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  1. #11  
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    Quote Originally Posted by Rebel Yell View Post
    It would be hard for a couple years, but we'd be better of in the long run to let them fall. Remember E.F. Hutton?
    I think it would be hard for more than a couple of years, but well worth the price.

    Our grandparents learned first hand what it was like to lose everything. For that lesson, they saved, paid cash, and didn't go into debt except for a house. And part of the time, not for that.

    It would be a long, hard, deep recession. No doubt about it. That being said, it is time. We have lived on bad paper for too many years, and this "immediate gratification" mentality that everyone in this nation (me included) seems to have needs to be tempered with the reality that the money has to come from somewhere.

    The longer we let China and Japan own us, the worse off we are going to be. Let them fail, let the banks fail, let the whole system collapse. It is a lesson we are due.
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  2. #12  
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    Quote Originally Posted by Rebel Yell View Post
    I've always felt like the powers that be in this country. Republican or Democrat, they all have the same goal. Endgame: Communism. Democrats are the fast track to communism, we all know that. The Republican party is the slower track, the way to make the citizens feel they have a choice. The general public will follow their leader to the grave, Dem orRepub.
    ...[SNIP]...
    Am I crazy, or does anyone else see this?
    I see what is happening, but I draw a very different conclusion. The goal isn't communism per se, the goal is to maintain and expand the wealth of Americans. Any politician who appears, in the public eye, to fail at this task gets fired. Politicians want to keep their jobs, so they must appear as if they are making the average joe richer. Sure they have their own agendas and ideas about what wealth is, but if the public doesn't see them as promoting wealth they are no longer a politician. Obama is popular because Americans actually believe he will increase their wealth and their standard of living. He'll do nothing of the sort, and exactly quite the opposite, but no one said a politician had to be effective to win office, I only said a politician has to have the appearance of effectiveness.

    With that in mind, you have to ask yourself "What is richer?", and once you ask that question you have to ask yourself, "What is money?". It's the answer to the latter question that explains a lot of the taxpayer funded bailouts. In this country, and nearly all western countries, money is debt. The value of money is literally derived directly from debt. All you homeowners and automobile owners who think you own your house, well you don't. The bank owns the property, and you pay them for it in an ever expanding cycle.

    To illustrate this point, consider the following scenario: Before the end of the year, every American pays off all of his personal, consumer debt. One would originally think that would be a good thing. Americans wouldn't have any debt! Well, they also wouldn't have any money. All the money would belong to the banks, the issuers of the credit, we as people would still owe consumer debt to the banks because of interest. All the money would be taken out of circulation and handed over to the banks, and we consumers would still owe interest. The interest must be paid, by law, in dollars, and the only place to get more dollars would be to take out a loan from the Federal Reserve or it's affiliates who has the power to issue dollars. In other words, if there was no debt, there would be no money.

    So, how do the banks keep up with the demand for credit? Well, that's easy, they create money every time they make a loan. You think I'm kidding, but sadly I'm not. When your bank loaned you that $10,000 for your car, they didn't take that money from their depositors accounts and reassign it to the creditor. They invented $9,000 of new money, as bits in a computer, and backed it with $1,000 of real money that was previously created the exact same way via a loan. When you pay the man $10,000 for the car, he deposits that $10,000 in his bank, which is connected to your bank, all that "money" comes back into the banking system. However, the interest is still outstanding, growth must supply this extra money to pay the interest.

    In other words, the only way to float the economy is to make sure the lending institutions continue to create debt, because that is the only way money is created. When you think about it, the amount of money that must be borrowed (created) in order to pay the consumer debt of last year must be equal to or greater than the principal payment of this year's debt payment plus interest. So, if major financial institutions go under who's going to lend (create) the money necessary to float next year's debt payments? The time window between the creation of money and the interest due for the money created is paramount to continuously creating value from debt. If there are fewer lending institutions to lend, there are fewer institutions converting debt to money. The government has to bail them out in order to allow for the growth required just to pay interest!

    The "growth" of the economy is directly linked to consumer debt, so long as money is created from debt, and that debt is repaid on schedule, everything works. When the "bubble bursts" and people cannot repay their debt on schedule, things fall apart. Our economy cannot handle multiple lending institutions defaulting at the same time. Banking is a closed loop system, and any one bank who isn't creating new money from debt is causing existing debts to not be paid on schedule. It's the equivalent of a run on the banks. It's disastrous to the current economy of the U.S.

    To make it simple, the U.S. economy must grow on a curve. Economic growth of 10% this year over 10% last year is not a line on a graph. It's a curve, it compounds. The function is exponential. Therefore the economy of the U.S. must survive on an ever steepening curve that will eventually reach nearly vertical. When that happens, as it has now, a reset is inevitable. Both parties are doing their damnedest to avoid the inevitable reset, they are both sacrificing the future wealth of this nation to avoid the inevitable fallout of the steep curve the U.S. economy must fall from.

    Western economies revolve around an idea that value can be created from nothing forever exponentially. The only type of people who believe in that sort of nonsense are theologists and economists. The government is federalizing and redistributing wealth at an alarming rate for the sole purpose of ensuring the banks can continue to buy debt. Debt is money, and this country needs money in ever increasing volumes forever. Its easy to blame the economic problems of the US on communistic tendencies. It's much harder to blame the economic problems of the U.S. economy on the desire and demand for credit.
    Last edited by John; 09-24-2008 at 03:21 AM.
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  3. #13  
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    Quote Originally Posted by FeebMaster View Post
    It's just the nature of the beast.
    ...

    Exactly! When you allow the government to take care of you, whether it be management of the economic markets, DUI checkpoints, effectively outlawing smoking, etc., believe me, the government will "take care of you."
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  4. #14  
    Senior Member Rebel Yell's Avatar
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    Quote Originally Posted by Cold Warrior View Post
    Exactly! When you allow the government to take care of you, whether it be management of the economic markets, DUI checkpoints, effectively outlawing smoking, etc., believe me, the government will "take care of you."
    When I watched V for Vendetta a couple years ago, I thought it was just some liberal propaganda (but a good movie). Now, it really don't seem that far fetched.
    I feel that once a black fella has referred to white foks as "honky paleface devil white-trash cracker redneck Caspers," he's abdicated the right to get upset about the "N" word. But that's just me. -- Jim Goad
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  5. #15  
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    Quote Originally Posted by Rebel Yell View Post
    When I watched V for Vendetta a couple years ago, I thought it was just some liberal propaganda (but a good movie). Now, it really don't seem that far fetched.
    I agree with both of your points, i.e., it is liberal propoganda, but it isn't that farfetched. The difficulty is that both sides want to increase the scople and power of government, only with differing purposes and agendas. The left for their causes, social equality and economic leveling, and the right for their cause,s morality and security.
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  6. #16  
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    Quote Originally Posted by FeebMaster View Post
    I got side tracked a bit there, but basically what it comes down to is that while the Democrats may advertise a faster path to epically big government, the Republicans are the ones who deliver it. Either way though, that's what we're going to get because it is in government's nature to grow, justify its own existence, and grow some more.
    Your are dumb as a rock when it comes to the Global economy. JB is the only one that gets it.

    The economy is like a global conveyor belt; we send dollars to the foreign countries like Saudi and China for oil and purchases of goods. They send dollars back to financial institutions to NYC and London. They are converted into T-Bills, mortgage-backed securities, Fannie Mae debt and derivatives so that their money would grow in investments and be used to make purchase. In order for this conveyor belt to work, foreign countries holding the T-bills wanted to be assured their purchase would not be devastated by US inflation or a falling dollar. Plus they wanted to know that those bundles of mortgages they bought were safe. They wanted insurance (derivatives). For a price, you could lesser your chances of risk. Lehman and AIG were the two big players in the derivative market. Lehman went bankrupt and AIG almost went bankrupt.

    Factoid: without derivatives, it is unlikely that any country would want our T-bills. A global economy depends on an well oiled banking system. If Fannie and AIG were not bailed out, the entire financial would have collapsed. In other words, the derivatives (insurance) would have been worthless had AIG went under.

    One thing that really pisses me off is that we not only bailed out American financial institutions but we also bailed those countries (China, Saudis, etc) that are holding those derivatives. They took a risk that their investments in those mortgage backed securities would go up. They get bailed out and the American taxpayer gets screwed. The reason the stock market shot up Thursday and Friday of last
    week is because of the bailout of AIG.
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  7. #17  
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    Quote Originally Posted by lacarnut View Post
    Your are dumb as a rock when it comes to the Global economy. JB is the only one that gets it.

    The economy is like a global conveyor belt; we send dollars to the foreign countries like Saudi and China for oil and purchases of goods. They send dollars back to financial institutions to NYC and London. They are converted into T-Bills, mortgage-backed securities, Fannie Mae debt and derivatives so that their money would grow in investments and be used to make purchase. In order for this conveyor belt to work, foreign countries holding the T-bills wanted to be assured their purchase would not be devastated by US inflation or a falling dollar. Plus they wanted to know that those bundles of mortgages they bought were safe. They wanted insurance (derivatives). For a price, you could lesser your chances of risk. Lehman and AIG were the two big players in the derivative market. Lehman went bankrupt and AIG almost went bankrupt.

    Factoid: without derivatives, it is unlikely that any country would want our T-bills. A global economy depends on an well oiled banking system. If Fannie and AIG were not bailed out, the entire financial would have collapsed. In other words, the derivatives (insurance) would have been worthless had AIG went under.

    One thing that really pisses me off is that we not only bailed out American financial institutions but we also bailed those countries (China, Saudis, etc) that are holding those derivatives. They took a risk that their investments in those mortgage backed securities would go up. They get bailed out and the American taxpayer gets screwed. The reason the stock market shot up Thursday and Friday of last
    week is because of the bailout of AIG.
    It's not a big truck. It's a series of tubes.
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  8. #18  
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    Quote Originally Posted by FeebMaster View Post
    It's not a big truck. It's a series of tubes.
    Your expertise in the subject matter (0000) is noted!
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  9. #19  
    Senior Member Rebel Yell's Avatar
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    In light of more recent events, thought this could use a bump. I'm just too lazy to start a new thread on the same thing.


    What do you think now?
    I feel that once a black fella has referred to white foks as "honky paleface devil white-trash cracker redneck Caspers," he's abdicated the right to get upset about the "N" word. But that's just me. -- Jim Goad
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  10. #20  
    Senior Member FeebMaster's Avatar
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    My opinion on the subject is unchanged.
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