"Not With a Bang, But a Whimper"
Wednesday August 1, 2007
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- Our economy will not collapse as long as everyone keeps buying treasury bonds. However, this liquidity will cause inflation which wrecks havoc with the economy.
- We have maxed out congressional debt limits and won't have enough money to pay for health care and social security.
- We are bankrupt, especially if our international financiers cash in their debt bonds.
- So when our international creditors jump ship, not because they no longer want to support the dollar but more simply just to save their own economy (several countries are getting rid of their dollar reserves in fear that they will be worthless soon), then it will be a rush to cash in, thereby collapsing our economy.
- Excess liquidity did cause inflation in housing prices last year. We are now suffering from that excess. We are also beginning to experience the downside of a stock market bubble, with the Dow down 5% last week and still sliding this week
- The budget deficit and looming crisis in Social Security and health care costs have been well documented, and remain a concern for 2010 and beyond
- We owe over $8 trillion in debt. It would take over a year and a half of total U.S. production to pay it back. Of course, if all our financiers came calling, it would completely destroy the global economy. Furthermore, we are their best customer. So, the U.S. has them over a barrel just as much as they have us over a barrel. Therefore, they have no incentive to come calling all at once.
- Yes, they may panic, causing a dollar slide. Yes, they are diversifying out of dollars, but they are doing so slowly.
Comments
I believe nobody understand the economy so I just spend less than I earn and buy property. I do not care if it is nos the more astute investment bu at long as people need a roof they will rent or buy.the world can get by without many manufactured goods and services but not without a house.
fact is no one knows where this situation the mental wizards have gotten us into is headed. not the economists or politicians or wall street gurus. everyone has analyzed until they are paralyzed. we are all along for the ride on this one and just hope the wheels don’t come off before the ride ends.
Maybe my comment doesn’t belong here but here goes: Several months ago taxpapers received minimal stimulus checks in order to help boost the economy. If taxpayers were to receive stimulus checks for say $20,000 or more, we would really see the economy boosted. Very few would save this money but would spend it on maybe a car, home repair or upgrade, jewelry, furniture, vacations, clothes or other things of their choice. Talk about helping the economy, this certainly would!!!!
Hi Pauline,
I’ve heard this comment, and many like it, over the past year. The problem is sheer numbers. There are 138 million taxpayers in the country. Giving each one $20,000 would cost $1.38 trillion. It probably wouldn’t pass Congress, who is having trouble passing the current $825 billion stimulus package.
Kimberly
So we borrow $1.38 trillion so that we can give a lot people “free” money. Yep, you’re right. Congress would never pass anything like that.
Please… if the congress stops at $1.38 trillion, we should all rejoice.
In one year, the US Government is going to spend $3.7 trillion – an increase of $580 billion in one year over 2008 for mundane Govt things. And then there is TALF ($350 billion), Omnibs ($300 billion), Healthcare ($684 billion) and Education (??? billion) which are all separate spending packages.
Let’s stop acting like there are a lot of reasonable people in Congress.