American Economics Thread


Gatekeeper

Captain
Registered Member
Intriguing; can i get a source i can read further into this? Seems like a very dishonest tactic that would have most sovereign natures in an uproar.
Lol. But it's not dishonest if both parties agrees! Now I empathise BOTH parties. But of course, it's an underhanded way of getting rid of your debts by...... printing paper $ to pay for it! It reduces the debt ratio, and therefore enables The US to borrow more by issuing more T-bills!

The other party shouldn't agree to this as there are no benefit to them. But I guess there will be some inducement for them to agree.

This is akin to companies wishing to reduce their debt ratio by offering share instead. As shares are "never" redeemed. Where as corporate bonds have to be repay when due!

The sooner the $ is not the world's reserve currency the better.
 

Hexon

Just Hatched
Registered Member
Lol. But it's not dishonest if both parties agrees! Now I empathise BOTH parties. But of course, it's an underhanded way of getting rid of your debts by...... printing paper $ to pay for it! It reduces the debt ratio, and therefore enables The US to borrow more by issuing more T-bills!

The other party shouldn't agree to this as there are no benefit to them. But I guess there will be some inducement for them to agree.

This is akin to companies wishing to reduce their debt ratio by offering share instead. As shares are "never" redeemed. Where as corporate bonds have to be repay when due!

The sooner the $ is not the world's reserve currency the better.
Seems like Washington would be twisting the screws on its 'allies' to accept these worthless pieces of paper, effectively treating them as vassal states to promote and enrich the imperial core.
China should be cashing in on its Treasuries into more concrete assets which i believe it has been doing since the 08 GFC.
 

Franklin

Captain
USD Petrol dollar and Reserve currency status is unlike to change in the foreseeable future short of some calamitous misstep by Trump, like the US trying to default on China.

Everyone is currently too invested in the current system to change without being forced to do so.

However, what is now clear is that the American economy is ridiculously ill balanced, with the economic benefits overwhelmingly being monopolised by the few in the good and bad times alike, while any pain is outsourced almost exclusively to the rest of society.

It is truly incredible that America can spend such eye watering amounts of money on stimulus and rescue packages and yet still leave the vast majority of American workers with little to no assistance to deal with this pandemic.

As such, I think now the true threat to the American economy and status in the world is now internal rather than external.

How long can the elite keep the masses cowed and distracted while they are being given such raw deals, that are only getting worse was time goes?

In the golden age of American capitalism, the excesses of the few are lauded and celebrated as exemplars of success. The so-called American dream is that you too might have all that ridiculous wealth if Lady Luck smile on your big idea. And that did work, with many garage start-ups leading the way of American technological dominance.

The problem is the elite started to use their power and influence to change the rules in their and their children’s favour.

That has always been the greatest challenge of any society - whether prosperity and advancement brought about by meritocracy can survive the passing of the torch between generations.

It is perfectly understandable for parents to want to give their offspring every advantage to succeed in life, so it’s only natural that the rich and powerful would seek to change the rules of the game to tip the odds as much in favour of their children as possible.

One of the primary responsibilities of government should be to act as gatekeepers and referees to stop them going too far. And that is where America has gone wrong.

Private ownership of the media has by the mega-rich have turned what was supposed to be an impartial protector of the collectively greater good into a political tool of the elite to influence government.

Private ownership of the media has also helped to spawn and nurture another evil of the corruption of academia and the erosion of the public trust in science. If you are mega rich and don’t like the facts, simply pay a no-morals academic to write a total farce of a piece to promote unproven theories and/or attack real scientific facts you don’t like, get your privately owned media to give these extreme fringe players a disproportionately high coverage and undisputed scientific fact suddenly becomes personal opinions and beliefs.

In addition, America’s ludicrously rich political system is the perfect breeding ground for corruption. Cash for favours is effectively legalised and normalised so long as the cash was being paid to election campaigns rather than personal bank accounts, and everyone say the right magical legal words. But for all intents and purposes, the distinction is largely academic.

And this is how we got to where we are today, with the trillions spent overwhelmingly swallowed up by corporations who don’t really need it, which will ultimately end up lining very few, already extremely rich pockets; while ordinary workers see only a token amount and are left to fend for themselves and take the lion share of the economic pain.

That in turn explains the eye watering economic loss figures.

It is pretty clear to any real economist that trickle down economics is a sham created by the rich to benefit themselves. It is literally the masses fighting for the crumbs that falls from the high tables of the elite.

What really boost economic growth is redistributed wealth to the most needy.

Just think about it, if you give a millionaire an extra £10k a month, that isn’t going to mean anything to him to cause him to meaningfully change his existing spending habits. He will most likely just put that money into stocks and shares, or property. That might make GDP figures look nicer, but doesn’t do jack for the real economy.

OTOH, if you give 10 people who are living on the poverty line £1k each a month instead, that will drastically change their spending habits, and they will likely spend the overwhelming majority of that on goods and services, which will carry a multiplier effect and boost the real economy by far more than the £10k you originally put in.

Aside from the humanitarian benefit, it makes economic sense. And it is what the entire World other than America has been doing to help their populations handle the pandemic and necessary lock downs.

Conversely, this utter lack of any real support for ordinary people is why we are seeing so much resistance in America to having a meaningful lock down. Unsurprisingly, this plays right into the hands of the mega rich, who already live in effectively different worlds to the general public, and who can easily protect themselves from even the worst full blown outbreak, but who are inconvenienced by lockdowns.

There seems to be a clear and accelerating escalation trend in the excesses of the elites, the more they get away with, the more they push the boundaries of what they can get away with.

Eventually they will reach the limit of how much ordinary people can suspend reality, and once a tipping point is reached where enough of the population wakes up to just how raw a deal they are getting, and realise that all the safeguards that were supposed to protect them have been perverted into means to deceive and control them, the people will demand a new deal. That is how all the apex powers in world history started their decline. Small and medium powers are conquered, the top empires start their fall when they rot from within first.

A key reason why western elites hates China so much is because China not only represents a potential future threat as the only likely power to surpass the west in overall raw power; it is also a clear and present threat to the careful crafted illusion of the western elite that the western model is the best one possible. China is living proof of the viability of an alternative where ordinary people actually get the lion share of the fruits of economic prosperity. That is an existential threat to the way of life of the western elite, and it is a key reason why the privately owned western MSM is so overwhelmingly and uniformly anti-China.
The threat to US pre-eminence has always come from within. Most powerful nations throughout history didn't crumble because of external compitition but rather internal decay. America today is no different.

You can't create wealth through handouts. But rather you need to have savings in the economy that enable's productive investments which helps to increase incomes and the living standards of the people. The problem in the US is that they have policies in place for decades now that favours consumption and speculation and discourage savings. Those policies have created massive amounts of debts, distorted markets, sky high and overvalued asset prices. There is no easy way out for the US. At this point they only have one of two choices. They can either liquidate or inflate. If they liquidate that means they will let the chips fall where they may in the economy resulting in the short run for massive bankruptcies and mass unemployment. But it also means that all the excesses will be cleared out of the economy. That then will become a solid basis for future growth and prosperity. On the other hand if they inflate it will in the short run help to ease alot of the pain of the current crisis but will burden the economy in the future with even more distortions and debt. That will in turn prevent real productive growth and wealth creation. It seems that the Americans for now has chosen to inflate and that means the future is going to look very bleak for them.
 

hullopilllw

Junior Member
Registered Member
Intriguing; can i get a source i can read further into this? Seems like a very dishonest tactic that would have most sovereign natures in an uproar.
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The Federal Reserve has taken a new step to meet the global demand for dollars, setting up a facility that would allow central banks and international monetary authorities to enter into repurchase agreements with the US central bank and trade US Treasuries for dollars. The Fed said the new facility would work in tandem with the dollar swap lines already established by the central bank with its peers across 14 different countries as the coronavirus pandemic has spread across the world.
It wont be met with uproar, because it helps to stabilise the macro econs of developing nations when there is a mad rush to sell off their local currency for USD dollars. On the front, US appears to be helping them by providing much needed immediate liquidity. But on the long term, it means that US economy is essentially living and benefitting off debt while the expense is paid for by these developing nations in forms of domestic inflation, capital flight and depreciating currency.
 
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hullopilllw

Junior Member
Registered Member
Lol. But it's not dishonest if both parties agrees! Now I empathise BOTH parties. But of course, it's an underhanded way of getting rid of your debts by...... printing paper $ to pay for it! It reduces the debt ratio, and therefore enables The US to borrow more by issuing more T-bills!

The other party shouldn't agree to this as there are no benefit to them. But I guess there will be some inducement for them to agree.

This is akin to companies wishing to reduce their debt ratio by offering share instead. As shares are "never" redeemed. Where as corporate bonds have to be repay when due!

The sooner the $ is not the world's reserve currency the better.
US has been doing that all along for decades, what I want to mention is the attempt by US Treasury to one up the game limit that set a nation's debt against its own GDP into one that allow her to print against the value of the world GDP by subtly changing the nature of T Bond.
 

hullopilllw

Junior Member
Registered Member
Imagine if US decide to declare that nations can US T-Bonds holdings as cross border settlements. Most export-depending nations, which usually hoard huge amount of T-Bonds to hedge for competitive currency, won't hate that idea since it allow them to utilise T-Bonds as payment directly instead of being merely an investment. But what does that means ? An absolute upgrade of dollar hegemony.
 

Rettam Stacf

Junior Member
Registered Member
Imagine if US decide to declare that nations can US T-Bonds holdings as cross border settlements. Most export-depending nations, which usually hoard huge amount of T-Bonds to hedge for competitive currency, won't hate that idea since it allow them to utilise T-Bonds as payment directly instead of being merely an investment. But what does that means ? An absolute upgrade of dollar hegemony.
US version of digital sovereign currency ?
 

Gatekeeper

Captain
Registered Member
The threat to US pre-eminence has always come from within. Most powerful nations throughout history didn't crumble because of external compitition but rather internal decay. America today is no different.

You can't create wealth through handouts. But rather you need to have savings in the economy that enable's productive investments which helps to increase incomes and the living standards of the people. The problem in the US is that they have policies in place for decades now that favours consumption and speculation and discourage savings. Those policies have created massive amounts of debts, distorted markets, sky high and overvalued asset prices. There is no easy way out for the US. At this point they only have one of two choices. They can either liquidate or inflate. If they liquidate that means they will let the chips fall where they may in the economy resulting in the short run for massive bankruptcies and mass unemployment. But it also means that all the excesses will be cleared out of the economy. That then will become a solid basis for future growth and prosperity. On the other hand if they inflate it will in the short run help to ease alot of the pain of the current crisis but will burden the economy in the future with even more distortions and debt. That will in turn prevent real productive growth and wealth creation. It seems that the Americans for now has chosen to inflate and that means the future is going to look very bleak for them.
In a democratic system. Short term gain is always preferable to long term. After all you might not be the leader in the next five years, so why invest your efforts just to make the next guy look good?
 

2handedswordsman

Junior Member
Registered Member
lol, capitalism at its best and worst same time. Totally distorted and paranoid "economics". I wander when this black humour joke will end. I can't imagine the shockwave of this particular bubble
 

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