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rumple_stilskin
28-09-2014, 21:10
When the government is borrowing at 1% it should certainly be able to find projects to finance that have a return greater than that. Roads. Bridges. Energy efficiency. And on and on.



Why does the government pay 1% to borrow money from banks, when the banks are essentially guaranteed by the government?(as evidenced by the recent bailouts)

It should be 0% - Print it themselves instead of paying the banks 1% to print it.

Bankers are doing nicely.....

Uncle Wally
28-09-2014, 22:39
Why does the government pay 1% to borrow money from banks, when the banks are essentially guaranteed by the government?(as evidenced by the recent bailouts)

It should be 0% - Print it themselves instead of paying the banks 1% to print it.

Bankers are doing nicely.....


Yeah what he said! And who really knows how much the print!

Uncle Wally
28-09-2014, 22:48
Here is how money works,

The Biggest Scam In The History Of Mankind - Hidden Secrets of Money 4 | Mike Maloney - YouTube

JanC
28-09-2014, 22:55
Why does the government pay 1% to borrow money from banks, when the banks are essentially guaranteed by the government?

Those things have literally...nothing to do with each other.

Governments auction debt. They don't "take loans" from national banks as such. (and there are quite severe limits on the guarantees)

It's 2 entirely disconnected things.

rumple_stilskin
28-09-2014, 23:05
Those things have literally...nothing to do with each other.

Governments auction debt. They don't "take loans" from national banks as such.

It's 2 entirely disconnected things.

the US governement pays the Federal reserve(a private bank, despite the deceptive name) billions of dollars in interest every year. What a laugh.


Have you not been paying attention? Don't hear about that on fox news or CNN?

the US governemnt owes the federal reserve(a private bank, run for the purposes of private profit for private shareholders) 2 trillion dollars.

Uncle Wally
28-09-2014, 23:19
the US governement pays the Federal reserve(a private bank, despite the deceptive name) billions of dollars in interest every year. What a laugh.


Have you not been paying attention? Don't hear about that on fox news or CNN?

the US governemnt owes the federal reserve(a private bank, run for the purposes of private profit for private shareholders) 2 trillion dollars.


All he has to do is watch the video I posted. But he won't or he'll say it's a lie but it's not.

You know before the FED there was no federal tax, that only came after the FED was created because they knew they would need to get the money somewhere and government didn't have so they taxed the people.

JanC
28-09-2014, 23:23
the US governement pays the Federal reserve(a private bank, despite the deceptive name) billions of dollars in interest every year. What a laugh.

There is a lot more to it than that. Your simplistic "analysis" completely misses how the Federal reserve (which isn't actually private in the usual sense of the word) controls the money supply by buying or selling government securities. Most of the "interest" it receives on bought debt it does not keep. It is not a privately controlled entity and it cannot legally keep any profit or distribute it to private entities.

Your writings suggests some fat cat shareholders are cashing in on the government paying interest on its securities when that is entirely not the case. Quite a lot of government issued debt is bought by foreign entities anyway (for controlling their exchange rate or whatnot)


You've watched too many conspiracy videos without bothering to check into the finer details of how it actually works. You are also incorrect in stating that the banks (like the federal reserve) print money. They don't.

JanC
28-09-2014, 23:28
You know before the FED there was no federal tax

Learn your history instead of believing whatever clowns you get your information from. The first federal tax in the US predates the Federal reserve by 50 years. And the Fed was created in response to financial difficulties which had occurred before (like 1907) which made clear the need for a central bank similar to those which already existed elsewhere.

Nobbynumbnuts
28-09-2014, 23:54
the US governement pays the Federal reserve(a private bank, despite the deceptive name) billions of dollars in interest every year. What a laugh...........

To describe the FED as a 'private' bank is a complete exaggeration and one lots of people like to perpetuate despite the facts.

rumple_stilskin
29-09-2014, 00:23
There is a lot more to it than that. Your simplistic "analysis" completely misses how the Federal reserve (which isn't actually private in the usual sense of the word) controls the money supply by buying or selling government securities. Most of the "interest" it receives on bought debt it does not keep. It is not a privately controlled entity and it cannot legally keep any profit or distribute it to private entities.

Your writings suggests some fat cat shareholders are cashing in on the government paying interest on its securities when that is entirely not the case. Quite a lot of government issued debt is bought by foreign entities anyway (for controlling their exchange rate or whatnot)


You've watched too many conspiracy videos without bothering to check into the finer details of how it actually works. You are also incorrect in stating that the banks (like the federal reserve) print money. They don't.

Did you come down in the last shower?

The federal reserve pays each of the 12 regional federal reserves, which owns the federal reserve, $1 billion each for their expenses in performing their functions. Now if you believe they really have these expenses you would have to be stupid. So there is $12 billion a year. Another couple of billion in dividends each year. So about $15 billion is getting skimmed from the US government every year by the bankers. Why do they pay any dividends at all, what madness.

If the federal reserve was genuinely a not for profit entity, they would simply make it a branch of the US government.

A entity that has a genuine purpose of "not for profit" is set up with "not for profit" legal status. Then there are checks and balances in place to ensure it really is not for profit. That way you could audit their accounts and under the microscope check their bogus accounting.

If the federal reserve really had no profit purpose, it would have been set up as a different legal entity.

What is a conspiracy theory? Is that some words you use to slur an opposing and informed view?

rumple_stilskin
29-09-2014, 00:26
Learn your history instead of believing whatever clowns you get your information from. The first federal tax in the US predates the Federal reserve by 50 years. And the Fed was created in response to financial difficulties which had occurred before (like 1907) which made clear the need for a central bank similar to those which already existed elsewhere.

The 'Fed' is a complex entity set up by a few to steal from the masses(the people).

Using a proven system that worked well from stealing from the masses and existed elsewhere.

Uncle Wally
29-09-2014, 00:57
Learn your history instead of believing whatever clowns you get your information from. The first federal tax in the US predates the Federal reserve by 50 years. And the Fed was created in response to financial difficulties which had occurred before (like 1907) which made clear the need for a central bank similar to those which already existed elsewhere.

And who made those difficulties in 1907? The same people who wanted to have the FED. I have read the history of how a few banker had a secret meeting to get this scam in place. Tomorrow I will post links where to find the truth. The FED is a privite bank and I can prove it.

Uncle Wally
29-09-2014, 00:59
To describe the FED as a 'private' bank is a complete exaggeration and one lots of people like to perpetuate despite the facts.

And which facts would that be?

Armoured
29-09-2014, 05:10
The federal reserve pays each of the 12 regional federal reserves, which owns the federal reserve, $1 billion each for their expenses in performing their functions. Now if you believe they really have these expenses you would have to be stupid. So there is $12 billion a year.
Another couple of billion in dividends each year. So about $15 billion is getting skimmed from the US government every year by the bankers.

No need to make up numbers, they publish them all:
http://www.federalreserve.gov/publications/budget-review/2013-federal-reserve-system-budget.htm#TrendsInExpensesAndEmployment-C58393AE

You can decide for yourself but there are 20k+ employees, who manage trillions of dollars of assets and organise the physical printing of money. I submit that on average, they are going to be paid better than Walmart greeters. Works out to about $130k per employee. Their physical expenses are also a bit high, but then, they might have a lot to spend on vaults and stuff.


That way you could audit their accounts and under the microscope check their bogus accounting.

In fact, of course, they do publish audited accounts, every year, and you can read them:
http://www.federalreserve.gov/monetarypolicy/files/BSTcombinedfinstmt2013.pdf

If you do, you'd find that they submitted just less than $80 billion to the federal government. Or, approximately 98% of earnings distributed goes straight to the government.

JanC
29-09-2014, 10:01
The 'Fed' is a complex entity set up by a few to steal from the masses(the people).

Right. Except that the entire thing your argument hinged on (the government paying interest to the Fed) has already been shown to be false, as the Fed pay it back. The only reason this interest money is going back and forth is that the bonds the government issues are put on the open market where anyone can buy them. Anyone but the Fed would actually want to make some interest in return for their cold hard cash.

After a while it gets too tiring to argue with people who create countless elaborate theories they could not possibly hope to support with sound logic and premises.

You've already displayed you don't know how any of this actually works, you just use ignorance with a bit of "we're getting screwed by the bankers!" spin.

There are plenty of things that are screwed up in politics and on Wall Street, no need to make up any more on your own.

Fantastika
29-09-2014, 10:32
Governments auction debt. They don't "take loans" from national banks as such. (and there are quite severe limits on the guarantees)


I am no expert on this, but I am given to understand that the US is no longer "auctioning debt" in the traditional manner.

China is not buying, Russia is not buying, Japan is not buying any more US bonds. The US consumer long since got tired of buying "US Savings Bonds."

What Obama is doing is to "sell" or "transfer" the bonds from one US agency to another US agency. One agency offers them for sale at auction, the other agency buys them.

This "new money" ($80 billion/month) gets "put into circulation" by being deposited, by the buying agency, in big banks. The big banks don't sit on this cash, they invest it - by buying stocks in the stock market. With banks buying stocks and not selling, thus the steady rise of the Dow Jones and NASDAQ since Obama came into office and incredibly huge deficits became the "new normal."

It seems to me that this fiscal policy is a runaway train, and the wheels are coming loose...

Uncle Wally
29-09-2014, 10:36
Right. Except that the entire thing your argument hinged on (the government paying interest to the Fed) has already been shown to be false, as the Fed pay it back. The only reason this interest money is going back and forth is that the bonds the government issues are put on the open market where anyone can buy them. Anyone but the Fed would actually want to make some interest in return for their cold hard cash.

After a while it gets too tiring to argue with people who create countless elaborate theories they could not possibly hope to support with sound logic and premises.

You've already displayed you don't know how any of this actually works, you just use ignorance with a bit of "we're getting screwed by the bankers!" spin.

There are plenty of things that are screwed up in politics and on Wall Street, no need to make up any more on your own.



A government office does not have share holders.

Ron Paul Legacy Lives on as House Passes Fed Audit Bill

http://blogs.wsj.com/economics/2014/09/18/ron-paul-legacy-lives-on-as-house-passes-fed-audit-bill/

"The legislation would direct the Government Accountability Office to conduct a “full audit” of the Fed’s operations and report back to Congress. Currently, the GAO reviews the central bank’s financial operations, but not its policy decisions or agreements with foreign governments and central banks. An outside firm audits the Fed’s financial operations and its findings are published in the central bank’s annual report."

How could one part of the government be able to make agreements with foreign countries and not have to answer to any other part of the government? Where are the checks if Congress is not able to see a "full audit" let alone their dealing with other countries and "policy decisions"?


FED's share top holders are,

1. Bank of America
2. Morgan Chase
3. Citibank

Private banks and you want us to believe they do this out of the kindness of their cold banker hearts?

Armoured
29-09-2014, 10:47
How could one part of the government be able to make agreements with foreign countries and not have to answer to any other part of the government? Where are the checks if Congress is not able to see a "full audit" let alone their dealing with other countries and "policy decisions"?

Government controls fed through appointment of the top people - so it's answerable to the Executive.

As for the audit issue, it's a red herring. The only reason GAO cannot audit the Fed (in the specific sense some want) is because of a law adopted by Congress. So they can change it if they want.


FED's share top holders are,

1. Bank of America
2. Morgan Chase
3. Citibank

Private banks and you want us to believe they do this out of the kindness of their cold banker hearts?

Personally I hate the Fed's legal structure (adopted by Congress), because it allows conspiracy theories to continue. Many countries' equivalents started this way (Canada, UK, Australia, South Africa, etc), and the 'private ownership' structure was liquidated.

That said, you ask 'do they do it out of goodness of their hearts?'

The answer is no - for the most part (exceptions are small banks), those banks are shareholders are _required_ to become shareholders. For this, they receive effectively none of the usual benefits of 'ownership.' They can't control the entities, sell their stakes, get more profits, make any changes to the charter or operations, acquire more shares or dispose of them, etc.

In return, government controls the operations and all important policy decisions, either by law or appointment of the Fed's officials.

JanC
29-09-2014, 11:17
I am no expert on this, but I am given to understand that the US is no longer "auctioning debt" in the traditional manner.

I'm not entirely sure what you mean, but foreign capital is still buying US bonds. Not as much as they used to, but it's a matter of who wants them the most (for the least return). There's been no shortage of demand http://www.bloomberg.com/news/2014-07-13/traders-inundate-u-s-with-3-4-trillion-of-bond-auction-demand.html



What Obama is doing is to "sell" or "transfer" the bonds from one US agency to another US agency. One agency offers them for sale at auction, the other agency buys them.

It's kind of funny how one the one hand you regularly refer to Obama as the laziest president ever, yet on the other he is constantly credited with all kinds of mischief that would require him to have days that are considerably longer than 24 hours if he had to do all that himself.

But anyway, no that is not at all what is going on. If you have any info to support this theory, let's have it, but I don't even see how it would mathematically work. The Fed has been buying a LOT, certainly. But it wouldn't make any sense to have other government agencies buy government debt as you'd first have to give them the money to buy them.


the steady rise of the Dow Jones and NASDAQ since Obama came into office

lol, I think you'll find the stock markets have been on a "steady rise" since just about forever.

Deficits have also been around for a long, long time now. Way before Obama ever came around and had to deal with a global financial crisis. If America had decided to cut back spending and eradicate the budget deficit you'd be looking at massive unemployment and economic contraction, and then you'd be blaming them for thàt instead. I agree that there are systemic issues which are costing ever more to sustain but I'm not a genius economist to figure the best way out.

Large parts of the deficit have been fueled by tax cuts, incidentally.

Uncle Wally
29-09-2014, 11:41
Government controls fed through appointment of the top people - so it's answerable to the Executive.

As for the audit issue, it's a red herring. The only reason GAO cannot audit the Fed (in the specific sense some want) is because of a law adopted by Congress. So they can change it if they want.



Personally I hate the Fed's legal structure (adopted by Congress), because it allows conspiracy theories to continue. Many countries' equivalents started this way (Canada, UK, Australia, South Africa, etc), and the 'private ownership' structure was liquidated.

That said, you ask 'do they do it out of goodness of their hearts?'

The answer is no - for the most part (exceptions are small banks), those banks are shareholders are _required_ to become shareholders. For this, they receive effectively none of the usual benefits of 'ownership.' They can't control the entities, sell their stakes, get more profits, make any changes to the charter or operations, acquire more shares or dispose of them, etc.

In return, government controls the operations and all important policy decisions, either by law or appointment of the Fed's officials.


The US government does not control the policy of the FED, not by law or appointments. Did you read what I posted? That is what the new bill is all about. And as for the "they can change it if they want" They haven't wanted to and one reason I think is because the people who need to want to change it are the same people who need to take money from the same banks that are share holders. You see nothing wrong in that? And again the president does not "appoint" the FED chairman he just confirms the person appointed by the FED and again I'll say that you find nothing wrong with the guy who needs to confirm this takes money from the same people to get his job?

Uncle Wally
29-09-2014, 11:46
Please read the first line.



The Federal Reserve Act created a system of private and public entities; there were to be at least eight, and no more than 12, private regional Federal Reserve banks. Twelve were established, and each had various branches, a board of directors, and district boundaries. The Federal Reserve Board, consisting of seven members, was created as the governing body of the Fed. Each member is appointed by the President of the United States and confirmed by the U.S. Senate. In 1935, the Board was renamed and restructured. Also created as part of the Federal Reserve System was a 12 member Federal Advisory Committee and a single new United States currency, the Federal Reserve Note. The Federal Reserve act did create a national currency, but more importantly, the act was to create a monetary system that could respond effectively to the different stresses in the banking system and create a stable financial system. Along with the goal of creating a national monetary system and financial stability, the Federal Reserve Act also provided many other functions and financial services for the economy such as a check clearing and collection for all members of the Federal Reserve.

With the passing of the Federal Reserve Act, Congress required that all nationally chartered banks become members of the Federal Reserve System. These banks were required to purchase specified non-transferable stock in their regional Federal Reserve banks, and to set aside a stipulated amount of non-interest bearing reserves with their respective reserve banks. Since 1980, all depository institutions have been required to set aside reserves with the Federal Reserve. Such institutions are entitled to certain Federal Reserve services. State chartered banks were given the option of becoming members of the Federal Reserve System and in the case of the exercise of such option were to be subject to supervision, in part, by the Federal Reserve System. Member banks became entitled to have access to discounted loans at the discount window in their respective reserve banks, to a 6% annual dividend in their Federal Reserve stock, and to other services.


6% annual dividend What government office pays a 6% dividend?


Federal Reserve Act - Wikipedia, the free encyclopedia

Armoured
29-09-2014, 11:48
But it wouldn't make any sense to have other government agencies buy government debt as you'd first have to give them the money to buy them.

I'm surely going to regret opening this can of worms for the conspiracy-minded, but there are several government agencies (or bodies) that hold US government debt. Usually because the funds/taxes they collect are for future spending and congress wanted to 'lock' the funding and pre-fund.

The biggest and most significant is the Social Security 'trust funds' (many of the others are e.g. retirement funds for military and civil servants). In one of the very good things Reagan did, the government decided to set aside funds to ensure that the post-war baby boomers' social security contributions were saved to pay for them when they retire.

This leads to conspiracy theories of many types, like 'it's all fake' or 'government is bankrupt' or whatever.

I'll only comment to say that it's incoherent to believe that the government debt held for social security doesn't exist _and_ to believe that the government is bankrupt because it has to pay pensions in future; if you believe the debt doesn't exist (and won't be paid because congress decides not to), it could equally decide to stop paying social security. Either can be changed at will by congress. There's no reason to believe that government debt held by social security is less 'real' than debt held in anyone's (private) retirement account. (In accounting terms analogy, you can't believe it's on balance sheet and off balance sheet at the same time...)

Krugman has explained this several times better than I have above.

There's nothing weird about this, of course - lots of governments do the same for pension funds, with various legal constructions and variation. But for some reason the US political system supports more crazies who think this is weird.

quincy
29-09-2014, 12:11
I am no expert on this, but I am given to understand that the US is no longer "auctioning debt" in the traditional manner.

China is not buying, Russia is not buying, Japan is not buying any more US bonds. The US consumer long since got tired of buying "US Savings Bonds."

What Obama is doing is to "sell" or "transfer" the bonds from one US agency to another US agency. One agency offers them for sale at auction, the other agency buys them.

This "new money" ($80 billion/month) gets "put into circulation" by being deposited, by the buying agency, in big banks. The big banks don't sit on this cash, they invest it - by buying stocks in the stock market.

You are correct. Stocks have become inflated, also real estate, creating the illusion of recovery

JanC
29-09-2014, 12:13
I'm surely going to regret opening this can of worms for the conspiracy-minded, but there are several government agencies (or bodies) that hold US government debt.

Certainly, but the point was that it would make no sense for government agencies to buy debt and juggle it back and forth between each other for the sake of funding the government deficit/creating money in a less than obvious manner.

The Fed buys or sells depending on what they want to achieve with regards to monetary policy, no unrelated government agencies are required, least of all for obfuscation as balance sheets exist. What you reference isn't really related to monetary policy as far as I understand.

Armoured
29-09-2014, 12:27
Please read the first line.

I have read all of this, and more. Please refer to my point above, that as I said and as documented below, banks are generally required to participate and receive effectively none of the usual rights of ownership.

That said, it is a stupid system - but mainly because it keeps feeding the conspiracy theorists and loons who can do nothing but keep repeating the 'but it's private!' line, not because it changes anything in substance.


With the passing of the Federal Reserve Act, Congress required that all nationally chartered banks become members of the Federal Reserve System. These banks were required to purchase specified non-transferable stock in their regional Federal Reserve banks... Member banks became entitled to ... a 6% annual dividend in their Federal Reserve stock, and to other services.


6% annual dividend What government office pays a 6% dividend?


This was a compromise with banks, because banks complained they were being required to contribute and it was effectively a tax.

I looked up the 6% once - I can't find the reference, but as I recall it was set at that level in the 70s or early 80s when inflation was quite high. It looks like a lot right now, but at the time was considered quite low (i.e. it was less than inflation).

And of course - congress could change it at any time to zero or whatever it wants. It probably should, or better, get rid of the entire fiction of private ownership - like most other countries did.

Uncle Wally
29-09-2014, 12:34
Certainly, but the point was that it would make no sense for government agencies to buy debt and juggle it back and forth between each other for the sake of funding the government deficit/creating money in a less than obvious manner.

The Fed buys or sells depending on what they want to achieve with regards to monetary policy, no unrelated government agencies are required, least of all for obfuscation as balance sheets exist. What you reference isn't really related to monetary policy as far as I understand.



How could a government buy it's own debt?

Uncle Wally
29-09-2014, 12:36
I have read all of this, and more. Please refer to my point above, that as I said and as documented below, banks are generally required to participate and receive effectively none of the usual rights of ownership.

That said, it is a stupid system - but mainly because it keeps feeding the conspiracy theorists and loons who can do nothing but keep repeating the 'but it's private!' line, not because it changes anything in substance.



This was a compromise with banks, because banks complained they were being required to contribute and it was effectively a tax.

I looked up the 6% once - I can't find the reference, but as I recall it was set at that level in the 70s or early 80s when inflation was quite high. It looks like a lot right now, but at the time was considered quite low (i.e. it was less than inflation).

And of course - congress could change it at any time to zero or whatever it wants. It probably should, or better, get rid of the entire fiction of private ownership - like most other countries did.



What are you not getting?


The Federal Reserve Act created a system of private and public entities


This is not "fiction"

JanC
29-09-2014, 12:38
How could a government buy it's own debt?

I'm sorry, is this economics 101?

If you're not familiar with how these mechanisms work, why start off making grand claims about it?

Uncle Wally
29-09-2014, 12:39
You are correct. Stocks have become inflated, also real estate, creating the illusion of recovery


Not to mention some people's ego's



Obama is one.

Uncle Wally
29-09-2014, 12:41
I'm sorry, is this economics 101?

If you're not familiar with how these mechanisms work, why start off making grand claims about it?


Can you buy your own debt? How stupid does that sound? Take money you don't have to buy debt you don't have money for. Maybe you're not explaning it right.

Why borrow if you can just freaking print it out of nothing?

Fantastika
29-09-2014, 12:42
...In one of the very good things Reagan did,...


Better re-read your gobbledygook before posting it. You omitted the word "few".

Uncle Wally
29-09-2014, 12:52
Better re-read your gobbledygook before posting it. You omitted the word "few".


Yeah, one of the other good things Reagan did was to allow the CIA to start selling cocaine and heroin.


But that's another thread.

Armoured
29-09-2014, 13:01
Better re-read your gobbledygook before posting it. You omitted the word "few".

Another fine substantive response.

Decide what you like about Reagan, I wasn't making any sweeping statements about him. I wasn't and am not a fan, but I'm also willing to give him credit in the (few, if you like) areas where he did the right thing.

JanC
29-09-2014, 13:12
Can you buy your own debt? How stupid does that sound?

The issue here is that you are taking an uninformed intuitive approach rather than read how it works and why.
Top tip: our intuition is fairly useless and often wrong when it comes to complex issues like mathematics, physics, even economics. Your gut feeling is not as good as actually leaning about it.


Why borrow if you can just freaking print it out of nothing?

Well, the bond buying process is a step in the "print it out of nothing" scheme. Which, by the way, is necessary at one point or other. A fixed monetary base doesn't work very well economically.

The Fed uses bond buying/selling to control interest rates, money supply, inflation. How else would you suggest it would do this?

Fantastika
29-09-2014, 13:16
I'm not entirely sure what you mean, but foreign capital is still buying US bonds. Not as much as they used to, but it's a matter of who wants them the most (for the least return).

Last year, foreigners bought only $400 billion more than they sold. BTW, what's up with Belgium being in 3rd place, now? Unless other countries are using Belgium banks to conceal their activities. According to this website,
http://www.treasury.gov/ticdata/Publish/mfh.txt
Belgium was biggest buyer (year-to-year increase) of US bonds last year.

So that leaves $1 trillion being bought within the US, by the Federal Reserve, just for last year.


It's kind of funny how one the one hand you regularly refer to Obama as the laziest president ever, yet on the other he is constantly credited with all kinds of mischief

Yes, it's the lazy man's way to make money - print it. Some people make the case he is stealing it - from the next generation, who are children now.



But anyway, no that is not at all what is going on. If you have any info to support this theory, let's have it, but I don't even see how it would mathematically work. The Fed has been buying a LOT, certainly. But it wouldn't make any sense to have other government agencies buy government debt as you'd first have to give them the money to buy them.


The Federal Reserve buys it. That's one government agency. They buy it from the Treasury Department. That's the other government agency.

Right now, the Federal Reserve "owns" about $4 trillion in US debt.



lol, I think you'll find the stock markets have been on a "steady rise" since just about forever.

Stocks took a nosedive, conveniently just before the 2008 election, and they got back to that level 3 years later. Since then they have been on a very steady growth track, which correlates exactly to the Fed's steady pumping, via "Quantitative Easing" (printing money) of the monthly $80 billion into the big banks, and through them, into mutual funds and corporate stocks.


Deficits have also been around for a long, long time now. Way before Obama ever came around and had to deal with a global financial crisis. If America had decided to cut back spending and eradicate the budget deficit you'd be looking at massive unemployment and economic contraction, and then you'd be blaming them for thàt instead. I agree that there are systemic issues which are costing ever more to sustain but I'm not a genius economist to figure the best way out.

You're not an "economic genius" but you "know' that cutting the deficit would lead to economic ruin. Oooohkay...

Obama has not "dealt" with anything. He is delaying the balancing of fiscal books by printing money. He is delaying the confrontation with Islam by dropping bombs in several countries. He is delaying peace with Russia by supporting Kiev war-mongers. His plan, for anything, is to say, "ain't my fault."

When Bush doubled the US deficit, the media reacted in shock and horror. Now Obama has doubled it again, and you're saying, "hey, it's good economic policy."

Oy, this is good, to keep doubling your debt? No, this is not so good, such a plan is not so good.

At 2-3% interest, debt payment is only 15% of the US budget. If interest rates go to 5%, debt payment will consume one-third of the budget. At 10%, interest payment would swallow the entire budget, and we are looking at default, and a real collapse.

You can't build an economy on debt, and you can't construct a building on a foundation of sand.


Large parts of the deficit have been fueled by tax cuts, incidentally.

That's obviously incorrect. Everyone knows when Ronald Reagan *cut* tax rates from 70% to 28% it ignited the longest continuous economic expansion in the world, since WW2, and that US tax receipts had doubled by the end of his term. When John F. Kennedy was elected in 1960, he also, quite nicely, handled a recession by cutting taxes.

The "deficit problem was fueled" not by tax cuts, but by the Progressive (Democrat) Congress, which broke its promises and increased spending at an even more accelerated rate than treasury revenues were increasing. The mad spending Congress started a whole plethora of new agencies and self-sustaining bureaucracies, and every fat-cat congressman had his own $billion dollar pork barrel project to get funding for, and brag to the locals what a great Washington moneybags-man he was, bringing home the bacon.

JanC
29-09-2014, 13:55
Last year, foreigners bought only $400 billion more than they sold.

I'm not immediately seeing the connection between this and what you originally said. Foreign bond buying is down, we have established that much. It's not zero. The fed buying bonds brings down the interest rates which makes them much less interesting for anyone else to buy. Particularly when interest is below inflation.


BTW, what's up with Belgium being in 3rd place, now? Unless other countries are using Belgium banks to conceal their activities.

This is quite probable, actually. China is a good candidate.


So that leaves $1 trillion being bought within the US, by the Federal Reserve, just for last year.

More or less, yes.


Yes, it's the lazy man's way to make money - print it.

Except Obama is in not in charge of the Fed in any way, shape or form, and much the "printed" money does not actually show up in the economy. Inflation is still low (it actually is, not just government stats)



The Federal Reserve buys it. That's one government agency. They buy it from the Treasury Department. That's the other government agency.

That's how it has always been. There's no other way to do it. You made it sound like they had recently invented some scheme to buy bonds out of sight as no-one else wants them. If that was not your intention, I must have misunderstood.



Stocks took a nosedive, conveniently just before the 2008 election

The seeds for that crisis were sown in the years, even decades before it finally imploded. There is no way you could suggest it was an election ploy.



You're not an "economic genius" but you "know' that cutting the deficit would lead to economic ruin. Oooohkay...

Let's not exaggerate, but in any case that part of the equation is basic, not advanced economics.


Obama...Islam....Russia....Kiev war-mongers..... "ain't my fault." ......media.....Obama

All very relevant to the Fed, thanks. We know already where you stand on those other things.



You can't build an economy on debt

I would say it's hard to build one without it.
But the US debt is indeed getting to a point where it is counter productive, too much. But the Fed has already come out and signaled an end to this huge bond buying scheme.


Everyone knows when Ronald Reagan *cut* tax rates from 70% to 28% it ignited the longest continuous economic expansion in the world, since WW2, and that US tax receipts had doubled by the end of his term. When John F. Kennedy was elected in 1960, he also, quite nicely, handled a recession by cutting taxes.

There's a lot to say about the different factors and policies during that period. I'm not going to go into it. Fact is that current tax levels in the US are still low by historical standards. An increase in taxes (overall level that is, some taxes should drop whilst others should be raised and the tax code should be simplified) along with budget cuts would likely be the best long term fix. There is no way to cut like Reagan because, taxes aren't actually that high. Regardless, what worked at a certain time with certain problems, isn't really relevant in any other time period.

Reagan increased the national debt from 900B to 2.8 trillion as well by the way, was that a good thing then? He quadrupled the yearly average deficit of his predecessor.

rumple_stilskin
29-09-2014, 14:08
Government controls fed through appointment of the top people - so it's answerable to the Executive.

In return, government controls the operations and all important policy decisions, either by law or appointment of the Fed's officials.

The simple fact is that the bankers have the government politicians and civil servants in their pockets.

Check this article about how Goldman Sachs has the federal reserve in their pocket:
http://rt.com/usa/191092-fed-goldman-sachs-leak/

The bankers do huge funding of BOTH political parties, to protect their racket.
Essentially, the bankers appoint the president, and the president appoints a banker friendly chairman to the federal reserve. They appoint their mates to the lower level positions within the federal reserve.

the bankers are doing nicely....

rumple_stilskin
29-09-2014, 14:25
If you do, you'd find that they submitted just less than $80 billion to the federal government. Or, approximately 98% of earnings distributed goes straight to the government.

"earnings", everything is always a slight of hand when dealing with bankers. Is that 98% of Revenue or Net profit(the difference being some creative accounting to hand themselves out some nice dosh).

Secondly, why isn't it 100%

Thirdly, they have had 100 Years to correct the 'boo boo' they made of the legal status of the entity that has a charity purpose. It hasn't been changed for a reason.

What's a conspiracy theory?
Some people say Iraq had no WMD, but that's a conspiracy theory........we need to believe our politicians instead.

Does conspiracy theory = truth in our era of Doublespeak?


p.s. While I remember, 'Buying your own debt' - what a laugh, you can't make this stuff up. A comedy show of the true believers

Armoured
29-09-2014, 14:38
The simple fact is that the bankers have the government politicians and civil servants in their pockets.
...
The bankers do huge funding of BOTH political parties, to protect their racket.
Essentially, the bankers appoint the president, and the president appoints a banker friendly chairman to the federal reserve. They appoint their mates to the lower level positions within the federal reserve.

I agree that banks - money more generally - have too much influence in politics in the US. I'm more worried about some other industries - oil for one but many polluting industries - but I'd agree that US regulation of banks is shameful.

Where I disagree is that I don't think you need the Fed's structure to explain this.


"earnings", everything is always a slight of hand when dealing with bankers. Is that 98% of Revenue or Net profit(the difference being some creative accounting to hand themselves out some nice dosh).

Well they have expenses. Is there some other measure you'd like to use?

At any rate, total expenses - all, absolutely all - were about 11 billion (including those already mentioned). So even if your allegation were meaningful, it's still the vast majority.

And if you're going to allege widespread fraud, and not offer any proof, there's not really much to discuss.


Secondly, why isn't it 100%

Again, my point is that to refer to the dividend payments (a couple billion) without mentioning the _other_ $78 billion is dishonest.


Thirdly, they have had 100 Years to correct the 'boo boo' they made of the legal status of the entity that has a charity purpose. It hasn't been changed for a reason.

Yes, but I can only speculate. I think it's much more likely attributable to the fact that there is disagreement in congress to change anything rather than bankers' influence. If they already control everything, it'd be much smarter to hide it. Most likely (in my view), there are too many loons like Ron Paul that want to move to gold or destroy the fed rather than compromise and improve things.

But that's just my opinion.

Uncle Wally
29-09-2014, 14:39
The issue here is that you are taking an uninformed intuitive approach rather than read how it works and why.
Top tip: our intuition is fairly useless and often wrong when it comes to complex issues like mathematics, physics, even economics. Your gut feeling is not as good as actually leaning about it.



Well, the bond buying process is a step in the "print it out of nothing" scheme. Which, by the way, is necessary at one point or other. A fixed monetary base doesn't work very well economically.

The Fed uses bond buying/selling to control interest rates, money supply, inflation. How else would you suggest it would do this?



Are f@#king kidding me? The fiat system we have now is running the dollar into the ground and sucking the wealth from all but a few. It has done no good for 90% of the people in America and has only made them work more for less. The dollar is in the last stages of life. What America did back in the 60's 70's was a crime and I can't believe the rest of the world fell for it, they are starting to wake up.

JanC
29-09-2014, 14:45
Are f@#king kidding me? The fiat system we have now is running the dollar into the ground and sucking the wealth from all but a few. It has done no good for 90% of the people in America and has only made them work more for less. The dollar is in the last stages of life. What America did back in the 60's 70's was a crime and I can't believe the rest of the world fell for it, they are starting to wake up.

Don't tell me you think returning to the gold standard would be a good idea. It's utterly incompatible with a modern economy. It's simply worse.

Armoured
29-09-2014, 14:48
Are f@#king kidding me? The fiat system we have now is running the dollar into the ground and sucking the wealth from all but a few. It has done no good for 90% of the people in America and has only made them work more for less. The dollar is in the last stages of life. What America did back in the 60's 70's was a crime and I can't believe the rest of the world fell for it, they are starting to wake up.

Can you name an alternative that has proven better?

Uncle Wally
29-09-2014, 14:53
The issue here is that you are taking an uninformed intuitive approach rather than read how it works and why.
Top tip: our intuition is fairly useless and often wrong when it comes to complex issues like mathematics, physics, even economics. Your gut feeling is not as good as actually leaning about it.



Well, the bond buying process is a step in the "print it out of nothing" scheme. Which, by the way, is necessary at one point or other. A fixed monetary base doesn't work very well economically.

The Fed uses bond buying/selling to control interest rates, money supply, inflation. How else would you suggest it would do this?



One more thing, they just try to make it sound complex but it's still a simple scam.


The point the fiat system become necessary is when they have spent/stolen all the wealth/gold and have no other choice. This is why they need to keep starting wars to hold onto power. You can not live in debt forever which is where we've been and the only way to go. At some point you run out of places to get wealth because nobody will lend you any.

rumple_stilskin
29-09-2014, 14:59
Well they have expenses. Is there some other measure you'd like to use?

At any rate, total expenses - all, absolutely all - were about 11 billion (including those already mentioned). So even if your allegation were meaningful, it's still the vast majority.

And if you're going to allege widespread fraud, and not offer any proof, there's not really much to discuss.



Again, my point is that to refer to the dividend payments (a couple billion) without mentioning the _other_ $78 billion is dishonest.


Most likely (in my view), there are too many loons like Ron Paul

You just need to look at Maddoff to know what happens when a few people are allowed too much power with other peoples money. Or Enron. Or look at politicians and their expense claims. And to say no Audit is necessary, all is fine. Prove that it's not fine first.

To refer to the billions the bankers keep each year, and remember they have been doing it for 100 Years and so that's $200 Billion, and then to frame that as they give back 98% is an attempted slight of hand. To say they 'Don't keep much, not worth worrying about really'. to mention the other $78 billion that is not theirs either is not really relevant.

If they want to give me $90 billion, I can give them back 99%, even better, and you can't complain about that - getting back 99%.

You describe Ron Paul as a loon but his Audit the fed bill initiative has just passed the US house, probably wont be made law. The only people that hate Ron Paul are Bankers and warmongers. Which are you? or both?

Uncle Wally
29-09-2014, 15:17
Can you name an alternative that has proven better?


Oh here we go, when they run out of things to say. Trying to make you look stupid. I'll admit I'm stupid. Which looks bad for others if I know at least this.


All I know is that since money was invented it started as gold and/or silver and every country that tried this fiat thing failed. They end up with endless wars. So maybe we should try sticking to the gold standard. The other thing that is bad about it is the idea of endless growth. You can not keep growing forever, at one point you become too big and fat and can no longer function. When you live in a place that is only so big it is just impossible. The system was built by a few for a few.

JanC
29-09-2014, 15:21
The system was built by a few for a few.

When has that ever not been the case? Even the communist countries ended up that way.

Without a central bank and the ability to influence the money supply, you'd have way more recessions and economic hardship. You need something to smooth the peaks and troughs. Higher interest rates when things go well, and cheap money when they go bad.

Uncle Wally
29-09-2014, 15:51
When has that ever not been the case? Even the communist countries ended up that way.

Without a central bank and the ability to influence the money supply, you'd have way more recessions and economic hardship. You need something to smooth the peaks and troughs. Higher interest rates when things go well, and cheap money when they go bad.



I will have to get back to you tonight if I can, we may have a party.

But after your first sentence the second makes no or less sense. If you know what I mean.

Armoured
29-09-2014, 16:02
And to say no Audit is necessary, all is fine.

Again, they are audited. See the document linked to earlier entitled 'audit.'


The only people that hate Ron Paul are Bankers and warmongers. Which are you? or both?

Good argument! Have you stopped beating your wife yet?


Oh here we go, when they run out of things to say. Trying to make you look stupid. I'll admit I'm stupid. Which looks bad for others if I know at least this.

I asked, what would you suggest as an alternative? I'm not trying to make you look stupid. But if you believe 'system A' is wrong, you must have something in mind.


All I know is that since money was invented it started as gold and/or silver and every country that tried this fiat thing failed. They end up with endless wars. So maybe we should try sticking to the gold standard.

Every country that has tried has failed.


The other thing that is bad about it is the idea of endless growth. You can not keep growing forever, at one point you become too big and fat and can no longer function.

That's true about Elvis. But is it true about an economy? Not obvious to me. It's not a physical system.

Fantastika
30-09-2014, 18:36
I'm not immediately seeing the connection between this and what you originally said. Foreign bond buying is down, we have established that much. It's not zero. The fed buying bonds brings down the interest rates which makes them much less interesting for anyone else to buy. Particularly when interest is below inflation.


The Fed never had anywhere near the "balance" it has now - $4 trillion and climbing higher by the minute. When Bush left in 2008, the Fed had a balance of $500 billion. Now that "negative balance" has octupled, with no end in sight.

How fast it is rising: http://www.usdebtclock.org/



This is quite probable, actually. China is a good candidate.


So Belgium was the biggest buyer of US bonds in 2014. Except that other countries are using Belgium to make their transactions "discreet". When Khordokovsky or other billionaires do this concealment sort of thing, the media calls it "money-laundering" but when countries do it, oh, think of some name, like "Chocolate and Candy transactions."


Except Obama is in not in charge of the Fed in any way, shape or form, and much the "printed" money does not actually show up in the economy. Inflation is still low (it actually is, not just government stats)


Oh, right. Obama just appointed the new Fed chairwoman, Janet Yellen. He nominated her and then appointed her, after making sure she would continue to follow his guidelines. But, Obama has nothing to do with the Fed.

"Printed" money does not show up in circulation. Well, yeah! I thought there was an understanding here that when it is said "the government prints money" it means that the government is doing fiscal accounting, not actually printing $5 bills at the Bureau of Engraving & Printing in Washington DC. Tours run every 15 minutes, but they don't give out free samples.


That's how it has always been. There's no other way to do it. You made it sound like they had recently invented some scheme to buy bonds out of sight as no-one else wants them.


No, that's not how it's always been, and it's not how it is now. Most people, states, companies, countries buy things and pay for them.

Anyway, the size of this debt is off the scale. It's gone way past anything in recorded history


The seeds for that crisis were sown in the years, even decades before it finally imploded. There is no way you could suggest it was an election ploy.


Naive? EVERYTHING with Premier Obama is an election ploy, is political. He is doing campaign speeches and fund-raisers daily, 6 years after he came into office. The fact that Obomba is bombing Syria is an election ploy for the November 2014 elections. Even his poodle-dog media couldn't hide the fact that Irag & Syria were being overrun by head-chopping Islamic barbarians. Popular disapproval of Obama's policy of doing nothing, was running high, so he had to do something to get the electorate's approval, to get voters back on his side. He's worried about losing the Senate in November.



Let's not exaggerate, but in any case that part of the equation is basic, not advanced economics.


Did you ever take Economics 101? Running a deficit is bad for business, bad for the government, and bad for the citizen, in *basic* economics. But maybe not, in Advanced Euro Welfare State 101.


All very relevant to the Fed, thanks. We know already where you stand on those other things.


Obama's game with the Fed is the same as with everything else "it ain't my fault."


I would say it's hard to build one without it.


Most people don't use debt to build their personal wealth, neither do companies, neither to US states, neither do cities. When a country does it, it is a dangerous game. Sanctions aren't biting Russia worse is because Russia does not have a gigantic national debt that foreign countries can manipulate through international banks.


But the US debt is indeed getting to a point where it is counter productive, too much. But the Fed has already come out and signaled an end to this huge bond buying scheme.


Well, at least you do admit that it is "counter-productive" whatever that means. So far, I don't see any customers lining up to buy bonds. And I thought you just said, the Fed needs to keep "buying" them, to keep inflation low. If there are all these customers who can't wait to buy, they would bid up the price, Inflation would take off like a 747, and the US budget would be crushed under an avalanche of interest payments.



There's a lot to say about the different factors and policies during that period. I'm not going to go into it. Fact is that current tax levels in the US are still low by historical standards.


Where do you get this stuff, from CNN? the BBC?

US business taxes are the highest in the world. US personal taxes are the highest they're ever been. The rate was higher in, say 1950, but nobody paid 91%, there were many more loopholes. Today, the percentage share of your paycheck going to fund government is at an all-time high. Federal Taxes, FICA taxes, Obamacare taxes, City taxes, County Taxes, State taxes.

If taxes are low, why are productive and self-made wealthy people fleeing New York and California, with the highest state taxes, and moving to Texas and Florida, with 0% state tax rates?


Regardless, what worked at a certain time with certain problems, isn't really relevant in any other time period.


Yeah, so, ignore the past, right? And throw all the rules of economics into the dumpster. Good plan, Stan.

$186,349 in debt apportioned to every US citizen.

A great gift for the next generation.

Uncle Wally
30-09-2014, 18:49
Again, they are audited. See the document linked to earlier entitled 'audit.'



Good argument! Have you stopped beating your wife yet?



I asked, what would you suggest as an alternative? I'm not trying to make you look stupid. But if you believe 'system A' is wrong, you must have something in mind.



Every country that has tried has failed.



That's true about Elvis. But is it true about an economy? Not obvious to me. It's not a physical system.


I can tell when there's something wrong with my computer but that doesn't mean I know how to fix it, but I'm sure there is someone that will know how.

It's not only the economy it's the whole way we live, like big fat pigs.

Uncle Wally
30-09-2014, 18:55
When has that ever not been the case? Even the communist countries ended up that way.

Without a central bank and the ability to influence the money supply, you'd have way more recessions and economic hardship. You need something to smooth the peaks and troughs. Higher interest rates when things go well, and cheap money when they go bad.


Yeah I've heard that so many times. You do understand that the FED cause 1929, 1971, 1998, 2000, 2008 and this last one is not over. !907 was cause by the same people who wanted a FED so they could get the FED and the FED is there to protect banks not us. Look who has been making wealth, only the rich get richer and bankers fatter. The FED has not made anything better for 99% of the people.

Armoured
30-09-2014, 19:41
Did you ever take Economics 101? Running a deficit is bad for business, bad for the government, and bad for the citizen, in *basic* economics. But maybe not, in Advanced Euro Welfare State 101.

Evidently your economics education was highly deficient. Almost every business I know runs a deficit at some time. Most households too - they buy houses, for example.

And for governments, running a deficit of some amount (roughly, below the growth rate of nominal GDP) is sustainable forever. Governments are not households.

Uncle Wally
30-09-2014, 21:14
Evidently your economics education was highly deficient. Almost every business I know runs a deficit at some time. Most households too - they buy houses, for example.

And for governments, running a deficit of some amount (roughly, below the growth rate of nominal GDP) is sustainable forever. Governments are not households.




Nothing is forever and all that has to happen is for China to start cashing in US bonds. Like one trillion dollars worth.

Armoured
30-09-2014, 21:21
Nothing is forever and all that has to happen is for China to start cashing in US bonds. Like one trillion dollars worth.

Oh, that old tired saw - and has nothing to do with what I wrote either. I wish China would to shut this stupid line of discussion up. Simple answer: if China did that it would wipe out the US trade deficit in short order, and undermine the whole basis of the Chinese economy.

Long answer: China can't do it unless it buys some other currency. Which will just cause a different set of problems.

mpettis.com is worth reading - from someone who knows what he's talking about, and not just a random collection of goldbuggery slogans.

Fantastika
30-09-2014, 22:37
Evidently your economics education was highly deficient. Almost every business I know runs a deficit at some time. Most households too - they buy houses, for example.

And for governments, running a deficit of some amount (roughly, below the growth rate of nominal GDP) is sustainable forever. Governments are not households.

Thank you, I got 2 A's and a B in my university economics classes. The "B" was in a tough class of about 60 people where no one received an "A" and the professor handed out only 3 "B's". The prof called class attention to my excellent treatise on "oligarchy."

You and Barky are similar - neither of you knows anything whatsoever about running a real business or how to balance a budget.

http://www.fairbrothers.com/expatphotos/BushFault.jpg

Uncle Wally
30-09-2014, 23:11
Oh, that old tired saw - and has nothing to do with what I wrote either. I wish China would to shut this stupid line of discussion up. Simple answer: if China did that it would wipe out the US trade deficit in short order, and undermine the whole basis of the Chinese economy.

Long answer: China can't do it unless it buys some other currency. Which will just cause a different set of problems.

mpettis.com is worth reading - from someone who knows what he's talking about, and not just a random collection of goldbuggery slogans.

China has been buying all the gold the can get their hands on and are dumping dollars if you haven't heard.

Armoured
01-10-2014, 03:52
China has been buying all the gold the can get their hands on and are dumping dollars if you haven't heard.

Great! And I assume the US dollar has collapsed?

Uncle Wally
01-10-2014, 09:30
Great! And I assume the US dollar has collapsed?





Soon, soon.

Armoured
01-10-2014, 10:05
Soon, soon.

I've been hearing the same line from goldbuggers for ... well, forever. At least 10 years.

Reminds of the old joke - what does the masochist say to the sadist? "Hurt me, hurt me."

What does the sadist say to the masochist? "Soon, soon."

So anyway: why don't you give us some definition of "US dollar collapse" (say, to gold?) and a timeframe in which it will happen, and we can check in later.

Uncle Wally
01-10-2014, 10:52
Oh, that old tired saw - and has nothing to do with what I wrote either. I wish China would to shut this stupid line of discussion up. Simple answer: if China did that it would wipe out the US trade deficit in short order, and undermine the whole basis of the Chinese economy.

Long answer: China can't do it unless it buys some other currency. Which will just cause a different set of problems.

mpettis.com is worth reading - from someone who knows what he's talking about, and not just a random collection of goldbuggery slogans.

Well looky here,

China’s yuan surpassed the Swiss franc as the seventh most-used currency in the world.

The ruble’s share of global trading dropped to 0.4 percent from 0.6 percent since 2012, falling five places to rank 18th most-traded in the world, while the yuan tripled to 1.5 percent, according to the Society for Worldwide Interbank Financial Telecommunication, or SWIFT. Even as protests in Hong Kong this week challenged China’s leadership, direct trading began between the yuan and the euro, capping a year in which trade with European Union nations grew 12 percent.




Capital flow into China totaled $108 billion through the end of August, about triple the amount during the same period two years ago, according to data compiled by Bloomberg. The yuan, whose spot rate the government largely controls, has weakened 1.4 percent against the dollar this year, trimming its gain since 2005 to 35 percent


http://www.bloomberg.com/news/2014-09-30/putin-reserve-rubles-vanish-in-crimea-as-yuan-holds-gain.html

Armoured
01-10-2014, 10:58
Well looky here,

China’s yuan surpassed the Swiss franc as the seventh most-used currency in the world.

All well and good. But what does that have to do with dollar collapse? China doing well is not a bad thing for the US (in my view).

Uncle Wally
01-10-2014, 11:14
All well and good. But what does that have to do with dollar collapse? China doing well is not a bad thing for the US (in my view).



Weren't you just saying China needed dollars?


As less and less people need dollars they will become worth less. Why because they are only back by a gun.

Armoured
01-10-2014, 11:36
Weren't you just saying China needed dollars?

Perhaps I was unclear, but no, I didn't say that. I said if China sells dollars it will have to buy something else, and that its economy (right now) is to a significant degree built on buying dollars to pump up exports. It is transitioning but not yet clear to what.

In truth, I wish all success and think it's better for all if it works.


As less and less people need dollars they will become worth less. Why because they are only back by a gun.

Blah blah blah. I'm still waiting for your 'dollar collapse' scenario and timeframe.

Uncle Wally
01-10-2014, 12:21
Blah blah blah. I'm still waiting for your 'dollar collapse' scenario and timeframe.

Sorry no "timeframe" just yet but soon, maybe this month maybe next year, it depends on the war going on now, the economic war.

Yaks
01-10-2014, 14:03
Actually-if you knew the markets at all-you would know the US dollar is expected to go on a long term "bull run" and appreciate in value. The Eurozone continues to show signs of weakness which was the strongest contender for an alternative currency. When I left Russia the Australian dollar was $1.10 US. Now it is .87 US cents. The US Fed are looking at ending QE and their bond buying scheme and US interest rates are likely to rise-further strengthening the US Dollar. As this happens commodities-like gold and oil-that are priced in US dollars are expected to plummet even more than they have already. Oil is already at the level the Russian government requires to just balance the budget with risks to the downside.

Uncle Wally
01-10-2014, 16:01
Actually-if you knew the markets at all-you would know the US dollar is expected to go on a long term "bull run" and appreciate in value. The Eurozone continues to show signs of weakness which was the strongest contender for an alternative currency. When I left Russia the Australian dollar was $1.10 US. Now it is .87 US cents. The US Fed are looking at ending QE and their bond buying scheme and US interest rates are likely to rise-further strengthening the US Dollar. As this happens commodities-like gold and oil-that are priced in US dollars are expected to plummet even more than they have already. Oil is already at the level the Russian government requires to just balance the budget with risks to the downside.



Funny you should say that.


Gold is up today so is silver and sorry to tell you this but gold has done a lot better than the dollar over the last ten years. In 2001 gold was at about $250 now it's $1210 if you had bought gold and held on you would have made almost $1000 for every $250


Oil? Well OPIC is pumping out more to push the price down and hurt Russia, it's all manipulation.

JanC
01-10-2014, 16:46
The Fed never had anywhere near the "balance" it has now - $4 trillion and climbing higher by the minute. When Bush left in 2008, the Fed had a balance of $500 billion. Now that "negative balance" has octupled, with no end in sight.

Actually is IS in sight, the Fed has already said so.

Frankly, this can be argued about back and forth but the truth is that it's too early to tell whether this experiment has worked or not. Come back in a few years. Meanwhile, inflation is low, and the US economy is growing.


So Belgium was the biggest buyer of US bonds in 2014. Except that other countries are using Belgium to make their transactions "discreet". When Khordokovsky or other billionaires do this concealment sort of thing, the media calls it "money-laundering" but when countries do it, oh, think of some name, like "Chocolate and Candy transactions."

What. On. Earth. Are. You. On. About?

Just because some country (like China) doesn't want to be seen as directly buying US debt anymore doesn't make any of this illegal or even gray. It's 100% fine, the only difference is they are spending slightly more for a middleman. It's like asking your friend to pick up a nudie mag for you at the shop, not evading taxes or dirty money.

Money laundering is fundamentally different.


But, Obama has nothing to do with the Fed.

Indeed he does not, in actual fact.



Anyway, the size of this debt is off the scale. It's gone way past anything in recorded history

Whilst this is true, it applies to many time periods and presidents. Many of them left office with the debt higher than it was at any point before.




EVERYTHING with Premier Obama is an election ploy, is political.

Because Fantastika.


He is doing campaign speeches and fund-raisers daily, 6 years after he came into office.

No, he doesn't. And it doesn't make any sense for him to do so at this stage, either.


Did you ever take Economics 101? Running a deficit is bad for business, bad for the government, and bad for the citizen, in *basic* economics.

Basic economics? Find me a textbook that says that would you? Oh wait this is Fantastika who never backs up a single thing he wildly claims.

Most businesses run deficits at some point or other. Deficits and borrowing are often necessary to make any business successful.

Let's say you have a business that produces X. You're barely breaking even or running a loss. You have 2 options: turn off the lights and go on unemployment until you find a job or go to a bank or investor with a plan to use this borrowed money to make more money.

Maybe your business plan requires money to go into developing a new product, or doing heavy promotion and marketing to make people aware you exist. Meanwhile you are running deficits and spending money you don't have, but it is entirely necessary to have a hope of making your business successful. If it works, you end up with a prosperous business which has no problem paying back the money with interest. A universe where you can't run deficits or borrow is going to be one shitty place economically.

I am calling BS on your claimed economics grades, by the way.


Obama's game with the Fed is the same as with everything else "it ain't my fault."

Whereas in your world, absolutely everything is Obama's fault. Makes sense.



Most people don't use debt to build their personal wealth, neither do companies

Yes, they do.



Well, at least you do admit that it is "counter-productive" whatever that means.

It's counter-productive because public opinion now believes it is a bad thing. Which means it IS a bad thing, whether it would've been otherwise or not.


So far, I don't see any customers lining up to buy bonds. And I thought you just said, the Fed needs to keep "buying" them, to keep inflation low.

No, that is not what I said. I said the Fed buying bonds keeps interest rates low. Not inflation. Completely different.


If there are all these customers who can't wait to buy, they would bid up the price

Technically they would be bidding it down, which is what is happening as rates are super low (the opposite of, say, Greece).
If there was only the Fed buying, rates would be much higher (more expensive for the government to borrow) than they are.

A quick google showed one auction in July was oversubscribed more than 4 times.


US business taxes are the highest in the world.

They are very high but not quite highest overall. Close though. Still, the tax rate big corporations pay for example is tiny. The problem is the tax code is pretty hopeless and difficult for small businesses to live with. This isn't news, and it predates Obama by a long time. The problem is creating a good tax code and passing it while every career politician who needs to vote on it is in the pockets of Big Business.


US personal taxes are the highest they're ever been.

Nope they aren't. http://qz.com/74271/income-tax-rates-since-1913/


If taxes are low, why are productive and self-made wealthy people fleeing New York and California, with the highest state taxes, and moving to Texas and Florida, with 0% state tax rates?

Because they can easily do so? Because it's worth it? While staying within a union it's always going to be better to be in a place with lower taxes, as you can still reach the same customers in an open market.

The problem with US taxation is that it's inefficient and often targeting the wrong places (lobbying probably has something to do with that)
Overall the Government isn't receiving more taxes as a percentage of GDP than they used to, less in fact (and it is a fact: http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=200 )

But if you look at income inequality, the rich get richer while regular folks have been stagnating in terms of inflation-corrected purchase power for decades. The Apples and Googles, along with hedge funds managers and CEOs have massive real income growth whilst everyone else is treading water.


Yeah, so, ignore the past, right? And throw all the rules of economics into the dumpster.

Sigh. Going for opposites again?

The past is no guarantee for the future, you should know that much. The problems of today are different of those back then, the actual tax rates are different too. Different problems require different solutions and all that.

Uncle Wally
01-10-2014, 17:04
Actually is IS in sight, the Fed has already said so.

Frankly, this can be argued about back and forth but the truth is that it's too early to tell whether this experiment has worked or not. Come back in a few years. Meanwhile, inflation is low, and the US economy is growing.



What. On. Earth. Are. You. On. About?

Just because some country (like China) doesn't want to be seen as directly buying US debt anymore doesn't make any of this illegal or even gray. It's 100% fine, the only difference is they are spending slightly more for a middleman. It's like asking your friend to pick up a nudie mag for you at the shop, not evading taxes or dirty money.

Money laundering is fundamentally different.



Do you really think Belgium can afford to by bonds?

http://seekingalpha.com/instablog/839735-katchum/2689871-belgium-buys-u-s-treasuries-that-nobody-wants


They have $500 billion in GDP they have bought like $250 billion. They really have the money for that or is it the FED trying to hide QE4 or 5 or which ever number we're on. China sell $48 billion Belgium buys $56 billion. It's the FED buying and hiding the fact.


Oh and the FED sets the interst rate they buy bond to ajust inflation

Armoured
01-10-2014, 17:24
Do you really think Belgium can afford to by bonds?

That's a total misinterpretation of this information. It tells you where the custodian registers - it does NOT mean (necessarily) government.

http://www.treasury.gov/ticdata/Publish/mfh.txt
FAQ is here:
http://www.treasury.gov/resource-center/data-chart-center/tic/Pages/ticfaq2.aspx#q7

So it could easily be Belgian financial institutions, who might be holding them for others, etc.

JanC
01-10-2014, 17:40
Do you really think Belgium can afford to by bonds?

Yes. That many? No. But as Armoured said it only means they were bought via a Belgian financial organisation. Nothing more, nothing less.


It's the FED buying and hiding the fact.

Proof?

I know you don't have any, but in any case the Fed can't hide anything. It can't hide its accounts.



Oh and the FED sets the interst rate they buy bond to ajust inflation

The interest rate on the bonds (debt), silly.

Uncle Wally
01-10-2014, 21:40
Yes. That many? No. But as Armoured said it only means they were bought via a Belgian financial organisation. Nothing more, nothing less.



Proof?

I know you don't have any, but in any case the Fed can't hide anything. It can't hide its accounts.




The interest rate on the bonds (debt), silly.

Armoured said huh, well let him prove it.

The FED can do anything they want. They just press a button and poof there's a trillion dollars, in numbers that is not real paper. They are not fully audited I thought I proved that like the FED is a private bank, well ok a hybred private/public bank made up of a bunch of private banks.


They can't hide what? Like who got a trillion dollars?

$9,000,000,000,000 MISSING From The Federal Reserve SHOCKING FOOTAGE - YouTube

$500 billion don't know who he when to.

Alan Grayson: "Which Foreigners Got the Fed's $500,000,000,000?" Bernanke: "I Don't Know." - YouTube


Listen to Greenspan say the FED is an "independent agency and no other agency can over rule actions" of the FED.

Greenspan says Federal Reserve is above law and answers to no one - YouTube

Fantastika
01-10-2014, 23:08
Proof?

They are hiding it, you can't "prove" anything. Because it's hidden. You know when it's hidden, it's not open for anyone to see. That's a pretty simple concept, do you understand it?

It's called "money laundering."

OH, except when Belgium does it, it's called "discreet transfer."

JanC
01-10-2014, 23:38
They are hiding it, you can't "prove" anything. Because it's hidden. You know when it's hidden, it's not open for anyone to see. That's a pretty simple concept, do you understand it?

I understand that you can't possibly know if it's true then, yes. I can make anything up and claim it's "hidden". Well done. Great case for the screwball side.


It's called "money laundering."

Really? This is the definition of money laundring:

Money laundering is the process whereby the proceeds of crime are transformed into ostensibly legitimate money or other assets.

Explain to me how this is in any way applicable to a country buying foreign government bonds semi-anonymously.

This argument is so mind bogglingly retarded I don't think it's possible to articulate into words.

Yaks
02-10-2014, 03:45
Funny you should say that.


Gold is up today so is silver and sorry to tell you this but gold has done a lot better than the dollar over the last ten years. In 2001 gold was at about $250 now it's $1210 if you had bought gold and held on you would have made almost $1000 for every $250


Oil? Well OPIC is pumping out more to push the price down and hurt Russia, it's all manipulation.

yes and gold is off from its high over $1700 US too. But if you want to play timeframes look at gold in the early 1980s, inflation adjusted, over $2100. Yep 30 years later if you held gold you still wouldn't have got your money back.

Fantastika
02-10-2014, 05:31
money laundring:

Money laundering is the process whereby the proceeds of crime are transformed into ostensibly legitimate money or other assets.

Explain to me how this is in any way applicable to a country buying foreign government bonds semi-anonymously.

This argument is so mind bogglingly retarded I don't think it's possible to articulate into words.

You never answered the question, Mr. Debate Club 101, why are they hiding these "discreet transfers" of $200 billion?

"semi-anonymously" - :rofl:

You get a :10806: for obfuscation.

Fantastika
02-10-2014, 06:29
Listen to Greenspan say the FED is an "independent agency and no other agency can over rule actions" of the FED.



Alan Greenspan is widely regarded, and at my university, as the most intelligent economist in the US, if not the world. Unfortunately, today's media ignores him or denigrates him as a bad teacher who is calling the drunken-spending children in from playtime in recess...

http://www.thedailybeast.com/articles/2011/07/01/alan-greenspan-u-s-may-default-blames-president-obama.html

Even the Daily Beast, an Obama boot-licking poodle dog, knows something is wrong with the "economic strategy" of piling up mountains of debt.

Armoured
02-10-2014, 09:18
Alan Greenspan is widely regarded, and at my university, as the most intelligent economist in the US, if not the world.

Ummmm, no.

http://krugman.blogs.nytimes.com/2013/10/20/the-worst-ex-central-banker-in-the-world/

Many, many other sources support - not the world's best economist or central banker.


Unfortunately, today's media ignores him or denigrates him as a bad teacher who is calling the drunken-spending children in from playtime in recess...

At any rate, unclear how you think his point that 'too much debt is bad' (which is a truism, of course- too much of anything is bad) somehow supports your point that running deficits or borrowing is bad.

This is a man who was famously concerned that the national debt would disappear too quickly (Clinton period), after all.

Armoured
02-10-2014, 09:31
The Fed never had anywhere near the "balance" it has now - $4 trillion and climbing higher by the minute. When Bush left in 2008, the Fed had a balance of $500 billion.

You know so many things that are not true. It was actually $2.2 trillion.

http://www.federalreserve.gov/monetarypolicy/files/BSTFRcombinedfinstmt20072008.pdf

Even if you want to retread and argue the year before your numbers are wrong.


Now that "negative balance" has octupled, with no end in sight.

What do you mean by 'negative balance'? I can't see how this relates to the Fed.

Yaks
02-10-2014, 15:52
there is little wrong in having a huge debt when the debt is in your own currency and you control the printing presses and -by doing so-you can devalue the debt by lowering your currency on a whim(making it easy to pay back) or assist exporters to help you trade yourself out of it. US debt is not the same as Greek debt(which is not in its own currency and thus it can't devalue to get out of it and it hangs likes a millstone around the neck of the country.) The US economy is adding over 200,000 jobs a month for the last several months and unemployment is just over 6%. The economy is improving at a rate that interest rates will be rising in the new year, further strengthening the dollar.

Meanwhile China is in several asset bubbles and has only kept growing by creating empty cities and roads to nowhere. Of the two, China is more likely to have a hard landing than the US.

Keep in mind Russia is looking at recession too as well as having huge capital outflows. The Rouble is at the point of intervention and the last time the central bank intervened it blew through one third of its strategic reserve in just a week.
Brent crude is at the tipping point the Russians require to maintain the budget with no room to move. So again, another country in a much more dire situation than what the US is facing.

I could also mention the Eurozone but i think you get the point. The US economy is doing quite well considering.

Uncle Wally
02-10-2014, 16:46
there is little wrong in having a huge debt when the debt is in your own currency and you control the printing presses and -by doing so-you can devalue the debt by lowering your currency on a whim(making it easy to pay back) or assist exporters to help you trade yourself out of it. US debt is not the same as Greek debt(which is not in its own currency and thus it can't devalue to get out of it and it hangs likes a millstone around the neck of the country.) The US economy is adding over 200,000 jobs a month for the last several months and unemployment is just over 6%. The economy is improving at a rate that interest rates will be rising in the new year, further strengthening the dollar.

Meanwhile China is in several asset bubbles and has only kept growing by creating empty cities and roads to nowhere. Of the two, China is more likely to have a hard landing than the US.

Keep in mind Russia is looking at recession too as well as having huge capital outflows. The Rouble is at the point of intervention and the last time the central bank intervened it blew through one third of its strategic reserve in just a week.
Brent crude is at the tipping point the Russians require to maintain the budget with no room to move. So again, another country in a much more dire situation than what the US is facing.

I could also mention the Eurozone but i think you get the point. The US economy is doing quite well considering.



Reallity,

Tackling The Real Unemployment Rate: 12.6%

http://www.forbes.com/sites/louisefron/2014/08/20/tackling-the-real-unemployment-rate-12-6/

“Marginally attached” describes individuals not currently in the labor force who wanted and were available for work. The official unemployment numbers exclude them, because they did not look for work in the 4 weeks preceding the unemployment survey. In July, this marginally attached group accounted for 2.2 million people. To put that in perspective, there are currently 16 states in the U.S. with populations smaller than 2.2 million.


Bubbles,

Concern has been rising that investors are paying too much for securities in a search for good returns when interest rates are hovering near record lows, creating the bubble conditions for a new market crash.

The Bank of International Settlements warned at the end of last month that financial markets were running ahead of economic reality, and called for governments to stop new debt-driven overspending.

http://news.yahoo.com/asset-bubbles-could-deflate-global-recovery-061609857.html;_ylt=A0LEVyQyRy1UnKMAqotXNyoA;_ylu=X3oDMTEzajBuNmM4BHNlYwNzcgRwb3MDOARjb2xvA2JmMQR2dGlkA1ZJUDUwM18x

Many housing industry experts and economists (especially “celebrity economists”) have been touting their belief that the housing recovery has been very real over the past year to 18 months, and see things only getting better.
We, on the other hand, have seemingly been a rare contrarian.
For many months we have privately and publicly stated that the current housing “recovery” is an illusion – a false recovery built upon a sandy foundation above a slippery slope.
But the truth is, things are even worse.
In a recent article published by the Daily Real Estate News, (February 12, 2014 – “Rising Prices Chip Away at Housing Affordability”), evidence seems to suggest there are signs of a new housing bubble.

http://ushousingblog.blogspot.ru/2014/07/us-housing-bubble-to-burst-in-2014-new.html

Yaks
02-10-2014, 20:08
p/e are not stretched, indeed within norms making the US sharemarket at present fair value. Not cheap but not expensive either. It is has continued to climb the "wall of worry" which is typically good for stocks. Furthermore there has been an unwinding of speculative positions that have propped up commodities such as gold and oil. Oil indeed today broke support.

Yes unemployment stats can be misleading on first glance, but they are consistent in their variables. Thus a 6.1% shown rate has far few people looking for work than a 7.8% rate. You can argue with the formula but can't argue that it is heading southward.

asset price bubbles? there isn't much M&A activity at crazy multiples, nor commercial or residential real estate booms-indeed the latter is barely recovered. the only cautious tale is that of the Alibaba IPO. But that is one IPO when there has been a lack of quality ones over the last year. Inflation is non existent-indeed deflation is the biggest threat and soon the Eurozone will copy America's lead and print money to get them out of it. But, as stated, the US(remembering I am an Aussie so there is no bias) has weathered the GFC storm quite well and is recovering quite well-indeed much better than the rest of the world. China is slowing and thus so are commodity export countries like Australia, Canada, Brazil and Russia.

Now sure the fed could stuff it up by raising rates too soon but their timetable seems to be in line with what most people are thinking. Eurozone is a greater issue-while Russia(with or without sanctions) is going to be quite a bit of pain. hopefully most of that will just be oligarghs losing billions and not affect the average russian too much. Time will tell. but it is silly talking gloom about the US when it is in the best condition going forward right now.

Fantastika
03-10-2014, 01:54
Yes unemployment stats can be misleading on first glance, but they are consistent in their variables. Thus a 6.1% shown rate has far few people looking for work than a 7.8% rate. You can argue with the formula but can't argue that it is heading southward.


Wally has a point: http://www.usdebtclock.org/#

While the US was adding 35,000,000 people between 2000 and 2014, the number of employed people decreased from 153 million to 146 million, and while the official unemployment rate is 6%, the actual rate is 12%.

The Hologram in the White House is practicing virtual reality with his economic re-definitions: "employed person" has been redefined to include part-time workers, not just full-time workers; "unemployed" has been more narrowly defined to not include those people who have given up looking for a job.

Armoured
03-10-2014, 05:00
The Hologram in the White House is practicing virtual reality with his economic re-definitions: "employed person" has been redefined to include part-time workers, not just full-time workers; "unemployed" has been more narrowly defined to not include those people who have given up looking for a job.

You believe Obama changed the definitions? They've been part of the definitions for ages - well before.

Another thing you know that ain't so.

Fantastika
03-10-2014, 06:41
The Hologram in the White House is practicing virtual reality with his economic re-definitions: "employed person" has been redefined to include part-time workers, not just full-time workers; "unemployed" has been more narrowly defined to not include those people who have given up looking for a job.

You believe Obama changed the definitions? They've been part of the definitions for ages - well before.


No, they were redefined under Obama regime. Anyone with a basic brain stem knows that they were redefined by this banana-republic dictator.

You are a waste of time and a Russia-bashing troll. And you're not very intelligent, either.

http://www.usdebtclock.org/#

Armoured
03-10-2014, 08:02
No, they were redefined under Obama regime. Anyone with a basic brain stem knows that they were redefined by this banana-republic dictator.

Let's see a source, then. Or all can just assume it's another thing you know that ain't so - anther fantasy fact.

JanC
03-10-2014, 09:08
"unemployed" has been more narrowly defined to not include those people who have given up looking for a job


Anyone with a basic brain stem knows that they were redefined by this banana-republic dictator.

Bad news about your brain stem mate, those changes happened back in 1994 under the Clinton administration.

Are you unaware of Google's existence by any chance?

Uncle Wally
03-10-2014, 13:27
Let's see a source, then. Or all can just assume it's another thing you know that ain't so - anther fantasy fact.



You just believe any lie the US puts out, why can't she have her own fantasic fantasy? Is it denile? You know it is easier than to face the horror the US and it's bankers have given us the last 13 years if you just try hard not to believe the signs you feel safe. 9/11 was an inside job, no kids died at Sandy Hook and the Boston bombing was a Blackwater/Hollywood false flag all with fake blood and actors.

Armoured
03-10-2014, 14:35
You just believe any lie the US puts out, why can't she have her own fantasic fantasy?

Having your own fantasies is healthy. Having your own facts is delusional.


Is it denile?

No, it's Danube. :7534:

Uncle Wally
03-10-2014, 14:45
Having your own fantasies is healthy. Having your own facts is delusional.



No, it's Danube. :7534:


You have yourself a good weekend.