The U.S. Economy: Stand by for more worse news

[Michael]

We were through it three years ago. The US economy has been growing for three years now. You just don’t want to admit it because you want our economy to collapse and burn. You want a depression, per your own admission. That is probably why you continue to ignore reality, continue to ignore facts that run counter to your desires. As I previously pointed out, Iceland’s recession was 4 times more severe and lasted twice as long. Given your preference for financial ruin, I can understand why you want the Iceland model.

Two questions and one comment Joe:

1) Did you know that following the Revolutionary War, the United States post-war economy fell into a great Depression? That wasn't my question. The then English Revolutionaries knew this would greatly damage trade with Britain and harm the economy and yet they were willing to make that sacrifice for the 'greater good'. IOWs so that their children could live and breath in a nation not under the yoke of the English monarchs. So Joe? Was the ensuing Depression worth the gained freedoms? My question is: Knowing that the Revolutionary War would lead to Depression, do you think it was good or bad that the Revolutionary War was fought?

2) Why do economies HAVE recessions and depressions Joe? How do they come about? What roles doe the Federal Reserve play in facilitating them? Are they beneficial to the health of the economy? Why or why not?

3) Iceland, unlike us, has a growing economy. Iceland, unlike us, jailed their crony bankers (whereas Obama hired ours) as well as jailed the political 'civil servants' who facilitated the illegal bank fraud. Iceland, unlike us, doesn't have a $16 Trillion dollar mountain of generational debt. Iceland, unlike us, doesn't have an economy so flaccid that as soon as even a little tiny bit of government military debt-spending is reduced the economy reverses and immediately goes into recession.


It's quite clear your Progressive Keynesian Socialist policies are failing just as all Central Planning fails. They will continue to fail and our economy will normalize to a lower standard of living. Let's hope your beloved sociopathic Central Planners don't listen to closely to Krugman and stoke the flames of War. And it won't be an imaginary War, it'll be the real deal.



NOTE: I find it interesting that the Federal Reserve comes into being and a decade later we enter the worse Depression in our history, and yet you claim they had NOTHING at all to do with the Depression. These morons were paying farmers to burn their crops and destroy their livestock, yes you think this had NOTHING at all to do with why Americans were starving. Even Ben Bernanke says the Fed caused the Great Depression, yet you still won't see reason. The Fed, under Alan Greenspan, caused the Depression we're living through right now. And while you seem more than happy to defer the pain to your children and their children, I'm adult enough to not to. Perhaps that's why I'm able to recognize where the faults lay, and deal with them. While you just close your hands over your ears and go lalalalalalalala as the economy implodes.

 

[Michael]

I guess that explains why in 1965 my father and mother were both working to support a family with 3 children – all of our neighbors were in a similar boat. You need to get your facts right Michael.

My family was in a similar boat. My mother took a few years off to have us (3 kids total) then had to go back to work.

The cashier and the carpenter


The USA ran up massive debts with WWII, the Korean War, the new "Progressive" policies. As the cancer grows and consumes more and more of the productive labor, the economy has had to sacrifice more to the Government - in this case children having a mother at home. While your mother's may have worked, most of your grandmothers did not. OR, they did not while the family was at home. Maybe you don't realize it, but some mothers are putting their children in daycare from 6 WEEKS of age. They can't take off a single week more because the economy is so distorted it's destroying our entire way of life.

As they say: The Road to Hell is Paved by Central Bankers

 

[billvon]

The USA ran up massive debts with WWII, the Korean War, the new "Progressive" policies. As the cancer grows and consumes more and more of the productive labor, the economy has had to sacrifice more to the Government - in this case children having a mother at home. While your mother's may have worked, most of your grandmothers did not.

My grandmother worked her ass off for years on a potato farm to be able to afford the ticket to the US. Once here she worked in kitchens for years, then took six years off to have my mother and aunt. Then she went back part time, then full time until she retired. Then she came to live with us.

Just because your family could afford to not work as much is no reason to look down on the people who had to work for everything they had. (And THAT, not the June Cleaver fantasy that many people had about life before the 1960's, was reality.) Indeed, one of the problems we're having today are people like yourself who demand more for less.

OR, they did not while the family was at home. Maybe you don't realize it, but some mothers are putting their children in daycare from 6 WEEKS of age. They can't take off a single week more because the economy is so distorted it's destroying our entire way of life.

We were quite happy.

 

[Michael]

My grandmother worked her ass off for years on a potato farm to be able to afford the ticket to the US. Once here she worked in kitchens for years, then took six years off to have my mother and aunt. Then she went back part time, then full time until she retired. Then she came to live with us.

Just because your family could afford to not work as much is no reason to look down on the people who had to work for everything they had. (And THAT, not the June Cleaver fantasy that many people had about life before the 1960's, was reality.) Indeed, one of the problems we're having today are people like yourself who demand more for less.

I'm certainly not 'looking down' on anyone. I grew up poor, as in $40 a week poor. So, I know all about being poor. Which is why I find it funny to hear Joe ask BillyT if he's proposing Welfare recipients rough the system. Gods yes they do. The reason why disability is up is because that's become the new welfare scam.

That aside, the facts are, the standard of living had been increasing throughout the 1800s (greatest gains made in our history) and continued to increase into the 1900s such that by the 1960s only half of mothers would enter the work force. It was the norm to have the mother home with her children AND still be able to afford a middle class lifestyle. My grandparents certainly did do so. As for my own situation, I fit in perfectly with the statistics following the so-called 'Progressive' reforms of the 1960s. Massive spike in divorce, massive uptake of welfare, and a massive number of children living in poor neighborhoods surrounded by all the wrong ways to think.

I don't have a problem with one or two people working. I do have a problem when our standard of living is ONLY being maintained because both people HAVE to work. We are 80% more productive compared with 60 years ago. Our standard of living should reflect that. It's not. I maintain the reason it's not is because the Central Planning Cancer that substitutes for the Federal Government is so large now, it's actually destroying the host it feeds off. IOWs, it's taking in less and spending more, WAY more, than we can possibly hope to produce. Thus, mothers are now putting their 6 week old children into daycare and going to work. Or putting their children in as soon as possible to get back to work. Age of two is quite normal. Do they ALL have to? No, some are just jerks and want 'free time' away from their kids. Many could reduce their living standard and see to it their children are raised by their parents (what your parents did) - which is the right thing to do. But still many, have little to no choice but to put their kids into daycare.

Those kids are now being put on anti-anxiety drugs.
They're the same ones we're selling the Trillions of dollars in bonds on.
They're the ones going tens of thousands of dollars in debt hoping to get that once in a life time job as a cog somewhere and ending up at home working in a half-time McJob.

Thomas Jefferson made this very clear:
In a letter to Antoine Louis Claude Destutt de Tracy of 26 December 1820: “It is incumbent on every generation to pay it’s own debts as it goes. a principle which, if acted on, would save one half the wars of the world; and justifies, I think our present circumspection.”

Which is why I personally will not be surprised if our lovely Central Planners don't start a War. They LOVE War. It increases their power over the people. And because they're power hungry money junkies they want Wars to go on forever. The Wars we're 'fighting' now are over a decade long. Which they LOVE. They don't give two shits about children or women, if they did they wouldn't refer to them as collateral damage and continue murdering them.


It is quite evident that the US economy is a charade. The instant even the teensiest bit of a pull back in federal spending happens and it sends the economy into a spiral. This was an election year, MASSIVE spending added to GDP. Not to mention December is the biggest holiday season of the year. Yet, a small pull back in the Kill-Industry that poses as "Defense" and we immediately go into recession. This is a Systems Fault. It's called Central Planning and it never worked, will never work and simply doesn't work. Each and every day the Central Planners interfere with the economy is one step more into the muck we're mired. Making getting out THAT much painful.Joe says he doesn't want us to live through a Depression. So what? He'd prefer a 30 year so-called Recession that destroys the lives of millions and rubs and loss of civil liberty that'll accompany it? The wars that'll be used to mask it? No thank you - I'll take the couple of years of NEEDED Depression, which if we'd had, we'd of been out of by 2010 and be in the clear now. Sure, the top 1% would have lost a lot of money, but you know what, good. It's happening one way or another.

 

[joepistole]

Two questions and one comment Joe:

1) Did you know that following the Revolutionary War, the United States post-war economy fell into a great Depression? That wasn't my question. The then English Revolutionaries knew this would greatly damage trade with Britain and harm the economy and yet they were willing to make that sacrifice for the 'greater good'. IOWs so that their children could live and breath in a nation not under the yoke of the English monarchs. So Joe? Was the ensuing Depression worth the gained freedoms? My question is: Knowing that the Revolutionary War would lead to Depression, do you think it was good or bad that the Revolutionary War was fought?

This is a non sequitur. Our current situation is not in any way comparable to the circumstances that existed during the US Revolution.

2) Why do economies HAVE recessions and depressions Joe? How do they come about? What roles doe the Federal Reserve play in facilitating them? Are they beneficial to the health of the economy? Why or why not?

Recessions and depressions are caused by an event that triggers systemic fear in the market place causing investors to reduce spending and investment. The Federal Reserve steps in during these events to ensure that a liquidity crisis does not unfold and restoring confidence in the market. And yes restoring confidence in the economy is beneficial. That is why they do it.

3) Iceland, unlike us, has a growing economy. Iceland, unlike us, jailed their crony bankers (whereas Obama hired ours) as well as jailed the political 'civil servants' who facilitated the illegal bank fraud. Iceland, unlike us, doesn't have a $16 Trillion dollar mountain of generational debt. Iceland, unlike us, doesn't have an economy so flaccid that as soon as even a little tiny bit of government military debt-spending is reduced the economy reverses and immediately goes into recession.

What you don’t understand English? It has been repeatedly shown to you that the recession was 4 times worse and two times longer in Iceland than in the US. And despite your refusal to acknowledge facts you find unpleasant, it doesn’t change the fact the US economy is growing and has been growing for the last three years. And it doesn’t change the fact the US currency has not been devalued by 50% like the Icelandic Krona. And inflation in Iceland toped 18%, now compare that to 2% in the US. And the US didn’t get an IMF bailout like your friends in Iceland. Additionally, about half the US debt is debt the US government owes to itself – one of those minor details again.

It's quite clear your Progressive Keynesian Socialist policies are failing just as all Central Planning fails. They will continue to fail and our economy will normalize to a lower standard of living. Let's hope your beloved sociopathic Central Planners don't listen to closely to Krugman and stoke the flames of War. And it won't be an imaginary War, it'll be the real deal.
NOTE: I find it interesting that the Federal Reserve comes into being and a decade later we enter the worse Depression in our history, and yet you claim they had NOTHING at all to do with the Depression. These morons were paying farmers to burn their crops and destroy their livestock, yes you think this had NOTHING at all to do with why Americans were starving. Even Ben Bernanke says the Fed caused the Great Depression, yet you still won't see reason. The Fed, under Alan Greenspan, caused the Depression we're living through right now. And while you seem more than happy to defer the pain to your children and their children, I'm adult enough to not to. Perhaps that's why I'm able to recognize where the faults lay, and deal with them. While you just close your hands over your ears and go lalalalalalalala as the economy implodes.

Oh Michael, unfortunately for you and your desire to burn down the US economy, Keynesian economic policy has been validated by the recent economic crisis. Further, the standard of living is increasing, not declining as you want and need it to be. Those are cold hard facts Michael. Americans live a pretty good life. They have good roads, crime is at historic lows, healthcare is better and more available than at any time in our history, interest rates are low, and unemployment is falling.

Unfortunately for you Michael in order to support your ideology you have to ignore reality, ignore fact and reason and make stuff up. In order to recognize where the faults are Michael, you to have the ability to recognize reality when it knocks at your door, and you clearly don’t have that ability. You continually fail to recognize fact and reason in preference of your ideological Libertarians machinations. That is why Libertarianism is, has been and will remain a fringe ideology. While you like to pretend that there is something in the ether that prevents 99+% of the world from believing the things you believe, maybe it is just the opposite. Reality bites Michael, if you are a Libertarian. That is why you folks have to ignore fact and reason and make up your own reality.

 

[joepistole]

The cashier and the carpenter
The USA ran up massive debts with WWII, the Korean War, the new "Progressive" policies. As the cancer grows and consumes more and more of the productive labor, the economy has had to sacrifice more to the Government - in this case children having a mother at home. While your mother's may have worked, most of your grandmothers did not. OR, they did not while the family was at home. Maybe you don't realize it, but some mothers are putting their children in daycare from 6 WEEKS of age. They can't take off a single week more because the economy is so distorted it's destroying our entire way of life.

As they say: The Road to Hell is Paved by Central Bankers

For starters, how about using real data instead of this made up crap? If you ideology is so right on, you wouldn’t have to make stuff up. You wouldn’t have to deceive. You could be honest with others and yourself. I mean your chart from Kingworld is so blatently fake, it really isn't even funny.

The way to economic chaos and ruin is paved with lies and ignorance. But then that is after all what you are hoping for, economic melt down and ruin.

 

[LaurieAG]

I can´t follow you. In part because of your following math error:

If subtract equation (1) from equation (2) we have:

(c/2)(CU) - (c/2)(FT) = 0 which is the claim CU = FT and that is not true.

Tell in words what you are trying to do and what is not ethical.

The (U) and the (CU) and the (FT) are irrelevant, I just used them to identified how they could be split up and how they would be counted, you can manipulate unemployment and employment rates by turning full time jobs into multiple Part time jobs i.e. 6 month contracts.

 

[iceaura]

. GDP has never been higher, the stock markets are hitting new highs almost daily, unemployment rate is almost at full employment and more jobs are added to the economy with each passing month. - - - - And there has been significant banking reform, so the “Too big to fail” condition no longer exists.

GDP is dubious - most of the new wealth is filling the already swamped coffers of the wealthy, much of the best is military production and hangover from the stimulus etc.

Unemployment is still far too high (nowhere near the 4% or so once standard for "full employment") and the employment rate is even bleaker - new jobs tend to be part time and temp work, and even the full time hires pay less than the old ones (even less than nominal, if the increases in medical insurance are subtracted).

The banking reforms have not addressed the central problems that crashed the economy in 2008: comingling and collusion of retail and investment banking creating conflicts of interest and creation of risk; poor regulation of the derivatives market including alloign obscure accounting and inadequate reserves; overconcentration of banking market share and size leading to the "too big to fail" problem - it's worse, not better, now, as we are down to three or four dominant banks in the US; and so forth.

 

[Billy T]

... you need to ask yourself, if this news is as bad as you want it to be, why isn’t the market down 400 points or even a 100 points? Why are the markets not panicked? ...

Almost all financial experts agree on why market is near the all time high and climbing even on bad news* about the economy:

Stocks represent fractional ownership in business, factories, minerals in the ground, etc. and can be bought for dollars that are steadily loosing value while these real physical asset appreciate.

Which would you rather hold (1) decreasing value paper promises of the US treasury, OR (2) appreciating real physical assets?

----------------
* Some of the news is good - Corporate profits, mainly from their growing sale to Non-US markets are up, while in many cases US sales are down.

For example, Tupperware / Sara Lee recently gave these details:
"with a 1-year ROE of 54.4%, - more than double its peer group average of 21.2% with 2.5% dividends. Revenues from Latin America rose 7% (only in 3Q12) with sales from both Brazil and Venezuela surging 30% but US & EU were lower. Sales in Asia-Pacific climbed 10% on a reported basis to $197.5 million with Indonesia (up 30%) and India (up 50%). China and Malaysia posed double-digit growth in the quarter. 3Q12 profit more than quadrupled year over year to $47.5 million or 85 cents per share but revenues fell ..."

and just yesterday more formally said in the 4Q12 report:

"29Jan13: declares $0.62/share quarterly dividend, 72% increase from prior dividend of $0.36. Forward yield 3.53%. For shareholders of record Mar. 20. Payable Apr. 05. Ex-div date Mar. 18. The board has increased payout ratio to 50% of trailing diluted EPS, excl. items from 33% earlier. The board has increased repurchase from $1.2B to $2.0B, extending till 2017. The company expects to repurchase $100M shares in 1QFY13. Shares up +5.2% in premarket and closed at $73.75 on 29Jan13. Guidance for 1Q13 is EPS of $1.09-1.14 and for all 2013 is $5.62-5.77

I own 1000 sh of TUP at average cost of $58.47 and it is typical of profitable US firms getting most of their sales OUTSIDE of the USA or EU. In 2012 emerging markets represents 66% of TUP´s sales and is a growing percentage. With few exceptions, I mainly buy shares like TUP (or ADRs of foreign companies) as US market is going up only because the dollar is going down. - I.e. not much REAL gains, mainly nominal gains, you get to pay more taxes on when you sell!

I don´t give specific advice**, but will admit I am thinking of increasing my holdings of TUP - despite already owning 1000 sh. (I own ~50 different companies as diversification is important.) TUP closed at $73.75 yesterday and looks very solid to me with bright future.

IMHO, how sales by country of TUP and other small cost consumer goods producers are an excellent index of how the country´s economy is doing. American´s poor housewives are increasingly storing their leftover food in the frig, in used tin cans, not nice Tupper ware containers.

** Years ago in several posts I did recommend readers buy the ADR of Sao Paulo´s sewer & water company (SBS). It is up, in dollars nearly 700% now, or in real value about 500% and has mainly thru this growth become my largest holding. I can´t afford to sell it (nor Bunge, BG, which I bought back when it was still just a Brazilian, not global, company). I will die still owning both. If laws don´t change, my heirs get to declare their "cost basis" as the market value on the day I die. IRS gets cut out of collecting a large sum even if they sell the next day.

I was only a salaried worker, never a owner of business, but have done well financially for a poor "full needs scholarship student" who one Thanksgiving could not even scrape together bus fare home. The trick is to understand the economy and usually be correct in your expectations as to what will happen many years later - especially when most hold a very different view. If you can do that "buy and hold" is a good investment plan. You can only lose 100% and I have done that on some fraudulent Chinese ADRs like DGWIY, a Chinese water treatment and supply company that would have done very well if it were not all a fake, as China has very serious, long term, water treatment problems.

 

[joepistole]

I'm certainly not 'looking down' on anyone. I grew up poor, as in $40 a week poor. So, I know all about being poor. Which is why I find it funny to hear Joe ask BillyT if he's proposing Welfare recipients rough the system. Gods yes they do. The reason why disability is up is because that's become the new welfare scam.

Do you have any proof that disability fraud is up? No you don’t.

Do you have proof that people are telling the BLS they are not looking for work and therefore not being counted in the unemployment numbers and contributing to shrinking labor participation rate but are telling social services that they are looking for work in order to get welfare and food and housing subsidies? Really?

That aside, the facts are, the standard of living had been increasing throughout the 1800s (greatest gains made in our history) and continued to increase into the 1900s such that by the 1960s only half of mothers would enter the work force. It was the norm to have the mother home with her children AND still be able to afford a middle class lifestyle. My grandparents certainly did do so. As for my own situation, I fit in perfectly with the statistics following the so-called 'Progressive' reforms of the 1960s. Massive spike in divorce, massive uptake of welfare, and a massive number of children living in poor neighborhoods surrounded by all the wrong ways to think.

I don't have a problem with one or two people working. I do have a problem when our standard of living is ONLY being maintained because both people HAVE to work. We are 80% more productive compared with 60 years ago. Our standard of living should reflect that. It's not. I maintain the reason it's not is because the Central Planning Cancer that substitutes for the Federal Government is so large now, it's actually destroying the host it feeds off. IOWs, it's taking in less and spending more, WAY more, than we can possibly hope to produce. Thus, mothers are now putting their 6 week old children into daycare and going to work. Or putting their children in as soon as possible to get back to work. Age of two is quite normal. Do they ALL have to? No, some are just jerks and want 'free time' away from their kids. Many could reduce their living standard and see to it their children are raised by their parents (what your parents did) - which is the right thing to do. But still many, have little to no choice but to put their kids into daycare.

Those kids are now being put on anti-anxiety drugs.
They're the same ones we're selling the Trillions of dollars in bonds on.

As has been pointed out to you numerous times, women did just start working in the 60’s or 70’s. They have been working since the dawn of mankind. Until the 60’s and 70’s they never got paid for their labors.

And yeah, things were so much better when we were so much more intolerant, where people who hated each other were forced to be together, where it was ok to beat your wife, where racism was the law, when life spans were much shorter, when medical care was less capable and less available. Yeah those were the good old days.

They're the ones going tens of thousands of dollars in debt hoping to get that once in a life time job as a cog somewhere and ending up at home working in a half-time McJob.

Thomas Jefferson made this very clear:
In a letter to Antoine Louis Claude Destutt de Tracy of 26 December 1820: “It is incumbent on every generation to pay it’s own debts as it goes. a principle which, if acted on, would save one half the wars of the world; and justifies, I think our present circumspection.”

Which is why I personally will not be surprised if our lovely Central Planners don't start a War. They LOVE War. It increases their power over the people. And because they're power hungry money junkies they want Wars to go on forever. The Wars we're 'fighting' now are over a decade long. Which they LOVE. They don't give two shits about children or women, if they did they wouldn't refer to them as collateral damage and continue murdering them.

Hogwash, your great icon Thomas Jefferson, couldn’t even pay his own debts. His heirs had to bail him out, and this is the man you want to take advice from?

It is quite evident that the US economy is a charade. The instant even the teensiest bit of a pull back in federal spending happens and it sends the economy into a spiral. This was an election year, MASSIVE spending added to GDP. Not to mention December is the biggest holiday season of the year. Yet, a small pull back in the Kill-Industry that poses as "Defense" and we immediately go into recession. This is a Systems Fault. It's called Central Planning and it never worked, will never work and simply doesn't work. Each and every day the Central Planners interfere with the economy is one step more into the muck we're mired. Making getting out THAT much painful.Joe says he doesn't want us to live through a Depression. So what? He'd prefer a 30 year so-called Recession that destroys the lives of millions and rubs and loss of civil liberty that'll accompany it? The wars that'll be used to mask it? No thank you - I'll take the couple of years of NEEDED Depression, which if we'd had, we'd of been out of by 2010 and be in the clear now. Sure, the top 1% would have lost a lot of money, but you know what, good. It's happening one way or another.

This is just more hogwash Michael, more of your Libertarian machinations, an attempt to rationalize Libertarian failures. There are no central planners; the US economy is not centrally planned. And you are back to lying about my positions. Unfortunately for you, the economy is real. It puts food on our table every day and it keeps us warm in our secure homes.

 

[joepistole]

Which would you rather hold (1) decreasing value paper promises of the US treasury, OR (2) appreciating real physical assets?

If interest rates are going down, I like fixed income investments. When interest rates are going up as is likely in the next year or two, fixed income is not the place to be. I think a lot of naïve fixed income investors are going to get a wake up in the coming months and years. But that doesn’t mean there won’t be a market for fixed income investments. Because there will be a market for them. Prices will drop and yields will rise as interest rates rise.

[* Some of the news is good - Corporate profits, mainly from their growing sale to Non-US markets are up, while in many cases US sales are down.

For example, Tupperware / Sara Lee recently gave these details:

I like Tupperware too. They had a great quarter. In Brazil, I like Vale. If one wants to invest in China, I think an ETF or mutual fund is a better way to go for the average investor. Your experience with China is a big concern and why I never purchase Chinese equities. Even very savvy investors like Caterpillar have been burned by fraud in China.

 

[Billy T]

You can bet your bottom dollar that will be revised to be positive as 1Q13 has lot more problems than 4Q12 had. If 1Q13 GDP too has negative GDP growth, then US is officially back in recession. Most of the end of 2012 problems were "kicked down the road" until late 1Q13 or early 2Q13*, but how may times can the government pretend it is not in deep fiscal trouble, with Fed printing dollars at more than than a 1 trillion per year rate and interest rate on the debt already rising? (If interest rates return to their long term average then 95% of US GDP can just pay the interest cost of the 16.4 trillion debt! - Not much left over for food stamp or education programs, much less DoD funds.)

Most likely the government will find it spent a little more in 4Q12 so government expenditures did not drop by 1.33% so 4Q12 had positive GDP growth. "Kicking the can down the road" is a game the CBO can play too. Why should Congress alone have all the fun?

* DoD funds sequestered and equal, but still unspecified civilian cost reductions, postponed, Debt ceiling lifted till 18 May13, if Congress writes a budget, Balance of payment problems, immigration reform battle, etc.

 

[pjdude1219]

The cashier and the carpenter


The USA ran up massive debts with WWII, the Korean War, the new "Progressive" policies. As the cancer grows and consumes more and more of the productive labor, the economy has had to sacrifice more to the Government - in this case children having a mother at home. While your mother's may have worked, most of your grandmothers did not. OR, they did not while the family was at home. Maybe you don't realize it, but some mothers are putting their children in daycare from 6 WEEKS of age. They can't take off a single week more because the economy is so distorted it's destroying our entire way of life.

As they say: The Road to Hell is Paved by Central Bankers

always amusing to see you crying about problems caused by your ideas. this is what happen when you decided to protect corporate power and hate labor power.

 

[Billy T]

... {post 509 in part} Almost all financial experts agree on why market is near the all time high and climbing even on bad news* about the economy: Stocks represent fractional ownership in business, factories, minerals in the ground, etc. and can be bought for dollars that are steadily loosing value while these real physical asset appreciate. ...

More agreement with that:

this was the first quarter of negative GDP growth since 2009. This comes on the heels of the Conference Board's report which showed consumer confidence sliding to its lowest level in a year, falling to 58.6 in January from 66.7 in December. Despite the slumping economy and falling confidence, the stock market doesn't seem to care.

 

[joepistole]

You can bet your bottom dollar that will be revised to be positive as 1Q13 has lot more problems than 4Q12 had. If 1Q13 GDP too has negative GDP growth, then US is officially back in recession. Most of the end of 2012 problems were "kicked down the road" until late 1Q13 or early 2Q13*, but how may times can the government pretend it is not in deep fiscal trouble, with Fed printing dollars at more than than a 1 trillion per year rate and interest rate on the debt already rising? (If interest rates return to their long term average then 95% of US GDP can just pay the interest cost of the 16.4 trillion debt! - Not much left over for food stamp or education programs, much less DoD funds.)

The Fed and monetary policy cannot remedy incompetent fiscal policy. Republicans will have another chance in March to demonstrate the depths of their fiscal incompetence with the budget and the sequester looming on the horizon. Unfortunately, we are going to have to wait and see. However, there are signs of a slightly more moderate and reasonable Republican Party developing. But as the old adage goes, don’t count your chickens before they are hatched.

That said there is no indication the Fed is expanding the monetary supply as aggressively as you have claimed. As I have told you before, one Fed program does not a money supply make. There are a lot of other things that affect the money supply. And the US debt is manageable, but it will require competent long term fiscal policy, something we have not seen from Republicans for more than a decade.

[Most likely the government will find it spent a little more in 4Q12 so government expenditures did not drop by 1.33% so 4Q12 had positive GDP growth. "Kicking the can down the road" is a game the CBO can play too. Why should Congress alone have all the fun?

* DoD funds sequestered and equal, but still unspecified civilian cost reductions, postponed, Debt ceiling lifted till 18 May13, if Congress writes a budget, Balance of payment problems, immigration reform battle, etc.

Most likely, Q4 2012 GDP will be revised upward. And most likely Q1 GDP 2013 will show continued growth. But a lot will ride on how well Republicans in congress conduct themselves. Are Republicans going back to holding a gun to the nation’s economy and threatening to destroy it if they don’t get everything they want? I don’t know. But the Republican leadership is for the first time trying to bring a modicum of order and a reason to their petulant rabble in Congress.

 

[Michael]

This is a non sequitur. Our current situation is not in any way comparable to the circumstances that existed during the US Revolution.

So, one more time, was the Revolutionary War worth the fight, even though it directly led to trade being cut off from the British Empire (which covered about 1/8th of the entire world) and ultimately to a Depression?

It's a pretty simple question Joe that basically asks is living through a Depression preferable in some instances?

Recessions and depressions are caused by an event that triggers systemic fear in the market place causing investors to reduce spending and investment. The Federal Reserve steps in during these events to ensure that a liquidity crisis does not unfold and restoring confidence in the market. And yes restoring confidence in the economy is beneficial. That is why they do it.

And here's where the fault in your logic lays. Recessions and Depressions must occur to remove from the market malinvestment. See, it's so utterly simple even a Keynesian Progressive can grasp it.


This is why the Post–World War I Depression of 1920–21 started out MUCH WORSE and went much deeper than the so-called Great Depression - but it ended in a year. Did LOTS of people go bankrupt? Yup. What shouldn't happen is the Government Steps in and starts propping up the businesses that over-invested (example: Arms Dealers, because when you do, you end up with lots MORE dead women and children thanks to forever-wars, and a lower standard of living for the citizens whose labor is spent on idiotic phony wars). Guess what? When you have a lot of malinvestment, such as speculating on never ending housing highs due to artificially low interest rates, then when reality rears it's ugly head and *gasp* that crack-houses with the missing roof actually aren't worth $550,000, that dilapidated mall wasn't worth $10 million dollars - people MUST go bankrupt. That's normal Joe. It SHOULD happen. Business are started and go bust all the time. That's natural. When they all seem to align, then one may want to look at the root cause of why so many businesses went bust all in a particular period, such as when the Fed blows a bubble and it pops.

See how it works? The reason why the present Depression we're living through had to be so DEEP and so SEVERE a Depression is because of the Federal Reserve monetary system. Just like they caused the Great Depression. They created artificially cheap money and this led to trillions of dollars in malinvestment. Because that did not happen, we STILL have the malinvestment. Only now we also have TRILLIONS in debt to go along with it. Isn't it great how the Progressive Socialists have rigged the unfree-market: Heads the Rich Win, Tails the Poor Lose. AND what's the most sad, is this non-existence 'free' market is blames. There's no free market. We live in a tightly regulated centrally planned market and like all centrally planned economy, it's slowly collapsing around us as all the wealth is siphoned off to those closest to the money-spigot, the Fed, and all the Debt is shoveled onto the peons and their children and their children's children.




One more time, even though the post-WWI Depression started out much worse the the Great Depression, without the Federal Government and Federal Reserve there to bail out the richest 1% things went right back to normal in short order (about a year) and growth resumed in healthy free-market. Notice how that DID NOT HAPPEN during the Great Depression, thanks to the FED and Government 'helping' (such as paying farmers to burn produce and kill livestock to prop up prices - all while Americans starved to death) it stretched out for over a DECADE.

Notice the comparison with Iceland, yes I agree they had a DEEP Depression - which was fantastic for their economy! Unlike us, they put their bankers in Jail. They put their politicians in Jail. They are now out the other side and enjoying a productive free-market with real steady GDP growth and healthy banks. We OTOH, unlike during WWI and unlike in Iceland, instead opted to invent some made up bullshit called Too Big To Fail (AKA: Bail Out the Top 1% richest Americans and Europeans) and so we're now going down the Great Depression route. It's already been a good six years, and it's only just getting started. We're TRILLIONS of dollars in-debt. And unlike following WWII, we have no savings, much of our production has moved overseas, we have obligations to our so-called "Civil Servants" that are unpayable. Some estimates are 80 TRILLION. Our industry is, thanks to the Federal Reserve, LESS competitive. In short: We are f*cked. We're going into the Mother of All Depressions -OR- we're going to reach a new normal where children will live a much LESS prosperous life than even their grandparents.



AND you know what's the worse I find? Those that benefited from the bailouts just put on the blinders and sing La La La La and try and pretend to themselves they're not immoral jerks passing their horrid sins onto their children. As the Christians like to say: The sins of the fathers shall be visited upon the sons a thousand fold. It's pretty obvious what this is in reference to.

So, here we are, a country with Trillions and Trillions and Trillions of dollars in malinvestment, Tens of Trillions, maybe hundreds of Trillions, in obligations and all of it being propped up by Bonds sold on the unborn. Absolutely sickening. Which is why even the smallest pull back in spending, even during the run-up to the election of the POTUS which always sees good GDP numbers, caused a drop in GDP. You know where the pull back was? It was in the kill-machine that poses as the US Military. You know what the lesion idiots like Krugman are teaching our moronic unscrupulous politicians: WE NEED MORE WAR


Welcome to the inevitable outcome of Keynesian Progressive Socialism.
Welcome to Fascism Joe.

 

[Billy T]

... That said there is no indication the Fed is expanding the monetary supply as aggressively as you have claimed. As I have told you before, one Fed program does not a money supply make. There are a lot of other things that affect the money supply. ...

If you check what I post you will see I say things like "Fed printing dollars at more than than a 1 trillion per year rate and interest rate on the debt already rising?" (An exact quote from post 512 you are replying to) Or: "the Fed´s balance sheet is growing now by 1 trillion dollars per year," etc. and I rarely (if ever?) as speak of the "money supply" as unless you also discuss the "velocity of money" it has little significance.

Currently most of the "money supply" is being recycled back to Fed or Treasury by beneficiaries of the new printing press money buying Treasury bonds or making "excess deposits" with the Fed. I.e. the banks don´t want to loan, with risk of not getting repaid, when 100% face value safe alternatives are available. (plus the loan regulations they must operate under now are more strict.)

What I have tried to call attention to is that there is a limit to how much "thin air money" a government can print without everyone losing confidence that it will have value next year. Yesterday, wife´s daughter returned for S. Africa visit and I held a 50 billion Zimbabwe dollar in my hand. Interestingly it told the date of issue and said it would pay 50 billion dollars to the bearer by (another date, only about 6 months later). There was another note issued earlier for 100 million dollars that had picture of large group of concrete grain storage cylinders on the reverse. It was called an "agri-bond." Very likely the storage facilities were built earlier before the economy was destroyed by excessive use of the printing presses and empty when the note issued. Still another large note pictured three large rocks, one stacked on top of the other - I guess that was to imply how solid and stable the currency was.

Someone long ago noted that "the pen was mightier than the sword." I´ll extend that: As far as power to destroy a nation, "the currency printing press is mightier than the pen." Lets hope the Fed shuts the presses down before the US learns how true that is.

 

[Michael]

always amusing to see you crying about problems caused by your ideas. this is what happen when you decided to protect corporate power and hate labor power.

What? The free-market? I wonder how you explain the USSR, Communist China, and North Korea? Oh yeah, 'People are People'. Well, if that's all the thought you want to put into the matter, it's no wonder you'll continue to side with demagogues. That's what Demagogues do, they tell people what they want to hear, not what they need to hear. They don't attempt to explain anything, they just whitewash it. It'd be like going to the doctor with fever and instead of being hospitalized, which would suck but be for the best, be given pain killers to mask the disease and sent back out the door.

We have not had a free-market in 100 years. The 'rich' today are those that work the system, not those that are the most productive.
One more time, take a look at how quickly BOTH parties, Demagoons and Rethuglicans came together to invent a new phrase "Too Big To Fail" and to bail out the wealthiest Americans. Literally over a weekend. They happily dumped GENERATIONAL DEBT onto the middle class without giving it as much thought as they would the type of coffee they wanted with their "Free" donuts.

When interest rates return to the trend line, and they will return to the trend line. Then most of the GDP will be spent making interest payments. Then maybe things will be clearer who the Progressives WelfareQueens AND Warmongering Chickenhawks really work for.

 

[joepistole]

What? The free-market? I wonder how you explain the USSR, Communist China, and North Korea? Oh yeah, 'People are People'. Well, if that's all the thought you want to put into the matter, it's no wonder you'll continue to side with demagogues. That's what Demagogues do, they tell people what they want to hear, not what they need to hear. They don't attempt to explain anything, they just whitewash it. It'd be like going to the doctor with fever and instead of being hospitalized, which would suck but be for the best, be given pain killers to mask the disease and sent back out the door.

It’s funny to see you accuse someone else of demagoguery.

We have not had a free-market in 100 years. The 'rich' today are those that work the system, not those that are the most productive.

That is just hogwash. You need to tell that to the local restaurateurs, or the truck drivers, or all the people who lose out on job interviews and are trying to get jobs . . . tell them the economy is not competitive. I think they might have a different opinion. Regulation of a market doesn’t necessarily make the market uncompetitive. For example health regulations, don’t make the restaurant industry uncompetitive. Quite the opposite, the trust instilled by a well regulated industry promotes competition. So your notion that regulation of an industry always makes it less competitive is just not rooted in reality.

If you hate the rich so much, if you think they are such lizards, why do you accept their bankrolling of your political movement? Why do you advocate letting them do whatever they want whenever they want . . . you know, the whole Libertarian thing. Without government there is no entity powerful enough to restrain the wealthy. That is probably one reason why billionaires like the Koch brothers are aggressively funding and leading your ideology. They would love it if that nasty old government which prevents them from polluting the air, water and land and prevents them from stealing oil would just go away.

One more time, take a look at how quickly BOTH parties, Demagoons and Rethuglicans came together to invent a new phrase "Too Big To Fail" and to bail out the wealthiest Americans. Literally over a weekend. They happily dumped GENERATIONAL DEBT onto the middle class without giving it as much thought as they would the type of coffee they wanted with their "Free" donuts.

Well “too big to fail is gone”, all banks can fail now due to new regulation passed by the Democrats. Two, as has been proven to you umpteen times, the bailout did not result in generational debt. It resulted in the US government making profits to the tune of nearly a 100 billion per year for the last 3 years, reducing the “generational debt” you so like to demagogue.

When interest rates return to the trend line, and they will return to the trend line. Then most of the GDP will be spent making interest payments. Then maybe things will be clearer who the Progressives WelfareQueens AND Warmongering Chickenhawks really work for.

There is no magical trend line for interest rates. Interest rates will rise as economic activity picks up. That is normal and natural. But what you fail to understand is that with the exception of TIPS (Treasury Inflation Protected Securities), the interest rate paid by the US Treasury is fixed at time of issue and does not change over time. So rising interest rates with the exception of TIPS, has zero effect on amount of interest paid by US government on existing debt.

The bottom line here Michael is that you cannot prove your very grandiose claims. You have resorted to demagoguery again.

 

[joepistole]

If you check what I post you will see I say things like "Fed printing dollars at more than than a 1 trillion per year rate and interest rate on the debt already rising?" (An exact quote from post 512 you are replying to) Or: "the Fed´s balance sheet is growing now by 1 trillion dollars per year," etc. and I rarely (if ever?) as speak of the "money supply" as unless you also discuss the "velocity of money" it has little significance.

I am well aware of you post, and what you wrote.

Currently most of the "money supply" is being recycled back to Fed or Treasury by beneficiaries of the new printing press money buying Treasury bonds or making "excess deposits" with the Fed. I.e. the banks don´t want to loan, with risk of not getting repaid, when 100% face value safe alternatives are available. (plus the loan regulations they must operate under now are more strict.)

I’m not sure what you point is here or how it is relevant. The Fed has an easy money policy now for several very legitimate reasons. As we have discussed, at some point the Fed will start reversing that policy, when unemployment approaches 6.5% per previously released Fed statements.

What I have tried to call attention to is that there is a limit to how much "thin air money" a government can print without everyone losing confidence that it will have value next year. Yesterday, wife´s daughter returned for S. Africa visit and I held a 50 billion Zimbabwe dollar in my hand. Interestingly it told the date of issue and said it would pay 50 billion dollars to the bearer by (another date, only about 6 months later). There was another note issued earlier for 100 million dollars that had picture of large group of concrete grain storage cylinders on the reverse. It was called an "agri-bond." Very likely the storage facilities were built earlier before the economy was destroyed by excessive use of the printing presses and empty when the note issued. Still another large note pictured three large rocks, one stacked on top of the other - I guess that was to imply how solid and stable the currency was.

Someone long ago noted that "the pen was mightier than the sword." I´ll extend that: As far as power to destroy a nation, "the currency printing press is mightier than the pen." Lets hope the Fed shuts the presses down before the US learns how true that is.

There is no legitimate comparison between the US or the Federal Reserve and Zimbabwe. The Fed is not printing money Zimbabwe style as you have alleged. Zimbabwe no longer has an official currency. It hasn’t had an official currency for years now. Things got so bad; the government of Zimbabwe couldn’t print enough money to buy ink to print more money. Zimbabwe now uses the South African Rand and the US Dollar as currency. So your comparisons to Zimbabwe are a bit over the top.