Lords of Death Forums Lords of Death Forums LoD General Discussion What is wrong with our economic system

So who do we elect when only two candidates have sworn to have us out before 2013?
Ron Paul & Bill Richardson
I would say three but Dennis Kuckoonuts isnt a probable solution for a capitalist country.

"The citizens of Squanderville are ecstatic about this turn of events, since they can now live their lives free from toil but eat as well as ever. Oh, yes, there's a quid pro quo -- but to the Squanders, it seems harmless: All that the Thrifts want in exchange for their food is Squanderbonds (which are denominated, naturally, in Squanderbucks)."

No matter what Int rates will go up. The longer we delay this, the higher they will have to go (unless we resign ourselves to massive inflation). I agree with him, and agreed with him 12+ months ago. The US needs a recession to reset things.
Sad to say, but I read today that the US currency is becoming a contender to fuel the carry trade. If it does (possibly within 3 weeks), then that should be a humiliating wake up for all our US folks. Although there are some perceived benefits, but they are humiliating and not a valid long term policy. Eventually, you do need to pay back debts. To fuel carry trade means your currency is shit.
I just hope the 1.4 trillion dollars spent on Iraq was worth it (14,000 per tax paying person in America), and I didn't even get an Iraqi to do my lawn.
Speaking of Squanderville.
Dubai's purchase into Citibank on Monday. Canadians have bought a tremendous number of US banks and assets in the past 14 months. Canadian assets now stretch down to California. They have also bought a huge chunk of the US railroad system (most of the rail around Chicago is owned by Canada now). They have punched power corridors on west and east cost to keep you on the electricity nipple (they own ALL the hardware, you own NOTHING. You just pay for juice). 8% of all US Assets are now owned by foreigners, and it is increasing by 1 to 2% per yr. If you look at the import #'s you will be terrified. And there is nothing you can do about it now, you can't live without HBO. And before you say "expropriate" remember who feeds and powers ya & look at Zimbabwe (they chose that path). This was a very short empire compared to the others in past history. You are now selling your countries assets to keep the lights on.
Weclome to Squanderville. Hope HBO and Hummers were worth it.
And to everyone who dissed me a year ago for posting that China will be top dog, please repeat that? Gimme that show of hand again (I know who you are!). What was it, wasn't it "we'll never be #2, not in our lifetimes" or something like that.
You give a fuck? Start by paying down ALL of your personal debt as fast as you can. I'm not American and that is what I;ve beendoing for 2 yrs now to make up for you lazy fucks. If you don't get off your ass, I'll buy a railroad. It'll be the Arioch R&R, the drunk Railroad, all the way from Vancouver to San Diego.

I thought it was a good exchange.
The dollar has been due for a tumble for some time, it just happens to be in a free fall due to the economic situation we are in.
The overspending, lack of saving, and housing situation we are in put the economy in a horrendous position. The one thing that Ron Paul does not note that with the current situation, inflation, stagflation, and deflation will ALL make your savings evaporate. The only scenario to preserve that value is in a growth economy which we clearly do not have. We have been in a bull market effectively since the early 1980s......
Arioch, i wouldnt say the "carry trade" is on for the US dollar yet. We still have the highest sovereign paying interest rate on our debt in the world so it is still VERY expensive for people to borrow or short our dollar in the long term. The bet that IS in effect however is the short term prognosis on the dollar. The December overnight futures are pricing in a 100% chance that the Fed drops rate 25 bps and like 90% chance that the Fed drops 50....Fed does drop rates, the dollar freefalls some more......the bet of the dollar goes down versus the euro is the easiest layup out there....let me see if i cannot pull together some global rate graphs today at work.
Me and my boss did an economic piece in May talking about where we have been and how large investors should structure a portfolio. PM me if you would like to see it.

That is not the only scenario for preserving value:
Lets talk about making money. No, I dont mean earning it, I mean making it.
Thats counterfeiting you say! Well true, if you are doing it without the legal authority to do it.
What I am talking about is an entity that the citizens of the US have granted the permission to legally do it.
If you are a citizen of a country other than the US, this is still important, as the US Dollar is still considered the worlds reserve currency (at least for now!)
Lets go back in history a bit to the year 1913. Why is this year so important? Well in the year 1913 two very important things occurred in the US Congress that impacted the entire future of the US, and even the world.
Those two things were:
The creation of the Federal Reserve Act - which transferred the legal authority to create currency from the US Congress to a private bank called the Federal Reserve.
The creation of the 16th Amendment - which allowed the US Government to tax its citizens wages directly.
Interesting to note that these two pieces of legislature were passed in the same year, because if you research the matter you will find that they are dependent on each other to fulfill the objectives of those who pushed the legislature. What exactly those motives were we will leave for another time, but lets just say it was not the benevolent intentions of a small group of banking magnates for the good of the people.
Lets get back to the creation of the Federal Reserve, and the fact that the Congress literally handed over the keys of the kingdom to a private bank. By doing this, the Federal Reserve was given the authority to create the legal tender of the land, a responsibility to took to with gusto.
Over time, abuses of a gold and eventually total severance from a gold standard in 1971, has created a situation where the government can now 'create' as much money as it wants, without having to earn it.
Why is this bad? Well, because it is the sole cause of the vast majority of problems we are experiencing in our economy today.
Market Bubbles: Bubbles are caused by false demand. When demand forces anything to go up higher than its true value, eventually the laws of nature, the universe, God, whatever you want to call it, will force it to correct. It is important to understand that when the government is 'creating' this money, it has to get the money into the economy somehow. How does this happen? Through debt. For example - lets just say that for the sake of this theoretical scenario, that there was a society silly enough to give out $250,000 to $500,000 to anyone who asked for it, regardless of whether they could pay it back or not, to say, maybe, buy a house. Sound familiar? Now lets just imagine, in this totally imaginary unbelievable scenario, what kind of demand is placed on the prices of homes. Keep in mind, this isnt real demand, its all fueled by debt. Oh its real, some might argue. Is it? What would the housing market prices look like if there never was such a thing as a mortgage, and the only way someone could buy a home was with whatevr cash they had earned through their labor? What does the housing market look like now? Yes dear reader, market bubbles are indeed created by 'creating money'.
Devaluation of the dollar and devaluation of a countries prominence on the world stage: Preposterous, nothing as simple as printing money out of thin air could destabilize such a massively mind boggling powerful economy as the US of A! Oh really? Lets go back to basic supply and demand. You do not have to be a Mensa Genius to get this. When you have more of something, does it go up in value, or down in value? Let me help you, it goes down in value. Now, lets pretend for a second, that the government has literally doubled the amount of currency in circulation around the world, every ten years, ever since 1971 when we left a gold standard which prevented this from occurring prior. Ok lets not pretend, lets just say it has, because that is exactly what has occurred Does this cause the value of the currency to go up, or go down? Let me help you with this, it causes the value of the currency to go down.
Ok, so what happens then? Well every country in the world loses its incentive to keep using dollars as the reserve currency of the world, and things like countries de-pegging from the dollar like dominoes happens. Sound far fetched? Do some research my friend, you will see this is already occuring. Other things tend to occur as well, like re-pricing Oil into Euros. Good for those who have Euros, but for countries like the US who has to convert currency that is rapidly becoming worthless into Euros to buy its oil, not so good. No way you say! Just go google OPEC and their discussions on changing to Euros for oil. Oh, there are other side effects of course. The US currently borrows over $2billion a day just to keeps the lights on (yes, thats how much we are borrowing to continue running the government).What happens, when the entire world, who bought a ton of Sub-Prime based financial paper that happend to be repacked and rated AAA by Wall Street and sold to the Worlds Hedge funds and Banks, finds out it was all a big credit scam? Well, they lower the credit score of the issuer, of course. Combine an abysmal credit score with an abysmal currency valuation and what do you have? A situation where the world will no longer lend money to the US Government to keep running. Uh oh, now that might be bad.
Massive Inflation: Gas prices are skyrocketing, groceries are becoming ridiculously expensive, it takes two working parents today to buy half the lifestyle that a single working parent could buy 30 years ago. The middle class is being destroyed by inflation, taxes, and a river of jobs flowing overseas. Why is this happening? Once again my friend, because when you double the amount of money in existence, you also half its value by simple suply and demand. In other words, earned a $100,000 salary today is the equivalent of $12,500 a year in 1977. Boy this is fun, isnt it?
Right about now is a good time for a very interesting quote:
"Whosoever controls the volume of money in any country is absolute master of all industry and commerce...and when you realize that the entire system is very easily controlled, one way or another, by a few powerful men at the top, you will not have to be told how periods of inflation and depression originate" - President James Garfield, who was assasinated two weeks after making this statement.
So whats the point of all this, now that you have me seriously depressed, you might say?
The point is, that gold and silver have been true money for over 5000 years of human history, and it has only been th last half century that we have strayed away from this wisdom, and we are indeed paying for it, and will continue to pay for it in the years to come.
Gold and Silver are some of the only ways to protect your wealth in a currency that is not constantly devaluing at such a rapid rate it makes ones head spin.
The leaders of the worlds largest countries are figuring out that the US Dollar has been the worlds reserve currency not because the US is all that and a bag of chips, but because it was backed by gold for almost 200 years. As they realize that all fiat currency will eventually implode, it is my opinion they will be headed for gold.

So is this person completely crazy or does it have a shot of happening?
Forecast: U.S. dollar could plunge 90 pct
A financial crisis will likely send the U.S. dollar into a free fall of as much as 90 percent and gold soaring to $2,000 an ounce, a trends researcher said.
"We are going to see economic times the likes of which no living person has seen," Trends Research Institute Director Gerald Celente said, forecasting a "Panic of 2008."
"The bigger they are, the harder they'll fall," he said in an interview with New York's Hudson Valley Business Journal.
Celente -- who forecast the subprime mortgage financial crisis and the dollar's decline a year ago and gold's current rise in May -- told the newspaper the subprime mortgage meltdown was just the first "small, high-risk segment of the market" to collapse.
Derivative dealers, hedge funds, buyout firms and other market players will also unravel, he said.
Massive corporate losses, such as those recently posted by Citigroup Inc. and General Motors Corp., will also be fairly common "for some time to come," he said.
He said he would not "be surprised if giants tumble to their deaths," Celente said.
The Panic of 2008 will lead to a lower U.S. standard of living, he said.
A result will be a drop in holiday spending a year from now, followed by a permanent end of the "retail holiday frenzy" that has driven the U.S. economy since the 1940s, he said.
Some nut

First & foremost, foreign concerns want to maintain the value of their holdings. Their holdings have lots of dollars, so they'll prop it up. Look at how vigorously the Saudis are propping up the USD. It is not because they "like" us. But because they have too many dollars.
The US consumer accounts for 20% of all retail purchases worldwide. If that stopped, it would be felt from Bejing to Berlin. We buy what they make, if we stop buying, they can't make it, their folks stop working, and get restless. Foreign manufacturers will help prop up the USD.
Race to the bottom...Many foreign countries are combatting the low USD by firing up their own printing press ( currency). They are diluting their currency to keep it from raising in value too fast. Rubles are increasing at over 50% per year, 13% for Euros etc... etc... In reality all currencies are dropping in value (fiat currencies) but relative to the USD, foreigners are trying to keep the balance in place.
There are other reasons, but one over ruling aspect to all of this, a lot of the controls for the USD sits in foreign hands. If someone has bad intentions, they can harm the US tremendously (ie: China dropping ALL of it's USD in one day).
I don't see a precipitous drop for the USD like that simply due to foreign actions, not due to US actions or inactions. If foreign countries stopped propping it up, then I could see it suffering badly, but still not that quickly. Look at how long it took the Zimbabwe dollar to melt down, it drifted down for years before it dropped precariously (as all fiat currencies do).

He continued that "although there are only a few reserve currencies, an appalling lack of discipline is demonstrated by the U.S. dollar. As things stand today, the United States is indebted to the external world to the tune of $3 trillion. This sum actually exceeds the total official currency reserves of all the nations of the world -- including the USA. . . The evolution of the reserve role of the American currency in recent years gives grounds for a pretty pessimistic prognosis. The relationship between the state of the dollar and the value of gold is obvious. In relation to our discussion today, this means that gold continues to have particular monetary attraction in the minds of all prudent financial investors. . . . The internal imperfections of the international monetary system (which I spoke about earlier) have already led to a number of regional financial crises and still carry the danger of larger upheavals. Under these conditions, the growing interest of investors in real assets, gold in particular, is more than justified."
Full article: http://www.fxstreet.com/futures/market-review/gold-investments-market-update/2007-12-06.html