The U.S. Economy: Stand by for more worse news

@ Billy T,
Baby boomers will also open up the job markets a bit. Just needed to add that to your post.

 

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Yes but they will be nearly 100% jobs for consumption supplier, not producing anything for US to sell to others (Americans or foreigners). Jobs like getting needed heath services or if quite healthy and financially well off, traveling the US in the Winnebego trailer or by air of even by cruse ship.

I.e become extreme examples of what has gotten US into deep trouble: Consumption much greater than production, financed either by "negative savings" or borrowing, which are about the same thing. (Only difference is in one case is China is financing and in the other your heirs are).

 

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I mentioned in post 460 that the "smart money" was getting out of Treasury bonds, driving the 10 Year bond interest rates up more than 32% from recent lows in less than six months. And noted that China had to be considered as part of the "smart money" too; but almost all central banks are now selling dollars and buying gold:

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Data not shown for 2012 but it is well above 600 tons! Quite a change for 4 years ago and earlier when central banks were net sellers of gold. Germany no longer even trust the US to hold it gold - is returning it back to Germany and others are likely do the same. Then we will learn if Ron Paul was correct to think it ain´t all in the vault, as US claims.

 

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I read it's going to take 7 years to return to Germany it's gold. So, it seems that maybe no, it isn't 'in the vault'. Or rather, it's been leased out to more people than there is gold.

 

Yes it is quite a lot (and some is in France too that will be going home.) I am inclined to think the US owes others more gold than it actually has. It is such an old established policy. Paper money got its start in the late dark ages, when gold was money. It was too risky for most to keep their own gold, so they gave it to some lord (or often a wealthy Jew who had a vault) to keep. Generally speaking, the Jews were more honest, and never just took your gold, as lords sometimes did when they needed to pay soldiers, "fighting to protect you." Jews would lend to each other, so seldom could not pay, but local lords were often hostile to each other.

In exchange for your deposited gold and paying the annual fee, you go a certificate telling how much (usually a set number of gold or silver coins) etc. with which you could re-claim it, but never did all want their gold back at same time, so many more certificates were granted (to collect the annual fees) than for gold than they actually in the vault to pay off with. It is an old and profitable tradition the US probably still follows as normally the "bearer certificates" were used to pay for purchases within the community. -I.e. the birth of local gold-backed paper money. Most banks in the original English colonies and 13 states also issued their own gold backed paper money.

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with this text:
“The Thirteen Original Colonies plus Vermont and Louisiana had issues of colony or state backed currency that circulated within the Colonies.
In 1690, when Massachusetts first issued currency until the late 1780's, colony and state issues were printed and circulated in several denominations.” Originals (I think) of the above are on sale for $150 now at: http://www.replica3d.com/HTMLPages/CCorner/USABills.html

I would not want to be the last country to ask for its gold back from US storage. I think it very likely at least two more countries will follow Germany´s lead before the end of 2013, and by (or before) Halloween 2014, there will be a run on US´s stored gold too as well as my long predicted "run on the dollar." With the smart money now getting out of dollars, as indicated by the rapid rise of 10 Treasury bond interest, both the gold and dollar runs, appear to be in their early stages. If true these current just cautious moves, will accelerate into runs to get out while one can do so with little losses. Japan, which needs the Seventh Fleet protecting it will be one of the last and take great loses. Perhaps that loss would have paid for their own protecting navy?

Now days, some of the gold has "grown" more massive - I.e. has a tungsten core, which is hard to detect as has nearly exactly the same density. I have suggested some years ago than neutron bombardment is the non-destructive way to detect, as Au & W give off different energy gamma rays. (I forget the details, but recall one gives much more gamma radiation when neutron excited than the other does.) A special, compact reactor like subs use, could be truck mounted with a conveyer belt passing thru it. As the gold bars emerge, their gamma rays are automatically measured inside a well shielded (from reactor radiation) box. Then they are stored with no human contact (only a few hours, as I recall) to "cool off." Perhaps there is something wrong with my physics analysis, but if there is not and US does not do this to kill rumors, it adds to the suspicion that US is cheating as does the fact that for decades, Congress (especially Ron Paul) cannot even get a simple bar count inventory done! - 1000 year old traditions die hard. There ain´t no freedom of information at Fort Knox.

 

I don´t think China has much gold in the US but as world´s largest produced for at least three years, one must wonder why it is also now world´s largest buyer, mainly thru Hong Kong and direct private purchases, not recorded by any officials. - Just that non-Chinese buying does not total known non-Chinese production, and the other main buyer, India, is more open about the influx of gold as it sees that as a problem (loss of foreign currency adversely lowering their currency, so they tax imports) How much gold China has is still a great state secrete.

I posted long ago idea that when ready to force dollar collapse or when dollars collapses without any push from China due to growing debts and political “kick the can” disarray, China will back the RMB with gold for central banks only to make the Yuan the preferred international reserve currency. I.e. then China gets to pay for imports with printed paper as the US did when dollar was the reserve currency.

 

From what I understand the US dollar has not been based on gold since the 70s

So what does gold meaning anything to the US dollar ?

 

Agreed. Fortunately unemployment rates are declining.

Ah. I'm not on a "side." I don't generally hew to any particular set of ideologies from political parties, voting blocs etc. And since unemployment is decreasing steadily as the economy recovers I'm not too worried about the potential for a trend towards massive unemployment.

I think it's a good sign - for them. India's economy is improving.

Since we still have far, far more applications for H-1B visas than we have visas, it hasn't been a problem in terms of getting employees for US companies.

Then you don't know many doctors.

The trend in unemployment (downward since the 1980's, when automation started appearing in everyday US life) does demonstrate that the trend you claim is, in fact, not occurring.

 

Hard to say as impact is largely psychological, but if the US has been covering up adverse facts that would surely have significant adverse effects on US credit and acceptability of the dollar. One has to wonder why not even Congress has been able to get a real audit in 60 years! (and last one done in 1953 smell more like a cover up than a real audit - more details below.) We new a real physical audit commision, headed by someone like Ron Paul, that the public would trust.

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See how rapidly (yellow curve) the debt has increased and how much each ounce of gold would need to increase in value to pay off the debt in last four decades. If the gold claimed to be there is not, then the yellow curve would be even steeper in its rise. Last physical audit only took place "in 1953, just after US President Dwight Eisenhower took office. Even though it is the last audit up to date, it can’t be described as satisfying. No outside experts were allowed and the audit team tested only about 5% of gold." - This quote from same source.

 

IBM to Collaborate with Nuance to Apply IBM’s "Watson" Analytics Technology to Healthcare

About 8 years ago I recall computer program was able to diagnosis fetal illness when given the diagnostic data (blood work, ultrasound, etc...) better than a physician. The explanation was human emotion can cloud fetal diagnosis. I expect this software will get better and better and someday will replace physicians in certain instances.



That aside, I personally think farming would be an ideal business to go into right now. It's going to be a growth industry over the next 2 decades. I'm in the medical field, and TTYTT I love the work, but I am not sure if I'd do it again? Maybe, maybe not. I do love the work.... but, I don't know if I'd suggest my own children go into a medical field.

 

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QE2 added 0.5 trillion dollars.
QE3 does that each year until unemployment = 6.5% or inflation >2.5% which is what comes first, IMHO.

Several sources suggest that Fed´s balance sheet will grow to 5 trillion by start of 2015, but I think sooner as the "pushing on the string" accelerates and unemployment never comes close to Fed´s target 6.5%. The real question is how long can this dangerous and failing policy of printing press money continue to kick the can down the road.

Of course, stocks, farm land, gold, corn futures, etc. which represent real values, not Treasury´s paper promises, will keep growing in nominal value.

 

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But the number with English as their primary language is shrinking.
That explains why most US corporations are making growing profits, but not from US sales.

 

Someone actually making some sense:

[video=youtube;51-Jfh6ADH0]http://www.youtube.com/watch?feature=player_embedded&v=51-Jfh6ADH0#t=32s[/video]


AND unlike in the USA and Briton and most of southern Europe, their economy is growing. EXACTLY like many economists said OUR economy would be now IF we had let the criminals who run the Banks on Wallstreet fail. But we didn't. We let douche bags like "Oracle of Omaha" threaten to blow up the economy if they weren't personally bailed out. He made BILLIONS. Now he's on TV claiming he should pay a little more in income tax, a few million more. Big F-ing deal when you should be in the poor house and instead made BILLIONS at the expense of the Tax Payers (your children). They all did. AND you and your children will pay the price.

God I wish the American public had half the balls and a third the common sense as the Icelanders.

 

The Rich Get Richer Explained

[video=youtube;xA_glFb0oWs]http://www.youtube.com/watch?v=xA_glFb0oWs[/video]

 

I heard (on CNN) another interview at Davos that made sense too. The president of Nigeria of all people. He was asked about the corruption, fact that little of the oil income gets down to the masses. He said that is true but were are correcting it now. For example many of the corrupt bankers who were lining their pockets are being or have been tried in the courts, and several are already in Jail. Then he observed that none are in the US, instead their mistakes are bailed out with tax payers money making a growing "moral hazard." - I.e. take big risks- if it makes big profit you keep it & if it turns out badly, then the tax payers eat the losses.

 

Except you are lying again Michael, contrary to your claim, the US economy has been growing now for 3+ years as opposed to Iceland which has only grown for the last 2 years. Two, Iceland nationalized its banks and froze the deposits and investments of international depositors and investors which locked it into a trade conflict with its neighbors/trading partners. It is sort of odd to hear you condone a massive government intervention like we saw in Iceland when you are so against government intervention, being a Libertarian and all. And Iceland, like the US stimulated their economy with government spending avoiding the European austerity trap, so it is again kind of odd hearing you endorse Iceland as you have and continue to do while condeming the US stimulus package.

Imagine how much it would have cost the US tax payer to nationalize our banks. Instead of investors taking the losses, it would have been the US government. The US government actually made money on the US bank bailout, as opposed to Iceland. Imagine what confiscating the deposits of foreign investors and depositors would have had on the US economy. Here is another fact you are ignoring, that was a price paid by Iceland, wages were effectively reduced by 50% due to currency devaluation – again given your vocal diatribes about a very modest devaluation of US currency, it is odd to hear you endorse a 50% Icelandic currency devaluation.

The Great Recession was much more severe and prolonged in Iceland when compared to The United States. In 2009, the Icelandic economy shrank by 6.6%, in 2010, it shrank by an additional 4% and in 2011 it grew by a very modest 2.6%. In the US the economy shrank by 3% (inflation adjusted) in 2009 and it has been growing at an inflation adjusted rate of 2% for the last 3 years. Instead of one year of economic contraction, Iceland had two years of economic contraction.

In one month (i.e. October 2008), credit ratings on Icelandic debt went from A+ to BBB-, barely investment grade. Whereas; the US debt credit rating remained at AAA+ until 2011 when Republicans began threatening to not pay the nation’s debts in pursuit of their political agendas. And even then, the rating went from AAA+ to AA+. So the rosy picture you are trying to paint on Iceland, isn’t really so rosy when you look at the facts.


As for the Oracle of Omaha, Warren Buffet, unlike your gurus, really did predict the problem with derivative securities and made his reservations about them well known much in advance of the crisis they created. And contrary to your claims, no one bailed out Warren Buffet. Mr. Buffet made his money not with government handouts but by doing what the US government did, investing in banks and other industries at a time when prices were extraordinarily low due to the panic created by the crisis. Contrary to your claims, the US taxpayer made money on their investments during the crisis.

Your notion that the bailouts cost the US government money is fiction. And since the US government made money on the "bailouts", it is also fiction that debts were incurred that will be passed down to future generations resulting from the bailouts as you have claimed. The debts that have been incurred as a result of the economic crisis were due to increased spending on social safety net programs and the significant revenue losses incurred by federal and state governments.

Below is a chart showing the Federal Reserve profits that have been transferred to the US Treasury accounts over the course of the last few years. You will note that Fed profits have almost tripled since the onset of The Great Recession. So the truth is the Fed and the profits produced by the so called bailouts are reducing the Federal deficit, not increasing it as you have alleged.

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http://www.cnbc.com/id/48991493/US_Treasury_Expects_151_Billion_Profit_From_AIG_Bailout

http://www.nbcnews.com/business/taxpayers-make-money-tarp-treasury-says-715381