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Shins
Fun guy
Registered: 09/15/04
Posts: 16,337
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Fed announces QE infinity
#16846865 - 09/14/12 02:43 PM (11 years, 6 months ago) |
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did anyone catch the lastest fed release?
they're going to be buying tens of billions in mortgage backed securities indefenitely. they also promised to keep interest rates low even free a recovery.
I'm only scratching the surface here of the announcment, but this is really bad news for the economy and dollar.
I hope you've got a good stack of precious metals already or some other plan because were all about to get tucked.
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Anonymous
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Re: Fed announces QE infinity [Re: Shins]
#16848005 - 09/14/12 06:57 PM (11 years, 6 months ago) |
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Infinity? Is this just so they can set a tone of that they will be around forever, which clearly isn't the case.
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geokills
∙∙∙∙☼ º¿° ☼∙∙∙∙
Registered: 05/08/01
Posts: 23,563
Loc: city of angels
Last seen: 1 day, 3 hours
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Re: Fed announces QE infinity [Re: Anonymous]
#16848407 - 09/14/12 08:35 PM (11 years, 6 months ago) |
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"QE infinity" is a term being popularized in the media, not by the Federal Reserve itself. Although, it does have some legitimate basis. Here is what I wrote yesterday in my Stocks thread:Quote:
Well that was nice. The Fed is going to run an open ended program whereby it will be purchasing mortgage backed securities and long term treasuries, as necessary, until they are satisfied that the economy is working well again. This is a significant change from previous policy where they would set a time limit and dollar cap on their operation. They also indicated that interest rates will be kept low through mid 2015. This is favorable for the market, and we see it popping as I type.
Obviously, another desperate attempt to do the same old thing and hope for a different outcome. Quite frankly insane, but for the short-sighted, absolutely brilliant. Europe does not appear to be too far behind, although Germany is fighting the good fight.
-------------------- -------------------- ┼ ··∙ long live the shroomery ∙·· ┼ ...╬π╥ ╥π╬...
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qman
Stranger
Registered: 12/06/06
Posts: 34,927
Last seen: 43 minutes, 37 seconds
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Re: Fed announces QE infinity [Re: geokills]
#16851119 - 09/15/12 12:04 PM (11 years, 6 months ago) |
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Just wait until they have to announce more treasury bond purchases, think about it, who would buy treasury bonds with such low yields in this environment? So not only will they have to buy from all of the upcoming sellers, they also will have to buy all the new issuance coming onto market.
Then we also have all the state debt that is in big trouble, California borrowed .65 cents for every dollar it spent last month, the state is beyond broke, before we know it the Fed will be the only buyer of mortgage, treasury, and state debt. This is the beginning of the end of the current financial system.
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Anonymous
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Re: Fed announces QE infinity [Re: qman]
#16852410 - 09/15/12 04:23 PM (11 years, 6 months ago) |
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This amounts to a stealth tax on the American consumer via inflation. Its really hard to invest in this environment. Printing money via counterfeiting is theft and so is QE.
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qman
Stranger
Registered: 12/06/06
Posts: 34,927
Last seen: 43 minutes, 37 seconds
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Re: Fed announces QE infinity [Re: Anonymous]
#16852861 - 09/15/12 06:11 PM (11 years, 6 months ago) |
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Quote:
Anonymous said: This amounts to a stealth tax on the American consumer via inflation. Its really hard to invest in this environment. Printing money via counterfeiting is theft and so is QE.
Theft is the correct word for sure, but this is what governments always do with fiat money, they abuse it and then finally destroy it.
So far the inflation has been tame since the QE started, inflation is much higher than stated, but the inflation that is coming will be obvious to all in my opinion.
I really feel sorry for older people who don't want to risk capital and stay in cash earning 0% while inflation is eating away on purchasing power. The only investments I feel comfortable with are gold, silver, and maybe energy related assets.
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Mr. E
No Touchies!
Registered: 07/07/12
Posts: 165
Loc: Hiding in the Sky
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Re: Fed announces QE infinity [Re: Shins] 1
#16854233 - 09/16/12 12:06 AM (11 years, 6 months ago) |
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I just stumbled across this video the other day. Scary and amusing at the same time! It was made a few years ago but seems even more relevant now.
-------------------- Only Red Horse Rainbows can save us, let them run wild and asunder!
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Anonymous
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Re: Fed announces QE infinity [Re: Mr. E]
#16859213 - 09/16/12 09:24 PM (11 years, 6 months ago) |
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Why did our credit downgrade get no media attention? Strange.
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Lana
Head Banana
Registered: 10/27/99
Posts: 3,109
Loc: www.MycoSupply.com
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Re: Fed announces QE infinity [Re: qman]
#16861042 - 09/17/12 07:43 AM (11 years, 6 months ago) |
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Quote:
qman said:
Quote:
Anonymous said: This amounts to a stealth tax on the American consumer via inflation. Its really hard to invest in this environment. Printing money via counterfeiting is theft and so is QE.
Theft is the correct word for sure, but this is what governments always do with fiat money, they abuse it and then finally destroy it.
So far the inflation has been tame since the QE started, inflation is much higher than stated, but the inflation that is coming will be obvious to all in my opinion.
I really feel sorry for older people who don't want to risk capital and stay in cash earning 0% while inflation is eating away on purchasing power. The only investments I feel comfortable with are gold, silver, and maybe energy related assets.
gamn, well said and true. Most here have never experience the years when Carter was president and inflation was bad. I think that you're seeing inflation within food prices almost on a weekly basis. I guess that we'll have to wait and see. Like a bad B-horror movie, you just can't stop watching.
Lana
-------------------- Myco Supply - Distributors of Mycological Products http://www.MycoSupply.com The Premiere Source for Mushroom Growing Supplies. Visit us online or call us toll free
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qman
Stranger
Registered: 12/06/06
Posts: 34,927
Last seen: 43 minutes, 37 seconds
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Re: Fed announces QE infinity [Re: Lana]
#16861326 - 09/17/12 09:24 AM (11 years, 6 months ago) |
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Quote:
Lana said:
Quote:
qman said:
Quote:
Anonymous said: This amounts to a stealth tax on the American consumer via inflation. Its really hard to invest in this environment. Printing money via counterfeiting is theft and so is QE.
Theft is the correct word for sure, but this is what governments always do with fiat money, they abuse it and then finally destroy it.
So far the inflation has been tame since the QE started, inflation is much higher than stated, but the inflation that is coming will be obvious to all in my opinion.
I really feel sorry for older people who don't want to risk capital and stay in cash earning 0% while inflation is eating away on purchasing power. The only investments I feel comfortable with are gold, silver, and maybe energy related assets.
gamn, well said and true. Most here have never experience the years when Carter was president and inflation was bad. I think that you're seeing inflation within food prices almost on a weekly basis. I guess that we'll have to wait and see. Like a bad B-horror movie, you just can't stop watching.
Lana
Our situation today makes the 70's look like a paradise. In the 70's, investors could at least earn a decent rate of interest to compensate for the inflation. If inflation was running at 10-11%, savings accounts were giving 15% and higher, thus positive real interest rates, one could preserve their purchasing power.
Today, the governments states inflation at 1.5-2% which is a big lie, in reality inflation is running 5-7%, yet savings accounts yield 0%, thus we have real negative interest rates, one loses purchasing power staying in cash.
The most important difference from the 70's is wage growth, workers in the 70's were given yearly raises to compensate for the higher costs of living, my father was getting 9-11% raises every year. Today, we basically have flat wages, or definitely below the rate of inflation, thus real wages are declining.
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Gilgamesh18
Herbivore Man
Registered: 03/01/12
Posts: 11,671
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Re: Fed announces QE infinity [Re: qman]
#16861337 - 09/17/12 09:27 AM (11 years, 6 months ago) |
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Quote:
qman said:
Quote:
Lana said:
Quote:
qman said:
Quote:
Anonymous said: This amounts to a stealth tax on the American consumer via inflation. Its really hard to invest in this environment. Printing money via counterfeiting is theft and so is QE.
Theft is the correct word for sure, but this is what governments always do with fiat money, they abuse it and then finally destroy it.
So far the inflation has been tame since the QE started, inflation is much higher than stated, but the inflation that is coming will be obvious to all in my opinion.
I really feel sorry for older people who don't want to risk capital and stay in cash earning 0% while inflation is eating away on purchasing power. The only investments I feel comfortable with are gold, silver, and maybe energy related assets.
gamn, well said and true. Most here have never experience the years when Carter was president and inflation was bad. I think that you're seeing inflation within food prices almost on a weekly basis. I guess that we'll have to wait and see. Like a bad B-horror movie, you just can't stop watching.
Lana
Our situation today makes the 70's look like a paradise. In the 70's, investors could at least earn a decent rate of interest to compensate for the inflation. If inflation was running at 10-11%, savings accounts were giving 15% and higher, thus positive real interest rates, one could preserve their purchasing power.
Today, the governments states inflation at 1.5-2% which is a big lie, in reality inflation is running 5-7%, yet savings accounts yield 0%, thus we have real negative interest rates, one loses purchasing power staying in cash.
The most important difference from the 70's is wage growth, workers in the 70's were given yearly raises to compensate for the higher costs of living, my father was getting 9-11% raises every year. Today, we basically have flat wages, or definitely below the rate of inflation, thus real wages are declining.
How did this all happen?
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qman
Stranger
Registered: 12/06/06
Posts: 34,927
Last seen: 43 minutes, 37 seconds
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Re: Fed announces QE infinity [Re: Gilgamesh18]
#16861986 - 09/17/12 11:45 AM (11 years, 6 months ago) |
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"How did this all happen?" I would say the key word is globalization, I remember that everyone said that this trade with third world economies would be the greatest thing in the world for US workers, they were wrong bigtime.
Shipping your manufacturing base overseas is just devastating to the overall economy, it increases unemployment, decreases wages, and lowers the standard of living. Very few opposed the gutting of US manufacturing jobs, most believed in the hype. Every manufacturing job supports 5 domestic service jobs, it's a terrible domino effect. We can not compete with foreign workers that get paid .50-1.00 dollar per dollar, without any benefits.
So today, we have massive deficits ($16 trillion) not counting Fannie and Freddie mortgage debt (7 trillion) and no way to ever pay it back. Just to make the interest payments, the Fed must manipulate rates down to 0-2%. If the average interest rate just went to 5%, which is still very low, our interest payments would be over $800 per year, or 1/3 of total tax revenue. As we can see, that would be the end game.
The Fed and ECB are going to continue to buy all the toxic debt going forward, they are going to push the limits of fiat money to the edge of the cliff, but it will come to an end at some point. We are going to get a devaluation of currency either from market forces or official policy. Most Americans or Europeans have no clue what is coming, it's a matter of when not if.
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Memories
Registered: 05/09/12
Posts: 10,484
Loc: Suwannee River
Last seen: 3 years, 11 months
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Re: Fed announces QE infinity [Re: qman] 1
#16862006 - 09/17/12 11:49 AM (11 years, 6 months ago) |
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I just hope this unsustainable juggernaut has enough fuel to last through most of my life.
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unknown1123
Experimental
Registered: 05/15/08
Posts: 5,813
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Re: Fed announces QE infinity [Re: Memories]
#16862048 - 09/17/12 11:57 AM (11 years, 6 months ago) |
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Quote:
Memories said: I just hope this unsustainable juggernaut has enough fuel to last through most of my life.
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qman
Stranger
Registered: 12/06/06
Posts: 34,927
Last seen: 43 minutes, 37 seconds
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Re: Fed announces QE infinity [Re: Memories]
#16862165 - 09/17/12 12:25 PM (11 years, 6 months ago) |
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Quote:
Memories said: I just hope this unsustainable juggernaut has enough fuel to last through most of my life.
Unless you are 85, your are going to see this ponzi scam come to a end, it could happen tommorrow, or in 3-4 years.
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Gilgamesh18
Herbivore Man
Registered: 03/01/12
Posts: 11,671
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Re: Fed announces QE infinity [Re: qman]
#16862282 - 09/17/12 12:50 PM (11 years, 6 months ago) |
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So basically there is no way to get out of debt at all? Assuming defense and entitlement spending are brought down to realistic levels and taxes are increased would that help at all or would it just delay the inevitable crash.
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Memories
Registered: 05/09/12
Posts: 10,484
Loc: Suwannee River
Last seen: 3 years, 11 months
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Re: Fed announces QE infinity [Re: qman]
#16862284 - 09/17/12 12:50 PM (11 years, 6 months ago) |
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What scale of resultant collapse would you predict? Worse than the great depression?
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Shins
Fun guy
Registered: 09/15/04
Posts: 16,337
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Re: Fed announces QE infinity [Re: Gilgamesh18]
#16862846 - 09/17/12 02:24 PM (11 years, 6 months ago) |
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Quote:
Gilgamesh18 said: So basically there is no way to get out of debt at all? Assuming defense and entitlement spending are brought down to realistic levels and taxes are increased would that help at all or would it just delay the inevitable crash.
It would just delay it at the cost of austerity.
The system was designed to fail, if you know basic math and learn about the monetary system its obvious that that is more debt and interest than there is money to pay it.
It's no mistake, its some kind of massive fascist banker fraud.
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qman
Stranger
Registered: 12/06/06
Posts: 34,927
Last seen: 43 minutes, 37 seconds
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Re: Fed announces QE infinity [Re: Gilgamesh18]
#16862874 - 09/17/12 02:27 PM (11 years, 6 months ago) |
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Quote:
Gilgamesh18 said: So basically there is no way to get out of debt at all? Assuming defense and entitlement spending are brought down to realistic levels and taxes are increased would that help at all or would it just delay the inevitable crash.
There is no way out unfortunately, we are in a debt death spiral. Lets just assume for one minute that our leaders actually cut the defense and entitlement spending (which is highly unlikely), what would happen?
The net result would be a plunge in GDP, today with $1.4 trillion deficits we get a tiny 1.5% GDP growth rate (says government stats, I say lower), take away the extra $1.4 stimulus and we would see -4% to -6% GDP or a contraction of the economy. That would result in less tax revenue, which would result in less ability to service the existing debt. What politician wants to be responsible for a nasty crash of the economy?
We are forced to run huge deficits just to keep the economy from going into depression. There was a time (1950's) when a $1 of government spending created $4.50 of GDP. A few years ago, $1 of government spending created .06 cents of GDP, today $1 of spending actually is now negative to GDP, as the extra debt is becoming to burdensome.
As far as hiking taxes is concerned, I highly doubt it would result in more tax revenue. For the last 100 years, tax revenue has averaged 18% of GDP, no matter what the tax rates. If we tax too much we slow down the economy and get less GDP, less GPD slows down the tax revenue. Bottom line, there is no way to tax our way out of this problem.
The debt will be dealt with by devaluation of currency, paying the debt back with cheaper dollars. The best way to do this is with pegging the dollar to the US gold reserves. To back up the dollar with gold for the US with a 40% backing, we are looking at a gold price in the 15k to 35k range today, maybe even higher the longer they wait.
The devaluation of the dollar will be devastating to the middle class, resulting in a much higher cost of living, nothing like we have experienced in our history. Entitlements might be a fraction of what was promised, if at all. I did not even bother to address the $60-$100 trillion of unfunded liabilities (social security or medicare). Obviously those promises will never be made good, just ask Greece, Spain, Portugal, and soon to be other Euro nations how promises are turning out.
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Mr. E
No Touchies!
Registered: 07/07/12
Posts: 165
Loc: Hiding in the Sky
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Re: Fed announces QE infinity [Re: qman]
#16863019 - 09/17/12 02:49 PM (11 years, 6 months ago) |
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It's all a huge clusterfuck for sure. And not just here it seems like there are less and less good places to escape to. Are there any relatively "free" countries left with a solid economy? How's Canada doing? Maybe Switzerland?
-------------------- Only Red Horse Rainbows can save us, let them run wild and asunder!
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Gilgamesh18
Herbivore Man
Registered: 03/01/12
Posts: 11,671
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Re: Fed announces QE infinity [Re: qman]
#16863245 - 09/17/12 03:25 PM (11 years, 6 months ago) |
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Quote:
qman said:
Quote:
Gilgamesh18 said: So basically there is no way to get out of debt at all? Assuming defense and entitlement spending are brought down to realistic levels and taxes are increased would that help at all or would it just delay the inevitable crash.
There is no way out unfortunately, we are in a debt death spiral. Lets just assume for one minute that our leaders actually cut the defense and entitlement spending (which is highly unlikely), what would happen?
The net result would be a plunge in GDP, today with $1.4 trillion deficits we get a tiny 1.5% GDP growth rate (says government stats, I say lower), take away the extra $1.4 stimulus and we would see -4% to -6% GDP or a contraction of the economy. That would result in less tax revenue, which would result in less ability to service the existing debt. What politician wants to be responsible for a nasty crash of the economy?
We are forced to run huge deficits just to keep the economy from going into depression. There was a time (1950's) when a $1 of government spending created $4.50 of GDP. A few years ago, $1 of government spending created .06 cents of GDP, today $1 of spending actually is now negative to GDP, as the extra debt is becoming to burdensome.
As far as hiking taxes is concerned, I highly doubt it would result in more tax revenue. For the last 100 years, tax revenue has averaged 18% of GDP, no matter what the tax rates. If we tax too much we slow down the economy and get less GDP, less GPD slows down the tax revenue. Bottom line, there is no way to tax our way out of this problem.
The debt will be dealt with by devaluation of currency, paying the debt back with cheaper dollars. The best way to do this is with pegging the dollar to the US gold reserves. To back up the dollar with gold for the US with a 40% backing, we are looking at a gold price in the 15k to 35k range today, maybe even higher the longer they wait.
The devaluation of the dollar will be devastating to the middle class, resulting in a much higher cost of living, nothing like we have experienced in our history. Entitlements might be a fraction of what was promised, if at all. I did not even bother to address the $60-$100 trillion of unfunded liabilities (social security or medicare). Obviously those promises will never be made good, just ask Greece, Spain, Portugal, and soon to be other Euro nations how promises are turning out.
Very scary to think about would you suggest exchanging US dollars for another more stable foreign currency like the Swiss Franc as well as buying up gold and silver?
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DieCommie
Registered: 12/11/03
Posts: 29,258
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Re: Fed announces QE infinity [Re: Gilgamesh18]
#16863256 - 09/17/12 03:26 PM (11 years, 6 months ago) |
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You should never be saving dollars in any economy really, good or bad. Just save enough to keep for an emergency. Beyond that you should be putting your dollars in real wealth and investments.
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Gilgamesh18
Herbivore Man
Registered: 03/01/12
Posts: 11,671
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Re: Fed announces QE infinity [Re: DieCommie]
#16863288 - 09/17/12 03:30 PM (11 years, 6 months ago) |
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Quote:
DieCommie said: You should never be saving dollars in any economy really, good or bad. Just save enough to keep for an emergency. Beyond that you should be putting your dollars in real wealth and investments.
I do have money in various investments, stocks and bonds what really worries me though is all of that becoming worthless and having to start all over financially.
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qman
Stranger
Registered: 12/06/06
Posts: 34,927
Last seen: 43 minutes, 37 seconds
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Re: Fed announces QE infinity [Re: Gilgamesh18]
#16863472 - 09/17/12 04:00 PM (11 years, 6 months ago) |
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There is no paper currency in the world that has not lost purchasing power in the last 12 years, they are all un-backed fiat currencies. The scary thing is that many central banks around the globe are still large holders of US dollars(bonds)in their reserves, that is not good. When the dollar goes down in value, so does their central banks reserves.
Central banks around the globe are finally becoming net buyers of gold for the first time in 30 years (what took them so long), as they finally recognize that they are going to need gold to back up their own currencies with something real, not IOU's. Gold and silver are the ultimate currencies, don't let the price volatility scare you, cash is turning into trash.
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DieCommie
Registered: 12/11/03
Posts: 29,258
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Re: Fed announces QE infinity [Re: Gilgamesh18]
#16863769 - 09/17/12 04:52 PM (11 years, 6 months ago) |
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Quote:
Gilgamesh18 said:
Quote:
DieCommie said: You should never be saving dollars in any economy really, good or bad. Just save enough to keep for an emergency. Beyond that you should be putting your dollars in real wealth and investments.
I do have money in various investments, stocks and bonds what really worries me though is all of that becoming worthless and having to start all over financially.
Thats always a risk. Diversifying is the hedge against that.
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Shins
Fun guy
Registered: 09/15/04
Posts: 16,337
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Re: Fed announces QE infinity [Re: DieCommie]
#16864093 - 09/17/12 05:50 PM (11 years, 6 months ago) |
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Theyre pumping money into stocks at the cost of higher cost of living which hurts the most vulnerable in society the most - the young, the poor, the elderly, the disabled, the unemployed etc.
This is the irony of left wing economics, they promise to help the very people they end up hurting the most.
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Stonehenge
Alt Center
Registered: 06/20/04
Posts: 14,850
Loc: S.E.
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Re: Fed announces QE infinity [Re: Shins]
#16864237 - 09/17/12 06:15 PM (11 years, 6 months ago) |
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I've been talking about this for years. It is now on the horizon, not years or decades away. As i've been saying, and also qman and others, we will inflate our way out of the debt situation. Sure, we'll pay back china and others for the trillions of $ in treasuries. We will pay with new dollars. Remember a few years back mexico trimmed 3 zeros off their currency? There was a time when an old peso was worth something, today something like 13,000 old pesos or 13 new pesos = $1. And the dollar has been dropping at the same time.
I've got a solid investment in gold, a little in silver and a substantial amount in real estate. That along with gold, silver, energy production, and food production are the solid goods that rise along with inflation. Rent can go up as fast as they print funny money and r/e values go up the same way. You want to eat? Pay the price and farmland, water reserves, ferts, will go up too.
The administration knows this will kill the old folks on ss and fixed pensions. But if it will keep them in office a little longer, they would toss their own parents and grandparents under a bus gladly. Most politicians are psychopaths and care only about themselves.
Its very true about how they lie about inflation. They also jigger the unemployment numbers which are pushing 20% now if you don't subtract discouraged workers, underemployed workers, and so on.
The only solution i can see is a revolution. Toss out the whole govt, start over from scratch. Maybe have the military take over for a while until we can have fair elections.
-------------------- “A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.” (attributed to Alexis de Tocqueville political philosopher Circa 1835) Trade list http://www.shroomery.org/forums/showflat.php/Number/18047755
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Gilgamesh18
Herbivore Man
Registered: 03/01/12
Posts: 11,671
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Re: Fed announces QE infinity [Re: Stonehenge]
#16864313 - 09/17/12 06:25 PM (11 years, 6 months ago) |
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Screw it if shit hits the fan I'm getting totally fucked no matter what happens no way am I coming out of this prosperous.
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Edited by Gilgamesh18 (09/17/12 06:29 PM)
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unknown1123
Experimental
Registered: 05/15/08
Posts: 5,813
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Re: Fed announces QE infinity [Re: Gilgamesh18]
#16864572 - 09/17/12 07:09 PM (11 years, 6 months ago) |
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Quote:
Gilgamesh18 said: Screw it if shit hits the fan I'm getting totally fucked no matter what happens no way am I coming out of this prosperous.
Bottles and bottles of "insert your favorite drug here"
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Hotnuts
old hand
Registered: 02/26/05
Posts: 3,436
Loc: Wild Blue Yawnder
Last seen: 2 months, 22 days
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Re: Fed announces QE infinity [Re: unknown1123]
#16901491 - 09/24/12 09:52 AM (11 years, 6 months ago) |
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If Bernanke didn't actually believe that buying Treasuries and MBS' helps the economy? I'd feel sorry for the man! He's really up there in Washington, all alone. It's a shame. Congress is useless and what they're asking the man to do, is impossible. The Fed CAN NOT have an employment mandate. It's absurd!
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Hotnuts
old hand
Registered: 02/26/05
Posts: 3,436
Loc: Wild Blue Yawnder
Last seen: 2 months, 22 days
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Re: Fed announces QE infinity [Re: qman]
#16901566 - 09/24/12 10:07 AM (11 years, 6 months ago) |
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Quote:
qman said: "How did this all happen?" I would say the key word is globalization, I remember that everyone said that this trade with third world economies would be the greatest thing in the world for US workers, they were wrong bigtime.
Shipping your manufacturing base overseas is just devastating to the overall economy, it increases unemployment, decreases wages, and lowers the standard of living. Very few opposed the gutting of US manufacturing jobs, most believed in the hype. Every manufacturing job supports 5 domestic service jobs, it's a terrible domino effect. We can not compete with foreign workers that get paid .50-1.00 dollar per dollar, without any benefits.
So today, we have massive deficits ($16 trillion) not counting Fannie and Freddie mortgage debt (7 trillion) and no way to ever pay it back. Just to make the interest payments, the Fed must manipulate rates down to 0-2%. If the average interest rate just went to 5%, which is still very low, our interest payments would be over $800 per year, or 1/3 of total tax revenue. As we can see, that would be the end game.
The Fed and ECB are going to continue to buy all the toxic debt going forward, they are going to push the limits of fiat money to the edge of the cliff, but it will come to an end at some point. We are going to get a devaluation of currency either from market forces or official policy. Most Americans or Europeans have no clue what is coming, it's a matter of when not if.
Quote:
qman said:
Quote:
Gilgamesh18 said: So basically there is no way to get out of debt at all? Assuming defense and entitlement spending are brought down to realistic levels and taxes are increased would that help at all or would it just delay the inevitable crash.
There is no way out unfortunately, we are in a debt death spiral. Lets just assume for one minute that our leaders actually cut the defense and entitlement spending (which is highly unlikely), what would happen?
The net result would be a plunge in GDP, today with $1.4 trillion deficits we get a tiny 1.5% GDP growth rate (says government stats, I say lower), take away the extra $1.4 stimulus and we would see -4% to -6% GDP or a contraction of the economy. That would result in less tax revenue, which would result in less ability to service the existing debt. What politician wants to be responsible for a nasty crash of the economy?
We are forced to run huge deficits just to keep the economy from going into depression. There was a time (1950's) when a $1 of government spending created $4.50 of GDP. A few years ago, $1 of government spending created .06 cents of GDP, today $1 of spending actually is now negative to GDP, as the extra debt is becoming to burdensome.
As far as hiking taxes is concerned, I highly doubt it would result in more tax revenue. For the last 100 years, tax revenue has averaged 18% of GDP, no matter what the tax rates. If we tax too much we slow down the economy and get less GDP, less GPD slows down the tax revenue. Bottom line, there is no way to tax our way out of this problem.
The debt will be dealt with by devaluation of currency, paying the debt back with cheaper dollars. The best way to do this is with pegging the dollar to the US gold reserves. To back up the dollar with gold for the US with a 40% backing, we are looking at a gold price in the 15k to 35k range today, maybe even higher the longer they wait.
The devaluation of the dollar will be devastating to the middle class, resulting in a much higher cost of living, nothing like we have experienced in our history. Entitlements might be a fraction of what was promised, if at all. I did not even bother to address the $60-$100 trillion of unfunded liabilities (social security or medicare). Obviously those promises will never be made good, just ask Greece, Spain, Portugal, and soon to be other Euro nations how promises are turning out.
I can agree with all these points. And your point on "Globalization", too.
What needs to be done, is- something drastic and the direct opposite of what's being done, today. With the Fed printing more money and Congress running deeper deficits, they're gonna make the meltdown, that much worse. What needs to be done, is- something of the likes of what President Harding did in 1920/21. To combat that recession.
Edited by Hotnuts (09/25/12 09:03 AM)
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DieCommie
Registered: 12/11/03
Posts: 29,258
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Re: Fed announces QE infinity [Re: qman]
#24617291 - 09/09/17 11:27 PM (6 years, 6 months ago) |
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qman said:
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Memories said: I just hope this unsustainable juggernaut has enough fuel to last through most of my life.
Unless you are 85, your are going to see this ponzi scam come to a end, it could happen tommorrow, or in 3-4 years.
Nearly 5 years on, still no end.
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qman
Stranger
Registered: 12/06/06
Posts: 34,927
Last seen: 43 minutes, 37 seconds
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Re: Fed announces QE infinity [Re: DieCommie]
#24617656 - 09/10/17 07:35 AM (6 years, 6 months ago) |
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DieCommie said:
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qman said:
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Memories said: I just hope this unsustainable juggernaut has enough fuel to last through most of my life.
Unless you are 85, your are going to see this ponzi scam come to a end, it could happen tommorrow, or in 3-4 years.
Nearly 5 years on, still no end.
But the problems are still here and only worse.
I give the policymakers tons of credit, they have held it together for longer than many expected.
The business cycle still hasn't disappeared from the real world and we are overdue for an official recession, once than happens all bets are off in my opinion.
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