Let's get to the root of America's financial problems
Over at ZeroHedge they posted an article about the stock market of today being compared to the stock market of the 1980's. Specifically, the stock market of Ronald Reagan.
Basically, a "Tyler Durdin" is pointing out that the current stock market trend is more like John F. Kennedy's stock market, leading up to the crash and then rebound than Reagan's early recession and then skyrocketing up until the crash in the last 80's, which still didn't last as long as the dismal performance of the previous 8 years. I won't get into that and the money manipulation by the Fed, but that is part of the problem of what I am going to talk about.
The third chart down in a comparison between Q4 1980 and the latest numbers. I highlighted a couple of things.
Wiemar Republic of the United States of Zimbabwe
Right now we are holding a Federal debt of $21 trillion est., despite record tax revenues.
We are at 105% of GDP in Federal debt and we have seen examples of what happens when a country goes beyond 100% Debt to GDP ratio. The economy fails and then hyperinflation kicks in making things even worse. If you aren't familiar with Zimbabwe's and The Weimar Republic's hyperinflation, then you should read up on them. Zimbabwe has gotten out of their hyperinflation by getting their debt canceled, but there are signs that it is coming back. The Weimar Republic got out of their hyperinflation by starting World War II.
The United States of America can't be bailed out by China canceling its debt nor can a war be started without causing issue around the globe. The only way that we can get out of this path of destruction is to cut the government and pay down the debt. The Federal Reserve (not a government agency) can only mask the problem with low interest rates for so long. If they raise the rate, then it will cause more debt and more issues for the economy. Which brings us to my main issue.
What is the point of saving money?
I remember opening a Certificate of Deposit (CD) when I was a kid. I believe at the time, in the late 80's, it had a 7-8% return and it would restart itself after a certain amount of time (12 months) and use the prevailing interest rate. I cashed out the CD to open up my first checking account when I got to college. If you have CD's with longer terms, they offered higher rates. I believe I remember 10-12% CD's at the time and there were probably even higher ones earlier in the 1980s'. As you see in the image I first posted, the 10-year Treasury Yield was 12.4% in 1980.
People used to save money. Then the Federal Reserve started doing things that they thought was best for everyone.
Now, people don't save money. A 5% return is considered a good guaranteed return on investing in the stock market. This is a laugh, when you consider that you could have easily earned that or more from a regular savings account, that didn't charge you money to keep it open. People would also invest in government bonds, like my parents. My father would get some of his paycheck in bonds, which meant that he couldn't cash it right away, but later he could and have more than if he got the payment immediately.
But, today, nobody saves for the future, unless you are HODLin' cryptocurrency. I just found out about Stellar's interest program, which is a like a savings account, which I will write about later. My kids have piggy banks, but I wonder how many other kids have piggy banks.
I don't know where I wanted to end this rant, but just lamenting on the fact that people are more in debt now because there is no reason to save money. It is too easy to get credit and not see the bill later and that also makes people not care about government spending.
If the citizens don't care about holding debt themselves, why should they care if the government holds more debt?
Let the positive energy sing!
More Power to the Minnows!!
Trading on Bittrex and Binance
Claim Your Stake with a Stake Box
HODLin’
Stellar Lumen(XLM) -- Cardano (ADA) -- Digibyte(DGB)
Get your old school text-based gaming on.
Reveal spoiler
What a time to live.
Which was cut the next year.
Basically the financial system is toast.
Yup.
From other sources, we're heading for another global recession sometime around 2020. Need to get those short orders ready again...
They'll fudge it until 2030 when the plan to eliminate 90% of the global population is working full steam. #conspiracy
oooh, that sounds a bit FEMA camps and Illuminati :-)
Well...it's not like they wrote it all out and gave it a fancy name like 'Agenda 21', which they updated to 'Agenda 2030'. I mean...it's right there in plain site and nobody would do that... cause people are paying attention...right?
I'm a misanthrope, I'd quite happily watch the world burn and toast marshmallows on the embers. Do you think a population cull would be such a bad thing ?
I'm not sure I'm into the whole 'depopulation program' theory. I understand the reason for open borders and immigration, more fuel for the banking system. The socialist aspect as well, poor people don't have any money to steal, so spread the wealth enough so that they're in a postion to buy debt in the form of mortgages, car loans, insurance. Mass immigration and open borders are an investment for the financial institutions.
You're old enough that they been saying the Earth is overpopulated since the late 60's.
If you go with the new ice age starting in 2020 and peaking in 2030 and add the push towards green energy that wouldn't be able to keep up with energy needs during the ice age, then you have a recipe for world wide disaster of people starving and freezing to death.
The open borders is just a way to keep people to "accept" others and also "accept" one world governance.
I think I'm more mercenary than you, I believe it's all about keeping the money rolling in.
You make a good point about an ice age though, that wouldn't be good and we're due one soon. I never really got into the whole global warming argument but it made me laugh because it's not heat that's going to kill us, it's the cold :-)
I remember when it was called 'global warming' and everyone predicted by now we'd all be dead from heat, too hot for crops, most of the world starving to death... And when that didn't pan out they had to rebrand it as 'climate change' instead, so it could get hotter or colder.. (way to hedge your bets, lol).
Those people don't realise the sun could wipe us out in a second if the right conditions arose. Even a mini ice age would thin the herd considerably.
Just cutting government spending will not solve this problem, the real problem is wealth inequality. Currency moves through the economy in a circle, when the flow of money stops and the minority at the top has the majority of the currency the economy begins to slowly die. Even if the government cuts all its spending the money that is in the hands of the wealthy minority will not just start being spent by them...
The money that was created by the FED and the debt that was created by banks via fractional reserve banking has all ended up in the hands of the wealthy, they are not spending it because the people at the bottom don't have enough currency to give them a return on investment.
We live in a broken economic system that leads to wealth inequality, the government does not prevent it because it is taken over by the wealthiest minority...
Wealth inequality isn't a bad thing.
I would be also for the Federal government selling everything outside of DC and military bases to pay off the debt.
There will be some wealth inequality in all economic systems.
But wealth inequality is what can destroy an economy completely when it is too high, simply because it destroys the velocity of money. When the minority at the top holds the majority of the currency in an economy there is no reason for them to invest/spend that money because they already have it all. So the people at the bottom struggle for the crumbs that are left and cannot find living wage jobs. This usually leads to more money/debt creation by banks because there is not enough money in circulation being earned/spend, unfortunately this new money eventually ends up at the top while inflation increases.
An economy only works best when the majority of the currency in circulation is held by the middle class, because they are the ones who perform the most labor and earn/spend the most, this keeps the velocity of money high.
Currently we have the greatest wealth inequality in global history, eliminating the government would not solve this problem. The US government is the biggest job creator/employer on earth. I definitely don't agree with many things the US government spends money on but some things I do agree with. Eliminating these jobs would actually increase wealth inequality at a faster rate, because when you privatize everything that means all the profits go to the minority at the top.
But it doesn't create anything. That's the problem.
Rich people don't just sit on all of their money, they buy stuff. They buy new technologies and artisan items that allow skilled people to earn money.
I guess it depends on what your definition of create is. The US government spends money the same way as everyone else. There are private corporations out there like Raytheon and Lockheed Martin that make weapons of war. The only reason those corporations do not go bankrupt is because the US government buys stuff from them, 99% of their yearly revenue is from the government spending its money. There are thousands of privately owned corporations in the USA that the US government buys things from or buys services from, building roads, bridges, buildings, etc, etc... Every time the US government buys something it creates a job for someone somewhere...
The US government is so good at spending money into the economy they actually spend more than they bring in, in taxes. The politicians who are in charge are so inept at creating a balanced budget they just borrow or print more money instead of increasing taxes on the rich and/or cutting spending on things that American people don't need.
Some do, that is why wealth inequality has continued to increase for the last 40+ years, when there is too much wealth held by the minority there is no reason for them to spend/invest because it is a loss for them if they do. The majority of people at the bottom do not have enough money anymore to give them a return on their investment. Every time a private investor make an investment into the economy they expect to earn a return on that investment, that is not possible when the majority of wealth is already held by the minority at the top.
Also you could make the same argument that wealthy investors don't create anything, they make capital investments and hire people to work for them. While they wait for their investment to earn them a profit. Which is the same exact way the US government spends money, they hire/contract people to do work for them, except their profit is people paying taxes which they will just spend again and again every year...