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Politics : Politics for Pros- moderated -- Ignore unavailable to you. Want to Upgrade?

To: LindyBill who wrote (297581)	3/22/2009 7:09:44 AM
From: carranza2	1 Recommendation Read Replies (2) \| Respond to of 793927

And we never have to pay the piper. The piper always gets paid in some form or other. There are no free lunches in macroeconomics. Devaluing the dollar via inflation caused by assuming huge amounts of debt will put the dollar's status as the reserve currency in jeopardy. It will also put our future in jeopardy because the debt has to be paid. The figures I have seen suggest that as much as 60-70% of government income in a few short years will be used to pay debt and interest. How much will that leave to repair our crummy infrastructure, pay for defense, etc? Individually and nationally, we have gorged on debt. The bailouts have increased the public side of the debt by an enormous amount. Inflating to reduce debt is absolutely not the answer for many, many reasons. Our government has been hijacked by financiers who should have been allowed to fail. Rather, we are bailing out entities like AIG so that others can receive 100% on the dollar on AIG's debt [there are lots of examples but this is the most current] paid by you and me. No negotiation of the debt, no legal challenge to its validity, simply a transfer from your pocket to someone else's, then to the ultimate recipient. It started with W and continues with O. Why? Because finance controls Washington and finance does not give a rat's ass about the public good. We are on the way to becoming a banana republic, sad but true.

To: LindyBill who wrote (297581)	3/22/2009 4:18:37 PM
From: rich evans	1 Recommendation Read Replies (1) \| Respond to of 793927

Lindy, you should be a Fed Governer. Here are excerpts from one of them-Furgeson- in 2005. the current account balance is defined as the difference between a nation's saving and its investment. This definition highlights the decline in the ratio of national saving to GDP over the past ten years, even as investment rates have moved up a bit on balance, as the central cause of the widening of the U.S. current account deficit. Finally, because any excess of national spending over income must be financed by foreigners, the current account deficit is equivalent to the net inflow of capital from abroad. This approach points to the surge of capital inflows into our economy as the key development underlying the emergence of the large external deficit. So basically since our savings is low, and our budget deficits are high subtracting from savings and investment-- thank god for the trade deficits. The money has to come back here and increase our investment etc. But Carranza is right that this cannot be forever as eventually the foreigners who are foreced to bring their money back here end up owning a lot of the US assets or as greenspan always says ( have claims against us). Basically if a business is labor intensive it has moved to china, mexico etc. Electronics, clothing, shoes- you name it.A HP exec once told me that the computer/eclectronics business was like trying to eat soup with a fork. Very low margins and China etc is the only alternative. But our industrial companies are still here in the US making lots of products thatw are not so labor intensive or expensive to ship. And you are right that our manufacturing ouput is at an all time high before this downturn. But with a trade deficit of 5% of GDP and foreigners investing 5% of GDP in US per year, eventually they will own us. Oh well as you said, I don't care if the house next door is owned by someone from California or from NY. Rich