USA Debt Crisis

[counter_violent]

Govt's alone cannot get the west out of it's problems. It's only the labour of the people that can, but they only can if govt's free them up and incentivise them to do so.

After Thatcher cleared out the dead wood she then set about encouraging and incentivising. The change in mood of the population was quite staggering as millions picked up the baton and ran with it.

 

[Splitlink]

Btw. For decades last century the USA was the largest manufacturer in the world. It also had the highest standard of living, the highest wages, produced the highest quality goods, was the largest creditor nation, had some of the lowest taxes/regulation and had a strong currency. Strange that.

But they were the originators of the idea of getting foreigners to finance their debt and they have gone over the top with what was a good idea but killed to death. All manufacuring nations have allowed their strong unions to get lower paid foreigners to finance their high wages with low cost raw materials.. The unions have got as big a share of the blame as anyone. In another thread we spoke about tribalism. This is a perfect example of dog eat dog that has come home to haunt us.

 

[JRP2891]

If you make an effort to understand that interest rates should be determined by the free market and the natural force of supply and demand you will at least be able to see why the policy the bank of England is following is only doing more long term damage. Low interest rates cause people to borrow, consume, and speculate at the expense of saving, producing and investing. The determinative factors for interest rates should be the supply of savings available to lend and the demand for money by people and business who want to borrow.

 

[Splitlink]

How do we determine what the free market rate of interest is, when it can change so rapidly in the free market? The BOE has to fix a rate of interest. What is it to be?

Is it not true that the free market speculates while the BOE has to get it right according to what is good for the country's economic situation? That is, surely, why there are runs on bonds, as in Spain.

At present, I am shorting the euro against the pound. Right or wrong does not matter in this case. I am speculating. I am part of the free market. I am only acting on what I think, in my own interest, not the UK's or Europes's

 

[scose-no-doubt]

Al this free market blah blah blah nonsense.

Since when have we had a free market? The concept of a free market is about as plausible as perfect competition or strong form EMH.

 

[counter_violent]

Al this free market blah blah blah nonsense.

Since when have we had a free market? The concept of a free market is about as plausible as perfect competition or strong form EMH.

Exactly and until govt's stop tinkering and trying to influence free market, we won't get anywhere.

 

[JRP2891]

How do we determine what the free market rate of interest is, when it can change so rapidly in the free market? The BOE has to fix a rate of interest. What is it to be?

Is it not true that the free market speculates while the BOE has to get it right according to what is good for the country's economic situation? That is, surely, why there are runs on bonds, as in Spain.

At present, I am shorting the euro against the pound. Right or wrong does not matter in this case. I am speculating. I am part of the free market. I am only acting on what I think, in my own interest, not the UK's or Europes's

That's quite the point, the BoE is nothing but a hindrance. Abolish central banks completely and let the markets decide rates. Countries which have been running their houses correctly will then be rewarded with low rates at which to finance their debt.

 

[Splitlink]

That's quite the point, the BoE is nothing but a hindrance. Abolish central banks completely and let the markets decide rates. Countries which have been running their houses correctly will then be rewarded with low rates at which to finance their debt.

I'm not sure that I agree with that.

 

[Atilla]

Exactly and until govt's stop tinkering and trying to influence free market, we won't get anywhere.

Does your sentiments apply to;

1. Bank bailouts
2. Military spending
3. Financing wars

 

[YouAreNotFree]

But they were the originators of the idea of getting foreigners to finance their debt and they have gone over the top with what was a good idea but killed to death. All manufacuring nations have allowed their strong unions to get lower paid foreigners to finance their high wages with low cost raw materials.. The unions have got as big a share of the blame as anyone. In another thread we spoke about tribalism. This is a perfect example of dog eat dog that has come home to haunt us.

Unions, bless em, where do you start with these parasites?

A friend of my parents is in his 60's and until a few years ago was a union rep at Corus railway repair plant. He is die hard labour, thinks Maggie is the devil blah, blah, blah. Boy can I work him over well One of these days I might give him a coronary God forbid. I really should stop.

It's no surprise that in the West, unions are most prevalent in the public sector.

How do we determine what the free market rate of interest is, when it can change so rapidly in the free market? The BOE has to fix a rate of interest. What is it to be?

Is it not true that the free market speculates while the BOE has to get it right according to what is good for the country's economic situation? That is, surely, why there are runs on bonds, as in Spain.

At present, I am shorting the euro against the pound. Right or wrong does not matter in this case. I am speculating. I am part of the free market. I am only acting on what I think, in my own interest, not the UK's or Europes's

Interest rates in the free market can change very quickly, but ask why? Is the market irrational, stupid, clueless? Or is it a case of reacting to the uncertainty of a basket case economy created by endless idiotic meddling at every level and not knowing what crack-pot government action is coming next? What better way to determine risk than thousands of market players risking their own, or their companies money? If the risk assigned to Spanish bonds was out of whack you can be sure it would only be temporary as the opportunity would be snapped up by others.

Central banks are not the independent stewards of monetary policy we are told. They are political shills. Why anyone would trust them with determining just what is best for an economy is beyond me. They almost never, ever, ever get anything right. Even so, as far as I am aware their mandate is not even to micro manage the economy, it is price stability, which they call around 2% inflation. In that regard they are an epic failure. How many years have we heard from Merv that the price inflation above 2% is 'temporary'?

 

[scose-no-doubt]

Is the market irrational, stupid, clueless?

No but it's full of cronyism and corruption which is as big a problem as idiotic government, no?

How many years have we heard from Merv that the price inflation above 2% is 'temporary'?

lol

 

[new_trader]

The reality is that you are all focused on the wrong problems such as tax cuts spending cuts, etc

The real problem is that over the last 20 years the West has actively caused the destruction of their own manufacturing sector with the result that we are now confronted with massive unemployment or under employment. One country that I know of considers a person as employed (that is, NOT unemployed) if they work for ONE hour per week. The unemployment figures bandied about by various Western governments understate real unemployment levels by a factor of 2.5 to 3.

The manufacturing sector has almost universally been moved to China with the result being a 'hollowing out' of Western economies. Instead of producing things of value, we in the West are producing Facebook and Twitter where everyone talks about THEMSELVES to a nauseating degree. (Its all about 'Look at me!' The Western world is becoming ultra narcissistic and self indulgent ).

The next 5-10 years will see a RAPID and MASSIVE drop in wealth and living standards in the West as the wealth moves to the East and the 1.3 billion Chinese see a substantial increase in their living standards. The US has Trillions in debt and the US taxpayers will be paying it off through a lower standard of living.

Maybe you should read my posts more closely. I have said numerous times that the UK needs to focus on production and investment.

 

[Splitlink]

Unions, bless em, where do you start with these parasites?

A friend of my parents is in his 60's and until a few years ago was a union rep at Corus railway repair plant. He is die hard labour, thinks Maggie is the devil blah, blah, blah. Boy can I work him over well One of these days I might give him a coronary God forbid. I really should stop.

It's no surprise that in the West, unions are most prevalent in the public sector.








Interest rates in the free market can change very quickly, but ask why? Is the market irrational, stupid, clueless? Or is it a case of reacting to the uncertainty of a basket case economy created by endless idiotic meddling at every level and not knowing what crack-pot government action is coming next? What better way to determine risk than thousands of market players risking their own, or their companies money? If the risk assigned to Spanish bonds was out of whack you can be sure it would only be temporary as the opportunity would be snapped up by others.

Central banks are not the independent stewards of monetary policy we are told. They are political shills. Why anyone would trust them with determining just what is best for an economy is beyond me. They almost never, ever, ever get anything right. Even so, as far as I am aware their mandate is not even to micro manage the economy, it is price stability, which they call around 2% inflation. In that regard they are an epic failure. How many years have we heard from Merv that the price inflation above 2% is 'temporary'?

Speculators will ruin a country. I do not believe that currency speculators are any less parasitical than your dad's union friend but I suppose that it all depends on whose side you are on!

:cheers: Here's to Uncle Joe and George Soros!

 

[cr6196]

That's quite the point, the BoE is nothing but a hindrance. Abolish central banks completely and let the markets decide rates. Countries which have been running their houses correctly will then be rewarded with low rates at which to finance their debt.

That has already been tried. Read about what happened in the US banking system before the Federal Reserve Act. The brief version is that when stuff goes wrong, it goes very very very wrong without a central bank. Reserves get trapped in certain banks and money is always in the wrong place at the wrong time. The end result is that the whole banking system ends up in the hands of powerful bankers with no accountabiilty. Its pretty unbelievable that people still think central banks aren't needed in the 21st century. Some amazingly crackpot ideas here tho.

I would add that people need to consider that the interest rate elasticity of investment/consumption/savings isn't constant so interest rates really aren't really the whole story with monetary policy. In other words, if you look at ONS Financial Statistics you see that low interest rates aren't really doing anything. The money multipler is low and the interest rate elasticity for saving/investment is probablly close to 0. In other words, your focused on price without quantity (monetary econ isn't like other econ as short run supply isn't vertical). As I said before, there is little evidence of the rampant speculation that seems to concern people on here so much (Indeed, according to history, the economy has been bailed out multiple times by rises in asset prices against general recession i.e 1981).

 

[Splitlink]

I am not sure that I have that straight.

you say:

The brief version is that when stuff goes wrong, it goes very very very wrong without a central bank. Reserves get trapped in certain banks and money is always in the wrong place at the wrong time. The end result is that the whole banking system ends up in the hands of powerful bankers with no accountabiilty.

and then:

Its pretty unbelievable that people still think central banks are needed in the 21st century.

 

[Atilla]

There is so much noise on this thread that I don't think people know half the stuff they are talking about or the consequences of what they are saying...

1. People don't know don't care about causes of twin deficits.
2. They are quite prepared to kick the **** out of anyone below them.
3. They can't see beyond their noses.


Raise interest rates - OMG!

Do you guys know what that will cost the government and just how many people will lose homes and jobs???

Then how can anyone pay off the debt?

ABSOLUTELY BEGGARS BELIEF...

I'm not going to hold back. Those who support a policy of reducing taxes and raising interest rates - you know who you are. You are morons...

Morons with no regard to your fellow man... Very sad


Rant over.

 

[counter_violent]

There is so much noise on this thread that I don't think people know half the stuff they are talking about or the consequences of what they are saying...

1. People don't know don't care about causes of twin deficits.
2. They are quite prepared to kick the **** out of anyone below them.
3. They can't see beyond their noses.


Raise interest rates - OMG!

Do you guys know what that will cost the government and just how many people will lose homes and jobs???

Then how can anyone pay off the debt?

ABSOLUTELY BEGGARS BELIEF...

I'm not going to hold back. Those who support a policy of reducing taxes and raising interest rates - you know who you are. You are morons...

Morons with no regard to your fellow man... Very sad


Rant over.

Where does real wealth flow from and where does it go to ? Not the micky mouse printed folding stuff !

I'll give you a clue...it doesn't flow to countries with fekkin 0% interest rate policies.

Pains me to say it but what a waste of tax payers money it was trying to educate you.

 

[new_trader]

There is so much noise on this thread that I don't think people know half the stuff they are talking about or the consequences of what they are saying...

1. People don't know don't care about causes of twin deficits.
2. They are quite prepared to kick the **** out of anyone below them.
3. They can't see beyond their noses.


Raise interest rates - OMG!

Do you guys know what that will cost the government and just how many people will lose homes and jobs???

Then how can anyone pay off the debt?

ABSOLUTELY BEGGARS BELIEF...

I'm not going to hold back. Those who support a policy of reducing taxes and raising interest rates - you know who you are. You are morons...

Morons with no regard to your fellow man... Very sad


Rant over.

The welfare state supporter finally shows his true colours. Compassion has no place in economics but it certainly explains why you have such utterly bizarre and illogical theories and solutions to the UK's problems.

 

[Atilla]

Where does real wealth flow from and where does it go to ? Not the micky mouse printed folding stuff !

I'll give you a clue...it doesn't flow to countries with fekkin 0% interest rate policies.

Pains me to say it but what a waste of tax payers money it was trying to educate you.

Really now? tut tut tut...

If you see how much tax I pay from my salary - it would make your eyes water.
Not to mention losing child benefit very soon for two children + being a high rate payer.

But you know precisely because I got a state education - I'm happy to pay more tax for all the youngsters from poor families coming up the ranks.

Impecable integrity... Upright citizen... Much in demand member of the labour force. What more can I possibly say...

I wouldn't think of pain for my superb development dear CV. You should be leaping up and down, jumping with joy mate... :clap::clap::clap:

 

[Atilla]

The welfare state supporter finally shows his true colours. Compassion has no place in economics but it certainly explains why you have such utterly bizarre and illogical theories and solutions to the UK's problems.

Here NT me amigo, let's pley pros and cons... I'll go first...

1. Raising interest rates would raise the pound. Making imports cheaper and exports dearer. Exporters will further lose markets in tough markets. Competitors will edge forward.

2. It will raise the burden on business trying to stay afloat.

3. Business will postpone investment finding it more costly to borrow. Return on Investment will take longer to achieve.

4. It will create homelessness and increase possessions by the banks. Many households already squeezed by rising fuel and commodity prices.

5. It will raise the cost of servicing public debt.

6. It will raise unemployment and further reduce tax revenues and increase public debt.

How's about that for 6 then? Your turn...

PS. Note no reference to social issues, deprivation and misery... Pure finance...