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

[Billy T]

... The national debt is per the US Treasury $11,973,170,292,026.36.

I'll call that 12 Trillion dollars and note that is not the total debt the government owes to the public, but ONLY the federal debt ALREADY OWNED by the public. For example, the Social Security Trust Fund, SSTF, will be 100% paid to public, not returned to the Federal government and much, if not all of it, before the 30 years bonds already owned by the public mature, which you do consider federal debt. Those SSTF funds the public will collect now total 2.7 Trillion dollars:

12.0+2.7 = 14.7 trillion. Debt to be paid by federal government only due to one agency's obligations to the public (or in the case of defense department's already on the books obligations, to contractors of the industrial military complex).

So just considering this one government agency , SSTF, temporarily holding funds for the public (not to return to the federal government) the Federal debt is now 14.7 Trillion dollars. There are of course many other agencies the federal government owes dollars to, mainly related to retirement plans, cost of caring for injured veterans and cost of military programs high tech toys not yet billed. Just the F-35 cost estimate as of 23 Feb13 is: “$396 billion to buy 2,456 jets by the late 2030s, but program is plagued by cost overruns ...” not to mention the F-22 jets or took up the cost of the two new different design of destroyers for shallow waters and the very expensive* “stealth” ships any or 10,000 Chinese fishing ships in the S. China Sea can radio in the location of with 30 meter accuracy using the Chinese version of the GPS system.

All told, several trillion more debt for federal government to pay than the 16.8 trillion I and the debt clock people say is federal debt, falling due before the 30 year bonds you do admit are federal debt, must be paid.

SUMMARY: You are making a distinction without a difference – all the 16.8 trillion dollars plus many trillion more will be claimed, even if some of it is now legally owned by a government agency with obligation to pay the public or DoD contractors later.

... yes the national debt is growing. It has been growing for most of our existence. Our national income grows, our population grows and our national debt also grows.

We agree on all that. Problem is:
(1) That the government revenues are growing more slowly than the government costs are. I.e. the federal debt is growing;
(2) Interest rate are atypically low now (half of what is normal) so when they return to normal, the cost of carrying even just the already created debt doubles as the old bonds mature;
(3) The national productivity as measured by the GDP is growing slower than the debt. (Debt to GDP is now 105%)

... The wealthy are not going to abandon anything as long as there is a buck to make or power to be attained.

Nonsense. Have you not heard of the internet? You can live anywhere now buy and sell on the NYSX and most of the large corporation's income now comes mainly from Asia, especially China. All the big auto makers for example, even though the US ones have done well recently, are expanding there as that is the largest market and fastest growing one is.

*Four billion each, as I recall.

 

[joepistole]

I'll call that 12 Trillion dollars and note that is not the total debt the government owes to the public, but ONLY the federal debt ALREADY OWNED by the public. For example, the Social Security Trust Fund, SSTF, will be 100% paid to public, not returned to the Federal government and much, if not all of it, before the 30 years bonds already owned by the public mature, which you do consider federal debt. Those SSTF funds the public will collect now total 2.7 Trillion dollars:
12.0+2.7 = 14.7 trillion. Debt to be paid by federal government only due to one agency's obligations to the public (or in the case of defense department's already on the books obligations, to contractors of the industrial military complex).
So just considering this one government agency , SSTF, temporarily holding funds for the public (not to return to the federal government) the Federal debt is now 14.7 Trillion dollars. There are of course many other agencies the federal government owes dollars to, mainly related to retirement plans, cost of caring for injured veterans and cost of military programs high tech toys not yet billed. Just the F-35 cost estimate as of 23 Feb13 is: “$396 billion to buy 2,456 jets by the late 2030s, but program is plagued by cost overruns ...” not to mention the F-22 jets or took up the cost of the two new different design of destroyers for shallow waters and the very expensive* “stealth” ships any or 10,000 Chinese fishing ships in the S. China Sea can radio in the location of with 30 meter accuracy using the Chinese version of the GPS system.
All told, several trillion more debt for federal government to pay than the 16.8 trillion I and the debt clock people say is federal debt, falling due before the 30 year bonds you do admit are federal debt, must be paid.

Yeah if you count future projected spending as deb and call it debt then you can jack up the debt numbers. But then like your “real unemployment” numbers you wouldn’t be measuring debt. You would be measuring existing debt plus future projected expenditures minus projected revenues. That is hardly a fair, reasonable or useful measure.

SUMMARY: You are making a distinction without a difference – all the 16.8 trillion dollars plus many trillion more will be claimed, even if some of it is now legally owned by a government agency with obligation to pay the public or DoD contractors later.

Unfortunately for you and those like you Billy T it is a very important and relevant distinction. You can scare more people by including fictional debt to jack up your debt numbers just like you do with your unemployment numbers - add future spending without future revenues to existing debt and you can really exaggerate the debt numbers and scare a lot of people into doing stupid things.

We agree on all that. Problem is:
(1) That the government revenues are growing more slowly than the government costs are. I.e. the federal debt is growing;
(2) Interest rate are atypically low now (half of what is normal) so when they return to normal, the cost of carrying even just the already created debt doubles as the old bonds mature;
(3) The national productivity as measured by the GDP is growing slower than the debt. (Debt to GDP is now 105%)

No, we don’t agree. As previously stated government revenues are going up and government expenses are going down…faster than at any time in the last half century. Interest rates will rise as the economy recovers – assuming no intentional and unnecessary Republican induced debt default – and the interest paid by the government for new government debt will rise. Interest rates for existing government debt will not rise with the exception being for some savings bonds and TIPS bonds which is a small portion of existing debt.

Nonsense. Have you not heard of the internet? You can live anywhere now buy and sell on the NYSX and most of the large corporation's income now comes mainly from Asia, especially China. All the big auto makers for example, even though the US ones have done well recently, are expanding there as that is the largest market and fastest growing one is.

No not nonsense. It doesn’t matter where you live. If you earn money in The United States, it can be made subject to US taxation regardless of where you live. I have investments in some European countries and believe me they are not the least bit hesitant to tax my investments in those countries with or without the internet.

And again you are ignoring the fact that European countries like Sweden have effective tax rates that are almost double US tax rates and they have had those taxes for a very long time. And their economies have grown faster than the US economy over the same timeframes. Our Canadian brothers and sisters to the north have higher tax rates than we have here in the US. There people are not fleeing Canada for the states. In fact it seems more Americans are seeking to immigrate to Canada than Canadians who want to immigrate to the US. And large industrialists are not going to move their oil wells to a lower tax state, manufacturers are not going to move their facilities to a lower tax state, and stores like Wal-Mart are not going to wrap up their stores and move to a lower tax state. This Republican notion that the little people have to kiss and rub their bellies so they will keep their wealth here is just silly in addition to being wrong and is not supported by the evidence. The federal government doesn’t tax wealth. It taxes income.

Businesses and investors make investment decisions based on the business value. If an investment makes business sense, investors are going to be there to advantage themselves regardless of the tax incentives. If a business investment doesn’t make sense, it doesn’t make sense regardless of the tax issues. And then you have that unpleasant little fact that all other industrial/developed countries have higher tax rates than we have in the US. And the rich have not and are not fleeing those states and their economies have out preformed ours (e.g. Sweden).

 

[Billy T]

Don't miss the text and photos at the end. - Less than half of my post here:http://www.sciforums.com/showthread...l-Superpower&p=3102317&viewfull=1#post3102317

Yeah if you count future projected spending as deb and call it debt then you can jack up the debt numbers.

Then, to illustrate your "distinction without a difference" I note you consider the obligation to pay $10,000 in 2043 (recently issued 30 year bond) as part of the federal debt but paying out of 2.7 TRILLION dollars to retired people from the Social Security Trust Fund completely 10 years sooner or the approximately equal amount in medical expenses to be paid out in the next 13 years! is not, according to your "distinction without a difference" now part of the federal debt as it is not yet legally owned by the people or doctors who will receive these funds from the federal government.
I also note that very few bonds ("Saving Bonds" only by and large), which you considered part of the federal debt are legally owned by the ultimate beneficiaries. I.e. 99+ % of bonds, not owned by foreign governments (central banks usually) just like stocks are owned by financial institutions like brokerage firms and “held in trust” for the ultimate beneficiaries. That is why they can lend them to others who want to borrow and sell them (sell “short”) and buy them back later.

Trustees for the Medicare program said its hospital insurance fund would be exhausted in 2026, two years later than was estimated a year ago. Social Security’s reserves, meanwhile, will run out by 2033, a projection unchanged from last year.

In passing I will note that vast amount of gold held by Comex is sort of “held in trust” but does have defined owner. Each bar has a number on it indexing who or what firm owns it. Less than 7 million ounces now, and rapidly falling is owned by Comex and for each bar there are more than 50 people or firms “long” i. e. can asks for delivery of EACH bar. Many are now doing that now. (They don't want to get stuck with just a promissory note when the vault is empty.) In fact slightly more than 2/3 of all this “demand-able gold” has been drained form Comex's vault in the last eight months! I. e. At that rate the vault will be empty by the end of the year! I.e. the traded "Paper Gold" will be unbacked – NOTHING BUT PAPER.

...No, we don’t agree. As previously stated government revenues are going up and government expenses are going down…faster than at any time in the last half century.

Yes, I agree with the now bold sentence too (although not sure its end is true); however, you are ignoring or did not understand my point(1) of three, which was:
(1) That the government revenues are growing more slowly than the government costs are. I.e. the federal debt is growing;
Point is: government expenses > revenue = Debt increasing. Not important that the rate of revenue is rising faster than in last 50 years. It can continue to do that for the next 50 years as US goes deeper and deeper into debt, even on a per capita basis. I think we even agree that interest required for Treasury to sell 10 year or longer bonds has nearly doubled in slightly more than a year. Certainly your and other's tax bills are increasing more slowly but of course the full impact of rapidly growing interest cost paid to carry the growing debt is not immeditely felt as old bonds, still have their specified interest rate, (except for the TIPs , which have the principle to be paid at maturity increasing now.)

... No not nonsense. It doesn’t matter where you live. If you earn money in The United States, it can be made subject to US taxation regardless of where you live.

Here too you don't understand. You had suggested that US could climb out of debt by taxing the rich more and I noted that there was a surge of rich people giving up their citizenship and US residency to not owe any taxes to the US. Yes, if they remain US citizens living elsewhere does not remove their obligation to pay taxes on all their income regardless of where it is earned. US is about the only country that supports “double taxation” (Local tax and US tax on same income but the burden is eased by the foreign tax credit credits, in many cases.) So, in summary, yes it is nonsense to think the rich can pay for all Americans living beyond their means, driving the US ever deeper into debt. If that is attempted they will give up their passports and leave as some are already doing, now that Swiss Banks will in 2014 give the IRS information on their not declared earnings.

...And again you are ignoring the fact that European countries like Sweden have effective tax rates that are almost double US tax rates and they have had those taxes for a very long time. And their economies have grown faster than the US economy over the same timeframes.

Not ignoring, but as you have now twice brought it up, I will comment:
Yes all the Scandinavian countries do have about double US tax rates and prosper. They keep all their population healthy as possible with essentially zero out of pocket medical expense, so all get the needed vaccinations, not just the well off and live about three years longer, on average, than Americans do. I. e. are productive longer and that with much more economical preventative and early care when ill does explains in part of this prosperity with high taxes.
More important, by far, is their essentially free education thru post graduate school, if you want it, makes for a population, unlike that of the US with its local funding of terrible schools in poor neighborhoods, ALL well qualified to earn a good living in the modern world instead of become thieves and drug dealer to live well, until caught and join by far the world's highest percentage of costly prisoners. Each US prisoner, is not only non-productive but makes ~3 others non-productive members of US society. That is why the cost per prisoner exceed the tuition at most, if not all, Ivy league schools! (It was “all” a few years ago, but I have not seen recent data and tuitions are rapidly rising, making the average graduate of college take a $28,000 debt along with the diploma when they graduate.)
More important still in explaining why US is going deeper into debt is its “military industrial complex” which make only things to be destroyed at a total cost of more than the TOTAL COST of next 16 greatest DoD spenders in the world!
In the long run, perhaps worse for US prosperity is the lack of ability in Congress to fund very beneficial projects which have first “pay off” more than a decade into the future as China can and does. For example the US could use mainly existing rivers to transfer Great Lakes water to the US's thirsty S. West at a small fraction of the cost China has paid for the world's largest water transfer project, now nearing completion after planning starting in 1950s! They will move slightly more than 50% of the Nile Rivers annual flow to their water short NE from their SE rivers more than a 1000 miles away!

SUMMARY: Yes, high taxes, well spent like in Sweden, do make for prosperity and low taxes, spent stupidly,* like in the US on the Military Industrial Complex, terrible schools for the poor leaving them unqualified for jobs that do exist (except making license plates in a prison), and with little preventive health care, etc. etc. make for a nation about to collapse economically with growing per capita debt burden “second to none” in the world!
* For example the very costly, high tech, “stealth” destroyer, for the “Tilt East” that any of ~10,000 Chinese fishing boats can continuously report the exactly location of with their version of GPS!

... China is building the world's largest network of modern rails for world's highest speed trains - reducing time loss and transportation costs while making many new job through out the country, built the world largest hydro-electric and flood control project and is now completing by far the world's most massive water transfer project: ... As I said earlier: “Political power flows from economic power.” That is what China is rapidly gaining and what the US is losing. Empires have a historical habit of falling, with surprising speed and being replaced, I sure you, with your interest in history, know. Fact that in first half of 2013, 77% of all new US jobs created were part-time, low wage jobs does not speak well for an economy based 2/3 on Joe American's consumption. ...

This energy efficient train goes faster than all prop-type, air planes > 500Km /hour.

For scale, note the large earth mover at edge, bottom center.

Eastern and central parts will be operational in 2014 after more than a decade of intense construction and testing. The Nile flow is just over 80 cubic kilometers per year. (reference at: http://www.google.com/#fp=b1848aaff8811878&q=annual+flow+of+nile+river) and a cubic Km is 1000^3 cubic meters, or Nile moves 80 billion cubic meters vs. China is moving 44.8 billion cubic meters. I.e. the Nile moves less than twice as much water as China will but the Nile moves its water slightly more than twice a far. No other man-made water project come even close (not even within 3%) to what China has done to improve the economic health of the nation as world moves into the era of water shortages! China's "half Nile" does a trick nature's Nile can't do: It delivers water to the Beijing area 45 meters higher than its source! (2.8 billion kWh/year pumping energy) China started funding studies for this world's largest water project in 1950!

Lake Powell and Lake Mead supply much of the water needed by S. W. USA and they are going dry:

The US does not have an organizational structure to solve its largest water problem, with Congress mainly interested in the next election and not funding multi-decade-long water projects with first benefits long after they have left office. With cost of ~10% of China's 62 billion dollars, US could transfer water from the Great Lakes, mainly via existing rivers, to save the South West from disaster, but that will not be done by Congress.

Scripps Institution of Oceanography / University of California, San Diego says: "... There is a 50 percent chance Lake Mead, a key source of water for millions of people in the southwestern United States, will be dry by 2021 if climate changes as expected and future water usage is not curtailed, ... Without Lake Mead and neighboring Lake Powell, the Colorado River system has no buffer to sustain the population of the Southwest through an unusually dry year, or worse, a sustained drought. In such an event, water deliveries would become highly unstable and variable, ..." From: http://scrippsnews.ucsd.edu/Releases/?releaseID=876

** China has 10 "five-year" plans, each becoming precisely detailed and adjusted as they come closer to the present. The central committee of the CCP is elected for 10 year terms and often serves several. Its members mainly have advanced engineering degrees, although a couple are economists and geologists. Unlike the US Congress and administration, where >90% were educated as lawyers, there is not a single lawyer high up in the CCP!

Billvon lives in US's SW and has photo voltaic generation system providing more than his electrical needs, but should make sure he also has a good well and guns to defend his water or that may all be useless before his PV system debt (if typical) is paid. 2021 is only 8 years away.

 

[joepistole]

Don't miss the text and photos at the end. - Less than half of my post here:http://www.sciforums.com/showthread...l-Superpower&p=3102317&viewfull=1#post3102317
Then, to illustrate your "distinction without a difference" I note you consider the obligation to pay $10,000 in 2043 (recently issued 30 year bond) as part of the federal debt but paying out of 2.7 TRILLION dollars to retired people from the Social Security Trust Fund completely 10 years sooner or the approximately equal amount in medical expenses to be paid out in the next 13 years! is not, according to your "distinction without a difference" now part of the federal debt as it is not yet legally owned by the people or doctors who will receive these funds from the federal government.
I also note that very few bonds ("Saving Bonds" only by and large), which you considered part of the federal debt are legally owned by the ultimate beneficiaries. I.e. 99+ % of bonds, not owned by foreign governments (central banks usually) just like stocks are owned by financial institutions like brokerage firms and “held in trust” for the ultimate beneficiaries. That is why they can lend them to others who want to borrow and sell them (sell “short”) and buy them back later.In passing I will note that vast amount of gold held by Comex is sort of “held in trust” but does have defined owner. Each bar has a number on it indexing who or what firm owns it. Less than 7 million ounces now, and rapidly falling is owned by Comex and for each bar there are more than 50 people or firms “long” i. e. can asks for delivery of EACH bar. Many are now doing that now. (They don't want to get stuck with just a promissory note when the vault is empty.) In fact slightly more than 2/3 of all this “demand-able gold” has been drained form Comex's vault in the last eight months! I. e. At that rate the vault will be empty by the end of the year! I.e. the traded "Paper Gold" will be unbacked – NOTHING BUT PAPER.Yes, I agree with the now bold sentence too (although not sure its end is true); however, you are ignoring or did not understand my point(1) of three, which was:
(1) That the government revenues are growing more slowly than the government costs are. I.e. the federal debt is growing;
Point is: government expenses > revenue = Debt increasing. Not important that the rate of revenue is rising faster than in last 50 years. It can continue to do that for the next 50 years as US goes deeper and deeper into debt, even on a per capita basis. I think we even agree that interest required for Treasury to sell 10 year or longer bonds has nearly doubled in slightly more than a year. Certainly your and other's tax bills are increasing more slowly but of course the full impact of rapidly growing interest cost paid to carry the growing debt is not immeditely felt as old bonds, still have their specified interest rate, (except for the TIPs , which have the principle to be paid at maturity increasing now.) Here too you don't understand. You had suggested that US could climb out of debt by taxing the rich more and I noted that there was a surge of rich people giving up their citizenship and US residency to not owe any taxes to the US. Yes, if they remain US citizens living elsewhere does not remove their obligation to pay taxes on all their income regardless of where it is earned. US is about the only country that supports “double taxation” (Local tax and US tax on same income but the burden is eased by the foreign tax credit credits, in many cases.) So, in summary, yes it is nonsense to think the rich can pay for all Americans living beyond their means, driving the US ever deeper into debt. If that is attempted they will give up their passports and leave as some are already doing, now that Swiss Banks will in 2014 give the IRS information on their not declared earnings.Not ignoring, but as you have now twice brought it up, I will comment:

All of that was a bunch of gobbledygook Billy T. The fact is what you are trying to do is count estimated future spending, without the associated estimated revenues, as debt. And it isn’t. It is just that simple. So the US debt situation is nowhere near as dire as what you are portraying it to be.

What the US needs and was severely lacking during the George Junior administration and has been lacking since Republicans took over the House is responsible fiscal policies. The US faces a couple of fiscal challenges. First, it needs to grow its economy faster and to do that it needs fiscal policies which place more money into the hands of the middle class and less into the hands of the wealthy. Because middle class people send the money on goods and services thereby creating economic demand and economic growth rather than sticking it in some Caribbean bank account. The nation needs to reverse the huge wealth transfers from the middle class to the wealthy that were initiated some 35 years ago by President Reagan with his regressive tax policies.

Second, it needs to bring its healthcare costs in line with those of other developed countries. The US healthcare system is bloated, inefficient and increasingly ineffective. That has to stop. The traditional solution has been to transfer those costs from individuals to government without addressing the underlying cost issues – largely to protect the powerful healthcare special interests (e.g. physicians, pharmaceuticals, insurance companies, etc.). And Obama and his Democrats have made a first stab at that with Obamacare.

Three, it needs to invest more in infrastructure and research and development. In order to be a competitive and wealthy country, you need infrastructure. You need hard infrastructure like roads and state of the art communication and power systems. And you need state of the art soft infrastructure like an educated and capable workforce, intellectual properties, and legal and regulatory systems.

Contrary to Republican ideology, Americans don’t need to be polishing and kissing the Buddha bellies of the wealthiest among us and praying for their blessings and living in fear of their anger. Instead Americans need to be making the necessary changes outlined above. It means more short term spending/investments and less long term spending. It means not holding Americans and holders of American debt hostage to political demagoguery. It means reforming our political processes to severely curtail the special interest abuses in Washington (i.e. take the special interest money out of our political system).

[Yes all the Scandinavian countries do have about double US tax rates and prosper. They keep all their population healthy as possible with essentially zero out of pocket medical expense, so all get the needed vaccinations, not just the well off and live about three years longer, on average, than Americans do. I. e. are productive longer and that with much more economical preventative and early care when ill does explains in part of this prosperity with high taxes.
More important, by far, is their essentially free education thru post graduate school, if you want it, makes for a population, unlike that of the US with its local funding of terrible schools in poor neighborhoods, ALL well qualified to earn a good living in the modern world instead of become thieves and drug dealer to live well, until caught and join by far the world's highest percentage of costly prisoners. Each US prisoner, is not only non-productive but makes ~3 others non-productive members of US society. That is why the cost per prisoner exceed the tuition at most, if not all, Ivy league schools! (It was “all” a few years ago, but I have not seen recent data and tuitions are rapidly rising, making the average graduate of college take a $28,000 debt along with the diploma when they graduate.)
More important still in explaining why US is going deeper into debt is its “military industrial complex” which make only things to be destroyed at a total cost of more than the TOTAL COST of next 16 greatest DoD spenders in the world!
In the long run, perhaps worse for US prosperity is the lack of ability in Congress to fund very beneficial projects which have first “pay off” more than a decade into the future as China can and does. For example the US could use mainly existing rivers to transfer Great Lakes water to the US's thirsty S. West at a small fraction of the cost China has paid for the world's largest water transfer project, now nearing completion after planning starting in 1950s! They will move slightly more than 50% of the Nile Rivers annual flow to their water short NE from their SE rivers more than a 1000 miles away!

SUMMARY: Yes, high taxes, well spent like in Sweden, do make for prosperity and low taxes, spent stupidly,* like in the US on the Military Industrial Complex, terrible schools for the poor leaving them unqualified for jobs that do exist (except making license plates in a prison), and with little preventive health care, etc. etc. make for a nation about to collapse economically with growing per capita debt burden “second to none” in the world!
* For example the very costly, high tech, “stealth” destroyer, for the “Tilt East” that any of ~10,000 Chinese fishing boats can continuously report the exactly location of with their version of GPS!

I think on this we can largely agree. We need a government that works for the people and not for the special interests that fund our political campaigns and politicians. We need campaign finance reform and stronger ethical requirements for our elected representatives and Supreme Court justices. I think Supreme Court justices should be subject to recall. Elimination of athe "Fairness Doctrine" has led to more extreme and homogenous Republican Party. Frank Carlson was my kind of Republican. Unfortunately they broke the mold with Frank.

As long as our government and political system remain dysfunctional, we are going to have troubles.

 

[Billy T]

To Joepistole: I agree with most of your last post, as it is agreeing with me, but would like you to clearly explain why you include the pay out in 2043 of the principle of a recently issued 30 year Treasury Bonds as part of the "federal debt" but don't consider the certain pay out of ALL of the 2.7 TRILLION dollars now in the Social Security Trust Fund by ~2033, ten years sooner as part of the federal debt. Do you believe men from Mars will come and pay that 2.7 trillion so the federal government does not need to? - If that is not your belief, how is this "distinction without difference" explained? The government has a decade longer to try to collect the revenue needed for the 30 year bonds you include in the current government debt than to fund / redeem the IOUs sitting in the Social Security Trust Fund. How are these "IOUs" different from the bond IOUs? Both are to be paid with yet to be collected revenue.

That question is not "gobbledygook" but I bet your answer to this question will be.

Only difference I know of it is that 99+% of Treasury bonds* are owned and held by private agencies, like brokerages firms, "in trust for the beneficiary" and the 2.7 trillion is owned and held by Social Security Trust Fund, a government agency "in trust for the beneficiary."

* AFAIK, the only bonds the treasury issues with a person's name on it are the so called "Saving Bonds" and I' not sure, but think even those are no longer issued with your name on them anymore. - It has been decades since I owned any. Even then, they were not any asset your could sell - you could only turn them in to the treasury for a deeply discounted payment much less than their face value.

 

[Billy T]

US's population is growing older and poorer:

The new census data shows that lower-income households are a steadily increasing share of the population, while middle- to higher-income groups shrank or were flat.

In 2012, households earning less than $24,999 made up 24.4 percent of total households, up from 21.7 percent four years earlier. The share of households earning $50,000 to $99,999 slipped from 31.2 percent to 29.9 percent. Top-income households making more than $200,000 dipped less, from 5 percent to 4.6 percent over that period.

And more gloomy:

Consumers views of the U.S. economic outlook deteriorated in September to the weakest level in a year as higher borrowing rates started to chip away at progress in the housing market.

The recent cooling in the labor and housing markets points to an uneven recovery, helping explain why the Federal Reserve decided yesterday to maintain the pace of monetary stimulus. Faster job and wage growth would help ease the strain of costlier credit that’s discouraging some households from spending, which accounts for 70 percent of the economy.

“The decline in overall confidence is the result of a slowdown in the economy,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York

Perhaps it all gets much worse on or before Halloween 2014?

 

[Billy T]

Anyone read this? Not seen by me in Brazil but seems to reflect my expectations for Joe American (not the rich).

Please quote parts if you have read it.

 

[billvon]

Billvon lives in US's SW and has photo voltaic generation system providing more than his electrical needs, but should make sure he also has a good well and guns to defend his water or that may all be useless before his PV system debt (if typical) is paid. 2021 is only 8 years away.

Already been paid off.

Are you now becoming a prepper?

 

[Billy T]

Already been paid off. Are you now becoming a prepper?

What about the well? Do you have a good one, and guns to defend the water from those who don't, when lakes Powell and Mead are dry.
(You saw last part of long quote in post 623, but others may need this reference.)?

Not the normal type of Prepper, but I did move to Brazil nearly 20 years ago and have my cash (very liquid funds, not stocks) about equally divided between the two countries. I am starting to convert US stocks into cash now, using my losers to off set gains. I think it may be a little early still, perhaps a year, but would rather be safe than sorry. I use open ended GTC sell orders with price a few percent higher than the market and forget about them. A just after the "no taper now" news, I sold my 500sh of BG for just under $40,000. I bought it long, long ago when Bunge was a Brazilian company with HQ in Brazil.

 

[Anew]

I don't get the traft for economy, most run on plastic.
The economy really rely's on valuable occupational proportion as a welfare great for inhabitants of the country, that's really what economy is being able to give people occupational security, that's what the economy is related to heaha the great economy of self...

 

[Billy T]

Low-income Americans have long had to scrape by in old age, relying primarily on Social Security. The middle class, with its more educated and resourceful retirees, is supposed to be better prepared, ... The reality is often quite another story. More seniors who spent much of their careers as corporate managers and professionals are competing for low-wage jobs.* ...

About 7.2 million Americans who were 65 and older were employed last year, a 67 percent increase from a decade ago, according to government data. Yet 59 percent of households headed by people 65 and older currently have no retirement account assets, according to Federal Reserve data analyzed by the National Institute on Retirement Security. People who built successful careers, put their kids through college and saved what they could, are still facing downward mobility...

It’s about to get worse. Right behind the current legions of elderly workers is the looming baby boomer generation, who began turning 65 in 2011 and are reaching that age at a rate of about 8,000 a day. They’re the first generation expected to fund their own retirements, even as they live longer lives. They, too, are coming up short. ...
The median 401(k) balance for households headed by people aged 55 to 64 who had retirement accounts {only 41% of all have one!} at work was $120,000 in 2011, according to the Center for Retirement Research at Boston College.

Not Enough {especially for the 59% who have none}: Those savings will provide $4,800 a year, assuming seniors withdraw 4 percent annually, the amount recommended by retirement experts to ensure retirees don’t run out of money in their lifetimes. Little wonder that half of baby boomers aged 50 to 64 don’t think they’ll ever have enough to retire, according to a 2011 survey by AARP.

“The current retirement savings systems isn’t working, and that’s becoming a crisis as Americans who make it to 65 in good health are now living at least two more decades,” said Larry Fink, chief executive officer of BlackRock Inc., the world’s largest asset manager.

* Human interest focus of article is on a former corporate leader who made more each hour than the sum of his current three jobs pays in a month, yet he thinks he is lucky as most 75 year olds can find even one job to make ends meet. See a Graphs & Charts summary of the growing problem here:http://www.bloomberg.com/infographics/2013-23-19/end-of-retirement.html
Bloomberg won't let it copy, or I would have posted it. As article notes: Be good to your kids - You'll be living with them.

 

[Michael]

In the long run, perhaps worse for US prosperity is the lack of ability in Congress to fund very beneficial projects which have first �pay off� more than a decade into the future as China can and does. For example the US could use mainly existing rivers to transfer Great Lakes water to the US's thirsty S. West at a small fraction of the cost China has paid for the world's largest water transfer project, now nearing completion after planning starting in 1950s! They will move slightly more than 50% of the Nile Rivers annual flow to their water short NE from their SE rivers more than a 1000 miles away!

The very LAST people I want 'managing' the Great Lakes (partially owned by Canada) is the US CONgress (or the Chinese People's Republic). These water systems are fragile, and if people 'out West' can't manage theirs - then they need to move somewhere else or find their own solutions.

They could move to MI as an example, MI alone could produce enough food for the entire nation and then some.

As for China's 'forward thinking' - come on BillyT, you're going to use China as an example of responsible environmental resource management?

 

[Billy T]

... As for China's 'forward thinking' - come on BillyT, you're going to use China as an example of responsible environmental resource management?

Sort of but with the understanding that they have a lot of needs to help their people, much like the US had 100 or so years ago.

When I was just a child, not yet a teenager, my dad took me to Pittsburgh, then self promoted as the "Steel capital of the world." On a windless day the smog from the coke ovens made it impossible to see across a wide street but many were given good jobs in the growing industry. Give China some slack - they can't over night end the burning of coal, but are world leader in alternate energy system investments, and even in coal fired power plants have developed the world's most efficient ones (Super critical steam) not to mention the more conventional alternate energy system - many hydroelectric dams / flood control systems including the world's largest at the Three Gorges site. China is running "rough shod" over individual rights to met the "greater good"

For example no public hearings - just action so they could build the world's most efficient, attractive and >1Km long, airport for the Olympian in less time than England spent in public hearing for a minor expansion at Heathrow. Same is true as they build the world's largest and highest speed rail lines, or the amazing "half Nile" artificial river that moves more than 50% of the annual Nile water flow 45 m up hill to water short Beijing NE area. See photos of last two of these three projects in post 623 of this thread. Here is the airport photo:

Linear internal trains move passengers and bags to/from oval parking lot (or buses) to their gate, fast.

 

[Billy T]

 

[Russ_Watters]

I'm reasonably certain there was no such thing as a "reserve currency" while the gold standard existed.

 

[Billy T]

I'm reasonably certain there was no such thing as a "reserve currency" while the gold standard existed.

Sure there was. Global banks exchanged pounds or letters of credit in pounds when "The sun never set on the British Empire," not gold.

 

[Billy T]

Times are tougher now for most Americns, not already wealthy:

Hair, breast milk and eggs are doubling as automated teller machines for some cash-strapped Americans. While Americans can legally sell hair, breast milk and eggs, the sale and purchase of a kidney in the U.S. is against the law. {but done with typical price of $37,000. (This a Billy T insert from ad at link given above.)}

Bridie MacDonald in Farmington Hills, Michigan, lost her job in mortgage marketing on Sept. 27, a casualty of interest rates that have risen almost 1 percentage point since the start of May, {2012} ... With naturally red hair, the 25 year-old posted an online ad on Oct. 1 looking to sell up to 18 inches of her locks for $1,500. Since then, she’s received more than 100 responses. “I’ve been growing my hair out for maybe a little over two years, and I just decided now was the time since I lost my job,” MacDonald said. “It doesn’t cost anything to grow your hair out and sell it for money. It’s basically profit with very little work.

At Shady Grove Fertility Center, egg donors receive compensation at almost every step of the process, earning $7,000 by the time they finish their first donation cycle. Women can receive $7,500 for a second donation and $8,000 for each additional cycle up to a total of six, incurring no out-of-pocket costs along the way.

Hare, who also considered selling her breast milk, joins others exploring unconventional ways to make ends meet as the four-year-old economic expansion struggles to invigorate the labor market and stimulate incomes. The mother of two posted pictures of her 18-inch auburn mane on www.buyandsellhair.com, asking at least $1,000 and receiving responses within hours. Hare, who has a 4-month-old son and 7-year-old daughter, researched selling her breast milk online after seeing she could make as much as $5 an ounce.

Such a decision may be influenced by a labor market that’s struggling to improve and unemployment benefits that are running out. The jobless rate has been above 7 percent since the end of 2008. The share of unemployed Americans out of work for 27 weeks or longer was 38 percent in August, more than double what it was before the end of the last expansion, according to Labor Department figures. “Clearly that would be creating some pressure for people who haven’t been able to work,” Becker said. “They’re getting unemployment compensation that was less than they had in their last job, or their unemployment compensation may have run out and they’re on welfare.”

Sentiment regarding employment opportunities is similarly bleak, with 52 percent saying the job market has barely recovered since the recession, Pew’s survey shows. Payrolls are still down 1.9 million employees from the January 2008 peak, according to Labor Department data. Such figures help explain why some Americans are seeking unorthodox ways to supplement their incomes.

a 22Oct13 up date:

Part of US conversion to a nation of part time jobs, may be due to Obama care, which I favor, as ALL should have access to good medical care, (and quality primary education opportunities) as they do in Scandinavian countries where populations know that is desirable and economically beneficial for their country instead of huge prison populations that per /capital cost more annually than "Ivy league" schools do even though it does require paying ~50% of your income to government in taxes. Also a large part of reason why US's total medical cost (including insurance company and legal profits of the US's "for fees & profits" system) are 2 to 3 times higher per capita than in Scandinavia is that poor wait until very ill to seek help at the hospital's emergency room. The US life expectance is 2 or more years LESS than in Scandinavia, where it is nearly free to ill person.

 

[Billy T]

Dollar becoming less desirable:

Foreign investors were net sellers of U.S. long-term portfolio assets in August as China reduced its holdings of Treasuries to a six-month low.

The net long-term portfolio investment outflow was $8.9 billion after a revised $31 billion inflow in July, the Treasury Department said in a statement today in Washington. Net sales of U.S. equities by official holders abroad were a record $3.1 billion, and China lowered its holdings of U.S. government debt for the second time in three months, the department said.

 

[Billy T]

News now, no "stand -by" needed:

Legislation passed the chamber yesterday that would cut $39 billion from nutrition programs over a decade, a roughly 5 percent reduction that would end food-stamp benefits for 3.8 million Americans next year.
The vote came a day after the release of new U.S. Census Bureau data showing 46.5 million people living in poverty, close to 15 percent of the population and near a two-decade high. {That new legislation became effective today, 1 November 2013.}

What fraction of the US population receives food assistance of some kind? Answer: 1/5

Number of people on Food Stamps as of July 2013 (latest official data) was 47,637,407 See this and state by state data at: http://www.fns.usda.gov/pd/29snapcurrpp.htm
"The United States population on July 4, 2012 was: 313,933,954" This quote from: http://www.census.gov/popclock/

Thus 47,637,407 / 313,933,954 = 0.1517434 and 1 / 6.62 = 0.1510574 I.e. on most recent "Independence Day" one in every 6.62 Americans was dependent even for their food.

But the government will make that number look better by throwing 3.8 million Americans now getting food help off the roles. This is much much like how it reduces the unemployment number by not counting those who have looked for work, typically a year, before concluding that was just wasting their time and money as US produces only 130,000 or so new jobs per month when ~200,000 per month are needed just to keep up with the growth in the potential labor force. Or like the CPI is lessen when Jane can no longer afford her preferred Dove soap and switches to lower cost Ivory and the government says : "Wonderful, cost of personal hygiene is dropping. - Reduce that cost in the calculation of the CPI."

 

[Billy T]

Especially in 2014:

As pleasant a growth surprise as the third-quarter GDP numbers were last week, the 2.8% growth rate for the quarter doesn't look sustainable. The main reason for the step up in growth from the second quarter was an increase in inventories that added about 0.4 percentage points to the growth rate in the quarter. Inventories have now climbed for three consecutive quarters.

Weak consumer spending—and consumer spending grew by just 1.5% in the quarter, down from a 1.8% pace in the second quarter—argues that companies will have to let inventories run down in the fourth quarter and into 2014.

Such a rundown would mean that fourth-quarter GDP will have to give back some of the inventory-based gains in GDP growth recorded in the third quarter. Final sales, a growth measure that doesn't include changes in inventories, was up just 2% in the quarter. That's down from a 2.1% increase in the second quarter and is the slowest growth since the 1.5% rate in the second quarter of 2011.

One big negative for the US economy is the automatic budget cuts set to go into effect in 2014, pending budget talks between Democrats and Republicans in Congress. The agreement that ended the government shutdown in October kept sequester cuts at fiscal 2013 levels. But if budget talks fail—which is likely—the cuts for the fiscal 2014 year that ends in October 2014, will be more painful to the economy than the 2013 cuts. The new spending reductions will come on top of the cuts already made in government budgets, and they'll come after a year when many agencies used up all of their rainy day money.For example, the Pentagon used $4 billion in prior-year funding in fiscal 2013 to pay for Navy and Air Force procurement. That money won't be available for fiscal 2014, and the Pentagon would have to delay the delivery of an aircraft carrier and a nuclear submarine.

I'm not happy about it but it is looking more and more like I may be correct that the coming Halloween is going to be scary - real scary for most.