How I think the economy will go and why

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It is a fact that if a nation PRINTS trillions of dollars to solve its financial problems, that hyper inflation and collapse will follow.
However.... our US govt is NOT printing any money,...... it is **issuing electronic credits***, that act as money, and may indeed stimulate the economy....this is assisted by low interest rates so people can afford to buy homes and build businesses etc... little actual money is being printed though.
all this is happening as deflation due to tough economic times takes the hot air out of the housing and stock markets etc. the collapsing tax base will also force the bloat out of government... all if tgus us a good thing.
This deflation will be painful and *could lead to total collapse.... unless enough trillions in added *credit are issued into the economy through the banks to keep things afloat... floating on a massive sea of *credit. thats whats happening now...
its all just barely floating on a massive sea of credit... but it is doing this as the housing and stock market bubbles deflate. thats a good and a necessary thing... so far we are deflating these bubbles, and our bloated state governments without total collapse.
With luck that will be continued.
***** again, this sea of funny money **is not actually money*** (just credit), no extra currency is printed for most of it...
the US Dollar may very well *regain its value, when the FED raises interest rates again after these bubbles hit bottom... that will be tricky and it remains to be seen how that will be pulled off, especially given the 300 trillion dollars or so in hot air derivitives (insurance policies used to guarantee bad loans).
it may be that as the large insurers, such as AIG go broke, file bankrupcy and defualt that a good percentage of this derivitive mess will simply evaporate (like so many trillions in the worlds pension funds have already evaporated.)
as the work force gets more desperate, and half of the bloated govt work force is laid off, and the rest got their bloated retirements cut by 70% or so, and the social security recipients are unfortunately cut back to starvation levels..... and we start manufacturing in the US again...we will recover...... it will be a nasty next 15 to 20 years (time span directly calculated from life expectancy tables)
all of that is necessary...and will happen on the current path if we are lucky... depends on many things though, luck, oil prices, what we do about nuclear energy, and what other nations do etc..
***
when that stabilizes, my guess in 10 or 20 years of tight times, during which time the 80 million social security recipients will all be deader than hell... restoriing the national economy... full recovery will begin, that will take another 15 to 20 years... and we have seen these time frames recently in China and Russia.
then.... interest rates will be raised again, restoring the value of the US dollar in world markets. Investing in the mean time may be problematical. Some high tech areas will pay off well. The best investments will be in ones own operation, skill sets and networks.
imo
***
Support for this argument is my observation that the FED is willing to loan 'money' to the banks at 1% or less, and the banks are willing to loan at 4%... that tells you that those in charge have a solution for hyper inflation.. and I believe my memo here describes that solution...
if relatively few actual dollar bills are printed, paying the money back will be difficult and the 4% intrest will provide the banks with a real profit.
why:
(if the the treasury prints the actual bills, in excess of actual GDP, then the banks will lose, and collapse...thats why this thing is being done with credit to the banks... and not by putting dollar bills into peoples hands).
These guys in charge of the money, as corrupt as they are, probably do know what they are doing in this aspect at least...they need to save their own asses as well as ours.
***
Predictions:
a lot of folks will go broke in the financual turmoil...especially retailers and people with high overhead and into non essential businesses. actual producers of goods, and essential services with *low overhead will mostly survive imo.
actual producers who extend too much credit to those about to go under, (that is about half the Malls and stores in the US) will get burnt...due to tight money, that will put many contractors etc out of business as we are already seeing.
this is of course avoidable by structuring for low overhead operations...getting a sufficient advance on jobs and progress payments in advance of progress...
I think those contractors will survive ... (this was a memo to one of my contr clients)
Phil scott
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So, if I run my credit cards to the max, and keep some greenbacks at home, I should be just fine?
After all, that's essentially what you said. I must disagree with your view of things.
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Christopher A. Young
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On Jul 12, 9:53 pm, "Stormin Mormon"

printed or electronic? It still spends. As for us social security recipients being dead, I'd like to kick his butt ;)
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well.... you are surely correct... I oould be off base big time. Ive been wrong plenty of times before.
Ive just posted my views. No need to reiterate them. a person might choose to notice that credit can be shrunk back to zero with high interest rates, in effect cutting the 'money' supply.... cash money cant be shrunk in that way...you cannot 'un-print' it. that was my observation.
I am not asserting anything beyond that... I am not asserting that I am correct (especially since ive been wrong a lot in my views over my life span, and particularly since I cant recall a time when I or anyone else was exactly 100% correct in all aspects)
this was just an observation... for anyone to consider if they want. ..

I am a social security recipient... I am almost 70.. most of us that age bracket will be deader than hell. many of us shortly...and then we will not be cashing any more social security checks, and that will bring viability back to the SS system. all that is simply how it is.
and how it is.... is always relevant of course.
The maturinty and thoughfulness i see on this NG though is impressive... you guys must be a pleasure in person.
Phil scott
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phil scott wrote:

We are contemporaries. I was thinking of all the baby boomer's now starting to cash in too. Not getting an SS increase this year because there is said to be no inflation is ridiculous and one of Obama's ploys to get us to pay for his follies.
I just hope the rampant inflation does not hit us all at once and I don't see governments making the cutbacks they should be doing. This year, on fixed income, I expect to pay an extra $500 in taxes.
Frank
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You certainly can un-print money. I've been in the local Federal Reserve. They've got a machine the size of a bus that shreds money. It is strange to watch pallets of $100 bills disappearing. You want to say "Just let me take this little stack right here. No one will notice." -- Doug
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Stormin Mormon wrote:

Can you pay your taxes with imaginary money?
TDD
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Some would suggest that we have been doing that since the end of the gold standard.
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I do agree with the OP. No matter what is done now the most it can do is soften the blow. It will take 10 to 20 YEARS and our recovery will be anemic at best.
Thanks to credit debt and our country not producingf much of anything.
In a world economy production moves to the lowest cost place.
China with so many people and no environmental safety OSHA etc etc
they will own us if they dont already.
Plus our country being dependent on others for energy is just plain STUPID.
Feds should fund coal to gasoline plants nationwide immediately,
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correct.
Coal to gas is an awfully lot smarter than burning coal directly..and uses the coal,as it precludes the necessity of sending 700b a year offshore to buy oil.
Nuclear energy will be the final solution however, as it does not produce green house gases (which may or may not be as big a problem as some claim). we also have more energy reserves in natural gas in north america than the middle east has in oil... thats already usable as car and truck fuel.
Phil scott
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they worked hard for that money, those green backs..for them its *real money.
for the fed issuing credit...well its not quite the same thing, and it can be vaporized at will.
its a fine point, but probably the mode by which govt is going to try and unscrew the girlfriend here..... will it work? I think the entire mess is dicy as hell.. there are countless other factors besides just these money issues Ive raised.
(primary among them the changing demographics, the debilation that takes place when anything ages... say a flower for instance, has a life cycle, and it ages in a particular pattern...same with produce, and week old hot dogs,..and us old men... we all age...and we all follow a distinct pattern in that aging... then we die out.
and that has been true with nations as well...although the land mass seems to remainin in place. the nation just looses its balls so to speak... for instance the British empire.... pooooooof. but England is still there on its small island.
Rome is still with us as well...but the roman empire lasted only 300 years (a max0 260 is most comon.
Phil scott

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I don't have the courage to try.
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On Mon, 13 Jul 2009 07:42:16 -0500, The Daring Dufas

All money is imaginary.
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On Jul 13, 6:20 am, snipped-for-privacy@dog.com wrote:

working for a living is not imaginary however...the medium of exchange employed, as it is used ONLY in that context is not imaginary.. you are referring to the extended spin put on the medium of exchange by the non working class, banking and etc.
while the smear on these folks is warranted and gives a nice warm fuzzy feeling... the fact of 'work related money' that is what you must work for and spend to eat, makes *that money 'real'.
not to say of course that gold etc is not a bit more real.
more real than gold though, as is seen in times of famine, is good ground next to a water supply and some seed. that is unless you have a fondness for gold coin sandwiches.
the economy on a personal level boils down to the ability to produce for others in a good economy, and the ability to produce for yourself in dire times.... regardless the medium of exchange and its perversions.
Phil scott
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On Mon, 13 Jul 2009 09:12:35 -0700 (PDT), phil scott

All money is imaginary.
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On Jul 12, 6:53 pm, "Stormin Mormon"

err Norman. Im not giving advice... and no...thats not what I said. and no norman, i an not challenging you or anyone. I am posting my wold guess views on what I think *imght be the govt plan. and no Im not asserting that I am right.. in fact there is no way I could be more than slightly right over such a long time span.
and no norman I am not suggesting you run up your credit cards at 25% per year interest or whatever... then hope that 40 years down the road, after most of us and perhaps yersef are all deader than hell...cash in on the green bavks in yer matress.... but you can make such assumptions if you want.
You can do better than that though im sure.
Phil scott

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phil scott wrote:

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phil scott wrote:

Maybe, but your premise is flawed.
There's plenty of credit, but the credit-worthy enterprises are not going for it.
Nobody, but nobody, with a gram of sense would be trying to expand their business with the uncertainty emanating from Washington. Health insurance, cap-and-trade, tax increases, and turning terrorists loose in America are all possibilities and anyone faced with these potential business-destroying plans would be nuts to take such risks as building a new plant, hiring more employees, or launching a new product.
Until these proposals are stamped out or get implemented so one can see the consequences, expect continued shrinkage in the economy.
To paraphrase a famous mantra: "It's the uncertainty, stupid!"
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that is correct...and that is why you may very well be correct that issuing credit may not work in the end. My observation however is that is what govt is up to.
I am not recommending nor condeming the approach... I do *think* that it might muddle us through however...'think' being the key word.. I can think of 50 caveats that could drive the mess in other directions as well.
I do think however that this e money tactic is the current attempt..

we are certainly on the same page there.... however I do observe there is no shortage of idiots in the world, especially graduated from the Ivy League schools... a brilliant lot, they brought us all those 'financial products' you know. :)

myself and those I work with are not shrinking our businesses, we are definitely cutting our overhead, fixed labor costs, and other expenses... myself particularly operating with others in what have been called 'virtual companies'... previous called joint ventures. I no longer own a shop or have a pay roll. but I do the same sorts of business (industrial systems engrng and machinery fabrication(.
I notice many hotel chains bulidnng new hotels though.... bless em..

I dont disagree... esp for the USA, given our huge range of other issues, such as 80 million now reaching retirement and no way in hell to fund that. I share your views on the cap in trade policy as well,
that does not translate however as some tend to do...that all liberal policy is bad, and all other policy is right. I think we have plenty of insanity and corruption to go around on either side of the fence...polarized views tend to blind a person to the insanity on his or her own side of the fence.

Phil scott
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phil scott wrote:

Everybody agrees on goals, we differ on methods. Liberals tend to provide for the general welfare through the treasury, conservatives tend to promote the general welfare through the economy. Liberals tend to multi-task, they can solve a problem a minute (if everybody would just....). Conservatives tend to be single-focused, working on one problem at a time (first, let's kill all the terrorists...).
As Ben Stein recently said:
"When I think about the economy I think about a plump man who has just been hit by a truck while crossing a street and is in severely critical condition with internal bleeding. Instead of just stabilizing his hemorrhaging, the doctor decides that while the patient is unconscious, he might as well also do a face lift, some coronary bypasses and a stomach-stapling to keep him from gaining weight while he is recovering (if he does recover). After all, a crisis is not to be wasted.
"The problem is that all these ambitious operations create too much of a burden for the human body to bear."
He goes on to discuss the various proposals being touted. For example, why fark with the energy business? It's working. It's humming along without a glitch. It's providing jobs and dependable, affordable energy to everybody in the country - from electricity for your house to diesel for your farm tractor to gasoline for your car. Why take the chance of screwing it up at all, and especially why now?
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