USA Debt Crisis

[counter_violent]

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.

U gotta be fookin kiddin me You aint got a clue what a big tax bill is.

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.

Wot for, so they can go through Uni roll up some debt and finally get a job as third in line to the assistant manager at maccy D's I mean really, wot is the point

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

I don't doubt it for a second.

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:

 

[new_trader]

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...

This is nothing but brainwashed political rhetoric. It’s easy for you to say ‘keep interest rates low’ without actually explaining the mechanism used to achieve this. Perhaps you should research debt monetization and the consequences.

I have no doubt the Bank of England will follow your disastrous advice because it is politically expedient and that is why I am investing the greatest majority of my money outside of the U.K. It is a testimony to how confident I am the bleeding heart socialistic policies that you enthusiastically support will destroy this country.

I am now done with this thread because any more time spent trying to educate you is a dead investment and I like to see a return for my time and money.

 

[JRP2891]

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).

Please tell me what good the Fed and other central banks have done then, other than continually intervene in the markets making the problems even worse? In their current form, central banks should be abolished, however if they removed all market intervention operations, and remain there solely as a lender of last resort at VERY high interest rates, then that could be a possibility.

Since the Fed was created in 1913, the dollar has lost 96% of it's value. They've got every crisis response wrong - low interest rates which have led to malinvestments that exacerbate each recession with increasing severity, money printing which leads to asset inflation and the said depreciation of the dollar in six-pack Joe's pocket - double whammy loss of purchasing power: high energy and raw material costs (hard asset inflation) coupled with a falling dollar....does this sound like a central bank improving anyone's standards of living other than the bankers at the top who are receiving all the freshly printed money?


As for the SNB:

In July 2011, it was revealed that the SNB had suffered an accumulated loss of US$36 billion in the 18 months through June due to intervention in the currency markets to stem the rise of the franc - an utter failure - a loss that equaled 7.5% of GDP.

 

[cr6196]

Please tell me what good the Fed and other central banks have done then, other than continually intervene in the markets making the problems even worse? In their current form, central banks should be abolished, however if they removed all market intervention operations, and remain there solely as a lender of last resort at VERY high interest rates, then that could be a possibility.

Since the Fed was created in 1913, the dollar has lost 96% of it's value. They've got every crisis response wrong - low interest rates which have led to malinvestments that exacerbate each recession with increasing severity, money printing which leads to asset inflation and the said depreciation of the dollar in six-pack Joe's pocket - double whammy loss of purchasing power: high energy and raw material costs (hard asset inflation) coupled with a falling dollar....does this sound like a central bank improving anyone's standards of living other than the bankers at the top who are receiving all the freshly printed money?


As for the SNB:

In July 2011, it was revealed that the SNB had suffered an accumulated loss of US$36 billion in the 18 months through June due to intervention in the currency markets to stem the rise of the franc - an utter failure - a loss that equaled 7.5% of GDP.

Well if you look at the times where the Fed didn't do anything and the time before it existed then you would have to conclude that it would have been worse without them. Again, what they have done is supply reserves to where they are needed rather than reserves getting stuck where they are not. The reason why the dollar has lost its value is mainly because of wars not policy (Indeed, historically, the Fed has tried to defend against erosion in purchasing power whereas politicians/Treasury have been attacking it). Also, the Greenspan/Bernanke put is something very new and the only Fed Chairman who remotely fits your view of actively seeking inflation is Arthur Burns (even then that isn't based on fact but speculation). Look at McChesney Martin who throughout his term was accused of exactly the opposite of what your saying now. In short, the Fed has very little to do with purchasing power and when it did, it was because politicans gave it little choice. Its also quite strange to be complaining about inflation now when we the past thirty years have seen the most moderate inflation since records began. Look at the FRASER database at the St. Louis Fed instead of watching Glen Beck or wherever these views have been copied from.

You also make the completely erroneous (but populist) suggestion that open market operations are the most damaging when in reality these are the operation most subject to supply and demand as banks make decisions about their liquidity positions. Surely your example of the SNB highlights this. The idea of a penalty discount rate (unsuprisingly) isn't new either...

Remember as well the US isn't in a bubble, US rates were low because of excess saving somewhere else. And as I said before interest rates are only one dimension of savings/investment. Raising rates, at this point, doesn't achieve anything with $1.6tr of excess reserves apart from produce more saving and another recession. Abolishing central banks would mean that banks have total power over credit creation. Considering the recent crisis, does that sound like a good idea?

 

[scose-no-doubt]

They've got every crisis response wrong - low interest rates which have led to malinvestments that exacerbate each recession with increasing severity, money printing which leads to asset inflation and the said depreciation of the dollar in six-pack Joe's pocket - double whammy loss of purchasing power: high energy and raw material costs (hard asset inflation) coupled with a falling dollar....does this sound like a central bank improving anyone's standards of living other than the bankers at the top who are receiving all the freshly printed money?

You seem to know a lot about what would have happened had the CBs not stepped in. One day, if you're not too busy, can I come around and have a look at your what if machine?

 

[Splitlink]

You seem to know a lot about what would have happened had the CBs not stepped in. One day, if you're not to busy, can I come around and have a look at your what if machine.

Would you say that Europe and the Euro does not need a central bank to defend its currency, with 27 member states (admitted, not all of them are in the Euro, but most of them are)? I'd say that without one the free market would be picking over the carcass by now.

If it is true that Europe needs a disciplinary body, then so do all the other states, IMO.

 

[neil]

This am the Euro appreciated against the Dollar ?

 

[scose-no-doubt]

I agree.

All of this free market stuff that is being argued here is based on the theoretical perfect economic world where everything auto-adjusts and balances nicely. We don't have it now and we never will.

 

[Atilla]

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.

This is nothing but brainwashed political rhetoric. It’s easy for you to say ‘keep interest rates low’ without actually explaining the mechanism used to achieve this. Perhaps you should research debt monetization and the consequences.

I have no doubt the Bank of England will follow your disastrous advice because it is politically expedient and that is why I am investing the greatest majority of my money outside of the U.K. It is a testimony to how confident I am the bleeding heart socialistic policies that you enthusiastically support will destroy this country.

I am now done with this thread because any more time spent trying to educate you is a dead investment and I like to see a return for my time and money.

You for real? That is pure economics! Political rhetoric???? Get out of there - no way is there any politics at all. More like you do not give any consideration to your prescribed solution. Raise interest rates.

Interest rates are very blunt inaccurate too. Monetarists just like Keynesians failed miserably. Money Supply elasticity is debatable and is not necessary responsive at all. Especially in recessionary or inflationary periods.

You can't argue or defend your stance so you just walk away from reality and keep banging your drum about gold and fiat currencies (which I do agree on implementing as a longer term solution).

Bon voyageu

 

[JRP2891]

Remember as well the US isn't in a bubble

Dave, our views are poles apart, and frankly i can't be bothered to write an essay, but it's safe to say i disagree with you.

 

[Splitlink]

So where are we going with this debate? I'm beginning to wonder who is on whose side.

 

[scose-no-doubt]

Everyone vs Atilla

 

[JRP2891]

You seem to know a lot about what would have happened had the CBs not stepped in. One day, if you're not too busy, can I come around and have a look at your what if machine?

Silly boy.

 

[Atilla]

Everyone vs Atilla

Ahhh thanks dude.

Bring it on come on... I'll take you all on... Have some more...

1. Raise tax
2. Cut spending
3. inflation > interest rates

Debt payed off in no time...


You know it makes perfect sense... :smart:

 

[Splitlink]

Do you know what I think? That the conservatives will get everything fairly decent by the next elections or, shall we be generous and say the election after that, then Labour will come in and the whole cycle will start again.

We are all suckers for punishment. What we are nagging about here does not matter a damn because we have no real say unless one of us is a future PM. You can count me out of that possibility.

So I think that I will try the free mrket and see what I can make there.

 

[cr6196]

Dave, our views are poles apart, and frankly i can't be bothered to write an essay, but it's safe to say i disagree with you.

I don't understand, your taking that quote completely out of context...i am not taking about financial bubbles, I was saying bubble in the sense of seperation from outside events (and I was saying that the US isn't in a bubble in that sense as well so your interpretation is unbelievably wrong...i actually don't understand how its possible to be that wrong as if you thought I was talking about financial bubbles then my statement agrees with you as I said the US wan't in a bubble...so you must have realized I was talking about something else then took my quote out of context then misunderstood it). I would also listen to scose, as he points the logical absurdity of your "proof".

Also, my point is that just saying there is a "bubble" massively oversimplifies what is happening atm. Credit growth and the money multiplier atm in the US (and in the UK) are going nowhere but there is a massive problem with capital flows and exchange rates. Doesn't it confuse you how some parts of the theory aren't fitting together? The bubbles that should be happening in the US are popping in dollar peg countries (HKD/SGD). In other words, the theory goes out the window and you have to interpret it as you go. Low interest rates=bad/high interest rates=good (that does a massive diservice to the economists who are quoted as having that view as well) is just unbelievably naive on basically every count (esp. when there are excess savings through most of the economy)

my name isn't Dave either...

 

[Atilla]

Do you know what I think? That the conservatives will get everything fairly decent by the next elections or, shall we be generous and say the election after that, then Labour will come in and the whole cycle will start again.

We are all suckers for punishment. What we are nagging about here does not matter a damn because we have no real say unless one of us is a future PM. You can count me out of that possibility.

So I think that I will try the free mrket and see what I can make there.

If the big Republicans or tea party followers ever get elected in the US - the US will become a well and trully a stuffed hippo...

You can just imagine can't you... What we need is more of Ragean and Bushes policies. You know those two great leaders of our time...

 

[Atilla]

Reagan was a great leader, at least for the Americans. Bush should have cut taxes more, I agree - for that and for other reasons he was not a great leader.

Personally I think Reagan was a great leader too. I did like him. Politically and diplomatically he was very good indeed.

His policies were all wrong. One of the key reasons is the ballooning of Pentagon and military spending and the culmination of those policies in exercising that power in kicking ass all over the world.

He presided over a period of global growth. Not necessarily anything to do with cutting taxes. Dellusional grandeur mate. Political capital imho.

Moreover, Russia's bad policy re:Afghanistan and ultimate destructions of its command structured economy would have come to a natural conclusion like China - and European satellite communist states.


I beg to differ re:tax cuts being the reason.


In some respects I think when countries have bad leaders it is better to leave them to it. Why sell capitalism and free market economies to Russia and China? Wouldn't it not be better to leave them in their decadent command structured production methods. Less competition. It's like selling your secret weapon. It's like cloning the goose that lays the golden eggs...

As for Bush not cutting taxes enough... The World is Never enough is it?


I always wonder how Bush Jnr ever got elected. Well greased oily boy... How much more tax brake can these oil giants want. The White House as may as well write them a subsidy... White House + Oil giants = true democracy. Throw in some help from intelligence services (debts returned to daddy) - and brothers dodgy counting methods and hey presto = true democracy.


Legacy of US debt goes back to coming off the gold standard over Vietnam & precipitated by desire for world domination.

I reckon The World is Never Enough is apt title eh? Where was James Bond to stop the madness...

 

[Successful_Trader]

In hindsight, I don't think Bush was that bad of a president... I absolutely despised him when he was in power, but compared to Obama his record doesn't look that bad. At least he always said what he thought and rarely sugarcoated things, unlike our current president.

 

[Atilla]

In hindsight, I don't think Bush was that bad of a president... I absolutely despised him when he was in power, but compared to Obama his record doesn't look that bad. At least he always said what he thought and rarely sugarcoated things, unlike our current president.

What would you like Obama to do?