The Bankrupt United States of America

[Zeb_Carter]

How many year, months, weeks until we need a wheelbarrow full of dollars to buy a loaf of bread?

 

[Black13]

A global revolution will happen before it ever gets to that point. We are on the verge of a dramatic event in evolution, the world economy is just one signpost. There's the geometric increase in poplutation, and the decrease of resources available to supply it...
I dunno, but in nature, when there are too many deer and not enough wolves, the deer eat all the grass, die off, and become fodder for the sparse amount of wolves; the wolves then multiply and eat all the deer, giving the grass a chance to grow; now, there are too many wolves and not enough deer, so the wolves die off, giving the deer a chance to multiply, eating all the grass, etc. etc. All the while, things change in all 3 aspects of the fluctuation in an effort to accomplish a more harmonious symbiosis among them.
So let it be with man and the world. We're all about to turn animal for a while.

 

[trysail]

http://finance.yahoo.com/tech-ticke...ss-Says:-U.S.-Living-Standards-Doomed-to-Fall


“No Way Out” of Debt Trap, Gross Says:
U.S. Living Standards Doomed to Fall
Mar 08, 2011
by Stacy Curtin

In this [sic] U.S., states across the country face a collective $125 billion shortfall for fiscal 2012, while Congress is facing a budget gap nearly 10 times that size.

PIMCO founder and co-CIO Bill Gross has previously said that if the United States were a corporation, no one in their right mind would lend us money. For the last decade, we’ve been “relying on the kindness of strangers” to help cover our debts, he tells Aaron in the accompanying clip.

By “strangers” he is referring to our foreign counterparts, like China for example. Basically, for years Americans have spent their hard-earned dollars on less-expensive Chinese made goods. With great gratitude, China turned around and used all those dollars to buy up U.S. Treasuries and other dollar-denominated assets.

But now after years of reckless spending, America’s debt level is nearing a breaking point and can no longer rely on foreign capital as a last resort. “When a country reaches a certain debt level, confidence in that country’s ability to repay that debt becomes jeopardized,” says Gross, citing the work of Ken Rogoff and Carmen Reinhart in This Time Is Different.

The Way Forward...And Your Pocket Book
The budget crisis situation unfolding at the state and federal government level does not bode well for working men and women in this country. There are really only two choices, says Gross. And, neither favors your pocketbook:

Option #1 – Keep spending and do nothing
Option #2 – Balance our budgets by cutting entitlements​

House Republicans ran and won on a platform to cut $100 billion from the budget this year and last month managed to pass legislation that would strip $61 billion in spending.

But for President Obama and Congressional Democrats, those cuts go way too far at a time when the country is still struggling to recover from the worst recession since the Great Depression. Goldman Sachs and Bill Gross agree and have warned that cutting too much could stifle growth.

Meanwhile, neither side as gotten serious about reforming entitlement programs like Social Security and Medicare, which account for more than a third of Uncle Sam's budget.

If the country cannot come to grips and cut back on entitlement programs, U.S. debt will continue to grow and governments around the world will loose faith in the U.S. dollar. Foreign goods would become more expensive, says Gross, while our standard of living would drop.

Under the second option, if entitlement programs are cut, many Americans would naturally have to learn to live on less and take a hit to their standard of living.

“There is really no way out of this trap and this conundrum at this point,” says Gross. From an investment perspective his advice is to stay clear of “bonds in dollar denominated terms” and to be “wary of higher interest rates going forward.”


more...
http://finance.yahoo.com/tech-ticke...ss-Says:-U.S.-Living-Standards-Doomed-to-Fall

 

[JackLuis]

Hard to balance a budget when you're paying the Taliban to shoot at our own troops.

Let the Afghans fix their own problems.

 

[trysail]

The following was sent to me by e-mail:



U.S. may soon hit debt walls
by Scott S. Powell
The Philadelphia Inquirer
March 6, 2011

Nobody wants to say it, but a major reason corporations are not creating many jobs and expanding in the United States is the increasing systemic risk being created by Washington.

The United States is supposedly in economic recovery, yet President Obama projects a record $1.6 trillion deficit for 2011 — with years more trillion-dollar annual deficits and escalating debt ahead. Government debt is growing by $120 billion a month, three times faster than the $40 billion monthly increase in GDP. What is going on?

The real issue is not the U.S. government’s debt ceiling to accommodate ongoing deficit spending, but rather the wall that we are about to hit: foreign governments balking at financing U.S. debt except at significantly higher yields to offset the inflationary impact of the dollar’s declining value.

Recently, officials from China, Brazil, and other countries blamed high food and raw-materials prices on Washington — charging it with exporting inflation by degrading its currency through quantitative easing. No surprise here, as most commodities are traded in dollars. The Wall Street Journal notes that some economists blame dollar weakness induced by Fed policy for contributing as much as 50 percent of the price inflation in commodities such as corn, sugar, wheat, coffee, cotton, rubber, the metals, and oil.

This year Charles Plosser, the president of Philadelphia’s Federal Reserve Bank, has a vote on Ben Bernanke’s Federal Open Market Committee. In a recent interview, Plosser revealed he opposes his boss’ policy of quantitative easing, saying that “the costs outweighed the benefits” and that price stability has “got to be job one” at the Fed. There is, however, another issue for the Fed to worry about.

Another looming debt wall is the one from declining credit quality. An unsettling report, “Evolution of Moody’s Perspective on the U.S. Aaa Rating,” received little attention when released Jan. 27 in the midst of upheaval in the Middle East. But, coming on the heels of a similar warning from Standard & Poor’s, it has serious implications.

Moody’s states that “recent trends in and the outlook for government financial metrics in particular indicate that the level of risk, while still small, is rising and likely to continue to rise in the next several years.” It continues, “The time frame … appears to be shortening, and the probability of assigning a negative outlook in the coming two years is rising.”

Moody’s infers that accelerating government spending since the financial crisis of 2008-09 is the reason for shortening the time horizon for the negative credit watch revision. That debt is growing more than four times faster than revenue in the United States should be alarming by itself.

But the Moody’s report goes further, comparing the United States to other triple-A rated countries. It turns out that the United States is the outlier, with three times more growth in debt to revenue than the triple-A median, and more than twice that of Germany, France, the United Kingdom, and Canada, all of which have undertaken austerity measures. In addition, the combined federal and state debt in the United States is approaching the tipping point of 100 percent of GDP — considerably worse than any of the Triple-A-rated European social welfare states.

The U.S. government has enjoyed unlimited access to financing because of its role in having the reserve currency and being the safe haven in global financial markets. Thus, the U.S. Treasury bond has been the risk-free benchmark. But if the credit-rating outlook on U.S. sovereign debt turns negative, the dollar will risk losing its status as the world’s reserve currency because its associated government debt could no longer be considered risk free. Demand for dollars would decline precipitously and cause further devaluation.

The important take-away here is the imperative of reducing systemic risk by tying the debt ceiling to deficit reduction. Longer term, the debt ceiling should be capped at a percentage of GDP.

Without telegraphing the will to radically cut spending, the United States will hit a Greek wall of deficit finance and liquidity problems. If that becomes headline news it is already too late. History reminds us that such crises happen faster than most anticipate and almost always before the ratings agencies take action.
________________________________

Scott S. Powell is a visiting fellow at Stanford University’s Hoover Institution, a partner at RemingtonRand, and a former debt portfolio manager.

 

[Pure]

ho hum,

this chicken little stuff is kinda boring.

quoted by Curtain PIMCO founder and co-CIO Bill Gross has previously said that if the United States were a corporation, no one in their right mind would lend us money. For the last decade, we’ve been “relying on the kindness of strangers” to help cover our debts, he tells Aaron in the accompanying clip.
=========

US is not a family or a corporation. nor are Weimar days upon us.

if you look at statistics comparing Debt to GDP, or external debt to GDP,

http://en.wikipedia.org/wiki/Debt-to-GDP_ratio

http://en.wikipedia.org/wiki/List_of_countries_by_external_debt

you see that the US is not worse off than several other stable countries. in the first site, graph shows US ratio is about the same as Germany's.

----

i would think you're all hysterical, but i infer you're mostly in the habit of voting Republican, and likely have a Ronald Reagan bust on your mantle. and somehow, when he was running the national debt through the roof, there was nary a word from the likes of you. and the same for GWB, to a lesser degree. your 'debt' anxiety is at the best, partisan, and at the worst, sham.

==
As to mr powell:

In addition, the combined federal and state debt in the United States is approaching the tipping point of 100 percent of GDP — considerably worse than any of the Triple-A-rated European social welfare states.

there is no such 'tipping' point, as the nations who go over, show. and it's just false, for many measures--see the graphs referenced-- that the US is worse off than the healthier w. european social democracies.

 

[Pure]

note to Jack

JackHard to balance a budget when you're paying the Taliban to shoot at our own troops.

ditto the iraqis. and did you EVER hear one of these 'budget balancer' types object to the iraq war, costing billions per month?

did you EVER hear one of them say. "we could reduce military spending by [even] 1%"?

in practice, they're budget busters and borrowers, just like their hero, RR.

 

[Pure]

a note of sanity.

Barry Eichengreen is a respected US economist.


http://www.spiegel.de/international/world/0,1518,748239,00.html

[...]
SPIEGEL: US debt is currently at 90 percent of GDP, which is slightly above the European average...

Eichengreen: …which unfortunately is not the case when it comes to federal tax revenues in the US. Whereas European governments receive taxes equating to 40 percent of GDP, the figure is just 19 percent in the US. This means that, without raising taxes, we will not be in a position to balance our budget and pay back debts with interest. But because you can't talk about raising taxes in this country, the US will gamble away investors' trust.

SPIEGEL: Is there any desire in US political circles to do something about this problem? Just last December, President Barack Obama extended the Bush administration's tax cuts to 2012, even though tax cuts for the super-rich do nothing to stimulate the economy.


Eichengreen: You've answered your own question. This tax stimulus is very ineffective because it tears another hole in the budget and rich people are not inclined to spend the money that they save with the cuts. But the government has to find a way to boost the US economy -- to lower unemployment, which is at 9 percent, if nothing else. Equally important would be a clear statement from Obama and Congress about how they plan to tackle the debt problem in the medium-term. But instead of doing that, the administration and Congress have just pushed the problem further into the future -- foolishly to 2012, of all years. Believe me, it will be impossible to talk about this problem

[...]
for the complete interview, see the url, above.

 

[trysail]

Key words: UNFUNDED LIABILITIES








Let's take a look at the U.S. national debt outstanding and its UNFUNDED LIABILITIES as of 1 December, 2010 reported by http://www.usdebtclock.org. At the moment, the total stands at a stunning $125,785,600,400,000 ( for U.S. based innumerates, that's ONE HUNDRED TWENTY-FIVE TRILLION SEVEN HUNDRED EIGHTY-FIVE BILLION SIX HUNDRED MILLION FOUR HUNDRED THOUSAND DOLLARS ) or $411,064 per person or $1,010,100 per taxpayer.




U.S. Debt Clock:
http://www.usdebtclock.org/

 

[Pure]

the sky is falling

Key words:

fictions; scaremongering; corporate agenda.

http://www.eurekalert.org/pub_releases/2009-04/uoia-la040109.php
Public release date: 1-Apr-2009


Contact: Jan Dennis

'Unfunded liabilities' a financial myth, expert says

CHAMPAIGN, Ill. — A growing chorus of complaints about the U.S. government's "unfunded" debts may be unsettling, but no cause to become unnerved, a University of Illinois tax expert says.

Law professor Richard L. Kaplan contends the notion of "unfunded liabilities" is merely an ominous new catchphrase coined during debates over massive spending programs such as Social Security and Medicare that is rooted in financial fallacy.
"The only possible meaning of 'unfunded liability' is in contrast to a 'funded liability,' which presumably is more financially secure and apparently morally superior as well," said Kaplan, an authority on tax law and government entitlement programs. [...]


"Consequently, an 'unfunded liability' by the government to make good on some financial commitment in the future is functionally no different than a 'funded liability' that consists of the only dependable asset around – namely U.S. Treasury obligations," Kaplan said.

He suggests retiring the archaic phrase, saying it "implies an alternate state of fiscal adequacy that really does not exist at all."

"Recent events have shown that whether we are talking about stock in General Motors or Citicorp, money market mutual funds, or even bank deposits, it is the federal government that ultimately stands behind these 'assets,' " Kaplan said.

====
see also,
http://www.angrybearblog.com/2009/02/social-security-has-no-unfunded.html

 

[gothic_nymph]

How many year, months, weeks until we need a wheelbarrow full of dollars to buy a loaf of bread?

My Grandmother always said that time would come.. The time when you had to carry your money in a wheelbarrow in order to buy anything. Scary to think she was right when we laughed at her!

 

[trysail]

...'Unfunded liabilities' a financial myth, expert says...

ROTFLMFAO.


"unfunded liabilities' a financial myth, expert says..." Try that one out on your creditors! That is priceless; I'd say that particular "expert" pretty much violates the definition of the word expert.


Yessir, a promissory note is a myth! Pension liabilities are a myth. Healthcare expenditures are just a figment of the imagination. You've rewritten economics and thus deserve a Nobel Prize.


_____________________
August 8, 2009
Warren Buffett wrote an op-ed piece in the New York Times earlier this week. Leaving huge monetary and fiscal expansion in place for too long is a recipe for economic disaster. Mr. Buffett did the math in a very simple and understandable way. This year we face a $1.8 trillion deficit. Just so you understand what a trillion means, a trillion is one million times one million. How does a millionaire become a trillionaire? He has to earn one million dollars a million times. If you could earn $1 million every single day of your life, you would reach $1 trillion in just under 2,740 years. This fiscal year alone, our government will spend $1.8 trillion more than it takes in and it will have to borrow (and in theory pay back) every one of those dollars. That is a big number.

Mr. Buffett tries to explain how this is all going to happen. In round numbers, our trade deficit will push $400-500 billion overseas that will return in the form of Treasury bond purchases. Americans are starting to save more as well. They might buy a similar amount of bonds. Add the two and you are roughly halfway there. What about the rest? The Fed prints it. We all know what that means in the long run. It means inflation. Printing more money quite obviously dilutes the value of the dollar. President Obama says he will cut the deficit in half during his first term. If he accomplishes that and brings the deficit down to a mere $900 billion he might be able to allow the Fed to turn off the printing presses if the total of our trade deficit and net American savings stays in the $900 billion range. That is a lot of ifs.

 

[Pure]

note to try

Originally Posted by Pure View Post
...'Unfunded liabilities' a financial myth, expert says...
ROTFLMFAO.


try"unfunded liabilities' a financial myth, expert says..." Try that one out on your creditors! That is priceless; I'd say that particular "expert" pretty much violates the definition of the word expert.


Yessir, a promissory note is a myth! Pension liabilities are a myth. Healthcare expenditures are just a figment of the imagination. You've rewritten economics and thus deserve a Nobel Prize.


===

i see you only read the headline. the gist of the article is that 'unfunded liabilities' makes one think there's a better kind around that the US could and should be having. in the last analysis, such a distinction, says Prof Kaplan, is a myth.

PS again you imply that the US gov, with its financial set up and capabilities, is basically the same as the economy of a household. it must greatly puzzle you that the US ran a deficit of over 200 billion per year, throughout the "aughts", and since the recession it's been over a trillion, three years running. not much like your household, is it? of course households can't issue bonds or print money, but little differences like that don't matter.

 

[Zeb_Carter]

Originally Posted by Pure View Post
...'Unfunded liabilities' a financial myth, expert says...
ROTFLMFAO.


try"unfunded liabilities' a financial myth, expert says..." Try that one out on your creditors! That is priceless; I'd say that particular "expert" pretty much violates the definition of the word expert.


Yessir, a promissory note is a myth! Pension liabilities are a myth. Healthcare expenditures are just a figment of the imagination. You've rewritten economics and thus deserve a Nobel Prize.


===

i see you only read the headline. the gist of the article is that 'unfunded liabilities' makes one think there's a better kind around that the US could and should be having. in the last analysis, such a distinction, says Prof Kaplan, is a myth.

PS again you imply that the US gov, with its financial set up and capabilities, is basically the same as the economy of a household. it must greatly puzzle you that the US ran a deficit of over 200 billion per year, throughout the "aughts", and since the recession it's been over a trillion, three years running. not much like your household, is it? of course households can't issue bonds or print money, but little differences like that don't matter.

Hmmm....

So what you're saying is that my mortgage, credit card balances and auto loan aren't the same as the government deficit?

Or are you saying they are the same and I don't have to worry about paying them off?

Please let me know as quick as you can so I can just write them off.

 

[LJ_Reloaded]

My Grandmother always said that time would come.. The time when you had to carry your money in a wheelbarrow in order to buy anything. Scary to think she was right when we laughed at her!

Zeb Carter is an idiot.

The only way you'll need a wheelbarrow of money to buy food in America is if there is a shortage of food.

If you believe I am wrong and Zeb Carter is not an idiot and you believe that hyperinflation will happen then you, right now, already have an apple tree and have made friends with local farmers.

If you have not done these things then you know Zeb Carter doesn't know what the HELL he is babbling about.

 

[Zeb_Carter]

Zeb Carter is an idiot.

The only way you'll need a wheelbarrow of money to buy food in America is if there is a shortage of food.

If you believe I am wrong and Zeb Carter is not an idiot and you believe that hyperinflation will happen then you, right now, already have an apple tree and have made friends with local farmers.

If you have not done these things then you know Zeb Carter doesn't know what the HELL he is babbling about.

And RJ is a 35 year old loser who lives in his mother basement beating his meat to internet porn and wondering why he has no life and such a small dick.

 

[JustaSCOUNDREL]

Trysail, a question for you. I think most of us know the recent spike in oil prices is due to fear and a lot of speculation. I happened to hear Jim Cramer on TV today saying the feds should sell some of the Strategic Petroleum Reserve. He thinks doing so would panic the speculators and drive the price of oil back to a normal level.

The SPR holds about 720 million bbl of oil. Mostly bought, I assume, at $70-80 per or less. So selling at today's prices would not only force the price down but would make a few $ in profit. Then we could refill the SPR at a lower price.

Trysail, I am curious what your thoughts are on his proposal and how much they might have to sell?

Thanks

Mike C.

 

[trysail]

Trysail, a question for you. I think most of us know the recent spike in oil prices is due to fear and a lot of speculation. I happened to hear Jim Cramer on TV today saying the feds should sell some of the Strategic Petroleum Reserve. He thinks doing so would panic the speculators and drive the price of oil back to a normal level.

The SPR holds about 720 million bbl of oil. Mostly bought, I assume, at $70-80 per or less. So selling at today's prices would not only force the price down but would make a few $ in profit. Then we could refill the SPR at a lower price.

Trysail, I am curious what your thoughts are on his proposal and how much they might have to sell?

Thanks

Mike C.

First off, one of the things I've learned over too many years of watching is that neither I nor anybody else has any ability to repeatedly and accurately predict the short run direction of the stock market, interest rates, earnings or petroleum prices. When you hear somebody do it, there is only one thing you can be assured of: you are listening to a crook or a fool.


I don't think it's wise to tap the SPR for any reason other than a true national emergency. For example— the world has an economic jugular vein; it is located at the Ras Tanura export pipeline manifold in Saudi Arabia. If the bad guys should ever ____ ____, the world would be a hurtin' place and the SPR would be a real lifesaver for the U.S.


It's very easy to "outsmart yourself" and I am leery of the ability of any committee to reach decisions and execute deft trading manuevers. The U.S. government is, of course, one of the world's largest committees and you can just imagine the second-guessing, outrage and backbiting that would occur should the U.S. manage to "sell low and buy high."


The idea of attempting to use the SPR to manipulate the short run course of petroleum prices is a little too "cutesy" for my taste. As much as the world curses speculators, they do serve a purpose and they don't always win. You don't hear about it when they take one on the chin ( people don't tend to brag about their losses ).


I don't listen to Cramer or his ilk. As far as I'm concerned, he and his media brethren are mainly noisemakers.


The world now consumes something on the order of 89-90 million barrels of petroleum a day. U.S. consumption is ~20 million BOPD with ~9 million produced domestically. Our imports come from a variety of countries.





ETA:


http://noir.bloomberg.com/apps/news?pid=20601110&sid=aALBBIn16vEg


Oil at $100 Kills Brain Cells, Impairs Thinking
by Caroline Baum

March 11 (Bloomberg) -- It must be the noxious fumes or the stratospheric prices because crude oil crossing the $100 threshold makes normally thoughtful individuals funny in the head.

The early symptoms of high oil price syndrome, or HOPS, can easily be masked or confused with a more generalized form of lazy economic thinking.

For example, those afflicted with HOPS start making assertions that higher oil prices are inflationary, as if relative price changes can morph into an economy-wide rise in prices without help from the central bank...


more...
http://noir.bloomberg.com/apps/news?pid=20601110&sid=aALBBIn16vEg

 

[Zeb_Carter]

Guess I better go buy that wheelbarrow now.

 

[JustaSCOUNDREL]

Trysail I generally agree with you. No I am not a fan of Cramer, not at all. I was thinking if the U.S. suddenly dumped 25% of the SPR on the market 180 million bbl might cause cause some panic in within the speculator market. Your figures changed my mind a lousy 3 day supply influx would just be a minor blip with almost no consequences.

The only thing in your post I disagree with is the Bloomberg article. Right now the local price of gas is $3.45 well ahead of the driving season. In my own opinion the price of oil and gas will remain high until after the summer season.

I believe people will drive less and spend less to compensate for the high price of getting to work and even going to the store. Fuel for the farmers, truckers, trains, food mfg.s and the working stiffs will cost more. Most retail stores have already absorbed about as much of cost increases as they can. Thus the cost of everything will go up.

As to Ms Baum who wrote the article she is full of crap!!! Inflation affects the consumer no matter what the Fed says. As you well know the Fed and the BLS takes the inflation in food and energy out of the equation because they are too volatile and would skew the numbers from what they want them to be.

The Fed says inflation has been basically zero for the last 2 years. Today I went to shopping. I paid $1.71 a dozen for eggs on sale. 2 years ago I was paying 99 cents a doz. on sale. No inflation my ass.

You Sir know as well as I do when prices increase the consumer cuts back on spending. No mater whether it is gas, food or anything else. Since consumer spending is a large of our economy when spending goes down the economy goes down. So yes, when the price of oil goes up the economy goes down.

So what did I buy today at the grocery? Mostly stuff on sale. Rice, dry beans, some canned things, hominy and enchilada sauce for posole. I have some pork in the freezer. a pound of smoked sausage on sale. milk on sale $1.74 2 years ago it cost $1.29. Some generic sodas for the kids at 87 cents for 2 liters. Yeah I know we could do Cool Aid cheaper but when I got them they were addicted. Over a hell of a lot less then normal and in the end I saved 16% and my savings usually run 20-25% off list.

I will soon be cutting back on my cable TV and maybe my land line telephone. There will be higher thermostat settings this summer.

There will be further cuts I will be looking hard at everything. I will be shopping in the dollar stores and there will be a lot less discretionary spending.

All this is not just because of the spike in oil prices but because of the economy in general.

Sorry about the rant but your post of Ms Baum's article really pissed me off. Those Ivory Tower living intellectuals Do not have a clue how we in "fly over country" live or what we have to do to live.

To end this I want to say one of my favorite sayings is:

Remember the 7 P's of Life. Proper, Prior, Planning, Prevents, Piss, Poor, Performance.

I failed to properly implement the 7P's. My fault and no one else.

Any way have a good day Sir.

 

[trysail]

Trysail I generally agree with you. No I am not a fan of Cramer, not at all. I was thinking if the U.S. suddenly dumped 25% of the SPR on the market 180 million bbl might cause cause some panic in within the speculator market. Your figures changed my mind a lousy 3 day supply influx would just be a minor blip with almost no consequences.

The only thing in your post I disagree with is the Bloomberg article. Right now the local price of gas is $3.45 well ahead of the driving season. In my own opinion the price of oil and gas will remain high until after the summer season.

I believe people will drive less and spend less to compensate for the high price of getting to work and even going to the store. Fuel for the farmers, truckers, trains, food mfg.s and the working stiffs will cost more. Most retail stores have already absorbed about as much of cost increases as they can. Thus the cost of everything will go up.

As to Ms Baum who wrote the article she is full of crap!!! Inflation affects the consumer no matter what the Fed says. As you well know the Fed and the BLS takes the inflation in food and energy out of the equation because they are too volatile and would skew the numbers from what they want them to be.

The Fed says inflation has been basically zero for the last 2 years. Today I went to shopping. I paid $1.71 a dozen for eggs on sale. 2 years ago I was paying 99 cents a doz. on sale. No inflation my ass.

You Sir know as well as I do when prices increase the consumer cuts back on spending. No mater whether it is gas, food or anything else. Since consumer spending is a large of our economy when spending goes down the economy goes down. So yes, when the price of oil goes up the economy goes down.

So what did I buy today at the grocery? Mostly stuff on sale. Rice, dry beans, some canned things, hominy and enchilada sauce for posole. I have some pork in the freezer. a pound of smoked sausage on sale. milk on sale $1.74 2 years ago it cost $1.29. Some generic sodas for the kids at 87 cents for 2 liters. Yeah I know we could do Cool Aid cheaper but when I got them they were addicted. Over a hell of a lot less then normal and in the end I saved 16% and my savings usually run 20-25% off list.

I will soon be cutting back on my cable TV and maybe my land line telephone. There will be higher thermostat settings this summer.

There will be further cuts I will be looking hard at everything. I will be shopping in the dollar stores and there will be a lot less discretionary spending.

All this is not just because of the spike in oil prices but because of the economy in general.

Sorry about the rant but your post of Ms Baum's article really pissed me off. Those Ivory Tower living intellectuals Do not have a clue how we in "fly over country" live or what we have to do to live.

To end this I want to say one of my favorite sayings is:

Remember the 7 P's of Life. Proper, Prior, Planning, Prevents, Piss, Poor, Performance.

I failed to properly implement the 7P's. My fault and no one else.

Any way have a good day Sir.

It's difficult ( and probably impossible ) to explain what it's like to live through a period of high inflation to anyone who hasn't had the experience. It's also difficult— and probably impossible— to explain monetary economic theory in a post on Literotica. The equation MV=PT is something that anyone who seeks to understand inflation and its causes needs to understand.

The near 15% annual CPI inflation that the U.S. suffered in '79-'80 was brought about by the Federal Reserve's response to the oil shocks of the '70s. The Fed "printed money" and in doing so created inflation.

http://research.stlouisfed.org/fred2/graph/fredgraph.png?&chart_type=line&graph_id=30655&category_id=0&recession_bars=On&width=1000&height=600&bgcolor=%23B3CDE7&graph_bgcolor=%23FFFFFF&txtcolor=%23000000&ts=8&preserve_ratio=false&fo=ve&id=CPIAUCSL&transformation=pc1&scale=Left&range=Custom&cosd=1950-01-01&coed=2011-01-01&line_color=%230000FF&link_values=&mark_type=NONE&mw=4&line_style=Solid&lw=3&vintage_date=2011-03-11&revision_date=2011-03-11&mma=0&nd=&ost=&oet=&fml=a&fq=Monthly&fam=avg&fgst=lin​

The high inflation eventually caused high interest rates:

http://research.stlouisfed.org/fred2/graph/fredgraph.png?&chart_type=line&graph_id=30394&category_id=0&recession_bars=On&width=1000&height=600&bgcolor=%23B3CDE7&graph_bgcolor=%23FFFFFF&txtcolor=%23000000&ts=8&preserve_ratio=false&fo=ve&id=GS10&transformation=lin&scale=Left&range=Max&cosd=1953-04-01&coed=2011-02-01&line_color=%230000FF&link_values=&mark_type=NONE&mw=4&line_style=Solid&lw=3&vintage_date=2011-03-11&revision_date=2011-03-11&mma=0&nd=2001-03-01&ost=&oet=&fml=a&fq=Monthly&fam=avg&fgst=lin​

I agree with you that (1) Bernanke's Fed is understating current inflation and (2) their practice of disseminating and encouraging the use of the CPI excluding food and energy prices is ridiculous, absurd and preposterous. It's nonsense.


You and I both know there is no such thing as a free lunch ( "TANSTAAFL," thank you, Robert A. Heinlein ).


The politicians have overpromised and overspent for decades and the piper will eventually have to be paid. Fiscal and monetary profligacy has consequences— some of which are now confronting the U.S. You're a smart fellow; given a choice between fiscal and monetary austerity and "printing money" ( i.e., inflation ), which course do you expect politicians to choose?


Only followers of demagogic politicians and believers in perpetual motion machines believe it is possible to "have it both ways."

http://research.stlouisfed.org/fred2/graph/fredgraph.png?&chart_type=line&graph_id=31469&category_id=0&recession_bars=On&width=1000&height=600&bgcolor=%23B3CDE7&graph_bgcolor=%23FFFFFF&txtcolor=%23000000&ts=8&preserve_ratio=false&fo=ve&id=AMBSL&transformation=lin&scale=Left&range=Custom&cosd=1918-01-01&coed=2011-02-01&line_color=%23336600&link_values=&mark_type=NONE&mw=4&line_style=Solid&lw=3&vintage_date=2011-03-11&revision_date=2011-03-11&mma=0&nd=&ost=&oet=&fml=a&fq=Monthly&fam=avg&fgst=lin

http://farm2.static.flickr.com/1039/1477225848_d22d89d8c6_o.jpg

​

 

[trysail]

http://noir.bloomberg.com/apps/news?pid=20601110&sid=aLgG6z14Ou4c



[ emphasis supplied ]

Bill Gross Says Treasuries Have Little Value, Echoing Buffett
By Wes Goodman

March 31 (Bloomberg) -- Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., said Treasuries “have little value” because of the growing U.S. debt burden.

The U.S. has unrecorded debt of $75 trillion, or close to 500 percent of gross domestic product, counting what it owes on its bonds plus obligations for Social Security, Medicare and Medicaid, Gross said in his monthly investment outlook. The U.S. will experience inflation, currency devaluation and low-to- negative interest rates after accounting for consumer-price gains if it doesn’t reform its entitlement programs, he wrote.

Gross “has been selling Treasuries because they have little value within the context of a $75 trillion total debt burden,” he wrote in the report published on Newport Beach, California-based Pimco’s website. Congress "must make ‘debt’ a four-letter word."

The comment echoes Warren Buffett, the billionaire investor who recommended avoiding long-term fixed-income bets in U.S. dollars because its purchasing power will drop. Treasuries have handed investors a 0.1 percent loss this quarter, adding to a 2.7 percent decline in the final three months of 2010, based on Bank of America Merrill Lynch data.

President Barack Obama’s government has increased the U.S. publicly traded debt to a record $9.05 trillion, leading Gross to compare the nation to Greece, which had its credit ratings cut two steps by Standard and Poor’s on March 29.

“We are out-Greeking the Greeks,” he wrote.

Inflation Risk
Gross said in an interview March 11 that he eliminated government-related debt from his Total Return Fund because investors aren’t being adequately compensated for the risk of inflation.

Buffett has shortened the maturities of Omaha, Nebraska- based Berkshire Hathaway Inc.’s bond holdings as the Federal Reserve eased monetary policy to stimulate the economy, according to regulatory filings.

“I would recommend against buying long-term fixed-dollar investments,” Buffett, chairman and chief executive officer of Berkshire, said March 25 in New Delhi. “If you ask me if the U.S. dollar is going to hold its purchasing power fully at the level of 2011, 5 years, 10 years or 20 years from now, I would tell you it will not.”

The Fed said in November that it would pump $600 billion into the U.S. economy by purchasing Treasury securities to sustain the economic expansion...

more...

http://noir.bloomberg.com/apps/news?pid=20601110&sid=aLgG6z14Ou4c

Greeking

 

[trysail]

http://wattsupwiththat.files.wordpress.com/2011/04/2011-spending-trillion-cartoon.jpg​

 

[trysail]

http://online.wsj.com/article/SB10001424052748704050204576219073867182108.html


We've Become a Nation of Takers, Not Makers
More Americans work for the government than in manufacturing, farming, fishing, forestry, mining and utilities combined.

By Stephen Moore

If you want to understand better why so many states—from New York to Wisconsin to California—are teetering on the brink of bankruptcy, consider this depressing statistic: Today in America there are nearly twice as many people working for the government (22.5 million) than in all of manufacturing (11.5 million). This is an almost exact reversal of the situation in 1960, when there were 15 million workers in manufacturing and 8.7 million collecting a paycheck from the government.

It gets worse. More Americans work for the government than work in construction, farming, fishing, forestry, manufacturing, mining and utilities combined. We have moved decisively from a nation of makers to a nation of takers. Nearly half of the $2.2 trillion cost of state and local governments is the $1 trillion-a-year tab for pay and benefits of state and local employees. Is it any wonder that so many states and cities cannot pay their bills?

Every state in America today except for two—Indiana and Wisconsin—has more government workers on the payroll than people manufacturing industrial goods. Consider California, which has the highest budget deficit in the history of the states. The not-so Golden State now has an incredible 2.4 million government employees—twice as many as people at work in manufacturing. New Jersey has just under two-and-a-half as many government employees as manufacturers. Florida's ratio is more than 3 to 1. So is New York's.

Even Michigan, at one time the auto capital of the world, and Pennsylvania, once the steel capital, have more government bureaucrats than people making things. The leaders in government hiring are Wyoming and New Mexico, which have hired more than six government workers for every manufacturing worker.

Now it is certainly true that many states have not typically been home to traditional manufacturing operations. Iowa and Nebraska are farm states, for example. But in those states, there are at least five times more government workers than farmers. West Virginia is the mining capital of the world, yet it has at least three times more government workers than miners. New York is the financial capital of the world—at least for now. That sector employs roughly 670,000 New Yorkers. That's less than half of the state's 1.48 million government employees.

Don't expect a reversal of this trend anytime soon. Surveys of college graduates are finding that more and more of our top minds want to work for the government. Why? Because in recent years only government agencies have been hiring, and because the offer of near lifetime security is highly valued in these times of economic turbulence. When 23-year-olds aren't willing to take career risks, we have a real problem on our hands. Sadly, we could end up with a generation of Americans who want to work at the Department of Motor Vehicles...

more...
http://online.wsj.com/article/SB10001424052748704050204576219073867182108.html

 

[Stella_Omega]

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