Where do you get 10% for the CPI? Even if you include the volatile food and energy the CPI for last year was 3.24% no where near the 10% you made up. Also people didn’t forget about risk its just with so much money flowing around in the system people have looked for higher returns which pushed down interest rates for all investments even the risky ones.
Please check the dollar index. The dollar is at an all time low. Record highs for the Euro, a 30 year high for the Canadian dollar, and the Swiss Franc is also approaching an all time high. You don't hit an all time low against a basket of the 6 major currencies, and not have a dollar crisis. You haven't seen the high interest rates. Yet. They come after the inflation. Helicopter Bernanke still thinks he can fight an economic fire by pouring more gasoline on it. Well then you would know that core CPI excludes major consumer product groups from the numbers. Specifically food and energy, which are the two groups most likely to show a currency devaluation. China is a socialist country. But they were broke and couldn't afford to militarize. They have now started buying weapons, mostly from the Russians because the burden of feeding the poorest farmers has been assumed by opening the economy to western investment, which uses them as cheap labor. The workers do not profit, or make a wage to save, they are merely trained, fed and housed. The west gets cheap goods. And the Chinese government is off the hook for education or welfare.
http://www.nowandfutures.com/cpi_lie.html No, please read up on the roaring 20's which led to the great depression. Cheap and easy credit always creates mal-investment. Which leads to bankruptcy. With enough bankruptcies, you have a recession. With a lot, a depression. http://en.wikipedia.org/wiki/Great_Depression People haven't even seen anywhere near the bottom of the mortgage crisis right now, the 2006 ARMs readjust next year, and a lot of people are going to lose their homes. That's what happens with artificially low interest rates and speculative credit.
It depends what our return on debt it. If it’s higher then what we pay for borrowing it then yes. It’s a good deal. Also more jobs have been replaced by technology then those that have been shipped overseas. In fact American gets more jobs insourced to then it outsources to other countries. http://www.heritage.org/Research/TradeandForeignAid/wm467.cfm#_ftn5 As for a healthy economy you have one part right low inflation, but that won’t be achieved using precious metals. A real healthy economy will have 1. Low inflation. Which can be controlled through interest rates, I don’t believe we have run away inflation, the majority of our inflation risk is because of rising commodity prices because of growing global demand. 2. Growing GDP. As long as your economy expands and a health rate you have a healthy economy. Whether its an agriculture economy, manufacturing economy or a service economy. How healthy of an economy would it be if we had a large manufacturing/production base but had no customers to buy our goods since they were more expensive when compared to other competitive goods sold from other countries. How long would those people have jobs? My guess not too long.
It’s not a crisis just like in 2002 when the dollar reached an all time high against the Euro and Canadian dollar it wasn’t a crisis for them then. Food would not show a currency devaluation since the majority of food consumed in the US is produced in the US. While energy would show the effects of a weaker dollar, since august the dollar is down 8% while the price of oil there are other issues that effect the dollar. Also say that the oil falls from $100 a barrel now to $60 a barrel in February. Does that mean inflation has fallen by 40%. Using such volatile groups such as food and energy can hide inflation or amplify it depending on the commodity market. Also a recession (slowing of the economy) leads to bankruptcies not the other way around. One I looked at that page and I still don’t see where 10% comes from. I see what they think it is (6.6%) and even that is suspect since they “think†its 6.6% with giving a reason at how they came to that number. Also they don’t know how to value hosting since they talk about Median US house value but for inflation purposes the government uses rent prices not house values. Except the depression didn’t start out as a depression yes there was a correction in the stock market but the economy when into a depression once the banks stopped all lending and companies couldn’t get the required capital to perform business functions. Also this notion that bankruptcies create recession is false. A person or company can get bankrupt and not affect the economy one bit. If the economy slows down or crashes then people who lose these jobs or companies that can’t sell their products go bankrupt. Also even if you get ride of the fed you’ll still have excess credit in the system because Japan is giving almost interest free loans out and you have high saving rates in the east looking for higher returns.
I think insourcing is bad as well, especially when you have foreigners flying into the country on H1B Visas and working for dirt cheap wages, then getting on a plane and flying home. Again, this is just one more thing that undermines our economy. Think about it. Instead of companies hiring Americans to do jobs, Americans who will spend their money in OUR economy, companies fly in workers, pay them, and then the workers go home, taking money OUT of our economy, and spending at home, bringing money into their own country. Americans get put out of jobs, companies save a killing, and money flows out of the country. It sounds like the only entity who benefits from this is the corporation. Everyone else loses. To me insourcing is just as bad as outsourcing, it only benefits a handful of people. As Guerilla has said, the problem with controlling interest rates is that you have an economy that is managed by one entity, in our case the Fed. Instead of the market being left to itself, you have someone managing it. To me this is dangerous, because humans are susceptible to corruption, and when you have a small group of people(The Fed), who manage interest, it is only inevitable that they will manage the economy in a way that benefits themselves and Wall Street. By having a true free market economy that is not managed by any entity, it is fair to everyone. You're right when you say that a strong manufacturing base means nothing without consumers who can afford the goods produced, but when you outsource jobs to foreign countries, or you insource jobs, you destroy your manufacturing base, and you leave a lot of people unemployed at the same time. So not only do we have a "managed" economy, where a Central Bank determines interest rates, and can print money when they want, you also have an economy where jobs are consistently being done by immigrants, laying off American workers and destroying the manufacturing capability. The only thing this can lead to is disaster, and economy where the Middle Class no longer exists, and a handful of Elite rule everything. Here is a book that I'm going to buy real soon called Richistan:A Journey Through the American Wealth Boom and the Lives of the New Rich:http://www.amazon.com/Richistan-Jou...bs_sr_1?ie=UTF8&s=books&qid=1196221530&sr=8-1 This book explains how the the CEOs, COBs, and Upper Middle Management saved billions by outsourcing and insourcing, and how they turned these savings into multi million dollar bonuses that they gave to themselves and their upper management. Think about it. The U.S. is in the midst of a recession, one that will likely go deeper, you have the dollar being devalued, and on top of it all, you have this tiny elite that is so rich, they make the rich look poor. Compare this people to even those who have six figure incomes, and you will see that they make the six figure income people look poor. These people eat $1,000 omelette's, and they wear $700,000 watches. When you have this level of insane consumption, it can only mean that the wealth gap in your society is increasing to the point in which the Middle Class will soon become like the dinosaurs.
I visualize the U.S. economy as being like a rubber band. You have the Rich at one end, the Middle Class in the middle(no pun intended), and the poor on the other end. Now, as the wealth gap grows, visualize in your mind this rubber band being stretched. Eventually, as the gap continues to grow, the rubber band continues to stretch, and soon enough, the rubber band will stretch beyond its limit, snap, and break to pieces. Once the economy "snaps" like the rubber band, the Middle Class will be destroyed, because just as with the rubber band itself, where the center snapped first, the Middle Class will be the first to go.
No, we are not in a recession. However, we are facing a recession. In fact, we always are. It's called a business cycle (artificial or not, the cycle does exist). A recession can occur for different reasons. For example, a high rate of inflation could trigger it. When prices are high, aggregate demand goes down. This causes interest rates, wages, and investments to go down. The result is a contracting economy, or a recession. I believe that what will become a large contributing factor to trigger recession soon is a decrease in government spending. Keep in mind that GDP = Y = E = (a+Yd) + I + G + (X-M). When a country is participating in a war, a recession will always follow (with rare exceptions). Recession is a macroeconomic concept, and there's no such thing as a "recession for the poor" like some people are suggesting here; it makes no sense.
Are you familiar with the expression "a rising tide lifts all boats"? I think I've already explained this to you, but I guess I have to break it down even further. The concept of wealth condensation within capitalism is not a new idea, and you are not the first to come up with it. It's been examined and analyzed closely, and most "free-market economists" came to the conclusion that wealth disparity itself is not harmful to the economy. Karl Marx obviously disagreed. The major flaw of your argument is in your false assumption (once again) that the income elasticity of demand of all goods are equal across the economy. Common sense should tell you that this is false, and comparing the induced consumption patterns of the the poor/middle class and the rich confirms it. The rich has a significantly lower MPC (marginal propensity to consume) than the poor. Instead, they have a higher MPS (save) and MPI (invest) which is the exact reason why their wealth grows. Consequently, the economy as a whole benefits; they drag the rest of the economy (i.e. the poor and the middle class) up with them in the long run. As Adam Smith said, in capitalism, people unwittingly do good to the rest of the economy even if they act in their own self-interest. You could argue that wealth disparity is immoral or against what this country stands for and I'd be in support of that, but purely from an economics perspective, I'm afraid that your argument has no legs.
You know, to be totally honest with you, I'm not familiar with the formulas that you post, or the many technical terms you use to talk about the economy. I've never taken a formal course in economics. But I don't think these things are truly necessary to assess the situation this country is in today. Do you know why that is? It is because all I have to do is look at my own life, my own cost of living. I look at my power bill this month, and compare it to three years ago, and I see that the price has gone of up dramatically. I look at the cost of milk today, and compare it to three years ago, and again, I see that it has gone up dramatically. I look at the cost of my rent, and I compare it to three years ago. What do I find? You guessed it, it has gone up. Then on top of this, I go and read the work of economists who are more familiar with economics than me, and their views on the economy are reality for me, because they are exactly what I see in my own personal life. At some point, you have to get past the technicalities and deal with reality. The reality is, I just paid for an online game in Euros, and I can clearly see that the dollar is being devalued. The one thing that I know for sure is that something is wrong with the economy, and it is getting harder to get by. I also know from history that, governments and powerful people typically cause economic problems. They fight wars, consolidate wealth for themselves, and throughout much of history, you always have the same things in most economies regardless of culture: a handful of super rich, and a bunch of super poor. Today I see America headed in that direction. We have, on one hand, a tiny elite that can afford $700,000 watches, and on the opposite end, 41 million Americans can barely afford the basics, and 12 million regularly go without food. What this tells me is that this country is headed towards becoming a third world nation. A rising wealth gap can only lead to one end, and in my own life, I can clearly see what this end will be. Many countries have had their Middle Classes wiped out due to fiat money, and the best one I can think of right now is Argentina. I don't know if you realize just how prosperous this nation was, but at one time, believe it or not, Argentina has a standard of living that rivaled the U.S., and it was the most wealthiest nation in South America. Thanks to an economic collapse at the end of the 1990s(caused by the government, and fiat paper money), Middle Class Argentines with great wealth suddenly found themselves living in shanty towns. You may want to take some time and check out the article here at Wiki, for I think this is exactly where the U.S. is headed:http://en.wikipedia.org/wiki/Argentine_economic_crisis_(1999-2002)
It's not all gloom and doom. People are spending money and there is money to be made. Some high end exports are becoming competitive. However, most likey there will be a recession. The last free years have been fueled by the housing bubble and the prices are out of alignment with the "real worth" The asking price of a 2-3 unit building is the New York metro is something like $500,000 and it's impossible to cover morgage, tax, insurance and other expenses with the rent. Lets say you have three apartments that you can rent @ $1200 a month = $3600 Your mortage will run about $3600 so everything else will have to come out of your pocket like property taxes, water and sewer, and heat. You will be negative at least $1000 a month. Houses just aren't selling right now. The only way to make any money is to flip and there aren't many buyers that can pay that kind of money.
Except that’s not insourcing, that’s American companies filling a void with foreigners, there is only 65,000 H1B visas given out every year and their filled up in the first two months. Insourcing is how Toyota a foreign companies builds cars in Kentucky using Americans on the assembly lines. Or how Honda is opening up a new factory in southeast Indiana. That’s insourcing. The economy is not managed by them, they only steer the ship back on course when it goes off track by an economic shock like 9/11 or Y2K or things of that nature. Give me 3 examples of things that the Fed has done that are corrupt? They can’t personally own stocks or bonds to benefit them. Also if you’re for a true free market economy why don’t you talk about getting rid of congress, they have done more harm to business through addition regulation and taxes then the fed could ever do. Except in the last 20 years only 2 million jobs have been outsourced while in the last 10 years 35 million new jobs have been recreated. http://trade.businessroundtable.org/trade_basics/trade_jobs.html In a recession you don’t have an economy growing at 4% which is what the government will report our economy grew in the last quarter. In a recession you don’t have unemployment staying at 4.6%. Please do you use the term recession if you do not know what it means. Also you talked about a true free market economy well in a true free market economy you should have no problem if companies cater to the rich by serving them $1,000 omelettes and making $700,000 watches.
Sorry but your visualization is wrong, the economy isn't like a rubber band, because the rubber band can't keep expanding, while our economy can. Two. The rich that you hate so much were middle class or poor people before. The great thing about our economy is how mobile it is, out of the 400 people on the Forbes 400 in 2001, 60% weren't there in 1989. http://64.233.167.104/search?q=cache:cbzCKqUhxIwJ:blogs.wsj.com/wealth/category/richistan/+WSJ+60%25+of+people+on+forbes+400+weren%27t+there+in+1989&hl=en&ct=clnk&cd=2&gl=us
It isn't all doom and gloom, I'm doing well myself, but I have to look beyond my own personal life. I look at the economy as whole, and it is looking pretty bad. I used the rubber band analogy to show what a huge wealth disparity leads to, not in relation to the economy growing itself. I was talking about the wealth gap. I don't hate them because they're rich. I hate them because they exploit people, and lobby the government, and do all types of things which are designed to keep them in a position of power, while the rest of us wallow in misery. I know what a recession is. The government lies, that has already been established in this forum. You're beating a dead horse. We've already showed that the CPI is deceptive, the government tells us 2% when they don't even include housing, energy, or food, three of the main things, as I've already mentioned, which I see increasing. I don't care about government numbers. I see what I see. Government can fudge the numbers. I see my bills going up, that means I've got to dig deeper in my pockets to pay the bills, which means I have less wealth, and I have to struggle to make money money just to pay bills that increase. There is a reason the bills increase, and it comes from our monetary policy. I like to simplify stuff. You remind me of the math teachers that I had in college who used all types of complicated methods to solve math problems, when they could have simplified it in just a few steps. It is all very simple. It is getting harder to get by, and the government is the reason for it. It is run by powerful people that only care about themselves. This isn't a new phenomenon, it is has been this way since the dawn of human civilization. History agree with me, and not you. You never mentioned anything about Argentina, and why their Middle Class got wiped out. You act like our society doesn't have people in high places that are ruthless, cunning, and power hungry. Why do you persist in believing that powerful people care so much about us, when history shows otherwise?
Hillary Clinton running for President really puts Argentina to mind. The country has been electing the first ladies president and falling apart the last 50 years.
There is 300,000,000+ people in this country...that 400 of them make it to Forbes list means nothing to the rest of them.
Hey Tesla, Great words on this thread I saw that link to that book above but it said they werent available..... Anyhow - Whats your thoughts on this ? http://www.amazon.com/48-Laws-Power...0197/ref=pd_bxgy_b_text_b/102-0336844-4164158 Also do you know anywhere that has that book now?
You say you’re doing well but you have to look at the economy at the whole but the statistics that shows how the economy is doing you flatly reject. The wealth disparity is highly correlated to productivity and education. They exploit people how, by giving them jobs which they support their families with? As for lobbying the government they are U.S. Citizens as well, they voice should be heard just like anyone else’s, and while you may wallow in misery I’m pretty happy Right the government must be living because you don’t like the GDP results. If the government is lying breakdown the GDP results and prove to me that their false. As for the CPI web site you showed. I already proved to you that it was wrong if your going to cite a web site at least cite a web site that understands that housing CPI in constructed by monthly rents, now home values. That they actually have statistics to back up their results instead of staying that they “think’ that the CPI at least 6.6%. I can make a web site to say I “think†the CPI is 1% and it doesn’t make it any more right then their if you can’t back up your results and they can’t. Also the government doesn’t exclude food and energy they only exclude food and energy from the Core CPI which is used as a benchmark for fighting inflation. Food and energy is still tracked and recorded in the CPI report. Again if you really understood what a recession was you would understand that during a recession companies lack the pricing power to increase prices because there is a lack of demand for their good so you wouldn’t see your bills going up. You should as hell wouldn’t have oil at $100 a barrel if the US was in a recession because the demand for oil would fall but it hasn’t because were not in a recession and there is nothing that you can show to me to indicate that we are in a recession.
Most working age people do not know what a real recession is. I've posted unemployment rates going back to President Ford. If you look at the rates from 1975 thru 1986 --- 7.0+ unemployment is the norm. U.S. Unemployment Rates by Year 1974 5.64 Ford 1975 8.48 1976 7.70 1977 7.05 Carter 1978 6.07 1979 5.85 1980 7.18 1981 7.62 Reagan 1982 9.71 1983 9.60 1984 7.51 1985 7.19 1986 7.00 1987 6.18 1988 5.49 1989 5.26 Bush, G.H.W. 1990 5.62 1991 6.85 1992 7.49 1993 6.91 Clinton 1994 6.10 1995 5.59 1996 5.41 1997 4.94 1998 4.50 1999 4.22 2000 3.97 2001 4.76 Bush, G.W. 2002 5.78 2003 5.99 2004 5.53 2005 5.08 2006 4.63 http://www.miseryindex.us/urbyyear.asp