Unfortunately the whole western world economy has been based on a 'ponzi' scheme. That is, to keep today's standard of living up, borrowing from tomorrow to spend today was made easier and easier. So, people that had 'things' that made them feel wealthy also had a debt that didn't make them feel equally poor because they had a belief that they would always be able to earn the money to pay off the debt.
The really stupid thing was that we collectively believed that this could go on for ever. Debt had been growing in excess of incomes for over 40 years! The logical end point of all this was to get people borrowing 100% of their future incomes for more than 10 years, and reducing interest rates to a point where it LOOKED possible to keep it all going. (Yes, I know most people don't owe that much debt PRIVATELY, but collectively that is about the situation worldwide!)
Unfortunately it has all come unstuck. Now, the limit to the fantasy 'endless pot of gold' has been found. And now the world has had to start to pay back all that debt. And consequently we are not buying things on credit any more, and can only afford necessary things rather than luxuries. But because we are all spending less now, only those people who are in jobs doing NECESSARY things (ie. not mobile dog washes and corporate massages) are needed in our economy. This means less and less people earning a living to pay off debt, and so less and less money being spent in the economy, so more and more unemployment......
If you do some research you will discover that the economic situation the world is in now is worse than at any time in recorded history. The debt problem is MUCH worse than the 1930's depression, or any other in history. Therefore the current depression will be MUCH worse as time goes on than most people have any idea of right now.
The standard of living in the world is going to drop like a stone for the next 5 years or more. You will see food riots in major cities and mass civil strife that could threaten the break-up of the US.
I am not kidding! This has happened in other countries all throughout history for much less than is coming on us now.
What SHOULD HAPPEN is that all that debt should be simply cancelled! Call an international 'jubilee' and simply wipe out all the debt. That could be done, but it most likely will not, because the people we collectively OWE the debt to - the mega-global-bankers, also own the military machine that will protect them and enforce their 'rights' to be paid back. (Why do you think that the world's governments are all going into huge debt to bail out BANKS!?) That means that slowly but surely most of the the world's population will be reduced to debtor-slave status, and the top .1% of the world will control 90% of the REAL wealth!
During this crisis, behind the scenes governments have been formulating plans to alter the laws on bankruptcy to prevent the debts people owe from being written off, but rather to be extended perpetually, potentially even from GENERATION TO GENERATION so that the creditors will effectively be PERMANENT FEUDAL LORDS over the vast majority of the population. It is starting with a 5 year term, but plans are already being laid for this to be extended.
Just read Genesis 48 and find out what the basis of Israel's slavery to Egypt was - for 400 YEARS! Even though they became (aparently) wealthy, their life was owed to Egypt as SLAVES because they had sold their land to the king during the famine. The same is happening today to the whole world. The new 'Egypt' is the world's banking cartels, and the new 'kings' are the world's elite mega-wealthy.
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Psa 2:1 Why do the nations plot, and why do their people make useless plans?
Mat 16:6
And Jesus said to them, Take heed, and beware the leaven (lies) of the Pharisees (law makers) and of the Sadducees (ruling classes).
I agree with most of that. The debt is out of control. When china calls in the debt, the US economy followed by the rest of the world's economies will collapse. We may all end up struggling to survive on a daily basis, as most of the people of the world already do.
Enjoy the easy life while it lasts-it won't last much longer.
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You of course are presuming that "China will 'call in' the debt".
That is not likely. and by 'not likely' I mean a preposterous notion. For one thing, the "notes" they have are not callable. They are sellable on the open market but there is no right of redemption before term.
Secondly, all that will happen if they try to flood the market with them is that their value will go down and they (china, the investors, etc) will lose money.
That's not to say things can't possibly collapse... Just that it isn't terribly likely at this time.
You of course are presuming that "China will 'call in' the debt".
That is not likely. and by 'not likely' I mean a preposterous notion. For one thing, the "notes" they have are not callable. They are sellable on the open market but there is no right of redemption before term.
Secondly, all that will happen if they try to flood the market with them is that their value will go down and they (china, the investors, etc) will lose money.
That's not to say things can't possibly collapse... Just that it isn't terribly likely at this time.
That is like saying the baby boomers will not ask for social security because it will bankrupt the system. People care about themselves. China will want a return on its investment other than dollars of diluted value. This will boost China's currency which will make gold and oil cheaper for them to buy.
__________________ "give me a kiss to build a dream on and my imagination will thrive upon that kiss... sweetheart I ask no more than this... a kiss to build a dream on"
IMHO the USA, and the dollar, won't see the dominance it once held. I think it's in the EU and Asia's interest to keep the US tethered to its debt to avoid a global economic collaspe. No doubt the US economy will bounce back, it always has. However the long-term consequences of the government bailout have yet to be seen.
In the long run, a part of end times prophecy is being fulfilled as the world is moving closer to a one-world monetary system.
Our redemption draws nigh, come quickly Lord Jesus!!!
In very simplistic terms, I view the economy analogously to the body's circulatory system. (I know, don't laugh, it's simplistic but it helps understand the general principles ).
The key to economic growth and health is fluidity - the "movement" of goods or services and money back and forth. A "stagnant" economy is one where movement has slowed to very small amount of movement.
When consumers (for whatever reason) stop spending money, the economy slows - and to the degree they stop spending money is the degree to which it slows, to stagnation or stops altogether.
Consumers slow in their spending of money when they don't have a surplus to spend - loss of a job, reduction in pay, high taxes, high debt (fees associated with high debt), adverse/unexpected expenses for serious non-discretionary needs (e.g. serious health problems, legal problems, etc.), etc.
Businesses slow in their spending for similar reasons and some others, loss of market share, or loss of customers purchasing their product, increases in labor, production, and raw material costs, increased regulations, loss of influx of venture capital (investment in the company), increased cost of money (borrowing), etc.
Etc.
When money stops flowing, for whatever reason, the economy slows proportionately. For an economy to "recover" the simplest solution is to get the money flowing again. For that to happen, the variables that caused the slowdown must improve somehow.
When someone has a heart attack, the heart stops pumping and the person dies if circulation cannot be restored. And circulation cannot be restored unless the heart begins pumping blood again.
The "heart" of any economy is business (imho). Get business functioning again and jobs return, and with jobs, people have money to spend, which goes back to the businesses - and the cycle is restored.
...which brings me to the US economy and it's outlook. My concerns relate primarily to things affecting business, particularly this administration's hostile attitudes towards business and the belief that they can "jump start" an economy with an influx of money. The money is already there - it needs MOTION, not a transfusion. We need to get the pump (business) working again so the money can flow, so jobs can be created, and so consumers (job-holders) will start spending again. The government can do none of this - even artificially. One can perform CPR for only so long, which is all the government is attempting at this point. Until the government backs off and allows business to start working on its own again, this economy will remain in serious, dire trouble.
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"I have blotted out your transgressions like a cloud and your sins like mist; return to me, for I have redeemed you." - Isa 44:22
The "heart" of any economy is business (imho). Get business functioning again and jobs return, and with jobs, people have money to spend, which goes back to the businesses - and the cycle is restored.
...which brings me to the US economy and it's outlook. My concerns relate primarily to things affecting business, particularly this administration's hostile attitudes towards business and the belief that they can "jump start" an economy with an influx of money. The money is already there - it needs MOTION, not a transfusion. We need to get the pump (business) working again so the money can flow, so jobs can be created, and so consumers (job-holders) will start spending again. The government can do none of this - even artificially. One can perform CPR for only so long, which is all the government is attempting at this point. Until the government backs off and allows business to start working on its own again, this economy will remain in serious, dire trouble.
Just read Genesis 48 and find out what the basis of Israel's slavery to Egypt was - for 400 YEARS! Even though they became (aparently) wealthy, their life was owed to Egypt as SLAVES because they had sold their land to the king during the famine. The same is happening today to the whole world. The new 'Egypt' is the world's banking cartels, and the new 'kings' are the world's elite mega-wealthy.
Interesting analogy!
Originally Posted by DerSchweik
When consumers (for whatever reason) stop spending money, the economy slows - and to the degree they stop spending money is the degree to which it slows, to stagnation or stops altogether.
[...]
...which brings me to the US economy and it's outlook. My concerns relate primarily to things affecting business, particularly this administration's hostile attitudes towards business and the belief that they can "jump start" an economy with an influx of money. The money is already there - it needs MOTION, not a transfusion. We need to get the pump (business) working again so the money can flow, so jobs can be created, and so consumers (job-holders) will start spending again. The government can do none of this - even artificially. One can perform CPR for only so long, which is all the government is attempting at this point. Until the government backs off and allows business to start working on its own again, this economy will remain in serious, dire trouble.
Although I do agree that private consumer spending is important to our economies, I'm not at all sure that more US consumer spending is the solution. Rather, it seems to be part of the present problem. Yes, "the money is already there" as you point out, only, it is somebody else's money. Money borrowed from the Chinese to buy more Chinese stuff. Not only does it make the US consumers slaves to the Chinese economically, it also makes the US government slave to communist, undemocratic, unfree Beijing politically.
Rather, it is the Chinese consumers who should learn to spend like the Americans, whereas the American consumer should learn to save more like the Chinese have done in order to finance their living and spending with their own savings, not with loan money.
In a culture that worships mammon and shiny stuff, this will be one tall order.
__________________ One achieves little honour if one invades another country, which has done us no harm, with force and injustice, if one rapes and burns, kills and pillages those who only wished to live in peace. It would do us greater honour if our forefathers had always been peaceful and meek, if they had been content with all the things God had given them, instead of robbing and raping others. -- Olaus Petri
I am resolving now never to hold rancor, however justified it might be, toward a group of people, whatever their race, religion, conviction, prejudices, errors. -- Irčne Némirovsky
Cannons and fire-arms are cruel and damnable machines; I believe them to have been the direct suggestion of the Devil. If Adam had seen in a vision the horrible instruments his children were to invent, he would have died of grief. -- Martin Luther
Although I do agree that private consumer spending is important to our economies, I'm not at all sure that more US consumer spending is the solution. Rather, it seems to be part of the present problem. Yes, "the money is already there" as you point out, only, it is somebody else's money. Money borrowed from the Chinese to buy more Chinese stuff. Not only does it make the US consumers slaves to the Chinese economically, it also makes the US government slave to communist, undemocratic, unfree Beijing politically.
Rather, it is the Chinese consumers who should learn to spend like the Americans, whereas the American consumer should learn to save more like the Chinese have done in order to finance their living and spending with their own savings, not with loan money.
In a culture that worships mammon and shiny stuff, this will be one tall order.
Great response.
I totally agree. "Deficit" spending, or whatever you want to call it - when a consumer is in debt and continues to borrow in order to continue to spend is definitely NOT the solution - indeed it's propogating the problem. I guess to use my analogy that would be tantamount to being plugged into a cardiopulmonary machine (heart-lung) machine, the sort used during open heart surgery to keep the blood circulating while the surgeon works on the live heart.
You're right - the money (blood) is not ours - it's borrowed money (transfusion). We're lying on the table, barely able to get up or move for all the tubes attached to us. Artificial [economic] life - susceptible to having the "plug pulled" at any time.
No, I think for my analogy to work, one must assume the consumer is "healthy", the blood their own, the heart pumping properly, the vessels not constricted, no artificial transfusions in place, etc. In other words, consumer spending only works when the consumer is spending out of their SURPLUS, not their DEFICIT. If the consumer is not healthy, they must first GET HEALTHY - get out of debt and establish a surplus from which to spend.
Not all debt is bad of course, but going into debt must happen after a sound analysis of one's situation to be able to repay the debt in a reasonable amount of time without dipping into or risking their surplus. IOW, one must be able to shed the debt quickly if it doesn't generate the return they anticipated or circumstances change that they aren't able to pay the premiums. KWIM?
I totally agree about our "sinful (imo)" debt situation with the Chinese. We must be beholden to anyone, let alone a largely god-less nation (not all, most) whose values are so antithetical to ours. We DO need to save. We DO need to get out of debt (or vice versa ).
Yes, spending money we don't have is a very serious problem and needs to stop.
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"I have blotted out your transgressions like a cloud and your sins like mist; return to me, for I have redeemed you." - Isa 44:22
Last edited by DerSchweik; 5th November 2009 at 10:53 AM.
Wipe the slate clean - a quote that would mean bringing all business, home loans and credit debts to zero. This would mean more spending on goods and serivces, boosting employment, and a slow increase in debt over the years. Satan has a grip on the economy by holding us ransom on mountain debt.
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