Foreign Affairs Discussion Group Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Foreign Affairs Discussion Group

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: Maurice Winn who wrote (183720)	3/18/2006 12:17:01 PM
From: neolib	Read Replies (1) of 281500

You should normalize the GDP per capita to workers too in that case. Which will put you back where you started. The average household income in the USA is in the low to mid $40K range. That is what the debt sits on for payment. That average 40K does not have $6K of disposable income left. IIRC, the average household savings rate dipped negative recently. You could, I suppose, apportion the debt to GDP production sources, but unfortunately, GDP does not say anything about profitability. Many companies for instance expect to produce 2X of an employees wages in sales off that employee. Yet the company's net profit might still be close to zero. So do you look at 1x for employees wages or 2x for GDP as a metric for how the economy is doing? In general, companies profits are much lower than 50% of sales, so I lean towards average household income as a better metric than normalized GDP, but neither is perfect. It would also be a major rewrite of the tax code to link to GDP production rather than taxpayers. If they don't have that much disposable income left, then they will not be able to pay their debts, so they will forfeit their assets. The trend over the last few years has been to extract income from their homes. Called Mortgage Equity Withdrawal. It can even lower their payments due to low (presently) variable interest rate loans. One can hardly bitch at the federal government when the populace does the same thing in their private lives. Hey presto, 100 people off the hook just like that. I'm sure others would also be happy to buy lots of really cheap houses. And other assets. Doubt it will work out that way for you and all the other foreign holders of the almighty $. I see a rather different scenario involving significant shifts in the value of same pieces of paper. Might not want to store to many of them in your mattress long term. :)

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next