Maybe I am confused...I took basic economics

[digitalandanalog]

Let's see... the country is broke. We have to borrow money and if we default our AAA rating is trashed for god knows how long.

Now there is all this talk of borrowing more money and spending money we don't have.

Did Obama take financial advice from my ex wife?

If we can't pay for it, who will?

Is Great Britain the rich uncle we are waiting for to die so that we can pay off our borrowed debts? Or something like that?

Seriously, What what the hell are our Great Leaders thinking?

[Perd Hapley]

Ah, but The One has taken an advanced course.

[El Tejon]

Damn the Economics, Full Politics Ahead!

[Waitone]

We have no intentions of repaying debt.  We will inflate.

[charby]

We have no intentions of repaying debt.  We will inflate.

<Sarcasm>

Well most of the Latin American countries have been through that in the last 50 years, so I guess it is our turn.

Well the benefit is when its all over with your home loans and student loan payments should be dirt cheap.


</Sarcasm>

[FTA84]

This is a real problem for our country because I don't see any elected officials being able to 'fix it' until it is 'broken'.  That is, we are now so deep in debt, the only way to get out from under it, is to slash spending like no tomorrow.  Now imagine a politician whose only accomplishment is to kill off tons of programs (including things like social security / medicare, i.e., leaving many old people in the cold).  Even if such a person got elected, they could never stay elected in this country.  More so, we would need say 50% of congress to made of these type of people, so it will never happen.

It will only happen when our social programs get crushed by the debt they created. Then we may have a chance for them to repair the situation

[HankB]

Seriously, What what the hell are our Great Leaders thinking?

"How can I get elected one more time?" (Except for the ones who are thinking "Can I avoid indictment/impeachment and prosecution if I do this?")

[MicroBalrog]

 

More so, we would need say 50% of congress to made of these type of people, so it will never happen.

Not really. Just big enough to make deals with the others.

[RevDisk]

We have no intentions of repaying debt.  We will inflate.

I sincerely do think that is the plan.  It worked in Central America and a few other locations.    Oh, it crushed the economy, decimated domestic production, wiped out life savings, destroyed retirement funds/pensions, etc.  But it got the government out of debt, and that was the important thing!

[HankB]

on January 08, 2009, 10:48:10 PM
We have no intentions of repaying debt.  We will inflate.

I sincerely do think that is the plan. 

I'm not sure I agree - this assumes politicians are taking the long view.

They're not.

I really believe that politicians as a group are only concerned about the upcoming election cycle.

Period.

[AZRedhawk44]

You know, I was driving home last night and thinking about this:

Government is the only entity that can get away with counterfeit and money laundering.

Need more money in the coffers without increasing taxes?  Print some!

Stick it into circulation, tax it, digitize it and get it electronically transferred back to you.  Inflation might decrease its value slightly and hurt your taxpaying population that didn't actually ASK for more money to be introduced into the system (and decrease the value of their money as a result), but heck:  you're Government, and you needed that money.

They skim their vig from every transaction... from introduction by the Fed to the banking system all the way down to you and me.  Even if we pocket it and stick it in the bank, they'll get some money from it via income taxes and the interest generated by it.  And... it'll get spent eventually.  G-men just have to wait to get their bite of it.  Cuz they will.

More money in the system always helps government and always hurts consumers.

[Standing Wolf]

Seriously, What what the hell are our Great Leaders thinking?

They're buying votes with public dollars. This isn't a recent development.

[Headless Thompson Gunner]

Let's see... the country is broke. We have to borrow money and if we default our AAA rating is trashed for god knows how long.

Now there is all this talk of borrowing more money and spending money we don't have.

Did Obama take financial advice from my ex wife?

If we can't pay for it, who will?

Is Great Britain the rich uncle we are waiting for to die so that we can pay off our borrowed debts? Or something like that?

Seriously, What what the hell are our Great Leaders thinking?

Who exactly do you mean by "we" when you say things like  "we're broke" and "we can't pay for it"? 

I ask because most of us are in fact quite solvent.  I have no hard numbers, but I'd say that 90% or 95% of non-impoverished Americans are able tomeet their obligations.   Fedgov is borrowing a lot, but there's virtually no chance of them defaulting or running out of eager creditors any time soon.

[Headless Thompson Gunner]

We have no intentions of repaying debt.  We will inflate.

We're in the midst of the biggest deflationary crash in nearly a century.  They've done everything they can to fight or reverse the deflation, but they've been remarkably ineffective. 

So even if they wanted to inflate, I'm not sure they could. Not right now anyway.  The government is just too small to control the monster that is our economy.

[longeyes]

You have to think of America as a narco-state.  Your "leaders" are dealers and pushers and your fellow citizens, all too many, are junkies.  Then it will become clear that the whole thing is a toxic process that can only end macrocosmically the way these things end microcosmically.

As for inflating away our debts, well, inflating away trillions will be quite a show, and will utterly destroy everything we know about "America."  This country will devolve into the Thunderdome.

[Werewolf]

<Sarcasm>

Well most of the Latin American countries have been through that in the last 50 years, so I guess it is our turn.

Well the benefit is when its all over with your home loans and student loan payments should be dirt cheap.


</Sarcasm>

Yeah - and all your savings will be worthless.

Hyperinflation is a really bad thing. Sure your relative debt goes down but those who own the debt or savers really get screwed.

[Scout26]

We're following the Japanese model.   

Recession
Massive Public works spending
Continued, long drawn out recession

The Japanese copied the FDR model......

[longeyes]

Yes, but the Japanese are used to and willing to "do without," and they are savers, and they embrace a more collective view of society, and they have a well-developed sense of shame.

All that makes "stagnation" a lot more bearable than it will be for a nation like ours, that is built on an ever-escalating future.

[Azrael256]

I took basic economics

Did you pay attention?  This is Keynes 101.  Well, they think it is, anyway.

More money in the system always helps government and always hurts consumers.

Um... no.  Inflation helps debtors, and hurts people on a fixed income with no COLA-like adjustment.  It hurts debtholders when it exceeds the interest they charge.  Most consumers are wage earners who carry debt.  Savers who hold large liquid assets entirely in cash under the mattress with no inflation protection are just idiots, and are probably not consuming debtors anyway.

Hyperinflation is a really bad thing.

True, but we're not zimbabwe.  Third world crapholes hyperinflate because they have zero chance of backing the currency with *any* production.  Remember, zimbabwe didn't hyperinflate until after the means of production was literally run out of the country.  If production completely freezes here, then I'll worry.

The Japanese copied the FDR model..

Eh, kinda.  From Keynes to FDR to Japan to today is three big leaps.  Play telephone with kindergartners and you'll see why historians never say "this is exactly like when..."

Keynesian economics will get you out of a slump.  The problem, as we discovered post-depression, is that getting government to throttle back is impossible.  Once people latch onto the teat, they don't want to turn loose.  So, Keynesian economics turns into a giant ponzi scheme at some point.  If everything keeps growing steadily, outpacing obligations by inflating through increased production, we're cool.  Pushing entitlements and the like indefinitely into the future creates a drag that prevents growth from outrunning obligations, and at some point (probably not right now.  Sorry teotwawki folks) it can't keep up.

Anyway, the point is that anyone who tells you that he has a macro solution to something is probably a liar who's selling something.

[digitalandanalog]

Quote
I took basic economics

Did you pay attention?  This is Keynes 101.  Well, they think it is, anyway

And I can get more basic than that...

Grandma said don't spend it if you ain't got it.

[Azrael256]

And I can get more basic than that...

Grandma said don't spend it if you ain't got it.

Something tells me that "grandma" is perhaps less frequently cited, and probably doesn't actually practice that.

But, hey, the macro guys get spanked every time we have an economic shock like this.  It seems their "theory of everything" forgot to include everything again.  Maybe "grandma" and her folksy fiscal policy will become all the rage in the next bubble.  It ain't likely, but it's nice to think about.

[zahc]

speaking of japan, it seems rising crime is being caused by economic hard times, in the form of old people stealing.
http://edition.cnn.com/2008/WORLD/asiapcf/12/24/elderly.shoplifters/index.html?eref=rss_topstories
Also, the dollar is at a 13 year low against the yen, and there was/is a big run on USD. People are taking out loans to buy USD in hopes that it goes back up.

In the last 7 days Origami Bank has folded, Sumo Bank has gone belly up and Bonsai Bank announced plans to cut some of its branches. Yesterday, it was announced that Karaoke Bank is up for sale and will likely go for a song while today shares in Kamikaze Bank were suspended after they nose-dived. While Samurai Bank is soldiering on following sharp cutbacks, Ninja Bank is reported to have taken a hit, but they remain in the black. Furthermore, 500 staff at Karate Bank got the chop and analysts report that there is something fishy going on at Sushi Bank where it is feared that staff may get a raw deal.

[crawdaddyjim]

It is economic judo being worked on China, India, Russia, the ME and all of those other suckers who bought our debt (lent us money). They thought they were gonna get a nice return on their investments. Nope. We will just inflate away that possibility. And as we are one of the lowest or lowest saving nations on the planet with the largest economy. It will work until we have to fight the repo man. Then it could go all wobbly. But who cares about that. That is for the next administration to worry about....


Jim

[Monkeyleg]

...Origami Bank has folded...

Sorry, couldn't let a good pun get lost in the middle of a serious discussion.

[myrockfight]

In the last 7 days Origami Bank has folded, Sumo Bank has gone belly up and Bonsai Bank announced plans to cut some of its branches. Yesterday, it was announced that Karaoke Bank is up for sale and will likely go for a song while today shares in Kamikaze Bank were suspended after they nose-dived. While Samurai Bank is soldiering on following sharp cutbacks, Ninja Bank is reported to have taken a hit, but they remain in the black. Furthermore, 500 staff at Karate Bank got the chop and analysts report that there is something fishy going on at Sushi Bank where it is feared that staff may get a raw deal.

...The only thing worse than the state of the economy.