Sadly, it seems that Americans in general either choose not to see the truth, or are too ignorant to see it.

Quote:

Must must stop this idiocy while there is still an economy and a government to save.

I'm worried, seriously. The average person "out there"... and my customers who range from millionaires in FFLD county... to blue collar regular folks... all insist that the recovery has started.

I'm just not seein' it. Not at all.

While I appreciate your continuing narrative KD, I do not believe it will happen. The lazy, self-serving bureaucracy will ride this car straight over the cliff, and claim "No one could have seen it coming! Now, give us your children and their future as payment, and quit bitching about it. Oh, and we'll need your savings too - those less fortunate and more deserving than you just **** out another few mouths to feed, and you obviously have too much if you can still live indoors, drive a car and eat."

We're done. The end-game is near.

For How Long Will You Believe?

Good damn question. The willingness to extend and pretend is strong. You say there is an end. I think you're right but answer me this. If the EU is truly the socialist redistrubtion looters, don't you think they would collapse before the U.S.? But it hasn't and until the EU does, it appears the U.S. can survive a lot longer than the EU.

Duc the recovery has started. Albeit pitifully. So that's what they are seeing. What they don't understand is the underlying reason for the recovery is the unsustainable deficit spending of the gov. Plan accordingly. BTW I have given up trying to convince people of the problems coming our way. Too many think the gov has a secret storage of skittles waiting for them.

What is difficult for most people, is that they truly believe the American empire cannot crumble. And I don't think TPTB will stop the idiocy. As Frat said above "bureaucracy will ride this car straight over the cliff, and claim "No one could have seen it coming!"

This will not end well.
:(

Karl,

Still scratching my head on the debt multiplier and its impact on GDP you describe a couple weeks ago. Does the multiplier above jive with the snap back expected if deficit spending ended? That is, there's little velocity coming or going?

All modern economic systems are credit-based.

Used properly this allows some elasticity in the monetary system and stops the hideous inflation and deflation cycles that are insoluble in a non-credit based system (e.g. in any hard monetary environment.)

However, a shock absorber is just that - a shock absorber. When you try to continue to travel in one direction continually, you either snap back violently or hit the hard stop at the end of travel with disasterous results.

To the Moon Alice, to the Moon. Well to the edge of the cliff then down.

Time to revive the cliche: Pushing on a string. It still doesn't work.

I'm sorry, but you all apparently don't understand we are not broke because, wait for it, we can borrow money!

http://www.bloomberg.com/news/2011-03-07....

Is this guy kidding? Sadly, I think he really believes this.

Quote:

“The U.S. government is not broke,” said Marc Chandler, global head of currency strategy for Brown Brothers Harriman & Co. in New York. “There’s no evidence that the market is treating the U.S. government like it’s broke.”

The U.S. today is able to borrow at historically low interest rates, paying 0.68 percent on a two-year note that it had to offer at 5.1 percent before the financial crisis began in 2007. Financial products that pay off if Uncle Sam defaults aren’t attracting unusual investor demand. And tax revenue as a percentage of the economy is at a 60-year low, meaning if the government needs to raise cash and can summon the political will, it could do so.

Really? REALLY? Look, if you can't live on your current income, you are broke, EVEN IF you can borrow money to keep your spending up for some period of time. Eventually, it runs out. Oh, wait, except it won't because we are the reserve currency:

Quote:

George Magnus, senior economic adviser for UBS Investment Bank in London, says the U.S. dollar’s status as the global economy’s unit of account means the U.S. can’t go broke.

“You have the reserve currency,” Magnus said. “You can print as much as you need. So there’s no question all debts will be repaid.”

And when we are no longer the reserve currency? Well, we'll just cross that bridge when we get to it.

My head hurts... must be the result of banging it on the wall...

I think you are upsetting the animal spirits. You musn't upset the animal spirits. All that really matters is how we feel about the recovery!

At this point I hope they continue this course. Speed it up even. I'll hunt berries in the woods. My only hope is nature and math do win out soon and we see starving Americans roving the streets. This whole corpse of a nation might as well just crash already and the people that manage to grow food will survive and the ones that can't adapt will die. And of course all the criminals and traitors to this country are properly dealt with.

Morbid mood this morning after my own financial stress.....

Gen wrote..

However, a shock absorber is just that - a shock absorber. When you try to continue to travel in one direction continually, you either snap back violently or hit the hard stop at the end of travel with disasterous results.

To extend the analogy, you can also keep pressing down until the front bumper digs up the asphalt even as the front axles break, the wheels fly off, and the vehicle flips end-over-end, up and over the guardrail and off a bridge that spans The Royal Gorge, at the bottom of which it lands on the railroad tracks, where it is run over by the 12:05 out of Canyon City...



IOW, Bennie Boy's plan...

I think they still have more tricks left. They could pass more stimulus that would entail writing everyone a check. They could have government credit cards and just forgive the balance.

Quote:

The entire premise of the alleged "recovery" is that "growth" will return as a consequence of debt increases. That velocity will increase.

I understand what you are saying and undoubtedly it doesn't make sense for any entity to spend more money than it's able to take in. I have a question though, and I'm asking this because I am interested in (and value) your opinion........ or others here.

While increasing debt hasn't seemed to stimulate recovery, do we have any evidence that austerity measures stimulate recovery? The reason I ask is that I'm thinking of countries in Europe, e.g. Ireland, where they have implemented austerity measures. They don't seem to be doing well either, and logically, because "a != b" (debt != recovery) doesn't imply that "!a = b" (!debt = recovery). Perhaps neither extreme is the answer, or perhaps something else altogether is a more important factor? Even before the GS report came out I had some of the same concerns and wondered if perhaps we were implementing austerity measures prematurely. If the thinking is that the recovery can't occur EVER until the deficit/debt is reduced vs. holding off 3 or 4 years, which is the impression I have gotten from TF (tell me if I'm wrong), then what would be the downsides (vs. upsides) of the US defaulting on our debt? I understand this is a complex question but I've been wondering about this for quite a while and wondering what the thoughts are. If I need to move it to another forum, let me know.

Of course, to be honest, I think at this point, it's all moot. Neither party is going to make more than token cuts, at least until after the 2012 elections. I will believe both sides are serious when everything is on the table, from defense to oil subsidies (at over $100/barrel, like the oil companies need subsidies???) to entitlements.

I'm wiling to be a leg that despite all of the public evidence that things are failing, they are a LOT worse and that a TON of lies, fraud and accounting gimmicks are being used to make things appear as good as they do.

Quote:

While increasing debt hasn't seemed to stimulate recovery, do we have any evidence that austerity measures stimulate recovery?

You have to run a primary budget surplus. So-called "austerity" that fails to do that doesn't achieve the goal. Going broke slower is still going broke.

The RIGHT thing to do is force all these jackasses who did this to eat their own cooking and CHOKE. They'll blow up. So what? Let 'em. Capitalism says you should fail when you do this, and entrepreneurs will step in to replace your function, if that function has value in the market.

Is this statement true?

It is impossible for both public and private debt to decrease unless money supply also decreases. Holding money supply constant, public debt can't decrease unless private debt increases.

Are you reading Mosler? Throw that trash out.

TMD wrote..

BTW I have given up trying to convince people of the problems coming our way. Too many think the gov has a secret storage of skittles waiting for them.

You and me both, amigo (plus more than a few others, I'm sure). It's simply pointless to try to argue with people about this. They don't want to hear it. Idol is on, it's almost baseball season, whatever.

I'm sure the citizens of Rome never for an instant thought their empire could fall - right up until the Visigoths came over the 7th hill. Then began in earnest the wailing and gnashing of teeth.

It will be much the same for us, I'm afraid.

Bigbluffer wrote..

While increasing debt hasn't seemed to stimulate recovery, do we have any evidence that austerity measures stimulate recovery? The reason I ask is that I'm thinking of countries in Europe, e.g. Ireland, where they have implemented austerity measures. They don't seem to be doing well either, and logically, because "a != b" (debt != recovery) doesn't imply that "!a = b" (!debt = recovery). Perhaps neither extreme is the answer, or perhaps something else altogether is a more important factor? Even before the GS report came out I had some of the same concerns and wondered if perhaps we were implementing austerity measures prematurely.

Hell yes, austerity measures are going to cause widespread hardship in the real economy. The thing is, you can't apply Keynesian economics in a half-assed manner, like we have been doing since FDR.

John Maynard prescribed deficit spending during a downturns, yes. But the first part of his prescription was SURPLUSES DURING UPTURNS. Have we managed to do that since LBJ? The answer isn't just "no," it is "hell no."

So we have painted ourselves into this corner, where we are going to have to slash government budgets into the teeth of a downturn. And it is going to hurt. There is no way around it.

Default should DEFINITELY be on the table.

Austerity doesn't cause hardship. Austerity just demonstrates where things should have been in the first place.

Austerity = borrowed money evaporates

Quote:

We must stop this idiocy while there is still an economy and a government to save.

No, we don't. That's the funny thing. You can't bring reason to so many millions. Let them burn and start from scratch. You say one can't protect himself from what's coming if we continue on this path. But you know what? If you want to protect millions of idiots, you'll gloriously fail no matter how much you try to reason with them.