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Old 08-07-2008, 08:43 PM   #40 (permalink)
ar81
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The concern over banking issues is diverting attention from the real problem.

US has a negative currency flow. More currency is going out that currency getting in. You can blame the following factors:
-War (hiring foreign contractors with US taxpayers money in foreign lands and money spent by armed forces in foreign lands)
-External debt used to pay the war (interests paid to China)
-Trade deficit

So it is like a body that is leaking blood.
The problem of leaking blood is that internal liquidity is reduced, so there is not enough money for everyone.

Inside the body you have government, companies, banks and people.
Banks are having liquidity problems, so interests are low so people acquire debts to consume and to save banks, so the liquidity problem is being transferred to citizens.

This consumption with debt creates the false illusion of economic growth. But there will be a time to pay debts, and by that time, there will be recession, for people are the market and they will have less money to buy.
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