Are The Current US and World Economies "Fixable"?

[Rezzy7]

Too many individuals, too many governments, and too many companies borrowed too much money, and now many of them can't pay it back.

Meanwhile, besides huge debt, there are ongoing costs, and (in the US) infrastructure problems that have to be addressed. Also, there have been many big natural disasters and more could be on the way, costing many lives, and adding the cost of rebuilding whole communities to the price tag.

Is this all fixable? What do the intuitive people here have to say about where it's all headed?

[Spinoza]

I just wanted to correct one thing. You say "Too many individuals, too many governments, and too many companies borrowed too much money, and now many of them can't pay it back."

This is true for governments and to some extent for individuals but for companies this is mostly not true. There is actually a lot of capital sitting in company coffers. Debt isn't there problem, its more no one wants to take a risk in a down market.

Is it fixable? Yes.....really all we are talking about is tightening our belts its just a matter of degree. The question is how much and when or do we wait till the very end get to experience a huge clang.

[KaleidoskopicVision]

You know that the money they are borrowing cannot ever be paid back right? Debt is created for every dollar that is printed. That debt is not equal to the dollar's worth either. It has interest attached to it.

[SnerpGoodWord]

Originally Posted by KaleidoskopicVision

You know that the money they are borrowing cannot ever be paid back right? Debt is created for every dollar that is printed. That debt is not equal to the dollar's worth either. It has interest attached to it.

And the errors of internet economics march on...

[SnerpGoodWord]

Originally Posted by Rezzy7

Too many individuals, too many governments, and too many companies borrowed too much money, and now many of them can't pay it back.

Meanwhile, besides huge debt, there are ongoing costs, and (in the US) infrastructure problems that have to be addressed. Also, there have been many big natural disasters and more could be on the way, costing many lives, and adding the cost of rebuilding whole communities to the price tag.

Is this all fixable? What do the intuitive people here have to say about where it's all headed?

It's not ALL that broken. If you compare the current situation to any of a number of historical precedents, things are arguably quite a bit better off. What's not going to happen is perpetual smooth sailing, but that's never happened in the past and is unlikely to do so in the future.

[KaleidoskopicVision]

Originally Posted by SnerpGoodWord

And the errors of internet economics march on...

Enlighten us?

[KaleidoskopicVision]

From the mouth of a snake comes truth;

BBC Speechless As Trader Tells Truth: "The Collapse Is Coming...And Goldman Rules The World" - YouTube

[James Fletcher]

Current times remind me of the 70s. Stagflation, oil shocks, Mid East unrest and the Iranian revolution, not to mention Jimmy Carter's "malaise" and complete lack of conviction as leader of the free world. Many people at the time had their money on the system crashing down and the world ending around the same time disco died.

Fortunately, as we all know, things got better. The same will happen again.

[garentee]

Originally Posted by James Fletcher

Fortunately, as we all know, things got better. The same will happen again.

Things got better for some people.. they always do....Difference this time is there are more of us and the wealth is a LOT more concentrated...

[WarrenG]

My humble opinion is, it depends what you mean by fix.

If you mean repair it so that it's the way it was before, I don't think so. I think the big guns at the moment are going to crash hard (the west, basically), and they won't be back for a while. And even if they do recover, there will be only a decade or two before other factors come into play, like global warming, food shortages, and peak oil.

But if you mean fix as in "Make into something better," then yes that's definitely possible, and I think it's better to let this thing crash and build something new and better by combining what's left with other systems and ideas.

I even think this is the best course of action for people who want to make a change - let a better system grow through the cracks as this one falls apart, and do what you can to guide the collapse into a better place.

[SnerpGoodWord]

Originally Posted by KaleidoskopicVision

From the mouth of a snake comes truth;

BBC Speechless As Trader Tells Truth: "The Collapse Is Coming...And Goldman Rules The World" - YouTube

It's a hoax. Easily fooled?

[WarrenG]

Originally Posted by SnerpGoodWord

It's a hoax. Easily fooled?

Can you back that one up Snerpy?

I dunno if it's a hoax or not but since I just emailed it to loads of people I'd like to find out!!

I did find this on the BBC site, a statement saying it wasn't a hoax:

BBC - Press Office -

[SnerpGoodWord]

Originally Posted by KaleidoskopicVision

Enlighten us?

Your statements about the nature of money and debt are simply wrong. There, you're enlightened.

[SnerpGoodWord]

Originally Posted by WarrenG

Can you back that one up Snerpy?

Google it. At BEST the guy is just a random person with an opinion - anyone who opens a brokerage account and executes a trade can call themselves a trader and be technically accurate. But it appears he misrepresented himself and BBC issued a statement saying they were pranked, followed by a statement that they weren't sure. That's about par for the course for BBC when it comes to financial news.

[KaleidoskopicVision]

Originally Posted by SnerpGoodWord

Your statements about the nature of money and debt are simply wrong. There, you're enlightened.

[citation needed]

[SnerpGoodWord]

Originally Posted by KaleidoskopicVision

[citation needed]

[all of econmics, ever]

Seriously, we're talking basic facts here. The money supply and debt are not the same thing. There IS somewhat of a relationship, because T-bonds are very liquid and can frequently be used almost like money. It's also possible for money to enter circulation as a result of the Fed buying T-bonds. That may be the source of your confusion. But the relationship is NOT money=debt. The Fed could buy baseball cards or new ledger books and it would still expand the money supply.

[James Fletcher]

Originally Posted by garentee

Things got better for some people.. they always do....Difference this time is there are more of us and the wealth is a LOT more concentrated...

Yes. For those who choose to stake their claim.

[James Fletcher]

Originally Posted by WarrenG

But if you mean fix as in "Make into something better," then yes that's definitely possible, and I think it's better to let this thing crash and build something new and better by combining what's left with other systems and ideas.

As long as respect for the individual, my right to life, liberty and the pursuit of happiness, (Western) law and order, and current societal standards of hygiene are maintained, I'll live quite happily in any new society that crops up.

[garentee]

Originally Posted by James Fletcher

Yes. For those who choose to stake their claim.

Not necessarily..some (many) got f&^%ed by a very skewed system.

[Solipsist]

In my opinion, it's not really "fixable" until it all collapses completely.

[Rezzy7]

Originally Posted by Spinoza

but for companies this is mostly not true. There is actually a lot of capital sitting in company coffers. Debt isn't there problem, its more no one wants to take a risk in a down market.

I can only go by the information available to me from news and internet, so your opinion is as good as mine I suppose.

Is it fixable? Yes.....really all we are talking about is tightening our belts its just a matter of degree. The question is how much and when or do we wait till the very end get to experience a huge clang.

yeah, try asking so many of the American families who've lost both spouses incomes, maybe lost their homes, and have cut every corner and are bankrupt now to tighten their belts some more. So simple.

Originally Posted by SnerpGoodWord

It's not ALL that broken. If you compare the current situation to any of a number of historical precedents, things are arguably quite a bit better off. What's not going to happen is perpetual smooth sailing, but that's never happened in the past and is unlikely to do so in the future.

Oh, of course, more people have electricity and running water now. But if local governments continue on their present course (bankruptcy), a lot of our "better" is going byebye.

Originally Posted by James Fletcher

Fortunately, as we all know, things got better. The same will happen again.

That's always a possibility, but not necessarily without things getting extremely worse first. That's the part we hope to avoid. But may not be able to.

Originally Posted by WarrenG

My humble opinion is, it depends what you mean by fix.

Fix: correct the fall that seems to be happening now, and prevent much of the suffering that likely will result. Not like it was, but to something that's actually sustainable.

I think it's better to let this thing crash and build something new and better by combining what's left with other systems and ideas.

This may be a thing. Because sometimes that's what it takes for people to actually DO something about it.

[Spinoza]

Originally Posted by Rezzy7

I can only go by the information available to me from news and internet, so your opinion is as good as mine I suppose.

Here is what I find with a google search I just did

Kiplinger.com

Businesses Holding Onto Their Cash

Record profits in recent years have U.S. corporations sitting on a pile of cash. But they’re not willing to risk pouring much of into expansion plans as long as the economy remains weak


Companies Sit On Cash; Reluctant To Invest, Hire : NPR

The U.S. economy may be slowing to a crawl, but a lot of individual companies are richer than ever. They're being cautious about how they spend their cash, though.

In a recent report, Moody's said the 1,600-plus U.S.-based companies it rates had $1.2 trillion in cash at the end of 2010 — 11.2 percent more than they did a year earlier.


Fed: Disparity in net worth between companies and households - NYPOST.com

Us companies kept hoarding cash in the second quarter while household net worth declined, two factors seen holding back the economy.

The Federal Reserve said in a quarterly snapshot of financial flows yesterday that US companies continued to accumulate profits instead of spending them. Holdings of cash and other liquid assets at nonfinancial companies rose to $2 trillion in April through June, up 4.5 percent compared to the first quarter. That was the highest level since the series began in 1945.


Dow Jones US Firms Hoard Cash; Household Wealth Down

--U.S. firms' holdings of cash and other liquid assets hit new record

[SnerpGoodWord]

Originally Posted by Spinoza

Here is what I find with a google search I just did

This is correct - the amount of cash on balance sheets is at a record high.

For those that doubt that deflation (or insufficiently high inflation) causes hording, well, it's going on right now.

[WarrenG]

Talking about fixing things, check out what Iceland have been up to:

SACSIS.org.za » News » The World » Why Iceland Should Be in the News, But Is Not

[Solipsist]

Originally Posted by SnerpGoodWord

This is correct - the amount of cash on balance sheets is at a record high.

For those that doubt that deflation (or insufficiently high inflation) causes hording, well, it's going on right now.

Yet, inflation is at roughly 3 percent.

It's not deflation that's causing the hording, here. It's the Quantative Easing (read: printing of money), and the banks hording of the cash, due to an uncertain economic future. Most individuals have no "balance sheets," and no money to horde.

As long as there is a fiat currency, there will be no deflation. I suspect the whole deflation scare is a central bank tactic to devalue the currency for the purposes of ostensibly minimizing its debt.

[MariconesUnited]

Originally Posted by WarrenG

Talking about fixing things, check out what Iceland have been up to:

SACSIS.org.za » News » The World » Why Iceland Should Be in the News, But Is Not

Fascinating read! I'm highlighting some important stuff...

In the March 2010 referendum, 93% voted against repayment of the debt. The IMF immediately froze its loan. But the revolution (though not televised in the United States), would not be intimidated. With the support of a furious citizenry, the government launched civil and penal investigations into those responsible for the financial crisis. Interpol put out an international arrest warrant for the ex-president of Kaupthing, Sigurdur Einarsson, as the other bankers implicated in the crash fled the country.

To write the new constitution, the people of Iceland elected twenty-five citizens from among 522 adults not belonging to any political party but recommended by at least thirty citizens. This document was not the work of a handful of politicians, but was written on the internet. The constituent’s meetings are streamed on-line, and citizens can send their comments and suggestions, witnessing the document as it takes shape. The constitution that eventually emerges from this participatory democratic process will be submitted to parliament for approval after the next elections.

[SnerpGoodWord]

Originally Posted by Solipsist

Yet, inflation is at roughly 3 percent.

Not any more it's not. And it hasn't been on average over the past years - nearly everything is cheaper now than it was in 2008. Oil is 50% off. Corn's off about 15% and wheat almost 50%. Housing is about 30% off. Most manufactured goods have gotten cheaper. Labor has gotten cheaper.

You can use whatever numbers float your boat, but the fact is that everything has gotten cheaper. That's deflation.

[MariconesUnited]

Originally Posted by SnerpGoodWord

Not any more it's not. And it hasn't been on average over the past years - nearly everything is cheaper now than it was in 2008. Oil is 50% off. Corn's off about 15% and wheat almost 50%. Housing is about 30% off. Most manufactured goods have gotten cheaper. Labor has gotten cheaper.

You can use whatever numbers float your boat, but the fact is that everything has gotten cheaper. That's deflation.

I'm in Canada. I don't know how different it is in the US but over here the opposite of what you're saying is perfectly true. Especially when it comes to groceries which make up a disproportionately large percentage of poorer people's incomes. Oil used to go for about 1$ per litre 3 years ago. Now it's in the 1,30$-1,40$ range. And I don't see why things would be much different in the US.

And wait...You're saying that he can bring up numbers but you have ''facts''?

[SnerpGoodWord]

Originally Posted by MariconesUnited

I'm in Canada. I don't know how different it is in the US but over here the opposite of what you're saying is perfectly true. Especially when it comes to groceries which make up a disproportionately large percentage of poorer people's incomes. Oil used to go for about 1$ per litre 3 years ago. Now it's in the 1,30$-1,40$ range. And I don't see why things would be much different in the US.

Here's the price of crude over the period in question: Light Crude Oil Daily Commodity Futures Price Chart: Nov. 2011

just select the "Monthly (Continuous)" button on the left. Note the high around $150. Price right this second is 75.59 a barrel.

[MariconesUnited]

Sorry Snerp, you can use whatever numbers you want but the facts are the facts

Besides, I'm talking about the price at the gas station.