Obama says that the economy is hunky dory. And Donald Trump thinks that we are going to hell in a hand basket.
Let’s address the issue. We are in a World Depression that is beyond anything experienced by man in world history. You can get 6 percent back on a credit card purchase, but you get zip back for money in the bank. 60 million people have stopped looking for work and 43 million people are on food stamps. The government message is this, "Don’t acknowledge the depression, if you do so, it becomes self-fulfilling." We do not have to worry about it becoming self-fulfilling we are there.
The options we have from here are several, we need to rebuild our infrastructure. We can afford to spend trillions on roads, water and electrical. We cannot afford to spend any more on Government Quantitative Easing programs. The odd thing is that the money borrowed from savers got us to where we are now. The government cannot pay back what it has borrowed or even pay the interest on what was borrowed at a fair market rate. Government is ripping off retired people of their interest income, that they expected to be generated from their savings.
From a realistic point of view, 20 to 30 cents on the dollar is about all the government is going to pay on its debts. Just what does that mean? It means if you have savings in the bank, you are about to lose 70 percent of your purchasing power through inflation, government taxation or a new currency. The neat thing, if you are broke, it is totally painless, you have nothing to lose.
What you have to realize is, the Federal Reserve, the Treasury and Congress have turned our financial markets upside down. The expected outcome is unknown. The people in charge of this financial economic experiment, have no historical guidelines to gauge what is happening. The only thing that can be deduced is that this is not going to end well, when it ends.
We didn’t build this country spending money to get 6 percent back, we built it saving money for a rainy day. We haven’t saved anything and now we have a rainy day. It’s a little like going camping and using the toilet paper to start the fire. You’ll enjoy the meal and then discover that there is no toilet paper. It was not a problem until it became a problem.
14 comments:
Jim:
"The debt" will never be paid back. It isn't even considered. It isn't even considered an important issue. The gov will just make the monthly "minimum payment" on it at zero percent, and soon a negative percent, until the time comes when the debt gets inflated away. Ideas such as saving, reserves, budgets, gold backed currencies, deficits are bad, debt is bad, etc. etc. are all quaint ideas that won't exist in the future. Bail-outs, twists, QE, ZIRP, NIRP, fiscal and monetary policies being at odds, brain dead people at The Fed, other government involvements/interference in the economy, dangerous and destructive foreign policies, continual undeclared wars, more and more welfare, etc. etc. are all points that the American public have been putting up with (condoning) for many decades (especially since 2007) and they will put up with even more insanity and corruption as we move forward. Get ready for the next unusual and destructive solution... "helicopter money". Out of desperation the gov will try HM in the form of tax cuts/refunds or huge government spending into the private sector in an attempt to keep the USS Titanic from sinking. The USA can keep this game going on for a long long time because they can print their currency and their currency also happens to be the world reserve currency. It will be a long time before that changes. I hope that you have children because they will have to continue this depression blog after you have passed on and gone to Heaven. This blog of yours will be running for decades, because that is how long this depression (now going global) will continue for. 2006. Ten years and counting.
A long as Congress stays corrupt with their insider trading, etc, things will not get better for this country. How people can expect refreshing change when the well is contaminated is beyond me.
A decade after you started writing this blog Jim, it looks like the storm clouds are finally coming together, and we just might finally get that depression that we should have had long ago. A lot of what I have been reading and digesting in the past few months gives me cause fro concern. I saw similar things back in 05 but of course we know it took another few years for reality to sink in. So, this time, who knows, maybe we'll have another couple of years of zombyism (new word) before the collapse this time?
What do you think, are you seeing an acceleration of the shit hitting the fan?
Thanks,
Shadow Hills Horse
Hi Shadow Hills Horse
The biggest question is: Will it hit the fan before the election?
If it does, Trump has a chance.
We cannot kick the can down the road forever, at some time and place it will come to an end. A very bad end.
Take care
Jim
Jim: I'm always amazed at this common viewpoint that so many people seem to share.
It appears that most people just don't seem to get that, it is NOT that we might be in danger of "moving into" a depression, but that we have been IN one for quite some time. It is the spin from the government, and its main tool: the mainstream media, that prevents the population from having an awareness of the TRUE statistics (and the most meaningful and significant statistics) that reveal the actual status of the USA economy, and where it is headed. A big mistake is considering that the stock market is a reflection of the state of our economy. That market is rigged and is also manipulated by the government and thus has NO connection with the condition of our economy.
Massive and unserviceable debt; ZIRP; NIRP; lack of growth; low productivity; an unmaintained and decaying infrastructure; involvement in numerous ongoing wars; clueless and corrupt "leaders"; devaluation of the USD; 50+ million Americans on food stamps; countless Americans on unemployment; majority of new job creation comprises temporary, part-time, low-wage service industry jobs; stagnant or declining wages for over 15 years; continuous erosion of the Middle Class; negligence and condonation of corruption in government, banking and big business; lack of R&D, innovation and inception of new industries and technologies for creating jobs; corporate welfare (Fascism); burdensome taxes and regulations preventing entrepreneurship and small business; etc. etc. etc.
These are just SOME of the indicators that show we are in poor shape as a nation and heading down the dwindling spiral. If there isn't drastic change and resets in the key areas of our nation the consequences are going to be dire.
People: please re-analyze your thinking when you say that "we may be headed towards a recession or depression". One can't improve their lot in life unless they have a decent grasp on where they are actually at.
AIM,
"it appears that most people just don't seem to get that, it is NOT that we might be in danger of "moving into" a depression, but that we have been IN one for quite some time."
I do get it and I understand the implications, just like you . But where you miis something and don't understand, is called timing!!!
It's not enough to know what is happening but also to know WHEN? I have made preparations, just like I buy home and car insurance but just bc I buy insurance, it doesn't mean I stop driving or living life.
Now, maybe people like you, "get it" and spent the last decade or two, biting your nails and being anxious, and that's the way you have cjosen to live.
But people like me, we are full aware of hat is happening and take measures to be prepared, but we don't run to the bunkers and wait for things to happen. We try to live our daily lives in the best way we can and realize it is not in our hands what may or may not happen.
Those who have just had unidirectional way of thinking, have missed a huge stock market rally, a huge RE comeback, to name a couple.
So, please tell me, since you "get it", what have you done in the past decade while you have been waiting for the complete collapse to happen? just waiting and praying?
IMO, life is about living. So yes, you do acknowledge the risks that surround you but you do not let them from living...or else what is the point of life!?
thanks,
Shadow Hills Horse
sorry about the typos, wrote the my response quickly.
SHH
Hi Shadow Hills Horse
I'm sure An Inquiring Mind can defend himself. A flame thrower could be the tamest weapon he selects.
The stock market rally is as phony as it gets. It is the last game in town. There is no other place to get returns above .05%.
The real estate rally is Fed Funds sponsored. No bank is loaning money for 30 years at 3.5% interest. They are selling the paper to the Fed. The Fed doesn't have to make a profit over 30 years, the bank does.
Enjoy the rally, zero interest rate imply zero risk. Let's see, everyone since the beginning of time has paid their loans off. The logic just isn't there.
"The stock market rally is as phony as it gets. It is the last game in town"
Only if you consider the smartphone, tablet computer, Big Data, the Cloud, mobility, SaaS, the shale energy revolution, the Internet of things, 3D printing, quantum computers, genetic/precision medicine, etc.....which have transformed all people and businesses to new efficiencies, knowledge and entertainment......made possible so fast by low interest rates and Wall Street creativity now better regulated......phony. And a stock like HPQ with a PE of 7.5 and high dividend, ridiculously over valued. Other than some stocks, most carry an average of about a PE of 19, far less than typical bubble highs.
The only real risk is if the wrong person becomes our next president.
Jim, O/T (sort of) - my blogcolleague James Higham will have written to you to invite you to join our network "Martin Scriblerus" - hope you will!
Hi Joseph
I didn't look up the stock, but "a stock like HPQ with a PE of 7.5 and high dividend, ridiculously over valued." I think you meant undervalued.
I'm use to PE's ranging from 3 to 13. The stock market is what I refer to as the last game in play right now. The bond market is dead as is the builders market in real estate.
What you have to notice is that your investments have only one field to play in, the others are closed because of poor returns.
When we define a bubble, it is the misallocation of assets, that define it. We are forced to invest in what is not productive, but something that produces great returns. At some point, the benefits drops out of the equation and you have a very big loss because of no demand.
The stocks traded in the market are not linked to the corporation they represent. After the IPO, you are trading stocks between buyers, not the company. It's only worth what the seller wants to get it for.
So if IBM is doing great, it doesn't mean a damn thing. If the stock is going up, people want to buy it. It has nothing to do with the company itself.
This could end very poorly. You have been forewarned.
Jim,
Please answer this, do we not buy auto insurance for a possible disaster but still drive?
Point being, whether things are real or fake, is not the point, navigating through the risks of life is what matters or else, you become stale.
Lets say the "truth" is finally revealed in 2050, does that matter if you and I are dead?
Not for me...I prepare fpr the big one, be it a 8.0 earthquake or financial disaster, but I don't make it the focus and deciding factor of my life.
And I often think, well, I'm prepared but what happens when the shit hits the fan and your 100 relatives that are not prepared show up to your door? will i be able to shoot them away?
What happens when a stranger whom is a crying toddler finds his/her way to your gate, you got plenty of ammo and security measures, but what will you do?
I don't think any one of us really understands the implications of a total collapse, what will happen if shit truly hits the fans...
Now, that is very different than making a 1,000-10,000% on your precious metal investments...money is only good when you can use it. If you are dead or everything else around you is, what good is wealth preservation...
There are for sure systemic problems in our global financial system, no doubt, but I'm not going to hunker own and wait for them. I'll prepare for it, knowing full well, have no idea fr what I'm preparing for, and then spend the rest of my days enjoying the beautiful days God gives me.
God bless and good luck,
SHH
So if IBM is doing great, it doesn't mean a damn thing. If the stock is going up, people want to buy it. It has nothing to do with the company itself.****
That's why I only buy when bad news on stocks of great companies, which pay good growing cash dividends, and diversify in stocks and other kinds of investments, managing them all. Thank goodness there are people like you. That's how I make money. If there is a crash, I just buy more.
are you talking to yourself again joseph? who said anyone give is a damn about what you do, do your thing and god bless you.
and thank goodness there are people like you bc it means more beautiful women for people like me, keep typing away in your mom's basement, your imaginary gains will surely continue.
put up or shut up, what are you buying currently and what is your investment time frame? don't speak in generalities, be specific1
SHH
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