What is Digg?165 Comments
- elemental77, on 02/14/2008, -2/+65"The definition of insanity is doing the same thing over and over and expecting different results." -Benjamin Franklin
- Krippy, on 02/14/2008, -3/+42We are constantly patching up a deflating balloon, and soon all of the so called "repairs" will blow off. At this time, the whole nation will face the ramifications of the Federal Reserve. Not just Wall Street, not just the middle class, but everyone.
- Curlz31, on 02/14/2008, -7/+39Get ready for hyperinflation. I hope, for the sake of you Americans, US dollars at least make good fuel for a nice warm fire to sit around when you haven't got $US1 Million to pay your gas bill.
- Ifritdave, on 02/14/2008, -4/+34we are so ***** it's inconceivable, good thing i bought gold
- lOvOl, on 02/14/2008, -1/+31What a lot of people don't realize is that interest rate cuts don't automatically inject money into the economy; thereby causing inflation.
In order for interest rate cuts to work, there has to be demand out there from member banks to borrow money from the FED. Unfortunately, even after the interest rate cuts, this is not happening because banks no longer have the infrastructure to directly loan out money to consumers since they outsourced it all to mortage companies and nobody trusts those guys at the moment so like the article says the "clogging up of the credit markets" is the direct result of banks and finance companies not having enough information on the loans that are sold and packaged by federally chartered loan packaging companies like Fannie Mae and Freddy Mac.
So in other words, Ben Bernanke could lower interest rates to 0% and it might not do a darn thing because until faith is restored in the credit markets through legislation and enforcement of that legislation (something that is not gonna happen under Bush) which aggressively targets fraudulent originators of loans. Therefore in the end DEFLATION rather than INFLATION is the more likely result as the credit system ceases to function as everyone loses faith in the value of what they own and you get the descending spiral of the money supply that we had in the Great Depression.
Think about it. If you are a bank and you are going to borrow money from the Fed, before you bother to do that you need to first have somewhere to reloan out the money you just borrowed. If you have no validated consumers of those loans (i.e. people you can trust to pay back the loan), then you have no reason to borrow money from the Fed. In the past, banks dealt directly with consumers so they gave you an up or down based on your credit rating and other factors. Nowadays, the banks and investment houses don't originate the loans, rather they buy them up from mortgage companies and other financial institutions so they are basicly "taking the loan originator's" word as to the quality of sub-prime loans and liar loans. The guys who work at the mortgage companies just want to get their commission and because they know some other sucker (banks, foreign governments, etc.) are going to buy up the bad debt, they don't have to worry about anything once the loan is resold.
Also hedge funds and investment companies bought a lot of these loans and then got suckers to invest in those hedge funds and investment companies, meanwhile the hedge fund managers and investment companies paid themselves exhorbitant salaries and commissions even as the value of their portfolio went way down.
So in effect, we have a bunch of sociopathic ***** from the bottom on up in all of the FIRE (Finance, Insurance, Real Estate) industries who no longer trust each other, yet unfortunately are responsible for keeping the credit markets running. The international diamond trade is largely governed by trust and a handshake, yet our financial system is based upon nothing but lawsuits and lying.
The only real solution to our financial problems in the long-term will be draconian enforcement of financial laws with new legislation that readdresses the security and finance laws that were rolled back during the Clinton and Bush years which allowed this financial ***** to happen in the first place. There is no short-term fix, just hard tough choices the next President is going to have to deal with since President ***** For Brains is too cowardly to deal with these problems now and is just content to pass them on to the next guy who will in all likelihood get all the blame for the ***** that is likely to come. - Jassman, on 02/14/2008, -11/+40Now can people please start voting for Ron Paul in greater numbers?
- inactive, on 02/14/2008, -3/+29Well.... Could it be that there is so much of a debt burden on all levels that no quick fixes will work? It is already appearing that the fundamentals of the US economy aren't as strong as what the experts and pundits have been claiming.
- inactive, on 02/14/2008, -1/+23The whole tragedy is that the thought of a collapse scares people so much that they will grasp onto any good news, even if it is a lie. Common sense dictates that it is impossible to run up debts forever without eventually paying the piper.
- inactive, on 02/14/2008, -2/+23The average person that is focused on American Idol and Heath Ledger's death won't wake up until the piper has been paid and conditions are bad.
- Cleaner44, on 02/14/2008, -2/+19Sweet, inflation! This is great for America right? I hope I'm not wrong.
Maybe I better do a little more reading. I'll start with Ron Paul. - ZeroIce, on 02/14/2008, -0/+16Woot! More inflation!!!!
- Haohmaru, on 02/14/2008, -3/+19How about they tax us 10% of our income instead of 50%, forget the rebates and we'll go from there.
- Cryptocracy, on 08/17/2008, -3/+18they aren't insane. Its the NWO's goal to destroy the dollar, to force the "Amero" down our throats...
- sasharouge, on 02/14/2008, -4/+18Oh crap! I can barely afford a loaf of bread now... The bizarre thing is that there are people where I work talking about summer vacations, airline tickets, cruises, eating out, new cars, etc. I can't figure what's going on there...oh wait- those are the same people who talk nonstop about the survivor and home makeover shows. They are also the ones who solidly support McCain, Huckabee, or Obama. Can you say, "La la land"?
- inactive, on 02/14/2008, -1/+13That is the other facet to the problem. There is already too much debt on all levels. The best way to shore up our economy is to start paying down the national debt and quit bailing out private investors and banks that make bad business decisions. One would think that everybody learned from the S&L scandals from the 80's.
On the other hand, artificially lowered interest rates do also cause inflation, especially if the fundamentals of the economy are already weak. The bubbles are going to burst whether we like it or not. Government interference is just going to change the direction it happens in.
Everything is due for a big correction sooner or later. - inactive, on 02/14/2008, -0/+11Bloomberg is as mainstream as you can get reed311! LOL You are just angry that the truth is setting in.
- rahmis4ri, on 02/14/2008, -1/+12increasing fnma cap is just so stupid it's unbelievable. let's create more of subprime mess! woohoo!
rate cut? last one didn't work, let's do some more things that didn't work. yee haa!
amazing. - thebellmaster1x, on 02/14/2008, -0/+10Hm, that's odd... I tried ramming my car into this wall here, but it didn't fix the transmission.
...Should I try again? - CurtisLow101, on 02/14/2008, -3/+13END the Federal Reserve!
- inactive, on 02/14/2008, -1/+11OK The dollar has devalued 30% since the 90's. The federal budget has tripled since then. Also people forget to factor in consumer debt. That has been skyrocketing since the 90's as well. Maybe things won't get as bad as Zimbabwe, but a crisis similar to what Mexico faced in the early 90's is feasible
- Azerael, on 02/14/2008, -1/+11How do you expect them to bring freedom to towel-wearing heathens without using your hard-earned money?
- inactive, on 02/14/2008, -0/+9We have never been burdened with so much debt before. Nor has the dollar been in such deep *****. My question to you reed311 is this....How much more deficit spending will it take before the World Bank has to bail out the US?
- korr, on 02/14/2008, -1/+10RP spam? Its bloogberg.com...
- inactive, on 02/14/2008, -3/+12Yep, go ahead and cut the rate further. Sure, the stock market gets it's initial prop up but doesn't stave off the inevitable crash.
The dollars (Federal Reserve Notes) that you hold are nothing more than a promise. That promise is being devalued by the day. All it takes is a major debt holder, Japan and/or China, to call ***** and the whole house of cards comes tumbling down.
We are already in a recession. The median income isn't going up, it's going down! Just because your favorite pundit pops on the tube and tells you everything is great doesn't mean it's true. I bet against the market and am making a killing. Then again, I'm only making a killing in Federal Reserve Notes which are getting to the point where they aren't worth the paper they're printed on.
I've decided to spend my FRN on precious metals. My favorites are gold, silver and copper jacketed lead. I trust you're doing the same? Otherwise, get ready for the inevitable collapse and the declaration that a new currency is required.
If you don't understand the theory of stagflation/inflation just do a search on what bread costs in Zimbabwe. You know something is ***** up when they're printing $10M notes that can barely buy a hamburger.
Hell, I'm looking forward to the fall. I'm guessing that is what it's going to take for most of you to get off your fat asses, quit watching American Idol and get something done. My gardens are planted and my food/water supplies are sound. How are your food/water supplies? When the SHTF, you'll look like a deer in the headlights. I'll just fire up a nice deer backstrap with fresh veggies and wait for one of you dumb ***** to come down my road and attempt to take it. Hopefully your next of kin will be prepared for the news.... - schnikies79, on 02/14/2008, -0/+9You are half right.
If everybody has a large amount of money (even if it is backed by gold), the price of the backing goes down as well. Simply put inflation affects backed currency as well. Now if there is scarcity in the backing currency, then that can control inflation.
Basically, if we were backed by gold, the rate our money supply could grow would be tied to the same rate that we can produce gold via mining.
If you all the sudden have a huge influx of new backing currency, inflation can take off just the same. - chorenic, on 02/14/2008, -2/+11Way to go Bush, push Greenspan out of office in order to appoint the numb nuts of your choice, it's worked out well every other time. Aah, Adam Smith would be so proud.
- inactive, on 02/14/2008, -1/+10I doubt hyperinflation will happen (50% inflation in a month), but I do know that our economy is going to continue to free fall, maybe for a year, cause hell... we are already budgeting for $400 billion deficit, weakening our dollar even more as we borrow more from foreign markets.
The leaders of our country should have been preparing for this, *****, we've been forecasting this would happen for over 2 years now... - earlycj5, on 02/14/2008, -0/+8Gah, for those of us that are fiscally responsible this just sucks.
My investments in the stock market went down, though I'm considering more since the market is down right now.
But so did my savings account interest rates, twice in two months, looking at more now. Grabbed a 6 month CD with some of it at a higher rate though. - theNazz, on 02/14/2008, -0/+7The dollar lost over 30% of its value since 2002. You call it recession or not, that is ***** news to anybody not invested heavily in foreign markets or currencies.
- systemghost, on 02/14/2008, -0/+7FED: If it ain't dead after you hit it once, JUST KEEP BACKING UP AND RUNNING IT OVER UNTIL IT DIES!
- Cryptocracy, on 08/17/2008, -1/+8nothing to see here folks, move along! reed is either an idiot or a shill for the NWO
- atbnet, on 02/14/2008, -0/+7Let's try 0%. I don't have an economics degree but I doubt I can do any worse.
- inactive, on 02/14/2008, -0/+7Fed interest rates do not make stocks go up, they make the dollar go down by decreasing the interest paid to dollar owners and increasing the supply of dollars. People may spend more dollars, but that is because they are worth less.
- Jassman, on 02/14/2008, -1/+8Unintentional, sorry.
- jrskblx125, on 02/14/2008, -0/+6hahaha i second the 0% suggestion!
- kswilkinson, on 02/14/2008, -1/+7Well, considering we're all probably over the age of 5, we've all been through a "recession" before. Check your economic premises before you discount the inevitable. We're a non-productive society, lazy, fat, and trying to sell cheaper dollars than ever before. The world doesn't want money that loses value. The world certainly doesn't want to be forced to take that money or threatened with economic and military "sanctions" and war. Just look at Russia dusting off its military...
Wake up.
Though, I'm glad we've got the guarantee of your "promise" that everything will be OK. I feel better now, actually (!). - kamikazicondon, on 02/14/2008, -0/+6HaHa can't wait for Jim Cramer to comment on this!
- Duncan3, on 02/14/2008, -0/+6They are already printing money at a 15%/year rate. Print faster!!!! But keep claiming the CPI is 3% like it has been every year for the last 17 years please ;)
Nobody is buying this ***** anymore. - Jassman, on 02/14/2008, -11/+17Now can people please start voting for Ron Paul in greater numbers?
- inactive, on 02/14/2008, -0/+6OK The dollar has devalued 30% since the 90's. The federal budget has tripled since then. Also people forget to factor in consumer debt. That has been skyrocketing since the 90's as well. Maybe things won't get as bad as Zimbabwe, but a crisis similar to what Mexico faced in the early 90's is feasible.
- Napoleone, on 02/14/2008, -0/+6The sheep will deem false anything not told them by their shepherds.
- inactive, on 02/14/2008, -3/+9The blatantly gross malfeasance in the stewardship of the federal government and the budget would be one place to start.
- kreneskyp, on 02/14/2008, -0/+6The last time we had a major recession in the 80s we had way less debt and oil was cheap (i remember 85cents a gallon) . This time we will have a ridiculous amount of debt and oil prices are high. Even without the US buying oil prices will remain high because china will buy it all up. oil is the lifeblood of this economy and if we can't get it cheap it will fail
this is going to be a bad one. - inactive, on 02/14/2008, -0/+5Actually the poor were more likely to be able to purchase a home before the artificially low interest rates, as long as they saved. Now in many markets the bottom 1/5th has little hope of owning their own home.
There are still places in the midwest were someone making 8 bucks an hour can hope to purchase some land and a house. That may change soon, unfortunately. - Napoleone, on 02/14/2008, -0/+5Déjà vu shows its wisdom.
- thailand1972, on 02/14/2008, -0/+5Good thing I bought a house out in Thailand (literally 10 times cheaper than house prices in the UK)
- inactive, on 02/14/2008, -1/+6And yet consumer spending came back relatively strongly in January. We may never even enter "official" recession. People have been conditioned to spend beyond their means and I don't think that "party" is over just yet. I'm not an alarmist but the conditions of the world economy are such that America is being pushed, slowly, to a cliff edge. We won't even know we're falling until the ground hits us.
The dot-com bubble didn't do it, 911 didn't do it and it does not appear that the housing bubble will do it. I suppose as long as foreign nations remain willing to send us products for IOUs then the party will continue. But no one can logically argue that this condition can last indefinitely. Certainly currency traders have been betting on an economic disaster in the US for a long time. However, the timing of it is impossible to predict and, at least for now, most world trade is done at the implicit point of a United States rifle barrel. The American Empire is unique in the history of mankind...it will be interesting to see how it plays out. - masterwalls69, on 02/14/2008, -2/+6I agree....VOTE RON PAUL too ELIMATE the "inflation" tax. It was made to destroy the MIDDLE class and its working
- InfiniteNothing, on 02/14/2008, -0/+4If it's going to be inflated into nothingness you might as well spend it while it's good.
- mutiger, on 02/14/2008, -0/+4Bad, bad, bad idea...
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