Global Economy Bursting?

[Big ole Boy]

real money party - non ballot choice

... I am voting for the real money party .......

.... its a party that will not be on the ballot ...

....

 

[Couch Potato]

... I am voting for the real money party .......

.... its a party that will not be on the ballot ...

....

By definition money is symbolic rather than real. Even with commodity based money systems the money is not "real." The value of the commodity only exists for those who need the commodity. Take gold for instance. It is a popular commodity for monetary systems, but the "real" value of gold for me personally is zero. I have absolutely no use for it. It has symbolic value for me because I know it has real value for others.

 

[Randolph Kinney]

Volcker says it's time to tighten monetary policy

http://www.dallasnews.com/business/...says-it_s-time-to-tighten-monetary-policy.ece

 

[Big ole Boy]

....hmmm ... let me see ..... here .... ummmmm ......


...... OK, Congress finally decides not to raise spending ... hmmmm....

.... if the economy is 65% government already ...... then ...


...hmm...... for every 1% drop in Federal Spending will equal ........ a .065% decrease in the GDP ..... hmmmmm ....

... so if congress can drop spending by say 1% ....... we can cut out a little over 1/2 a percent on the GDP number ....

...... hmmmmm

.... shall we try for a 5% reduction?

.... that would leave us with a negative GDP .....

.... so........

...... GDP ^ = 65%(Congress)^ + 35%(Private Sector)^

..... How much of a spending cut can Keynesians tolerate?

 

[Randolph Kinney]

GDP = private consumption + gross investment + government spending + (exports − imports)

What is killing the economy is the price of oil (we run a trade deficit), private consumption (purchases were financed by increasing debt), and investment (who is building new factories, new houses, etc.).

Government spending is 25% of GDP, not 65%.

 

[Randolph Kinney]

Prepare for More Money Printing

http://www.cnbc.com/id/43233866

The bond market is going in one direction which is up-falling yields which is telling you quite clearly the direction of economic travel is downwards. That translates into a need for QE3, which means a big injection of cash into the bond market. That cash injection will have the normal inflationary knock-on impact, driving back up commodities, supporting industrial stocks, dragging the financials up with them.

 

[Randolph Kinney]

Central Bankruptcy – Why QE3 is Inevitable

http://finance.yahoo.com/blogs/dail...GFlbHBlbnRv?sec=topStories&pos=9&asset=&ccode

The Fed acknowledged this insolvency risk on January 6th when it modified its accounting rules to ensure that it never technically runs out of capital. In a system that would make Enron jealous, the new gimmickry allows Fed losses to be booked directly as Treasury liabilities. The truth is that without the ability to fully withdraw prior liquidity the Fed is incapable of significantly raising interest rates. After all, the Fed can't raise rates by fiat. It must sell assets to do so. Similarly, to support the dollar it must take money out of circulation, which is also accomplished by asset sales. But the Fed's arsenal is no longer stocked with high grade assets. In the end, any meaningful attempt to withdraw liquidity will only bankrupt the institution.

 

[Restrain]

This may have been posted elsewhere, but I ran across an interesting article about the "economic growth" of the economy, showing a 1.8% rate of growth. The actual rate figuring in actual inflation is a negative 3+%. And the talking heads wonder why people are worried.

 

[Randolph Kinney]

What's Killing The Recovery Dead In Its Tracks

http://www.businessinsider.com/char...The Day&utm_campaign=Clusterstock_COTD_060111

household debt as a percentage of personal income

Too much debt for the income level to support and tight credit conditions restrain consumer spending. With out expanding consumer debt, there cannot be growth.

Either income levels have to grow or debt levels have to drop. Bankruptcy and defaulting on loans is one way to reduce debt.

It's going to be a long long time before consumer spending can propel economic growth.

 

[Terrel L. Shields]

The actual rate figuring in actual inflation is a negative 3+%. And the talking heads wonder why people are worried.

Today on CNBC, someone made the comment in effect, that QE2 was roughly 3% of the GDP over the past 3 years, thus "real" growth has been in the 1% level with lack of any future stimulus. There simply is nothing driving the economy and a double dip seems inevitable and is already upon us in Housing....again matching the period 1929 - 1949 and 2000 - 2011 and we are following the same path on slightly different trajectories, and the late 30s were as dismal as the early thirties... or as one guy put it, the crisis stage is over, but the economy has been weakened.