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The Velocity Of Money In The U.S. Falls To An All-Time Record Low

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posted on Jun, 6 2014 @ 12:16 AM
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originally posted by: bbracken677
a reply to: Aazadan

In other words you are saying that debt should constantly increase ad infinitum. And this is ok and in fact, good.


Correct. That is the responsible course of action for a nation. National level economics work different from personal level economics. The reason is because at a national level money is infinite. You and I cannot create our own money (unless we're a banker but there's even a limit to that determined by leverage). A nation however can create it's own money. Every nation on earth does it.

At a national level debt represents faith in the currency. When you remove debt you remove faith in that currency. Don't feel bad that you don't understand this, even most in Congress including those who sit on the financial committees don't get it. That's why any time they've tried to explain this stuff in interviews all they're able to respond with is "it's complicated". The truth is that it's a convoluted system that is entirely contrary to how you would think it should work. Telling the truth is bad politics.


Our country and economy were fine with the exceptions of cyclic downturns due to zero controls on any aspect of the economy, until the 20th century when this self-serving and deluded view of debt started. You cannot seriously suggest that our current level of debt is fine and that we should be growing it. That this level of debt and growing will not yield extremely negative results. That eventually our constantly expanding debt will not, at some point in the fairly near future, result in a lack of confidence in the dollar resulting in collapse and disaster?


You do realize fractional reserve banking, and infact everything the fed has done since 1913 has been done in the past? The Federal Reserve isn't our first private central bank and it won't be our last. If everything was fine in the past as you claim, then logically the problem isn't with the fed or with practices like central banking.

Also while our debt is quite large in terms of dollars, as a percentage of GDP it's actually quite healthy. Have a look at Europe some time.




posted on Jun, 6 2014 @ 03:47 PM
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a reply to: Aazadan

No offense, but that is ridiculous. No wonder we are as screwed up as we are. Economics from decades ago had quite a different view of things. I mean that from an academic sense. In fact what you describe sounds more like economics Monty Python style.

There will be major fallout from our public debt within 10 years or less. When it does, remember this discussion. I called the banking / credit problem almost 10 years before it happened. We are not finished in that area either. There will be significant pain coming over the next 10 years or so.

Public debt aside, just our trade deficit will continue to drain wealth from the country, unless the exportation of natural gas saves our bacon.



posted on Jun, 6 2014 @ 03:55 PM
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a reply to: Aazadan

By everything was fine.. That was, of course, an oversimplification. However I would describe the beginnings of our current screwedupedness as being the beginning of the fed. The second factor being the start of our current string of ever increasing public debt (thank you Roosevelt) whereas before our ventures into debt were shallow and short lived. The 3rd factor being Reagan's strong dollar policy. I love Reagan, but hate that. The strong dollar led us into the age of out of control upside down trade balances and jobs going overseas.

Anyways... There is no quick fix for our economy, it will take many years to dig out of this hole, likely.



posted on Jun, 7 2014 @ 12:40 AM
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originally posted by: bbracken677
a reply to: Aazadan

No offense, but that is ridiculous. No wonder we are as screwed up as we are. Economics from decades ago had quite a different view of things. I mean that from an academic sense. In fact what you describe sounds more like economics Monty Python style.


You're finally getting it. It is Monty Python style economics. Economics between entities that can make their own money out of thin air work different than economics between those who can't. Banks can create money from nothing, so can nations. Economics works different for both of them. How often do you consider cash on hand to be a liability? When you loan someone money, it actually comes from your account. No such thing happens with either banks or nations, instead the debt comes from nothing and is counted as an asset.


There will be major fallout from our public debt within 10 years or less. When it does, remember this discussion. I called the banking / credit problem almost 10 years before it happened. We are not finished in that area either. There will be significant pain coming over the next 10 years or so.


Very possible, people like Ted Cruz sure have tried. People owning the debt lose faith in that debt when you start talking about not paying it. Considering the dollar is backed by said debt it's quite bad to have that conversation. If deficits continue as they have been it's possible we'll over extend on debt too but nations like almost all of Europe as well as China and Japan have shown that the mythical 80% debt:gdp ratio isn't accurate.


Public debt aside, just our trade deficit will continue to drain wealth from the country, unless the exportation of natural gas saves our bacon.


We could shrink the trade deficit but it requires also shrinking profits from American companies. That's something the people owning said companies don't want so... good luck convincing them of it.


originally posted by: bbracken677
a reply to: Aazadan

By everything was fine.. That was, of course, an oversimplification. However I would describe the beginnings of our current screwedupedness as being the beginning of the fed. The second factor being the start of our current string of ever increasing public debt (thank you Roosevelt) whereas before our ventures into debt were shallow and short lived. The 3rd factor being Reagan's strong dollar policy. I love Reagan, but hate that. The strong dollar led us into the age of out of control upside down trade balances and jobs going overseas.


It goes back before the fed. All the fed does is it creates money at interest. Any other banking policy is something can and would also do without the fed. True fiat currency was created by Lincoln and congress to finance the Civil War when the bankers demanded too much in interest. It was still subject to fractional reserve banking as well as inflation and it was backed by absolutely nothing.



Anyways... There is no quick fix for our economy, it will take many years to dig out of this hole, likely.


It would help if we were actually trying to dig out of it. The problem is that no one knows how. On one hand the banks are far too large and hold far too much power. Any negative action against them will be met with retaliation. If you want to talk about terrorists in the world, ignore the sand people who just want to live according to their customs without being bothered and look to Chase, BofA, Capital One, Barclays, and all the rest. Those are real terrorists and they're using economic terrorism. It becomes exceptionally difficult to pass policies that can fix our economy when the policies that do so run counter to their interests. On the other hand we're trying what worked in the great depression. The government basically created mountains of debt buying products, we've done the same thing this time around but it hasn't changed anything. This is because everyone realizes this time around that the demand is totally artificial and subject to disappearing as soon as the government stops buying things just to buy them.

We won't actually see a fix to the economy until we have a president and congress that are willing to take on the bankers... good luck with that.



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