I think we are heading into an inflationary super cycle ...

rumble_lion

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Aug 7, 2011
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Message for NJPSU. Stop gloating about your portfolio gains. It only sets you up for a steeper fall.


As you know the government officially defaults when it can no longer service its debt (i.e., pay the interest on borrowing). Forget about us ever reducing the fiscal deficit. So default is triggered when investors other than the Treasury stop buying bonds at prevailing interest rates. When foreign and private investors demand a higher ROI and get it elsewhere. Once investors find an alternative to US Treasuries it's lights out! Life's greatest mystery is who will that be. China? That's like getting into bed with the syndicate. Once in you never get out. Suffice it to say we are still the cleanest shirt in a dirty load of laundry. I believe Jim Cramer said it during the mortgage crisis.


I disagree. Perhaps not raising income taxes so much as finding alternative sources, such as taxing Net Worth. I know, it requires an overhaul of the IRS. But for real estate investors the value of their holdings is readily available at the local taxing authority, so the feds taxing real estate is low-hanging fruit. Lookout those of you who live in SALT states. I can't fathom how the feds can avoid raising taxes on capital gains despite the intensive lobbying efforts against it. Congress is facing the River Rubicon on that one.


I agree. And our indoctrination err, education system only exacerbates the situation by churning out product that knows only CRT. China is perfectly content with it. The flag of the PRC will be the first on Mars.


It's a fallacy, is it not. Admittedly, I'm long-in-the-tooth and an accountant by trade but from what I remember from my econ classes is you can have one or the other.


I'm not sure our productivity was maxed out under Trump. Please explain.


Nope. Everybody's going to pay. It's just that some have further to fall than others. The majority of Americans are already there. Washington, Wall Street and Silicon Valley just doesn't acknowledge them. How do you suppose a populist president, who's not exactly the most effervescent person in the world, got elected in 2016. That's a rhetorical question.


At least you acknowledge the hospitality and leisure industry is overleveraged. Newsflash: it's big enough to bring down the economy because we don't make anything anymore. So I'd watch the transitory part.


Not hardly. The boomers are going to blowout their kids' inheritance. They're going to party like it's 1999!


You've got to be $hitting me! Are you on mushrooms or something.


You've got to watch that Cosmos, fella. He might be up to something.

Funny thing about your stock portfolio. It's denominated in dollars. You just have further to fall. Get a parachute.


I agree wholeheartedly. Live life to its fullest because the train we're riding is going to derail.


For the life of me I don't know why that's an embarrassment. I "clip" coupons all the time. Even as a young man in my prime earning years. Perhaps it's the Scot in me coming out, I dunno. And who doesn't like bragging about getting a deal. Anyone who doesn't is being disingenuous.


Yep. It would be political suicide. Even though the Chairman of the Federal Reserve is supposed to be apolitical. :cool:


China has to step into Afghanistan. Read: the Uyghurs. It's not like they have a choice. But I agree with your sentiments on the supply chain.


And that warfare will begin when our consumer can no longer afford to buy their product. Then there will be a fire sale of US Treasuries as they dump them. Yes, we can forget about infrastructure. I envision the Balkans. We'll be organized into tribes, occupying regions and fighting for what natural resources are left. The Great Lakes will have the upper hand due to the fresh water supply. Much of the southwest will be in deep kimchee. Anyway, I plan on becoming a highwayman. I've been a prepper for years now so I'm better prepared than most.


How's that going to work when children are already living with their parents. But to your point, there's going to be an abrupt reset to out standard of living. NJ and Paoli will hardly be at piece as they rush to mitigate the hemorrhaging. So long as they're denominated in dollars it is so.


Exactly! It's all about debt-servicing. At the first inkling the Fed can't tame rates it's over with.


Really? I thought the Chairman of the Federal Reserve answers to bankers. :cool: Now I remember Hank"Crash" Paulson on his knees before Pelosi but he was Treasury Secretary not Fed Chair.


It's at WWII levels and we got it back under control. How. By becoming the world's factory. We converted from making tanks and planes to consumer product for export. Back then you didn't need a college degree to work the assembly line; in fact, most assembly line workers made more than teachers. Also back then we had education standards. No coincidence that it began to change starting October 19, 1979.


Why would you cutoff your nose to spite your face. Oh, that's right. Because of TDS!


Yep. Young people have pretty much given up on ever accumulating the wealth that boomers have. Just like they don't think Social Security will be there for them. So why not live in the moment. Moreover, they don't seek monetary reward. They seek fulfillment. It's a different mindset.


I could not agree more with you, NJ. Only what we're heading towards is not a little haircut. We can agree an economic reset is long overdue. The longer it's delayed the more severe it will be.


Well said!


I don't know about that. I do the shopping for my family. While I see higher prices across-the-board I don't see empty shelves, like we had n the winter of 2020. Even lumber has normalized relatively speaking. Chips are still a problem. So what supply chains beside labor?

As you know the government officially defaults when it can no longer service its debt (i.e., pay the interest on borrowing).

The US federal government can always pay it's dollar denominated debts. It can never be forced into default.

Forget about us ever reducing the fiscal deficit.

The US federal government could pay off all the outstanding treasuries tomorrow if it wanted to. It would simply replace treasury credits with dollar credits. It makes no difference to the US federal government if the private sector holds treasuries or dollars.

Dollars are simply tax credits created by the federal government. These are created at will by the federal government.

Treasuries are simply savings devices for people that hold dollars. If provides a risk free method of earning some interest on your dollar savings. Of course the interest and principle is only redeemable in dollars which are simply tax credits created at will by the federal government.

So default is triggered when investors other than the Treasury stop buying bonds at prevailing interest rates.

Wrong. The federal government can never be forced into default.

When foreign and private investors demand a higher ROI and get it elsewhere.
Once investors find an alternative to US Treasuries it's lights out!


You don't really understand how all of this works. The federal government only issues treasuries after it has created dollars and spent them. Their is no other risk free alternative if you want to save dollars.

If you have a pile of dollars you don't want to spend you can invest in risk free treasuries and earn some interest or you can keep the dollars and earn no interest. It makes no difference to the federal government what you choose.

Life's greatest mystery is who will that be. China? That's like getting into bed with the syndicate. Once in you never get out. Suffice it to say we are still the cleanest shirt in a dirty load of laundry. I believe Jim Cramer said it during the mortgage crisis.

I can see why this is a mystery to you. I'm guessing it will continue to mystify you for rest of your life.
 

rumble_lion

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Aug 7, 2011
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True, but in a world of inflation, sometimes just increasing wages contributes to wage inflation which leads to further increases in overall inflation. Did you live through the carter years by chance?

Yeah, that inflation was driven by a monopoly(OPEC) raising prices on an essential economic input, not wages.
 

LionDeNittany

Well-Known Member
May 29, 2001
44,033
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DFW, TX
As you know the government officially defaults when it can no longer service its debt (i.e., pay the interest on borrowing).

The US federal government can always pay it's dollar denominated debts. It can never be forced into default.

Forget about us ever reducing the fiscal deficit.

The US federal government could pay off all the outstanding treasuries tomorrow if it wanted to. It would simply replace treasury credits with dollar credits. It makes no difference to the US federal government if the private sector holds treasuries or dollars.

Dollars are simply tax credits created by the federal government. These are created at will by the federal government.

Treasuries are simply savings devices for people that hold dollars. If provides a risk free method of earning some interest on your dollar savings. Of course the interest and principle is only redeemable in dollars which are simply tax credits created at will by the federal government.

So default is triggered when investors other than the Treasury stop buying bonds at prevailing interest rates.

Wrong. The federal government can never be forced into default.

When foreign and private investors demand a higher ROI and get it elsewhere.
Once investors find an alternative to US Treasuries it's lights out!


You don't really understand how all of this works. The federal government only issues treasuries after it has created dollars and spent them. Their is no other risk free alternative if you want to save dollars.

If you have a pile of dollars you don't want to spend you can invest in risk free treasuries and earn some interest or you can keep the dollars and earn no interest. It makes no difference to the federal government what you choose.

Life's greatest mystery is who will that be. China? That's like getting into bed with the syndicate. Once in you never get out. Suffice it to say we are still the cleanest shirt in a dirty load of laundry. I believe Jim Cramer said it during the mortgage crisis.

I can see why this is a mystery to you. I'm guessing it will continue to mystify you for rest of your life.

As you know the government officially defaults when it can no longer service its debt (i.e., pay the interest on borrowing).

"The US federal government can always pay it's dollar denominated debts. It can never be forced into default."

This is not true. Which is why the Govt was downgraded to AA at one point.

Eventually noone will take dollar denominated bonds from the US government. Forcing it to issue in another currency.

The government must fund itself.

LdN
 

rumble_lion

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Aug 7, 2011
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As you know the government officially defaults when it can no longer service its debt (i.e., pay the interest on borrowing).

"The US federal government can always pay it's dollar denominated debts. It can never be forced into default."

This is not true. Which is why the Govt was downgraded to AA at one point.

Eventually noone will take dollar denominated bonds from the US government. Forcing it to issue in another currency.

The government must fund itself.

LdN

This is not true. Which is why the Govt was downgraded to AA at one point.

And what happened after the downgrade? Nothing at all that's what happened because the whole idea of "rating" US government bonds is completely ridiculous.

Eventually noone will take dollar denominated bonds from the US government. Forcing it to issue in another currency.

And? Who cares? People can just hold their dollars in non interest bearing accounts if they so choose. They don't do that of course because any amount of risk free interest is better than zero.

The government must fund itself.

It already funds itself just fine thank you. The federal government does not need to borrow dollars from anyone. It spends first then issues treasuries to absorb some of the dollars it has created.

It of no importance to the federal government if people or businesses choose to hold their dollars in interest bearing treasury accounts or in non interest bearing bank accounts.

The dollars are created first - that is only way it can possibly happen in fact. Just think about a time just before the US created the first dollar. How did it spend the original dollars if it had borrow them first? There were no dollars to borrow because none had yet been created.
 
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m.knox

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Aug 20, 2003
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That is completely wrong. Please stop posting garbage about stuff you have no idea about.

According to MMT, the only limit that the government has when it comes to spending is the availability of real resources, like workers, construction supplies, etc. When government spending is too great with respect to the resources available, inflation can surge if decision-makers are not careful.​

And real resources are scarce. Now what? SPEND, SPEND, SPEND...
 

LionDeNittany

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May 29, 2001
44,033
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This is not true. Which is why the Govt was downgraded to AA at one point.

And what happened after the downgrade? Nothing at all that's what happened because the whole idea of "rating" US government bonds is completely ridiculous.

Eventually noone will take dollar denominated bonds from the US government. Forcing it to issue in another currency.

And? Who cares? People can just hold their dollars in non interest bearing accounts if they so choose. They don't do that of course because any amount of risk free interest is better than zero.

The government must fund itself.

It already funds itself just fine thank you. The federal government does not need to borrow dollars from anyone. It spends first then issues treasuries to absorb some of the dollars it has created.

It of no importance to the federal government if people or businesses choose to hold their dollars in interest bearing treasury accounts or in non interest bearing bank accounts.

The dollars are created first - that is only way it can possibly happen in fact. Just think about a time just before the US created the first dollar. How did it spend the original dollars if it had borrow them first? There were no dollars to borrow because none had yet been created.

You really lack a fundamental understanding of how money works.

How is this working in Venezuela right now? Bolivars are risk free there too.

LdN
 

rumble_lion

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Aug 7, 2011
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And real resources are scarce. Now what? SPEND, SPEND, SPEND...

What? You realize that economic activity consists of spend, spend, spend right? Do you want a much smaller economy? I guess we can always throw 10 or 15 million people out work to slow down all that spend, spend, spending that is going on.

And now all of sudden you are worried about scarce natural resources? The people that are against renewables and all gung ho on fossil fuels are now "concerned" about scarce natural resources? Good lord how can you even type that crap?
 

m.knox

Well-Known Member
Gold Member
Aug 20, 2003
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What? You realize that economic activity consists of spend, spend, spend right? Do you want a much smaller economy? I guess we can always throw 10 or 15 million people out work to slow down all that spend, spend, spending that is going on.

And now all of sudden you are worried about scarce natural resources? The people that are against renewables and all gung ho on fossil fuels are now "concerned" about scarce natural resources? Good lord how can you even type that crap?

Are you even aware of how scarce basic raw materials are? Get out from behind your desk. Plastics, metals, resins, fiberglass, pigments........

I am talking about gubmit spending as well.
 

rumble_lion

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Aug 7, 2011
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You really lack a fundamental understanding of how money works.

How is this working in Venezuela right now? Bolivars are risk free there too.

LdN

You really lack a fundamental understanding of how money works.

No, that would be you.

How is this working in Venezuela right now? Bolivars are risk free there too.

Please, you can't believe that the Venezuelan economy is the same as our economy?

Plus they it looks like they never had their own sovereign currency as they simply pegged their currency to the dollar.

Is the US dollar pegged to a another countries currency?

The monetary law of 1887 made the gold bolívar unlimited legal tender, and the gold standard came into full operation in 1910. Venezuela went off gold in 1930, and in 1934, the bolívar exchange rate was fixed in terms of the U.S. dollar at a rate of 3.914 bolívares = 1 U.S. dollar, revalued to 3.18 bolívares = 1 U.S. dollar in 1937, a rate which lasted until 1941. Until 18 February 1983 (now called Black Friday (Viernes Negro) by many Venezuelans), the bolívar had been the region's most stable and internationally accepted currency. It then fell prey to high devaluation.​
Exchange controls were imposed on February 5, 2003, to limit capital flight. The rate was pegged to the U.S. dollar at a fixed exchange rate of Bs 1,600 to the dollar.​
 

LionDeNittany

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May 29, 2001
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You really lack a fundamental understanding of how money works.

No, that would be you.

How is this working in Venezuela right now? Bolivars are risk free there too.

Please, you can't believe that the Venezuelan economy is the same as our economy?

Plus they it looks like they never had their own sovereign currency as they simply pegged their currency to the dollar.

Is the US dollar pegged to a another countries currency?

The monetary law of 1887 made the gold bolívar unlimited legal tender, and the gold standard came into full operation in 1910. Venezuela went off gold in 1930, and in 1934, the bolívar exchange rate was fixed in terms of the U.S. dollar at a rate of 3.914 bolívares = 1 U.S. dollar, revalued to 3.18 bolívares = 1 U.S. dollar in 1937, a rate which lasted until 1941. Until 18 February 1983 (now called Black Friday (Viernes Negro) by many Venezuelans), the bolívar had been the region's most stable and internationally accepted currency. It then fell prey to high devaluation.​
Exchange controls were imposed on February 5, 2003, to limit capital flight. The rate was pegged to the U.S. dollar at a fixed exchange rate of Bs 1,600 to the dollar.​

The Bolivar is pegged to the dollar?
Lol.

You may want to expand past your HS Freshman Economics lesson.

LdN
 

rumble_lion

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KnightWhoSaysNit

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Trump used to beg the Fed to do more of the policies you just railed against.

Of course you were silent then.

You would be wrong.

I am fundamentally a libertarian fiscal conservative. I am not a supply-side Republican. I was never a fan of Ronald Reagan, but then I would be even less a fan of his predecessor.

I believe in balanced budgets, balanced trade, restricting our military to our own defense (especially our borders), high standards of education (no pass, no advancement, no diploma), strictly regulated immigration, regulation to the extent needed to protect the environment and fair capitalism, etc.

In some areas more regulation is needed. In others less is needed.

One of the worst things we did recently is to allow central banks to have an unclear, dual mandate. This has opened the door for currency debasement, and the concentration of wealth through means other than production. (Essentially, theft of the Treasury by the "elites" in contact with politicians.)

I believe politicians should not be paid. It is a public service. No one should be a career politician much less retire to wealth as a result of "serving." There is enough talent. Surely there is better talent than the current installment of bureaucrats.

I believe our Constitution was written with a critical flaw. It did not prevent the electorate from voting itself the Treasury. Thus, when more than half of the population are taking some benefit from the ("richer") minority, the entire system collapses, as does, ironically, all the freedoms guaranteed by the Constitution. Incentives to be productive get removed.

But this is where we are headed -- to socialism -- because our foundation (Constitution) was inadequate for a democracy. It lasted a few centuries, so it wasn't a bad first pass for the colonies. They just did not fully envision that a people desperate for freedom would decide to take their own freedoms away.
 
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NJPSU

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May 29, 2001
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You would be wrong.

I am fundamentally a libertarian fiscal conservative. I am not a supply-side Republican. I was never a fan of Ronald Reagan, but then I would be even less a fan of his predecessor.

I believe in balanced budgets, balanced trade, restricting our military to our own defense (especially our borders), high standards of education (no pass, no advancement, no diploma), strictly regulated immigration, regulation to the extent needed to protect the environment and fair capitalism, etc.

In some areas more regulation is needed. In others less is needed.

One of the worst things we did recently is to allow central banks to have an unclear, dual mandate. This has opened the door for currency debasement, and the concentration of wealth through means other than production. (Essentially, theft of the Treasury by the "elites" in contact with politicians.)

I believe politicians should not be paid. It is a public service. No one should be a career politician much less retire to wealth as a result of "serving." There is enough talent. Surely there is better talent than the current installment of bureaucrats.

I believe our Constitution was written with a critical flaw. It did not prevent the electorate from voting itself the Treasury. Thus, when more than half of the population are taking some benefit from the ("richer") minority, the entire system collapses, as does, ironically, all the freedoms guaranteed by the Constitution. Incentives to be productive get removed.

But this is where we are headed -- to socialism -- because our foundation (Constitution) was inadequate for a democracy. It lasted a few centuries, so it wasn't a bad first pass for the colonies. They just did not fully envision that a people desperate for freedom would decide to take their own freedoms away.
My post was responding to Jerry, not you. Go back and look.
 

indynittany

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Feb 21, 2005
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I believe our Constitution was written with a critical flaw. It did not prevent the electorate from voting itself the Treasury....

I think the constitution, as originally written was fine on this point. The 10th amendment covers this. It's just ignored by both parties and, unfortunately, by the SCOTUS.

The problem, IMO, came about when the 17th amendment changed the way our senators were chosen. State legislators used to select our senators. Now they are chosen by popular vote. The governors used to be the big dogs in their respective states. Now it is the senators.

Since states can't print their own money, and most aren't allowed to even run deficits, governors had to say "no" once in a while. Prior to the 17th amendment, that was the end of it. Since then, if a governor says no, "the people" simply go to their popularly elected senators and circumvent the system. Washington can print money and as long as everybody continues to ignore the 10th amendment, the senators have a blank check to dole out the US treasury to whomever contributes the most to their campaigns.