this report ?
Your statements, according to all the data …
Craig Holmes wrote:… and …
“Americans on the whole have never been this wealthy”.
Craig Holmes wrote:
America as a whole has never been this rich, and it’s getting richer all the time. It’s a great time to be an American.
… is not true for most Americans (the 80% that own only 17% of all wealth in the U.S.).
The key words there is “on the whole” and “as a whole”.
Clever, but that is a deceptive and fraudulent statement, since the statement is false for MOST Americans.
Craig Holmes wrote: d.a.n: I want to give you a piece of information to chew on. Just to mess with your mind a bit.You think you are going to confuse me?
Craig Holmes wrote: If you look at your chart of debt to GDP from 1965 to 1980, those look like good years from a debt to gdp point of view as debt to gdp dropped dramatically. Look at the numbers for interest expense as a percentage of GDP.1965: 1.2%
1970: 1.4%
1975: 1.5%
1980: 1.9%
So? Interest rates and inflation were high in the late 1970s and early 1980s. But what is worse is incessant inflation, which started around 1976. That is, 3% this year is more than 3% the previous year, which is more than 3% that year before that, and so on … which creates economic instability.
All of these little bumps, spikes, and cherry-picked special cases do not disprove the general trend, in which things are getting worse (not better) for most Americans.
Also, the National Debt was much smaller in 1980, and it was much smaller relative to GDP also in 1980.
Craig Holmes wrote: Even though debt/GDP was declining, interest expense as a percentage of GDP was increasing. That is of course because interest rates were going up.Interest rates were rising because of inflation and excessive creation of money out of thin air.
All of it hurts the average person the most.
Craig Holmes wrote: Do in relative terms, debt was going down, but interest expense was going up. So the defict “cost” more to maintain in 1980 than it did in 1965.Not really.
The debt in 1980 was much smaller in magnitude and smaller as a percentage of GDP.
The high inflation is a clever mechanism to erode government debt. Unfortunately, the high inflation screws the little guy.
Craig Holmes wrote: The reverse is true now. We owe about twice as much on relative terms as we did thirty years ago but it cost us about the same in relative terms.The reason now for lower interest rates is because we are approaching the late stages of the pyramid-scheme.
With such massive debt, more loans must be created to create more money to pay the interest on the debt, to keep the pyramid-scheme monetary system from collapsing.
Easy credit makes it easier to get loans which creates more debt.
That’s what happened in the Great Depression, and that is what will happen again.
The DEBT will (if it hasn’t already) grow out of control, because the people can not even pay the INTEREST on the debt, much less the principal debt.
Likewise with the federal government … it can barely pay the INTEREST on the only the $9.2 Trillion National Debt, much less pay down the growing principal (not good with project shortalls in Social Security, Medicare, the PGBC pensions, and two wars in Iraq and Afghanistan).
We have had millions of foreclosures for years, and it may last for several more years.
This is how the banks convert money created out of thin air into real property and assets.
And the wealthy people buy up these properties at auctions and fire-sales (cheap), so the rich get richer, and everyone else gets poorer.
It is like playing the game of Monopoly in which one person (the banker) can print all the money they want.
Eventually, the bank owns everything, and everyone else is broke, or deep in debt.
The same thing is happening not only in the U.S., but world-wide.
Perhaps enough people will figure it out when they are jobless, homeless, and hungry?
Thus, your statements …
Craig Holmes wrote:… and …
“Americans on the whole have never been this wealthy”.
Craig Holmes wrote:
America as a whole has never been this rich, and it’s getting richer all the time. It’s a great time to be an American.
… are not true for most Americans (i.e. the 80% that own only 17% of all wealth in the U.S.). Posted by: d.a.n at February 12, 2008 07:27 PM
Dan:
The debt in 1980 was much smaller in magnitude and smaller as a percentage of GDP. The high inflation is a clever mechanism to erode government debt. Unfortunately, the high inflation screws the little guy.
Now you are confusing me. So you think it is better now right? I agree high inflation is bad. so lowering inflation is a good thing.
However is you look at your chart of wealth distribution the gap between rich and poor narrow when inflation is high.
Can you explain?
The reason now for lower interest rates is because we are approaching the late stages of the pyramid-scheme.
Sorry, but that is not the reason. pyramid-schemes are inflationary. (germany).
What is causing low interest rates is globalization. Cheap labor overseas keeps inflation low. Interest rates follow inflation. Unit Labor costs are the number one contributer to inflation.
Here are the dominos to low interest rates.
1. cheap labor overseas.
2. flat wage growth in USA.
3. Lower unit labor costs rising.
4. low inflation.
5. low interest rates.
6. high asset prices (stocks and real estate).
7. Wealth inequality.
Dan:
The following are riddled with inaccuracy.
… That’s what happened in the Great Depression, and that is what will happen again. The DEBT will (if it hasn’t already) grow out of control, because the people can not even pay the INTEREST on the debt, much less the principal debt.
there is no reason to pay the principal and America can easily pay the interest on the debt. It is only about 2% of GDP.
Likewise with the federal government … it can barely pay the INTEREST on the only the $9.2 Trillion National Debt, much less pay down the growing principal
there is no reason to pay down the principal and the interest is easily paid for.
(not good with project shortalls in Social Security, Medicare, the PGBC pensions, and two wars in Iraq and Afghanistan).
We have had millions of foreclosures for years, and it may last for several more years.
This is how the banks convert money created out of thin air into real property and assets.
About one percent of homeowners are in foreclosure. All of housing is about 4% of the economy. A small amount.
And the wealthy people buy up these properties at auctions and fire-sales (cheap), so the rich get richer, and everyone else gets poorer.
It is like playing the game of Monopoly in which one person (the banker) can print all the money they want.
Exactly, that is why homeownership rates are so high, it’s because fewer people are owning homes.
Come on Dan. There is very high home ownership rates and 1% foreclosure.
You are focusing on a very small part of the eocnomy to make your points (4%).
Craig Holmes wrote: Now you are confusing me.Not true. It’s not my fault.
Craig Holmes wrote: So you think it [high inflation] is better now right?No.
Any inflation is bad.
High inflation is worse.
But you can’t just look at the inflation rate this year alone:
____INFLATION RATE____
16% +
14% + - - - - - X
12% + - - - - X-
10% + - - - -X - -
08% + - - - X- - -
06% + - - -X - - -X
04% + -X- - - - - - X - X X
02% + - -X- - - - - - X - -
00% +X____________________YEAR
_____1 1 1 1 1 1 1 1 1 2 2
_____9 9 9 9 9 9 9 9 9 0 0
_____5 6 6 7 7 8 8 9 9 0 0
_____5 0 5 0 5 0 5 0 5 0 5
You also need to look at the exponential nature of inflation upon inflation (i.e. year after year, like the reverse of compounded interest).
Incessant (non-stop), year after year is bad too.
That is why the CPI looks this way (below):
____INFLATION_______
CPI (CPI=100 for year 1967)
650 + - - - - - - - - - - -X
600 + - - - - - - - - - - -X
550 + - - - - - - - - - - -X
500 + - - - - - - - - - - X
450 + - - - - - - - - - - X
400 + - - - - - - - - - - X
350 + - - - - - - - - - -X
300 + - - - - - - - - - X
250 + - - - - - - - - - X
200 + - - - - - - - - -X
150 + - - - - - - - - -X
100 + - - - - - - - -X
050 +XXXXXXXXXXX
000 +_______________________YEAR
_____1 1 1 1 1 1 1 1 1 1 2 2
_____8 8 8 8 8 9 9 9 9 9 0 0
_____0 2 4 6 8 0 2 4 6 8 0 2
_____0 0 0 0 0 0 0 0 0 0 0 0
Craig Holmes wrote: So lowering inflation is a good thing.Yes, of course lower inflation is better than high inflation, but incessant inflation is still bad, because 3% of inflation this year is worse than 3% inflation the year before, and so on. That is why a 1950 Dollar is now worth less than 11 cents (like the reverse of compound interest). That is why the M3 Money Supply increased from $135 Billion in year 1950 to $10.15 Trillion in year 2005.
And usury is not only an ethical issue, but it requires more and more money to be created to pay the INTEREST which does not exist, since money is created as debt (LOAN=PRINCIPAL+INTEREST), to keep the pyramid scheme from collapsing.
It is not only an issue of ethics, but it presents a mathematical problem too.
Our monetary system is not only dishonest, usurious, and inflationary, but it is a pyramid scheme with a mathematical certainty of eventual collapse when there is no more capacity for more DEBT.
Even low inflaiton (e.g. 2% or 3%), year after year creates exponential inflation.
The Fed banks loan money to member banks with INTEREST, and the member banks loan it with more INTEREST.
The banks receive the INTEREST on loans from money created out of thin air.
The banks then convert money created out of thin air by confiscating real property and assets via foreclosure and defaults.
What’s wrong with that picture?
What’s ethical about that?
That doesn’t even include the predatory lending, greedy and usurious hiking of interest rates (e.g. ARMs), and loan fraud.
Craig Holmes wrote: However if you look at your chart of wealth distribution the gap between rich and poor narrow when inflation is high.False.
Craig Holmes wrote: Can you explain?Yes.
Less regressvie taxation, and less government spending, and other factors had much more to do with that narrowing wealth disparity between 1965 and 1976.
The wealthy were taxed more, and the National Debt as a percentage of GDP was shrinking fast between 1945 and 1976.
Again, to try to attribute the shape of the wealth disparity curve to inflation is too simplistic and fails again to see the BIG picture.
While any inflation is bad, there are many different factors at different periods in history that contribute to the disparity of wealth (e.g. taxes, wars, monetary policy, etc.).
Today, the wealth disparity has never been worse since the Great Depression, and it is not due to one thing, but the dishonest, usurious, pyramid-scheme monetary system is one of these 10+ abuses that are causing that worsening disparity trend. Things (as a whole) have been getting worse (not better) since about 1976.
Other causes can contribute to inflation too, such as rising demand, increasing costs, and increasing prices for:
- various resources (i.e. oil, gasoline, rising healthcare costs, etc.)
- wars (e.g. two wars in Iraq and Afghanistan),
- increasing population growth (such as the 5 million per population growth in the U.S.)
Craig Holmes wrote: However if you look at your chart of wealth distribution the gap between rich and poor narrow when inflation is high.Again, trying to draw a correlation between wealth distribution and inflation is far too simplistic. You must look at many other factors too, such as: regressive taxation, wars, population, government corruption, government spending, DEBT, monetary systems, usruy, exploitation, globalization, illegal immigration, other abuses, etc.
Craig Holmes wrote: Sorry, but that is not the reason [i.e. late stages of pyramid scheme]. Pyramid-schemes are inflationary. (germany).Yes, Inflation is not the only reason for the wealth disparity trend. There are many other contributing factors, such as: regressive taxation, wars, population, government corruption, government spending, DEBT, monetary systems, usruy, exploitation, globalization, illegal immigration, other abuses, etc. But the economic instability caused by the usurious and dishonest pyramid-scheme is one of the major causes, and it gets worse as we get closer to the end stages of the cycle of the pryamid-scheme.
Craig Holmes wrote: What is causing low interest rates is globalization. Cheap labor overseas keeps inflation low. Interest rates follow inflation. Unit Labor costs are the number one contributer to inflation.Globalization is yet another exacerbating factor for the U.S.
Craig Holmes wrote:Here are the dominos to low interest rates.
- 1. cheap labor overseas.
- 2. flat wage growth in USA.
- 3. Lower unit labor costs rising.
- 4. low inflation.
- 5. low interest rates.
- 6. high asset prices (stocks and real estate).
- 7. Wealth inequality.
If only it were that simple.
- Here are the dominos to low interest rates. {Not true. You omitted many other factors again, such as DEBT, regressive taxation, usury, illegal immigration, wars, government corruption, and other abuses}
- 1. cheap labor overseas. {that can be a good thing, provided usury and exploition is avoided}
- 2. flat wage growth in USA. {not just flat, but actually falling; that is caused by many abuses}
- 3. Lower unit labor costs rising. {with flat or falling wages?}
- 4. low inflation. {that can result from excessive DEBT too}
- 5. low interest rates. {that can result from excessive DEBT too; banks can’t create more money out of thin air if credit is too hard to get.}
- 6. high asset prices (stocks and real estate).{those are bubbles and economic instability created by they pyramid scheme monetary system.}
- 7. Wealth inequality.{there are many causes for this, including regressive taxation, wars, population, government corruption, government spending, DEBT, monetary systems, usruy, exploitation, globalization, illegal immigration, other abuses, etc.}
The following are riddled with inaccuracy.
d.a.n wrote: That’s what happened in the Great Depression, and that is what will happen again. The DEBT will (if it hasn’t already) grow out of control, because the people can not even pay the INTEREST on the debt, much less the principal debt.
Craig Holmes wrote:
there is no reason to pay the principal and America can easily pay the interest on the debt. It is only about 2% of GDP.
Nonsense.
Get yourself a credit card, only pay the INTEREST each month, and see what happens.
First of all, the PRINCIPAL remains constant; the DEBT is not being repaid.
But the situation today is worse, because the PRINCIPAL is growing, and the $9.2 Trillion National Debt is only part of the total $22 Trillion of federal debt, not to mention other massive liabilities (e.g. Social Security, Medicare, PBGC pensions, two wars in Iraq and Afghanistan, etc.).
Also, your statement is deceptive, because the real issue is the TOTAL INTEREST on the $9.2 Trillion National Debt.
That is, the TOTAL INTEREST on $9.2 Trillion over 30 years could easily be double or triple the principal $9.2 Trillion of current debt.
Also, the annual INTEREST is closer 3% of GDP (there is over $1 Billion per day in INTEREST on the $9.2 Trillion National Debt alone and GDP is about $13.5 Trillion).
d.a.n wrote: Likewise with the federal government … it can barely pay the INTEREST on the only the $9.2 Trillion National Debt, much less pay down the growing principalThat is insanity.Craig Holmes wrote: there is no reason to pay down the principal and the interest is easily paid for.
Again, get yourself a credit card, only pay the INTEREST each month, and see what happens.
Again, that isn’t good at all with other liabilities and projected shortalls in Social Security, Medicare, the PGBC pensions, and two wars in Iraq and Afghanistan.
d.a.n wrote: We have had millions of foreclosures for years, and it may last for several more years. This is how the banks convert money created out of thin air into real property and assets.Hmmmm … so you are OK with that usurious and dishonest practice?Craig Holmes wrote: About one percent of homeowners are in foreclosure. All of housing is about 4% of the economy. A small amount.
Also, it is not merely 4% this year, but inflation and losses and abuses, year after year after year.
It is the exponential nature of these abuses (e.g. see the CPI Inflation curve above).
d.a.n wrote: And the wealthy people buy up these properties at auctions and fire-sales (cheap), so the rich get richer, and everyone else gets poorer. It is like playing the game of Monopoly in which one person (the banker) can print all the money they want.False. Home ownership is higher only for the wealthy.Craig Holmes wrote: Exactly, that is why homeownership rates are so high, it’s because fewer people are owning homes.
Home ownership for middle and lower income people has decreased.
Craig Holmes wrote: Come on Dan. There is very high home ownership rates and 1% foreclosure.It is only increasing for the rich.
It is decreasing for middle and lower income people.
Especially now, with millions of foreclousres, year after year.
The banks are converting money created out of thin air into real property and assets, and the wealthy are buying it up at cheaper rates.
The usurious pyramid-scheme monetary system is dishonest and cheating many Americans.
Home ownership is higher only for the wealthy.
Home ownership for middle and lower income people has decreased.
Craig Holmes wrote: You are focusing on a very small part of the eocnomy to make your points (4%).Not true.
The focus should be on the BIG picture, and the exponential nature of inflation, foreclosures, and other abuses year after year after year.
It is the overall effect of many abuses, that did not all come about by mere coincidence, that are cheating MOST Americans, beating them down year after year.
And it is cavalier and callous to trivialize it.
These abuses are hammering people in the least wealthy 80% of the U.S. population that own only 17% of all wealth in the U.S.
This is why the disparity trend is worsening.
___WEALTH OWNED by 1% of U.S. Population____
100% + - - - - - - - - - -
095% + - - - - - - - - - -
090% + - - - - - - - - - -
085% + - - - - - - - - - -
080% + - - - - - -X- - - -
075% + - - - - - - - - - -
070% + - - -X- -X- X - - -
065% + - -X- -X- - -X- - -
060% +X- - - - - - - -X-X-
055% + -X- - - - - - - - -
050% + - - - - - - - - - -
045% + - - - - - - - - - -
040% + - - - - - - - - - -
035% + - - - - - - - - - -
030% + - - - - - - - - - -
025% + - - - - - - - - - -
020% + - - - - - - - - - -
015% + - - - - - - - - - -
010% + - - - - - - - - - -
005% + - - - - - - - - - -
000% +_____________________YEAR
______ 1 1 1 1 1 1 1 1 2 2
______ 9 9 9 9 9 9 9 9 0 0
______ 2 3 4 5 6 7 8 9 0 1
______ 0 0 5 0 5 0 5 0 0 0
1% of U.S. population owned 45% of all wealth in the Great Depression (1920s to 1940s).
1% of U.S. population owned 20% of all wealth in 1976.
1% of U.S. population owns 40% of all wealth in 2008 (never worse since the Great Depression).
Tens of millions that have lost their homes (present and past) due to usurious interest rates, predatory lending, a dishonest and usurious monetary system, and these other abuses.
Thus, your statements …
Craig Holmes wrote:… and …
“Americans on the whole have never been this wealthy”.
Craig Holmes wrote:
America as a whole has never been this rich, and it’s getting richer all the time. It’s a great time to be an American.
… are not true for most Americans (i.e. the 80% that own only 17% of all wealth in the U.S.).
Posted by: d.a.n at February 13, 2008 07:29 AM
Dan:
Less regressvie taxation, and less government spending, and other factors had much more to do with that narrowing wealth disparity between 1965 and 1976. The wealthy were taxed more, and the National Debt as a percentage of GDP was shrinking fast between 1945 and 1976.
You are just wrong on this.
You say less government spending helped narrow that gap. YOu are 100% wrong on that. Government spending increased during this time.
http://www.cbo.gov/ftpdoc.cfm?index=3521
Dan:
Do you understand why bond prices go up when interest rates go down?
Posted by: Craig Holmes at February 13, 2008 03:48 PMCraig Holmes wrote:You say less government spending helped narrow that gap. You are 100% wrong on that. Government spending increased during this time.I’m not wrong.
You misinterpreted and twisted the statement.
I wrote that there was less government spending between 1965-to-1976 (i.e. less than since 1976-to-2008), and less National Debt-to-GDP between 1965 and 1976 (i.e. less than since 1976-to-2008) most certainly helped narrow the wealth disparity gap up until 1976 in which the gap started to grow again, but the changes were also due to MANYother causes.
That should have been obvious, since government spending increases almost EVERY year.
The issue is less spending between 1965-to-1976 (gap closing) than between 1976-to-2008 (gap widening).
The issue is that the government has grown more bloated and wasteful since 1976.
The issue is that the government spends MORE now. That’s all.
The wealth disparity gap narrowed between 1965-to-1976 and then worsened from 1976-to-2008 due to MANY things:
- less regressive taxation between 1965-to-1976 than since 1976-to-2008;
- less federal government spending between 1965-to-1976 than since 1976-to-2008;
- less National Debt-to-GDP ratio between 1965-to-1976, than since 1976-to-2008;
- less federal government DEBT between 1965-to-1976, than since 1976-to-2008;
- less illegal immigration between 1965-to-1976, than since 1976-to-2008;
- less globalization (usury, exploitation of foreign labor, corpocrisy, corporatism, and unfair trade policies) between 1965 and 1976 than since 1976-to-2008;
- lesser degrees of other abuses that have steadily worsened since 1976-to-2008;
- also, it is much earlier in the stages of the monetary-system’s pyramid-scheme cycle between 1965-to-1976, than since 1976-to-2008 (i.e. as debt grows, the pyramid-scheme comes closer to collapse, until there is no more capacity for more debt);
Also, don’t forget, the total federal debt is actually MUCH worse now, and likely to get worse yet, since $12.8 trillion was borrowed and spent from Social Security over the past 30 years, the PBGC pensions are $450 Billion in the hole, and there are 2 wars ongoing at this moment in Iraq and Afghanistan. Since the Social Security surpluses were spent, Social Security and Medicare are pay-as-you-go, which is why the CBO projections are not a pretty picture, with a 77 million baby boomer bubble approaching.
Craig Holmes wrote: Do you understand why bond prices go up when interest rates go down?It’s an inverse (see-saw) relationship.
Previously purchased bonds with higher yield rates become more valuable when rates are lower on new bonds being sold.
Previously purchased bonds with lower yield rates become less valuable when rates are higher on new bonds being sold.
This is part of what is wrong with America.
It spends too much time playing with money, instead of working to produce value.
Dan:
Previously purchased bonds with lower yield rates become less valuable when rates are higher on new bonds being sold.
Same thing happens with stocks.
Inflation undermines the value.
This is part of what is wrong with America.
At some point you need to comment on what you think is right with America.
The issue is less spending between 1965-to-1976 (gap closing) than between 1976-to-2008 (gap widening). The issue is that the government has grown more bloated and wasteful since 1976. The issue is that the government spends MORE now. That’s all.
The truth is that government spending increased from 1965 to 1985, and has declined since then marginally.
1962 18.8
1965 17.2
1970 19.3
1975 21.3
1980 21.6
1985 22.9
1990 21.8
1995 20.7
2000 18.4
2001 18.4
2005 20.2
You would need to point out any connection between government spending increases and wealth distribution.
There is a direct inverse connection however between inflation and wealth distribution. High inflation directly effects wealth distribution as does deflation. Both bring the rich closer to the poor.
Dan:
So who owns most bonds?
You misinterpreted and twisted the statement. I wrote that there was less government spending between 1965-to-1976 (i.e. less than since 1976-to-2008), and less National Debt-to-GDP between 1965 and 1976 (i.e. less than since 1976-to-2008) most certainly helped narrow the wealth disparity gap up until 1976 in which the gap started to grow again, but the changes were also due to MANYother causes.Posted by: Craig Holmes at February 14, 2008 12:36 AM
d.a.n: wrote: Previously purchased bonds with lower yield rates become less valuable when rates are higher on new bonds being sold.The root problem is greed which invented usury.Craig Holmes wrote: Same thing happens with stocks. Inflation undermines the value.
Greed and usury led to inflation and economic instability.
Too many people running around trying to make money from money, instead of creating value.
d.a.n: wrote: This is part of what is wrong with America.Some good things have happened:Craig Holmes wrote: At some point you need to comment on what you think is right with America.
- (1) We got the U.S. Constitution.
- (2) We abolished slavery.
- (3) We have made progress against discrimination based on race, religion, color, ethnicity, gender, disabilities, etc.
There has been progress, but:
- (1) it comes painfully, and it is a bumpy ride,
- (2) It is 2.00 steps forward, and 1.99 steps backward.
- (3) We have been going backwards again for about 30 years due to these 10+ abuses.
d.a.n: wrote: The issue is less spending between 1965-to-1976 (gap closing) than between 1976-to-2008 (gap widening). [or even the equal 11 years after 1976]. The issue is that the government has grown more bloated and wasteful since 1976. The issue is that the government spends MORE now than then [despite the federal government spending as a percentage of GDP].Federal “government spending has “declined since” 1985?Craig Holmes wrote: The truth is that government spending increased from 1965 to 1985, and has declined since then marginally.
- 1962 18.8% (as a percentage of GDP)
- 1965 17.2
- 1970 19.3
- 1975 21.3
- 1980 21.6
- 1985 22.9
- 1990 21.8
- 1995 20.7
- 2000 18.4
- 2001 18.4
- 2005 20.2
Not true.
There was certainly no decline in the amount (magnitude) of spending (not even if adjusted for inflation).
The amount (magnitude) of Federal government spending has increased almost EVERY year (in magnitude) for over a century.
And as you show above, the federal government spending as a percentage of GDP has not varied much.
But even as a percentage of GDP, the percentage was higher in the 11 years between 1976-to-1987 than the 11 between 1965-to-1976.
Also, the National Debt has been increasing since 1985 (in magnitude and as a percentage of GDP).
And the total federal debt (including Social Security, Medicare, and other unfunded liabilities) have increased TOTAL federal debt significantly, since $12.8 Trillion was borrowed and spent from Social Secuirity (leaving it pay-as-you-go with an approaching 77 million baby boomer bubble. Not good.
d.a.n: wrote: The issue is less spending between 1965-to-1976 (gap closing) than between 1976-to-2008 (gap widening). The issue is that the government has grown more bloated and wasteful since 1976. The issue is that the government spends MORE now.That statement is still accurate, because the $9.2 Trillion National Debt does not include other massive and growing federal government spending and liabilities for Medicare and Social Security which are now pay-as-you-go, because the surpluses were borrowed and spent for decades.
Craig Holmes wrote: You would need to point out any connection between government spending increases and wealth distribution.It is not that simple.
It isn’t just spending, but how it is spent.
But the federal government is extremely bloated and wasteful, and getting worse.
Taxation is regressive.
The monetary system and banks are dishonest, usurious, and cheating people.
Craig Holmes wrote: There is a direct inverse connection however between inflation and wealth distribution. High inflation directly effects wealth distribution as does deflation. Both bring the rich closer to the poor.It is not that simple.
Inflation is economically destabilizing, which hurts the middle and lower income groups more, because they are less able to protect their savings and wages from the erosion of inflation.
But there are many other factors too.
Craig Holmes wrote: Dan: So who owns most bonds?Americans, China, Japan, Germany, France, Britain, etc., etc., etc.
About a third of it is owned by foreigners.
That is why the U.S.’s actions can be economically destabilizing world-wide.
Who ever owns them, they’re not going to be happy when their bonds become more and more worthless each day due to incessant inflation, and the government can’t borrow or print enough money to avoid the collapse of their debt burdened pyramid scheme ($48 Trillion nation-wide debt). Eventually, there will be no more capacity for more debt or playing with money to make more money. That can be said with confidence, not only because the system has an ethical problem, but because it is also a mathematical certainty. It may take several more decades, but the debt will grow and grow, until it can’t grow any more, and then it will collapse as it did in the Great Depression.
Again, there are many other factors (see list below) that affect weatlh distribution.
But the things those many factors all have in common is the root causes:
- greed and selfishness
- apathy, complacency, laziness, and ignorance
- irrational fear (to pull the party-lever rather than vote out the bums)
- misplaced partisan loyalties and wallowing in the partisan warfare;
- delusion and insanity;
From that comes the many manifestations of those root causes above:
- Usury and predatory lending isn’t enough for the greedy and their bought-and-paid-for incumbent politicians.
- And that still is not enough for these greedy people and their bought-and-paid-for incumbent politicians.
Thus, corrupt incumbent politicians in the government and a corrupt Supreme Court, in-league with their wealthy puppeteers, use eminent domain to confiscate more property (i.e. legal plunder). - And that still is not enough for these greedy people and their bought-and-paid-for incumbent politicians.
Thus, corrupt incumbent politicians despicably pit American citizens and illegal aliens against each other for profits from cheap labor, votes, and shifts the tax burden via a regressive tax system to the majority of middle-income and low-income Americans. - And that still is not enough for these greedy people and their bought-and-paid-for incumbent politicians.
The incumbent politicians force Americans to provide free medical and welfare to tens of millions of illegal aliens (despite thousands of Americans murdered annaully by illegal aliens; and 29% of all incarcerated in federal prisons are illegal aliens). - And that still is not enough for these greedy people and their bought-and-paid-for incumbent politicians.
The incumbent politicians give illegal aliens drivers licenses, education, and even let them vote in our elections. - And that still is not enough for these greedy people and their bought-and-paid-for incumbent politicians.
So the incumbent politicians try to import more skilled labor to depress wages further, via abused H-1B visas.
Bill Gates, the most wealthy person in the U.S. goes before Congress and tells blatant lies about starting salaries for H-1B workers so that he can get the H-1B Visa limits increased. - And that still is not enough for these greedy people and their bought-and-paid-for incumbent politicians.
The incumbent politicians make unfair trade deals, and trick Americans into training their replacements. - And that still is not enough for these greedy people and their bought-and-paid-for incumbent politicians.
Even if the economy is unstable, the wealthy will still be wealthy because they will still have land, minerals, oil, gold, silver, buildings, homes, corporations, etc., and they can easily move and live elsewhere. Also, 99.85% of all 200 million eligible voters are VASTLY out-spent by a very tiny 0.15% of all 200 million voters that make 83% of all federal campaign donations (of $200 or more). Thus, they can get their bought-and-paid-for politicians to lower their taxes, give ‘em pork-barrel, massive subsidies, and corporate welfare. - And that still is not enough for these greedy people and their bought-and-paid-for incumbent politicians.
The incumbent politicians, puppets of their wealthy puppeteers, send them billions in pork-barrel, graft, subsidies, and waste. - And that still is not enough for these greedy people and their bought-and-paid-for incumbent politicians.
The incumbent politicians put caps on Social Security. - And that still is not enough for these greedy people and their bought-and-paid-for incumbent politicians.
Many of the incumbent politicians want to kill Social Security with the massive federal debt. Some wealthy people want to kill Social Security even though there is a cap (e.g. $97,500). - And that still is not enough for these greedy people and their bought-and-paid-for incumbent politicians.
Those are only a few of the many manifestations of unchecked greed.
The government debt is passed on to most Americans via regressive taxation that lets the wealthy pay smaller income tax rates. And the banks make interest on money printed out of thin air, and then convert money created out of thin air into real property via confiscation of real property and assets via foreclosure and defaults. Cha-Ching!
And unfortunately, there are too many apathetic, complacent, blindly partisan loyal, lazy, irrationally fearful, and delusional voters that repeatedly reward the same bought-and-paid-for incumbent politicians (for all of the above) in the two-party duopoly in the Do-Nothing Congress with cu$hy re-election rates of 93%-to-99%.
Posted by: d.a.n at February 14, 2008 01:00 PMDan:
Not true. There was certainly no decline in the amount (magnitude) of spending (not even if adjusted for inflation). The amount (magnitude) of Federal government spending has increased almost EVERY year (in magnitude) for over a century. And as you show above, the federal government spending as a percentage of GDP has not varied much. But even as a percentage of GDP, the percentage was higher in the 11 years between 1976-to-1987 than the 11 between 1965-to-1976.
Much of this decline in expenses is due to a decrease in debt service. Debt service peaked at over 3% and has declined quite a bit since then.
Who owns bonds?
Who ever owns them, they’re not going to be happy when their bonds become more and more worthless each day due to incessant inflation, and the government can’t borrow or print enough money to avoid the collapse of their debt burdened pyramid scheme ($48 Trillion nation-wide debt). Eventually, there will be no more capacity for more debt or playing with money to make more money. That can be said with confidence, not only because the system has an ethical problem, but because it is also a mathematical certainty. It may take several more decades, but the debt will grow and grow, until it can’t grow any more, and then it will collapse as it did in the Great Depression.
As per your wealth inequity figures it’s the wealthy who own financial assets.
Your comments above are exactly why you see during the great depression wealth distribution narrowing ACCORDING TO YOUR CHART. And also during the 1970’s ACCORDING TO YOUR CHART, wealth distribution narrowing. It’s because high inflation and disinflation erodes bonds. (dis inflation erodes bonds because of forclosure).
Conclusion:
When financial assets do poorly those that own them do poorly. Since the wealthy own financial assets, they suffer the most, and wealth distribution contracts.
Conversely, in times when inflation is approaching moderation (going from high to low, or negative to slightly positive), financial assets, (stocks bonds) do well, and those who own them do well. Wealth inequity expands.
Since 1982, inflation has trended downward. This is good for financial assets. Those who own them have down very well. That is why Wealth distribution has expanded.
Improved fiscal policy is why America as a whole (or as a country) has never been this wealthy and why wealth inequity is now a major problem at the same time.
Craig Holmes wrote: Much of this decline in expenses is due to a decrease in debt service. Debt service peaked at over 3% and has declined quite a bit since then.Why should the banks receive any interest on money created out of thin air?
Especially when up to 90% of each new dollar created is money created out of thin air ?
Craig Holmes wrote: Who owns bonds? … As per your wealth inequity figures it’s the wealthy who own financial assets.Most perhaps, but NOT only the wealthy.
A large number of middle income people own some of those, and they will be hurt the worst as their value is eroded by incessant inflation.
So, not only the rich are hurt, and the rich do not have all of their assets tied up in bonds and cash, because the wealthy have real assets too, such as land, oil, real estate, buildings, homes, gold, silver, minerals, commodities, etc. And even if the economy tanks, most of the wealthy will still be confortabley wealthy.
Craig Holmes wrote: Your comments above are exactly why you see during the great depression wealth distribution narrowing ACCORDING TO YOUR CHART.Not sure I understand.
There were several reasons for the narrowing or widening, but one of the major reasons is the usurious, dishonest, unstable pyramid-scheme monetary system.
Not only is usury an obvious problem (e.g. where will the INTEREST come from to pay on the $48 Trillion nation-wide debt, much less the PRINCIPAL $48 Trillion of debt?), but the pyramid-scheme is doomed mathamatically. The other factors are the many other manifestations of greed, apathy, complacency, laziness, misplaced partisan loyalties, delusion, insanity, and ignorance, such as illegal immigration, unfair and regressive taxation, legal plunder (e.g. eminent domain abuse), lawlessness, plutocracy, election fraud, wars, too many middlemen (e.g. healthcare), etc.
Craig Holmes wrote: And also during the 1970’s ACCORDING TO YOUR CHART, wealth distribution narrowing. It’s because high inflation and disinflation erodes bonds. (dis inflation erodes bonds because of forclosure).It’s not that simple.
But higher inflation means more economic instability.
But low and incessant inflation, year after year (like the inverse of compound interest) is very damaging, and hurts the middle and lower income groups more.
Craig Holmes wrote: Conclusion: When financial assets do poorly those that own them do poorly. Since the wealthy own financial assets, they suffer the most, and wealth distribution contracts.The real conclusion is that the monetary system is dishonest, usurious, economically destabilizing, and a pyramid-scheme with a mathematical certainty of eventual collapse.
Financial assets? What is that? Stocks, bonds, loans, etc., … everyone trying to make money by playing with money.
The problem is usury, which requires money to earn INTEREST to avoid erosion by incessant inflation.
Thus, everyone is running around like chickens with their heads cut-off looking for some place to put their money so that it won’t be eroded by inflation.
So everyone runs to stocks and a stock market bubble is created that finally collapses.
So everyone flees to real-estate and a real-estate bubble is created that finally collapses.
So everyone flees to government bonds, and a bond market bubble is created that finally collapses.
So everyone flees to gold, and a gold bubble is created that finally collapses.
So everyone flees back to stocks and the process starts all over again …
It causes recessions, which come and go … until there is finally too much debt to continue, and the economy finally collapses as it did in the Great Depression.
And the banks clean up quite nicely, by converting money created out of thin into real property via confiscation of real property and assets via foreclosures and defaults.
And the wealthy will still be comfortably wealthy, because they have real assets, such as land, homes, gold, real-estate, minerals, oil, natural resources, buildings, etc., and they can afford to now buy up properties and assets at discounted prices at auctions and fire-sales. The rich get richer and everyone else gets poorer. That’s what we have now … millions of foreclosures, and banks confiscate the properties which essentially covnerts money printed out of thin air into real property and assets. And the vultures swoop in to buy up the properties at discounted prices.
That ugly cycle will continue as long as too many people fail to see that the dishonest, usurious pyramid-scheme monetary system, and these other abuses did not all come about by mere coincidence.
Craig Holmes wrote: Conversely, in times when inflation is approaching moderation (going from high to low, or negative to slightly positive), financial assets, (stocks bonds) do well, and those who own them do well. Wealth inequity expands.Yep. It is all due to economic instability due to inflation due to usury.
Craig Holmes wrote: Since 1982, inflation has trended downward.Ha! Well … it couldn’t go much higer could it?
Incessant inflation is still bad and economically destabilizing; creating bubble after bubble.
Craig Holmes wrote: This is good for financial assets. Those who own them have down very well. That is why Wealth distribution has expanded.Of course, lower inflation is better than higher inflation.
As for the wealth distribution, there are other factors too (e.g. taxes, illegal immigration, government corruption, debt, wars, education, etc., etc., etc.).
Taxes also become more regressive (e.g. Warren Buffet paid a 17.7% income tax rate on $46 Million in 2006, and his secretary pays 30% on $60K).
Craig Holmes wrote: Improved fiscal policy is why America as a whole (or as a country) has never been this wealthy and why wealth inequity is now a major problem at the same time.“Improved fiscal policy” ?
Just when there appeared to be some progress.
“Improved fiscal policy” … with $48 Trillion nation-wide debt ($157,377 per person)?
With $22 Trillion total Federal Debt ($72,131 per person)?
With $9.2 Trillion National Debt ($30,164 per person)?
With bubble after bubble?
With the wealth disparity having increased 20% from year 1980 to 2008 ?
With hundreds of billions of annual pork-barrel, corporate welfare, subsidies, fraud, and waste?
What are you smokin’ ?
Craig Holmes wrote: Improved fiscal policy is why America as a whole (or as a country) has never been this wealthy and why wealth inequity is now a major problem at the same time.You make it sound like things improved.
Thngs have not improved for most Americans in the last 30+ years, because incomes fell (especially considering more workers per house hold and the National Debt), home owner ship for middle and lower income people has declined, eduation has declined in quality and increased in cost, taxation has become more regressive, illegal immigration has worsened; shifting $70 Billion to $338 Billion to tax payers and displacing millions of jobs (not to mention thousands murdered annaully by illegal aliens), energy costs and vulnerabilities have worsened, the population increased 38%, National Debt as a percentage of GDP increased from 38% to 64% (and that isn’t all of the federal debt), and other abuses and manifestations of unchecked greed.
The rich got richer while most Americans went backwards, and it is largely due to these abuses, growing in number and severity.
And right this minute, the banks are confiscating homes by the millions per year (and record high auto repossessions too), converting money created out of thin air into real property and assets from foreclosures and defaults.
Cha-Ching!
Dan:
Most perhaps, but NOT only the wealthy. A large number of middle income people own some of those, and they will be hurt the worst as their value is eroded by incessant inflation. So, not only the rich are hurt, and the rich do not have all of their assets tied up in bonds and cash, because the wealthy have real assets too, such as land, oil, real estate, buildings, homes, gold, silver, minerals, commodities, etc. And even if the economy tanks, most of the wealthy will still be confortabley wealthy.
This is mostly true. These assets are owned pretty much along the percentages that you quote about wealth distribution.
Financial assets? What is that? Stocks, bonds, loans, etc., … everyone trying to make money by playing with money.
Stock is owning a portion of a company. Bond is owning the debt of a company or government.
Speaking of inflation you said:
Ha! Well … it couldn’t go much higer could it?
It could have gone far higher had not fed policy changed.
Of course, lower inflation is better than higher inflation.
It does huge things for asset prices. Let me illustrate.
lets say that the earnings yield on the S@P 500 is 10% and so is the 10 year Tbill rate. Let’s say you own 100,000 of stock. If interest rates fall in half like that have over the last 30 years, that means your asset should double in price. Generally though earnings grow at about the nominal rate of GDP. If earnings grew at the rate of gdp, one would predict that stock values would stay at about the same amount as a percentage of gdp. But because interest rates have fallen in half, one would predict that the stock market is twice the size at least relative to GDP as thirty years ago. It is absolutely huge.
By the way, the same numbers work for real estate. If a person can pay 1000/month and has a 12% loan (like in the 1970’s) at thirty years they can only buy about a $100,000 home. However if interest rates decline, that same person can buy a home worth $167,000. The problem is they are still ranked the same by income in the world, so they are competing across the board. So what happens is their current home inflates to the $167,000 figure. Since as you point out the wealthy are far more likely to own homes they were the ones who benefited from the interest rate decline.
Things we own that are not consumed like bonds, stocks cars etc are effected in large ways by interest rates.
Declining in half over the last 30 years is one strong reason why there has been a wealth effect that has separated the classes.
But again, if you look at your chart, deflation is as dangerous as high inflation.
We haven’t seen deflation since 1948 and 1956.
We have had incessant inflation since 1956.
People underestimate the compound (exponential) effect of inflation year after year.
3%-to-4% inflation doesn’t sound so bad, but every year … year after year, is more devastating than 3% inflation, followed by a year of 3% deflation, followed by a year of 3% inflation, followed by a year of 3% deflation … in which the value of the dollar over a decade is more stable.
But, the incessant inflation and debt is necessary to keep the pyramid scheme from collapsing. And today, nation-wide debt ($48 Trillion) is almost half of the nation-wide net-worth (if it is about $110 Trillion).
The problem with net worth is that it can change drastically during periods of drastic economic instability (e.g. recessions and depressions).
At any rate, we have been going backwards for the last 30 years, and it is largely due to these 10+ abuses.
Education is the key to change.
Voters will get their education the hard way or the smart way, but either way, they will have the government that they deserve.
Posted by: d.a.n at February 14, 2008 10:24 PMDan:
But, the incessant inflation and debt is necessary to keep the pyramid scheme from collapsing. And today, nation-wide debt ($48 Trillion) is almost half of the nation-wide net-worth (if it is about $110 Trillion).The problem with net worth is that it can change drastically during periods of drastic economic instability (e.g. recessions and depressions).
You make that first paragraph sound bad. It’s not. Net Worth has never been this high. The amount after debt is paid off is much higher than 30 years ago.
Also, debts are higher because we own more. When you buy more homes there are more mortgages. The more ownership, in society the more debts.
We could go back to 1978 and sell our cars, compters, homes etc, but productivity would decline as we sell our tools to pay off our debts.
Productivity now is far greater than 30 years ago, and is a huge improvment.
Posted by: Craig Holmes at February 15, 2008 03:32 PMd.a.n wrote: Paragraph1: But, the incessant inflation and debt is necessary to keep the pyramid scheme from collapsing. And today, nation-wide debt ($48 Trillion) is almost half of the nation-wide net-worth (if it is about $110 Trillion). Paragraph2: The problem with net worth is that it can change drastically during periods of drastic economic instability (e.g. recessions and depressions).Yes, it is bad because:Craig Holmes wrote: You make that first paragraph sound bad. It’s not. Net Worth has never been this high. The amount after debt is paid off is much higher than 30 years ago.
- (01) A tiny 2% of the U.S. population owns over half of the total wealth in the U.S., which is about equal to the nation-wide debt of $48 Trillion (assuming the nation’s net worth is actually $110 Trillion).
- (02) 80% of the U.S. population owns only 17% of all wealth ($18.7 Trillion), which is only 39% of the $48 Trillion of nation-wide debt.
- (03) The total nation-wide debt is too large ($48 Trillion Debt / $110 Trillion Net Worth) and the methods that will be used to reduce it won’t work, since the pyramid system is doomed.
- (04) The total nation-wide debt is 44% of total net worth ($48 Trillion Debt / $110 Trillion Net Worth)
- (05) The total nation-wide debt is 3.6 times the $13.4 Trillion GDP.
- (06) The $9.2 Trillion National Debt is being piled onto tax payers, and the tax system is regressive
- (07) Over one-third The $9.2 Trillion National Debt is foreign owned.
- (08) The public and personal debt load is too large. It is actually ridiculous to believe it can be managed. The pyramid monetary system is in trouble and that is bad.
- (09) Where will the money for the INTEREST on the $48 Trillion of debt come from (much less the money to pay down the PRINCIPAL)? Especially since it does not exist yet?
- (10) More money will have to be created out of thin air, to create more inflation, to erode the U.S. Dollar, to erode the debt (ever).
- (11) The total nation-wide debt has never been so large in magnitude, nor so large relative to GDP, nor so large relative to nation-wide net worth (ever).
- (12) The total federal debt ($22 Trillion) has never been so large in magnitude, nor so large relative to GDP, nation-wide net worth, or nation-wide income (ever).
Craig Holmes wrote: Net Worth has never been this high.And neither has the debt ever been so high (ever).
Again, A tiny 2% of the total U.S. population owns half of all wealth in the U.S., and 80% of the U.S. population owns only 17% of all weatlh in the U.S.
Craig Holmes wrote: The amount after debt is paid off is much higher than 30 years ago.The amount (magnitude) by itself is meaningless. I could say the $9.2 Trillion National Debt has never been larger EVER, and I would be correct, but as a percentage of GDP, and the total wealth of the nation, that would be false. However, today, the total federal debt of $22 Trillion is a much more serious issue, and the $9.2 Trillion National Debt is less than half of the total federal debt, and the situation is especially serious since the $12.8 Trillion money borrowed from Social Security made it pay-as-you-go just as a 77 million baby-boomer bubble is approaching too.
Also, the mere 2% of the U.S. population that own enough wealth to pay that $48 Trillion nation-wide debt are not likely to pay that debt.
You could tax the wealthy more, and it would still not be enough.
So, the situation is more serious than most people realize.
Craig Holmes wrote: Also, debts are higher because we own more.Again, that depends on the definition of “own”.
While a person may own things (e.g. cars, homes, etc.), they still may lose it unless they have paid it off in full, or have significant equity to borrow against it if necessary.
Today, million per year are learning that hard lesson.
Also, today, automobile repossessions are at record high levels too.
Craig Holmes wrote: When you buy more homes there are more mortgages. The more ownership, in society the more debts.Yes, more debt. Now we’re getting somewhere.
Craig Holmes wrote: We could go back to 1978 and sell our cars, compters, homes etc, but productivity would decline as we sell our tools to pay off our debts.Computers? In 1978? I don’t know many people that owned a personal computer in 1978.
Inflation was high in the late 1970s and early 1980s. That’s about the time things started to unravel in the U.S., and it has been unraveling ever since.
Craig Holmes wrote: Productivity now is far greater than 30 years ago, and is a huge improvment.Well, that’s all relative.
Productivity has increased largely due to technological advances.
But productivity has also increased due to other nefarious pressues too, such as illegal immigration, more workers per household with less income per household.
Again, things for most Americnans have been getting worse (not better) due to these 10+ abuses that are cheating most Americans.
Posted by: d.a.n at February 15, 2008 06:41 PMDan:
So things are better today than they were 30 years ago because of these 10+ improvements:
1. Lower inflation
2. Lower interest rates.
3. Lower tax rates.
4. Greater access to technology
5. Improvments in Longevity
6. Greater home ownership.
7. Higher competancy in Math (SAT
8. Higher median incomes.
9. Higher median networth for average families.
10. Lower unemployment.
11. Higher productivity.
12. Lower prices for consumer items. (Go walmart!!)
And of course many many more.
Posted by: Craig Holmes at February 15, 2008 10:16 PMCraig Holmes wrote: d.a.n: So things are better today than they were 30 years ago because of these 10+ improvements:Posted by: d.a.n at February 16, 2008 10:44 AM1. Lower inflation {the larger issue conveniently overlooked is incessant (exponential) inflation since 1956 (see chart); there has been ZERO deflation since 1956; a 1950 U.S. Dollar is now worth less than 11 cents; the monetary system is a dishonest, usurious, doomed pyramid scheme;}
2. Lower interest rates. {technically, there was double digit interest rates in the late 1970s and early 1980s which is within the past 30 years prior to 1978}
3. Lower tax rates. {ONLY for the wealth; taxes are more REGRESSIVE now than ever before, which is why Warren Buffet only paid a 17.7% income tax rate on $46 Million while his secretary paid a 30% income tax rate on a $60K salary;}
4. Greater access to technology {mostly only for the wealthy; and owning a cell phone is not necessarily good when it tethers people to their jobs 24/7}
5. Improvments in Longevity {not for 195,000 people killed every year by medical preventable mistakes}
6. Greater home ownership. {ONLY for the wealthy; home ownership has declined for the middle and lower income people; also, they don’t really own them until they are paid for, and more people simply have more debt than ever before in the last 30 years;}
7. Higher competancy in Math (SAT) {but still behind compared to many other nations (including some poorer nations); not competitive in a global economy;}
8. Higher median incomes. {FALSE: median incomes have declined since 1967 when the following are included: more workers per household, more national debt with more regressive taxation, more illegal immigration depressing wages, less affordable health care, 195,000 people killed annually by preventable medical mistakes, and many other abuses hammering and cheating Americnas; also, excluding the upper 2% that own most of all wealth in the U.S., incomes have fallen for more middle and lower income people;}
9. Higher median networth for average families. {FALSE: median networths have declined since 1967 when the following are included: homes are not owned, and home owners have less equity, foreclosures have been in the millions for several years now, more workers per household, yet lower income per household, more national debt with more regressive taxation, more illegal immigration depressing wages, less affordable health care, 195,000 people killed annually by preventable medical mistakes, and many other abuses hammering and cheating Americnas; and the weatlh disparity gap has increased drastically since 1976; in 1976, 1% of the population owned 20% of all wealth, and now 1% of the population owns 40% of all weatlh;}
10. Lower unemployment. {but it is now increasing, and for many decades, replacement jobs pay less than the previous jobs, and there are now more jobs in government than all manufacturing jobs in the U.S.}
11. Higher productivity. {TRUE: due to the disappearing 40 hour work week, people training their replacements in foreign countries, and then taking replacement jobs that pay less, more workers per household with lower income per household, people tethered to their jobs 24/7 via cell phones and computers (and pagers prior to that), etc., etc., etc.}
12. Lower prices for consumer items. (Go Walmart!!) And of course many many more.{FALSE: more like, Go China! Yet, healthcare costs are higher and unaffordable for tens of millions, millions are bankrupted by illness; education costs are now higher while the quality of education has declined, higher education (i.e. college) is becoming unaffordable, one third of young Americans are unable to locate the state of Louisiana, 48% between ages 18 and 24 can’t find the Mississippi river, and 60% can’t find Iraq on a world map, 47% can not find India on a world map, and 75% think English is the most widely spoken language world-wide, many Americans don’t know (or care) what the National Debt is, and 99% of Americans are totally unaware that their monetary system is nothing more than a dishonest, usurious pryamid scheme that was signed into existence by Woodrow Wilson in 1913, etc., etc., etc.}
{not enough to offset the more numerous abuses hammering and cheating most Americans for the past 30+ years; However, voters bear some responsibility, since too many whine and complain about corrupt government, but repeatedly reward incumbent politicians in do-nothing Congress with 93% to 99% re-election rates since year 1980;}
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