America's Race to the Bottom

[kmguru]

There is a way to solve USA problem...but it will take me another 6 months to know for sure. Once the game is set, we all will know.

In the meantime hope if that happens. Otherwise go in to deep sleep and then we will recover the country from abyss.

The reality is Billy T's projection may come true, by then a situation would have been made to recover the country for a better path. That may be necessary because we have been too greedy and wasted a lot of good resources in Healthcare, Legal, Justice, Military and everything that is highly expensive.

Bottom Line is we earn little these days but spend a lot as we have been doing in past many years. That is our problem.

 

[kmguru]

Saw this one:

http://theeconomiccollapseblog.com/...-the-beginning-of-the-end-for-the-petrodollar

 

[Billy T]

Saw this one: http://theeconomiccollapseblog.com/...-the-beginning-of-the-end-for-the-petrodollar

Thanks & Thanks. I had not seen that excellent review article. I read it all, despite the length. All should, it they want a better understanding of why the US is headed for deep long lasting depression – much worse than the one of 1929 until WWII.

I found interesting that the huge new Chinese refinery at Yanbu, Saudi Arabia will be in production "by 2014." – Probably before my Halloween 2014 deadline for US dollar collapse. There is no reason for Saudis to continue sell oil to China, (their largest buyer of oil already) for dollars, which loss value YoY vs. RMB which typically gains four or more percent each year in purchasing power. Once oil is not sold for dollars, the huge volume of them recently made in US to stimulate plus those stored around the world (by far the main store of paper dollars now that US is a credit card economy) plus central bank holding of dollar bonds will, by law of supply and demand, collapse the dollar´s value.

Only place I disagree with article, is that I think the positive feed back (everyone trying to sell their dollars before they lose more value) will make approximately an 80% drop in dollar´s purchasing power in less than one month – not the slower collapse the article foresees. Article´s "slower collapse" is the common wisdom mainly because when you sell your dollars there seems to be no alternative place to store that value (certainly not the Euro or the Yen and China tightly controls the buying of RMB although with dim sum bonds for sale, less so than a year ago.) China can easily create the "alternative" over night when it is ready to do so. In many posts I have already discussed in detail what must happen first before China is ready, but basically: Continue to reduce the dollars in reserves; make exports to US & EU insignificant vs those to suppliers of raw materials and energy or other Asian nations that are suppliers of the low value added components China builds into its higher value production; & become mainly a domestic based economy. - All these "requirements" are rapidly being accomplished.

Here is how (and why) China makes the "alternative" overnight, with a simple announcement:

... Billy T comments:... I still think when China is ready to see dollar collapse, it will back RMB bonds with gold but for central banks only.* That will make the RMB bond the preferred form for central banks to hold their reserves in. Both the central banks and China selling dollar paper will crash the value of the dollar - nearly destroy it as a reserve currency.

Then China, not the US, will be able to pay for imports it needs with printed pieces of paper. That alone will more than compensate for the loss it takes on dollars still held in its reserves, but fact that US & EU will be in deep, long lasting depression unable to buy much oil etc. will help China too as then they will be the main buyers of oil etc. (paying in the then preferred RMB when oil etc. sellers do not accept rapidly declining value dollars). Buying without the price being nearly as high as if US & EU were in the market buying too.

*China as the world's largest producer of gold for last five years and now also world's largest buyer (leaving Indian in distant second place) can easily back its bonds with gold, because they have not many outstanding and control the rate of new issue but more importantly very few central banks will actually ask for the gold. - They don't now and will not in the future as gold pays no interest and is a cost to store.

From post here: http://www.sciforums.com/showpost.php?p=2890330&postcount=31 (same idea posted years earlier too)

 

[Billy T]

Despite large dollar trade surplus, China actually reduced the face value of dollars, it held in 2011. This (and other things) forced the Federal Reserve to buy 61% of Uncle Sam's debt last year. As more and more central banks try to decrease dollars they hold (even buying gold that for years they were net sellers of) and as the US deficits climb, the FED will buy more Treasury paper in 2012. This is unhealthy.

As individual bond holders watch the stocks climb and the dollar decline, they are becoming net sellers of Treasury paper too (to buy stocks or even some gold).

Thus, I will now predict that at least 3 of every 4 long term (10 year or greater maturity) bonds sold in 2012 will have the FED as their buyer,* and by the end of 2014, ONLY the FED will be buying - I.e. dollar greatly collapsed in purchasing power and not the main reserve currentcy for the world. That means Americans will need to make something to sell to pay for their imports (oil, etc.) -no longer able to buy with printed paper. That US production will be with salaries that are competive with same items being produced in Asia. - A drastic reduction in living standards in the USin 2015.

* Assuming there is not some "window dressing" move with the ECB where each buys offsetting bonds of the other - So the truth that few want to hold long term dollars or Euros does not look so bad on their books.

 

[Billy T]

I don´t know why but photo of people collecting their unemployment fails to appear here. Go to link below to see it if you like.
(If you are a computer geek, perhaps use quote to tell me why it fails to show. Link does have the word "resize" in it -could that be why?)

Later by edit after learning no photos display for me now. Please read short new thread here:
http://www.sciforums.com/showpost.php?p=2925953&postcount=1

“…Initial Claims for Unemployment Insurance for the week ending 4/7 rose 10,000 to 367K. The reported total was above the consensus estimate for 359K and last week’s revised total of 367k (from 357k).
Continuing Claims for the week ending 3/31 came in at 3.251M …” From: http://www.stateofthemarkets.com/re.../1/0/8c68a32920b8f8418649f2a1f607b349f956b2b1

Billy T thinks that 3.251M = 3251K or the new claims are nearly 10% of the continuing claims; if correct that implies a rapid acceleration as surely one can get unemployment for at least 52 weeks. This is coupled with the very disappointing new jobs created number, 120K, is quite a “black cloud” gathering on the US´s “recovering economy.” Despite the low job creation rate, the unemployment rate decreased – I.e. so many have decided that the change of getting a job is so low, that they just stopped looking for one – dropped out of the labor force and no longer are counted as “unemployed”

 

[Billy T]

In his "farewell speech" when leaving the White house, Ike warned us that the greatest danger to US may be the "military/industrial complex."

Here is IMHO a great example of its costly stupidity when US is going bankrupt:

“… The stealthy, guided-missile Zumwalt that's taking shape at Bath Iron Works is the biggest destroyer ever built for the U.S. Navy. The low-to-the-water warship will feature a wave-piercing hull, composite deckhouse, electric drive propulsion, advanced sonar, missiles, and powerful guns that fire rocket-propelled warheads as far as 100 miles. It's also longer and heavier than existing destroyers — but will have half the crew because of automated systems.

{Current projected cost (before the typical factor of two costs over runs) is}$3.8 billion apiece, according to the Navy's latest proposed budget. Including research and development, the cost grows to $7 billion apiece, said Winslow Wheeler, director of the Straus Military Reform Project at the Center for Defense Information in Washington.

Because of cost, the originally envisioned 32 ships dipped to 24 and then seven. Eventually, program was truncated to just three. …”{Billy T predicts there will only be one of these unaffordable “white elephants.”}
Quote from: http://news.yahoo.com/cutting-edge-navy-warship-being-built-maine-063753789.html

Billy T comment: Remember the “Spanish armada” –several dozen of the world´s largest and most technologically advanced warships – bigger and better canon, more sail, etc. Well the faster British warships, much smaller and costing about 10% of the Spanish ships, sent most of the Armada to the floor of the English channel but a few did get back to Spain.

If I wanted to sink this monster and had many willing to die in the effort, I would repeat what the Brits did to the Spanish Armada: I.e. with at least three dozen very high speed hydroplaning small speed boats simultaneously attacking with considerable, computer controlled random weave as they close with the monster and at least 100 pounds of plastic HE on in their bows with detonators triggered by contact ramming blow a few holes at or below the water line.

Or perhaps attack while ship is re-fueling like this:
“…On October 12, 2000, the USS Cole, an American Naval Destroyer, entered the harbor of Aden, Yemen to refuel. After the mooring of the ship to a buoy, the refueling operation began. Approximately 45 minutes into the refueling, a small ship, described as either a Zodiac-type rubber craft or a fiberglass boat, placed itself alongside the Cole and blew up. The resulting explosion tore an 40 by 40 foot hole in the side of the destroyer, causing casualties among the ship's crew. The casualties total 17 dead and an additional 39 wounded. …”

Or even just a few dedicated frog men dropped into the sea ahead of the Zumwalt from a “fishing boat” that is crossing the path of the Zumwalt a mile or two in front of the moving, highly automatic, undermanned, Zumwalt. If the Zumwalt should unexpectedly change course, no problem: another “fishing boat” following the first picks up the frog men and you try again in a few days.

Even primitive N. Korea may have reconance satellites in polar orbits before the Zumwalt is in the South China Sea. China will certainly continuous know the exact location of the Zumwalt to less than 100m error. China has more submarines than the US does and keeps most of them near China – at least 10 times denser surveillance by sub per square kilometer than US can do, not to mention China´s vast network of surveillance satellites.

China has also demonstrated, according to US Naval intelligence (assuming that´s not Oximoro) the ability to terminally guide a “ballistic” missile to its target. I.e. The US navy thinks even a weaving aircraft carrier up to 1800 miles from China could be sunk by this system even if the warhead is just conventional HE.

SUMMARY: The Zumwalt is a terrible waste of about10 billion dollars, IMHO. Ike had a point. America´s race to the bottom is being lead by the US military!

 

[Workaholic]

I assume US foreign policy has much to do with its decline as well, both in economy and prestige.

http://www.counterpunch.org/2012/04/13/worlds-apex-bully-leads-world-into-lawlessness/

Is it at all possible for the us to pull out of foreign regions and invest the money at home?

The US government pretends to live under the rule of law, to respect human rights, and to provide freedom and democracy to citizens. Washington’s pretense and the stark reality are diametrically opposed.

Now Washington is forcing as much of the world as it can to overthrow international treaties and international law. Washington has issued a ukase that its word alone is international law. Any country, except those who receive Washington’s dispensation, that engages in trade with Iran or purchases Iran’s oil will be sanctioned by the US. These countries will be cut off from US markets, and their banking systems will not be able to use banks that process international payments. In other words, Washington’s “sanctions against Iran” apply not to Iran but to countries that defy Washington and meet their energy needs with Iranian oil.

Frankly, Washington has no case. It is the hoax of “weapons of mass destruction” all over again. Iran, unlike Israel, signed the non-proliferation treaty. All countries that sign the treaty have the right to nuclear energy. Washington claims that Iran is violating the treaty by developing a nuclear weapon. There is no evidence whatsoever for Washington’s assertion. Washington’s own 16 intelligence agencies are unanimous that Iran has had no nuclear weapons program since 2003. Moreover, the International Atomic Energy Agency’s weapons inspectors are in Iran and have reported consistently that there is no diversion of nuclear material from the energy program to a weapons program.

On the rare occasion when Washington is reminded of the facts, Washington makes a different case. Washington asserts that Iran’s rights under the non-proliferation treaty notwithstanding, Iran cannot have a nuclear energy program, because Iran would then have learned enough to be able at some future time to make a bomb. The world’s apex bully has unilaterally decided that the possibility that Iran might one day decide to make a nuke is too great a risk to take. It is better, Washington says, to drive up the oil price, disrupt the world economy, violate international law, and risk a major war than to have to worry that a future Iranian government will make a nuclear weapon. This is the Jeremy Bentham tyrannical approach to law that was repudiated by the Anglo-American legal system.

There is no good answer to this question. Lacking evidence for a case against Iran, Washington and Israel have substituted demonization. The lie has been established as truth that the current president of Iran intends to wipe Israel off the face of the earth.

This lie has succeeded as propaganda even though numerous language experts have proven that the intention attributed to the Iranian president by American-Israeli propaganda is a gross mistranslation of what the president of Iran said. Once again, for Washington and its presstitutes, facts do not count. The agenda is all that counts, and any lie will be used to advance the agenda.

Do China, India, South Korea and Turkey realize that they hold the winning cards? Do they understand that they can give the bird to the American Empire and bring it down in collapse, or are they brainwashed like Europe and the rest of the world that the powerful Americans cannot be resisted?

Without concession to China and India, Washington is likely to be ignored while it watches its power evaporate. A country that cannot produce industrial and manufactured goods, but can only print debt instruments and money is not a powerful country. It is a washed-up two-bit punk that can continue to strut around until the proverbial boy says: “the Emperor has no clothes”.

 

[Billy T]

... Is it at all possible for the us to pull out of foreign regions and invest the money at home?

Possible, yes, but with greatly reduced living standards for Americans. (That is coming anyway when world ceases to accept green printed paper for goods and services of real value.)

So long as dollar is widely accepted as having more than value of paper it is printed on, Americans can live better by getting low cost labor to make the things they want. Until recently Chinese worked long hours for little pay in sweat shops so Americans (and some others) could live way beyond their means, but that era is ending. It helped keep inflation down.

Now the Vietnamese (and a few others) do what the Chinese did, but most of their low cost production is now flowing to China, not the US, and helping to keep Chinese high value added goods globally competitive, despite low double digit real annual increases in Chinese salaries, and giving a better life to 100 million Chinese, who were simple farmers a decade ago. (More than half of Chinese now live in cities, not on a farm.)

 

[Billy T]

"... The S&P/Case-Shiller Home Price Index of 20 metro areas shows that home prices in the U.S. were down -0.8% on the month. This was below the consensus expectations for a decline of -0.2% as well as January’s unchanged reading (December -0.5%) drop.

On a year-over-year basis, prices fell by -3.5%, which was slightly worse than expectations for a decline of -3.4%. ..."

From: http://www.stateofthemarkets.com/re.../1/0/33b9ee16bc592c1f5ccb3be6e96b26cb11915fb1

On the "bright side" the lowest ever 30 year mortgages and this lowering of prices did make slight monthly increase in number of homes sold (but the foreclosures, and "for sale" homes etc. in inventory is still growing).

 

[Billy T]

Here is why the unemployment rate is falling:

US is following the hippies´ advice: "Turn on & Drop out."

In fact three times more people dropped out of the labor force last week than those who found jobs. That is why (as Obama will loudly note when campaigning) the unemployment rate fell from 8.2% to 8.1%.

For a more true picture of US job conditions, watch this Peter Schiff video:
//www.europac.net/media/video_blog/truth_behind_unemployment_numbers_stimulus_vs_austerity

 

[Billy T]

".. In another sign that the economic recovery under President Obama is not producing gains for average Americans, median household incomes fell 1.1% in August to $50,678, according to a report released Tuesday by Sentier Research. Since the economic recovery started in June 2009, household incomes are down 5.7%, the Sentier data show, and they are down more than 8% since Obama took office. ...

Earlier this month, the Census Bureau released its annual report, showing that the number of people in poverty was nearly 3 million higher in 2011 than in 2009, an increase of 6%. That report also found that average incomes for middle- and lower-income households fell in 2011 after adjusting for inflation. They rose only for the wealthiest 20% of households.

The number of people on food stamps is up more than 220,000 in the first half of this year and up almost 12 million -- or 34% -- from June 2009 to June 2012. I think the first may be rounding up of the 7.5% drop in incomes since Obama took office that I recall reading elsewhere, but they do say "more than 8%".

The number of people in the labor force has fallen more than half a million in the past two months, with the participation rate down to 63.5%, a rate not seen in the past 30 years, according to the Bureau of Labor Statistics.

Almost 83,000 signed up for federal disability benefits in September, and more than 736,000 have joined in the first nine months of this year, according to the Social Security Administration. That's a higher enrollment rate than the first nine months of the Obama presidency.

This from Bloomberg:

The number of 26-year-olds living with parents has jumped almost 46% since 2007, according to Census Bureau data compiled by the University of Minnesota Population Center. Last year, the number of 18- to 30-year-olds living with their parents grew to 20.7 million, a 3.9% gain from 2010.

The figures underscore the difficulty that millions of young people have had in finding jobs and starting careers in the U.S. following the longest recession since the Great Depression. About a quarter of American adults between the ages of 18 and 30 now live with parents, while intergenerational households have reached the highest level in more than 50 years.

The number of unemployed Americans has surged 60%, to about 12.5 million, from 7.82 million in the first quarter of 2008, according to data compiled by Bloomberg. The nation's jobless rate, which peaked at 10% in October 2009, was 8.1% in August, compared with 5.1% in March 2008.

Note the average HOUSEHOLD income is now less than EACH man, woman, and child´s INDIVIDUAL share of the Federal debt! - A never before occurrence in US history (with possible exception immediately after the end of WWII, but that debt was quickly paid down, not rapidly rising as now.) !

I have checked few of these gloomy and steadily growing worse facts, but none seem inconsistent with those I have read elsewhere; however, if you have a good reference disputing them, please post it. They tell the work-force participation rate, not the unemployment rate, which has become essentially meaningless due to fact many of the very discouraged are not actively seeking a job now so are not "unemployed" - just can´t get a job.

Quick now, get head back in the sand so you can pretend US is in recovery mode or at least don´t shoot the messenger.

 

[quadraphonics]

Note the average HOUSEHOLD income is now less than EACH man, woman, and child´s INDIVIDUAL share of the Federal debt!

That scare statistic is silly, as it fails to account for the portion of said Federal debt that is itself owed to US households to begin with (this is roughly 2/3 of the Federal debt).

 

[Billy T]

That scare statistic is silly, as it fails to account for the portion of said Federal debt that is itself owed to US households to begin with (this is roughly 2/3 of the Federal debt).

I´m not sure how to think about this. For example, it is true that Social Security (or its trust fund) holds a great deal of Federal IOUs, but also true that they will be paid by some combination of taxing our children or borrowing (perhaps a little bit of more printing press money but can´t do much if any as SS is indexed to CPI and printing press money will increased CPI and could even make the debt the children pay or borrow even greater.) So fact that the right hand of the government owes the left hand now but the people will pay more taxes (or borrow) later to pay, seems like distinction without a difference, to me.

Thus I tend to use / believe today´s debt clock statement is below is correct:

".. Every man, woman and child in the United States currently owes $52,714 for their share of the U.S. public debt.

Public Debt: $11,253,922,532,438.69
Intragovernmental Holdings: $4,761,914,765,193.68

Total U.S. National Debt: $16,015,837,297,632.37

Question: Who owns the public debt? Answer: Mutual funds, pension funds, foreign governments, foreign investors, American investors, etc.

Are you calling all the debt clocks, which say this, "silly" - that sounds very arrogant to me.

From same source, here is the Top 10 foreign holders of US debt (as of Jul/2012):

1. China, Mainland, $1149.6 billion dollars
2. Japan, $1117.1 billion dollars ..................If Japan keeps adding to its holdings and China keeps up it slow two year decrease Japan will be # 1 again soon.
3. Oil Exporters*, $262.3 billion dollars
4. Brazil, $253.0 billion dollars ...................Interesting, at least to me, is Brazil is third largest holder of all countries and almost equal to all oil exporters.
5. Carib Bnkng Ctrs**, $246.2 billion dollars
6. All Other, $224.1 billion dollars
7. Taiwan, $196.1 billion dollars
8. Switzerland, $190.1 billion dollars
9. Russia, $154.3 billion dollars
10. Belgium, $144.2 billion dollars

*Includes oil exporting countries such as Saudi Arabia and Iran
**includes countries such as Bermuda and the Cayman Islands

Of the $5.1 trillion dollars of US debt that is owned by foreign governments, China and Japan own nearly half, ...
Also we are essential at the debt ceiling now (but Treasury will play some accounting trips to keep paying bill until early 2013):

".. The debt ceiling is currently set at $16.394 trillion. At the end of August, the amount of debt subject to that limit -- which excludes certain types of debt -- was $15.977 trillion, roughly $417 billion below the cap.
Since the government typically borrows between $100 billion and $125 billion a month, that means it's on track to hit the ceiling sometime in December. .."

It should be "interesting times" to watch the newly elected Congress try to cope with both the debt ceiling and the "Fiscal Cliff" at same time!

 

[quadraphonics]

I´m not sure how to think about this.

It is simple accounting: you tally up the liabilities on the one hand, and the assets on the other.

For example, it is true that Social Security (or its trust fund) holds a great deal of Federal IOUs,

I.e., the Social Security Trust Fund represents assets held by US households (in the same sense that the national debt represents liabilities held by said households). It's a transfer payment system: those IOUs represent liabilities to be paid by current (and future) workers, and correspondingly assets to be paid to current (and future) retirees. It is equivalent to one group of Americans owing money to another group of Americans, just like credit card debt or mortgage debt.

Are you calling all the debt clocks, which say this, "silly" - that sounds very arrogant to me.

Accounting only the liabilities that a group faces, without also accounting their assets, is silly and is nothing more or less than a scare tactic. Those "debt clock" things are obvious scare tactics - they exist for the express purpose of convincing people to worry about the national debt, without any consideration of what that debt represents or how it figures into the asset columns of the very same families being beaten over the head with scary numbers.

Every instrument of debt held by any entity anywhere in the world represents a savings asset held by someone else. To harp exclusively on the downside of the debt obligations of the US populace without also considering the upside of the savings assets that those exact same obligations represent for the US populace is not a serious, meaningful analysis of the impact of debt. It is a propaganda tactic employed to confuse and frighten people.

 

[joepistole]

Here is why the unemployment rate is falling:

US is following the hippies´ advice: "Turn on & Drop out."

In fact three times more people dropped out of the labor force last week than those who found jobs. That is why (as Obama will loudly note when campaigning) the unemployment rate fell from 8.2% to 8.1%.

For a more true picture of US job conditions, watch this Peter Schiff video:
//www.europac.net/media/video_blog/truth_behind_unemployment_numbers_stimulus_vs_austerity

That is another scare tactic. Changes in the workforce participation rate have more to do with demographics that economics. The Baby Boomers are getting older and dropping out of the workforce. And we are going to see more of it over the course of the next decade - baring any surge in immigration.

 

[Billy T]

... I.e., the Social Security Trust Fund represents assets held by US households (in the same sense that the national debt represents liabilities held by said households). It's a transfer payment system: those IOUs represent liabilities to be paid by current (and future) workers, and correspondingly assets to be paid to current (and future) retirees. It is equivalent to one group of Americans owing money to another group of Americans, just like credit card debt or mortgage debt.

Yes but for an IOU to be a real asset you should have very high, not very low, expectations that it will be paid at the future date promised.

I dare you to start a poll of sub-40 year olds asking if they expected to receive even 10% of the purchasing power they paid into Social Security back from Social Security when they retire. Also now days, many mortgages are in default or those "assets" backing them are being sold in "short sales" for less than face value of the mortgage or just taken over by the banks and held without banks being able to sell them with an acceptable loss entering their books (I.e. many banks prefer to hold them on bank´s books at a false higher face value.)

Let me convert this national IOU system to the family level using my family so you will better understand:
One daughter is very rich, other is not quite making it, without my aid for more than last decade (after rich husband lost his high pay financial industry job and went into depression and then divorce with no assets.) She returned to work but only as a substitute elementary school teacher until this year when she got a contract job for first time, but it is only for three days each week for one term (why she has not clearly told me). She hopes to still sub on the other two school days each week and get full time jobs with more exposure. Schools near her are firing more teachers than they hire in these tough times as is true of most of the US now. She is grad of Cornell´s Hotel School, but too many years without work in field that is also not hiring. She got highly qualified to teach at U. of PA as wanted to still be home when my grand kids were not in school.

If I asked her, my very rich daughter* would give me $100,000 (or even a million) and I could tell her that I will tell poor daughter to repay my IOU when she re-marries to a very rich man. The way you think, rich daughter has asset of IOU for $100K and lowered her current cash by $100K so no net change or decrease in her wealth. - It is all in the family, one member owing another the $100K, I spent on booze and wild women to die with no assets, but I don´t think she would see it that way any more than the sub-40 year old thinks he will get his purchasing power back from SS when he retires.

... Accounting only the liabilities that a group faces, without also accounting their assets, is silly

Not if you understand either the family example or the fact US is in a rapid growing debt decline and can only paid bonds already issued by monetization of the debt.

*One of a few owning partners in financial management firm that only accepts clients that have more than 10 million dollars they want her firm to manage. She managed, very well, Delta airlines "defined benefit" plan´s 4 BILLION of assets until they, like many others, switched to a "defined contribution" retirement plan. So well that her gains over current expected cost of future retirement payouts, which went straight to delta´s bottom line, was the only significant profit center Delta had. (Pilots and their planes lost money most years, but she kept Delta flying.) Thus, when Delta switched they had no funds for her to manage but she had many very attractive offers from financial firms and took one that included full partner ownership in the modest size firm she joined. They have no plans for an IPO.

 

[Carcano]

Yes but for an IOU to be a real asset you should have very high, not very low, expectations that it will be paid at the future date promised.
value.)

In any event, 'debt per citizen' numbers are not meaningful. More significant would be debt per citizens with a significant income that can be taxed over a certain time frame.

And the total national debt would have to be adjusted for corporate and capital gains taxation.

But even that doesnt matter much...no wildly hypothetical "if only republicans would just disappear" scenarios are allowed in this reckoning.

Not gonna happen.

 

[Billy T]

All quoted below is from Bloomberg references given in their text:
"... Since the Great Recession ended in June 2009, one measure of income inequality has reached its widest point in more than 40 years. The Gini index, {graph below} which measures how income is distributed, was 0.47 in 2011 – a 1.6 percent increase from 2010 and the first statistically significant annual increase since 1993. A score of 0 would indicate perfectly equal distribution, while a score of 1 would reflect a population in which one individual received all the income.

Read the full story here: http://www.bloomberg.com/news/2012-10-02/top-1-got-93-of-income-growth-as-rich-poor-gap-widened.html ..."

Billy T modified Bloomberg´s text in this blue section: An article telling top 1% got 93% of the income increase to make the Gini index grow worse so rapidly last year. See graph of how aggregate income has changed (Percent change in share since 1967 by the five 20% quintal income groups plus top 5%) at:

"... http://go.bloomberg.com/multimedia/americas-growing-income-gap-shows-two-recoveries-in-action/

Source: U.S. Census Bureau with quintiles defined by the following income thresholds:
Richest 5%: Greater than or equal to $186,000; Richest fifth: Greater than or equal to $101,583; Second-richest fifth: Between $62,435 and $101,582; Third-richest fifth: Between $38,521 and $62,434; Fourth-richest fifth: Between $20,263 and $38,520; Poorest fifth: Less than or equal to $20,262 ..."

 

[quadraphonics]

Yes but for an IOU to be a real asset you should have very high, not very low, expectations that it will be paid at the future date promised.

Said expectations are indeed very high.

I dare you to start a poll of sub-40 year olds asking if they expected to receive even 10% of the purchasing power they paid into Social Security back from Social Security when they retire.

I will not be biting on your stilted attempt to misconstrue Social Security as some kind of savings/investment instrument. It is a welfare transfer payment system.

But now that I see this "dare," it seems clear that the poll you created on that subject was intended exactly to bait me. Way to behave like a mature, adult moderator.

The way you think,

You don't seem to know what or how I think, and your over-reliance on inapplicable, stilted analogies is making you look like a fool who can't argue his position honestly.

Not if you understand either the family example or the fact US is in a rapid growing debt decline and can only paid bonds already issued by monetization of the debt.

So, as usual, you have no particular analysis of the actual subject to offer us. You just start from the assumption that the USA is doomed regardless, and then insist that this will manifest in whatever area you happen to be talking about at any given moment.

I can agree that, should your crank prophesy come to pass, the USA will have myriad fiscal difficulties. But I don't believe it will occur, and neither does anyone else whose views I take seriously, so I am not impressed by your position. This is not a matter of "understanding" your predictions. I understand your views just fine - that's exactly why I recognize how flimsy and emotional they are, and reject them as likely outcomes.

 

[Billy T]

Said expectations are indeed very high. ... it seems clear that the poll you created on that subject was intended exactly to bait me. Way to behave like a mature, adult moderator.

I know you intend the last quoted sentence sarcastically, but it is literally true - I don´t and you don´t know how much faith people have that they will, on average in purchasing power, get back from Social Security during their retirement years what they paid in; So, yes the sensible mature behavior is to ask them what percent of their paid in purchasing power to they expect to collect. - Exactly what the poll does.

See poll here: http://www.sciforums.com/showthread...-expect-back&p=2989075&viewfull=1#post2989075 and if less than 48 years old please vote in it. At present votes are evenly split 50% expect to get nothing back as SS will not exist when they retire and 50% expect* to get between 60% & 45 percent of their paid in purchasing power back.

You often think your views such as: "Said expectations are indeed very high." is 100% correct and only fools question them. This poll will provide a better /less biased answer. We can not ask a valid cross section of the US population here in a sciforms poll, but after 20 or so have replied (poll is open "forever") we will get an indication that is better than your or my opinion.
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* I might note that Adam Smith in Wealth of Nations said almost every man expects to live longer than the average for his age (unless already very sick). This allowed England of his era to finance its debts very cheaply by following popular and common scheme:

A group of ~10 or more rich men of nearly the same age lent money to England at very low or even negative interest rates for a long period - until only one was still living. That lucky one got back all the money paid originally in. Back then in the gold is money ("pound sterling") era, inflation was not very bad so the winner of the "last to die pool" got a nice purchasing power return and England got the use of their money for 20 or more year at essentially no or even negative nominal cost and certainly at negative purchasing power cost. (To the modern reader of this boring book, this is the most interesting part, IMHO. I read it all - few can endure that!)

This human tendency to think one will live longer than most his age, which England once exploited, will make the Poll´s voters on average expect to be collecting from SS for longer than they will on average - I.e. makes them vote for higher percentage return from SS than they will in fact get on average.

I don´t know why the US Treasury does not use this old finance scheme - almost every state has a lottery so if can´t be something about "its gambling." It must be that most people don´t expect much from the future anymore - In economic terms: have a personnel high discount rate. Or, sigh, perhaps with too many guns in too many greedy hands - it would boost the US´s already high murder rate.