Global Economy - What will be the Black Swan Event?

Just waiting to see a Wiemar moment of a man with a wheel barrow piled high with 1,000,000 $ note bundles on his way to buy a loaf of bread, or a candle, or a can of beverage.

originally posted by: ScepticScot

originally posted by: Vroomfondel

originally posted by: ScepticScot

originally posted by: Vroomfondel
I think in the end it will be not one but a whole fanfare of swans to choose from.

The financial situation we find ourselves in is completely untenable. Our entire economy at this point is nothing more than a giant Ponzi scheme. We have flooded the global market with so much cash trying to keep our economy alive that at some point, when the debt is called in, not just ours but many governments are going to find themselves in hot water. You simply can not solve a credit crisis with more credit. it only delays the inevitable and actually makes it worse.

Right now we are stuck in some kind of Wile E. Coyote moment where we have stepped off the cliff and are just waiting for gravity to notice. Our government keeps printing more cash and piling it up beneath us seemingly without realizing that its the weight of that cash that is going to cause the collapse. To make things even worse, our government shoved billions of dollars at large corporations so the corporations could start R&D and production and put people to work, in turn stimulating the economy. Instead of doing that the corporations just stockpiled the cash. Now the corporations have enormous cash reserves with little to no tangible value attached to it. The perfect storm is brewing.

The moment of insolvency will be when the debt is called in. It is impossible to pay. Not difficult, impossible. Its just a matter of time until we find ourselves in a Wiemar, Germany situation. We will go to bed one night with $10,000 dollars in the bank and wake up with $1,000 Patriot dollars or America bucks or whatever they will be called. It is the only way to avoid the 'wheelbarrow full of cash to buy a loaf of bread' scenario.

In the 1930's only one in four Americans lived in a family where someone had a job. From the high of 1929 to the mid thirties the stock market lost 90% of its value. All of the markers that were present in 1929 are here now, only worse. The average American today knows something is wrong but can't do anything about it. There will be many factors involved in the end and a buffet of choices as to which was the final straw that broke the camel's back. But that will be an academic argument because the real issue will be a huge segment of the population not knowing where its next meal is coming from.

National debt isn't anything like personal debt. It can't 'called in' and there is no risk of an involuntary default for the US or other countries that issue debt in their own currency.

The situation is slightly different in the Eurozone. The debt still can't be called in as it's fixed term but there is a possibility of countries defaulting (mainly due to the stupid set up of the ECB).

Any debt can be called on to collect. And inability to pay results in default. The danger is enormous. Its as simple as our creditors refusing to accept US currency due to its devalued state. The dollar would collapse. The only thing keeping it afloat now is the continued belief that it will somehow maintain its value. A task growing more difficult and unlikely with each passing day.

Explain how the US debt can be called in and collected.

The means and methods of default are too numerous to list. However, a debt is a debt and they all have to get paid. This answer at Quora said it well I think.

link

And this from BBC News.

link

originally posted by: Vroomfondel

originally posted by: ScepticScot

originally posted by: Vroomfondel

originally posted by: ScepticScot

originally posted by: Vroomfondel
I think in the end it will be not one but a whole fanfare of swans to choose from.

The financial situation we find ourselves in is completely untenable. Our entire economy at this point is nothing more than a giant Ponzi scheme. We have flooded the global market with so much cash trying to keep our economy alive that at some point, when the debt is called in, not just ours but many governments are going to find themselves in hot water. You simply can not solve a credit crisis with more credit. it only delays the inevitable and actually makes it worse.

Right now we are stuck in some kind of Wile E. Coyote moment where we have stepped off the cliff and are just waiting for gravity to notice. Our government keeps printing more cash and piling it up beneath us seemingly without realizing that its the weight of that cash that is going to cause the collapse. To make things even worse, our government shoved billions of dollars at large corporations so the corporations could start R&D and production and put people to work, in turn stimulating the economy. Instead of doing that the corporations just stockpiled the cash. Now the corporations have enormous cash reserves with little to no tangible value attached to it. The perfect storm is brewing.

The moment of insolvency will be when the debt is called in. It is impossible to pay. Not difficult, impossible. Its just a matter of time until we find ourselves in a Wiemar, Germany situation. We will go to bed one night with $10,000 dollars in the bank and wake up with $1,000 Patriot dollars or America bucks or whatever they will be called. It is the only way to avoid the 'wheelbarrow full of cash to buy a loaf of bread' scenario.

In the 1930's only one in four Americans lived in a family where someone had a job. From the high of 1929 to the mid thirties the stock market lost 90% of its value. All of the markers that were present in 1929 are here now, only worse. The average American today knows something is wrong but can't do anything about it. There will be many factors involved in the end and a buffet of choices as to which was the final straw that broke the camel's back. But that will be an academic argument because the real issue will be a huge segment of the population not knowing where its next meal is coming from.

National debt isn't anything like personal debt. It can't 'called in' and there is no risk of an involuntary default for the US or other countries that issue debt in their own currency.

The situation is slightly different in the Eurozone. The debt still can't be called in as it's fixed term but there is a possibility of countries defaulting (mainly due to the stupid set up of the ECB).

Any debt can be called on to collect. And inability to pay results in default. The danger is enormous. Its as simple as our creditors refusing to accept US currency due to its devalued state. The dollar would collapse. The only thing keeping it afloat now is the continued belief that it will somehow maintain its value. A task growing more difficult and unlikely with each passing day.

Explain how the US debt can be called in and collected.

The means and methods of default are too numerous to list. However, a debt is a debt and they all have to get paid. This answer at Quora said it well I think.

link

And this from BBC News.

link

The first link regards loans from the IMF which the US does not have.

The second is a commentary piece discussing the potential consequences of default without ever mentioning what would cause a default in the first place.

Neither of which answer the question of how US debt could be 'called in'.

Soverign debt is completely different from personal debt and discussing it in similar terms is pointless or misleading.

Well even if there are events that do occur, I believe they are manufactured to gauge the reaction of the public so new draconian laws or acts may be passed to further remove liberties from the real enemy.
The American people.

Google silent weapons quiet wars and read the .pdf file
It is literally being engineered and manufactured.
a reply to: FamCore

a reply to: pikestaff

Finance and politics have been going hand in hand forever.
Back in the day even Alan Greenspan took a position in Nixon's presidential election campaign.
No one heeds a sleeping Troll and November is the month with the second highest stock market returns over the last 10 years. Where do you get black swan market sentiment when there aren't even any ghosts from 1987?

originally posted by: ScepticScot

originally posted by: Vroomfondel

originally posted by: ScepticScot

originally posted by: Vroomfondel

originally posted by: ScepticScot

originally posted by: Vroomfondel
I think in the end it will be not one but a whole fanfare of swans to choose from.

The financial situation we find ourselves in is completely untenable. Our entire economy at this point is nothing more than a giant Ponzi scheme. We have flooded the global market with so much cash trying to keep our economy alive that at some point, when the debt is called in, not just ours but many governments are going to find themselves in hot water. You simply can not solve a credit crisis with more credit. it only delays the inevitable and actually makes it worse.

Right now we are stuck in some kind of Wile E. Coyote moment where we have stepped off the cliff and are just waiting for gravity to notice. Our government keeps printing more cash and piling it up beneath us seemingly without realizing that its the weight of that cash that is going to cause the collapse. To make things even worse, our government shoved billions of dollars at large corporations so the corporations could start R&D and production and put people to work, in turn stimulating the economy. Instead of doing that the corporations just stockpiled the cash. Now the corporations have enormous cash reserves with little to no tangible value attached to it. The perfect storm is brewing.

The moment of insolvency will be when the debt is called in. It is impossible to pay. Not difficult, impossible. Its just a matter of time until we find ourselves in a Wiemar, Germany situation. We will go to bed one night with $10,000 dollars in the bank and wake up with $1,000 Patriot dollars or America bucks or whatever they will be called. It is the only way to avoid the 'wheelbarrow full of cash to buy a loaf of bread' scenario.

In the 1930's only one in four Americans lived in a family where someone had a job. From the high of 1929 to the mid thirties the stock market lost 90% of its value. All of the markers that were present in 1929 are here now, only worse. The average American today knows something is wrong but can't do anything about it. There will be many factors involved in the end and a buffet of choices as to which was the final straw that broke the camel's back. But that will be an academic argument because the real issue will be a huge segment of the population not knowing where its next meal is coming from.

National debt isn't anything like personal debt. It can't 'called in' and there is no risk of an involuntary default for the US or other countries that issue debt in their own currency.

The situation is slightly different in the Eurozone. The debt still can't be called in as it's fixed term but there is a possibility of countries defaulting (mainly due to the stupid set up of the ECB).

Any debt can be called on to collect. And inability to pay results in default. The danger is enormous. Its as simple as our creditors refusing to accept US currency due to its devalued state. The dollar would collapse. The only thing keeping it afloat now is the continued belief that it will somehow maintain its value. A task growing more difficult and unlikely with each passing day.

Explain how the US debt can be called in and collected.

The means and methods of default are too numerous to list. However, a debt is a debt and they all have to get paid. This answer at Quora said it well I think.

link

And this from BBC News.

link

The first link regards loans from the IMF which the US does not have.

The second is a commentary piece discussing the potential consequences of default without ever mentioning what would cause a default in the first place.

Neither of which answer the question of how US debt could be 'called in'.

Soverign debt is completely different from personal debt and discussing it in similar terms is pointless or misleading.

It was misleading a bit...

If the u.s doesn't pay its debt, bond holders lose out? Is that it?

originally posted by: ScepticScot

originally posted by: Vroomfondel

originally posted by: ScepticScot

originally posted by: Vroomfondel

originally posted by: ScepticScot

originally posted by: Vroomfondel
I think in the end it will be not one but a whole fanfare of swans to choose from.

The financial situation we find ourselves in is completely untenable. Our entire economy at this point is nothing more than a giant Ponzi scheme. We have flooded the global market with so much cash trying to keep our economy alive that at some point, when the debt is called in, not just ours but many governments are going to find themselves in hot water. You simply can not solve a credit crisis with more credit. it only delays the inevitable and actually makes it worse.

Right now we are stuck in some kind of Wile E. Coyote moment where we have stepped off the cliff and are just waiting for gravity to notice. Our government keeps printing more cash and piling it up beneath us seemingly without realizing that its the weight of that cash that is going to cause the collapse. To make things even worse, our government shoved billions of dollars at large corporations so the corporations could start R&D and production and put people to work, in turn stimulating the economy. Instead of doing that the corporations just stockpiled the cash. Now the corporations have enormous cash reserves with little to no tangible value attached to it. The perfect storm is brewing.

The moment of insolvency will be when the debt is called in. It is impossible to pay. Not difficult, impossible. Its just a matter of time until we find ourselves in a Wiemar, Germany situation. We will go to bed one night with $10,000 dollars in the bank and wake up with $1,000 Patriot dollars or America bucks or whatever they will be called. It is the only way to avoid the 'wheelbarrow full of cash to buy a loaf of bread' scenario.

In the 1930's only one in four Americans lived in a family where someone had a job. From the high of 1929 to the mid thirties the stock market lost 90% of its value. All of the markers that were present in 1929 are here now, only worse. The average American today knows something is wrong but can't do anything about it. There will be many factors involved in the end and a buffet of choices as to which was the final straw that broke the camel's back. But that will be an academic argument because the real issue will be a huge segment of the population not knowing where its next meal is coming from.

National debt isn't anything like personal debt. It can't 'called in' and there is no risk of an involuntary default for the US or other countries that issue debt in their own currency.

The situation is slightly different in the Eurozone. The debt still can't be called in as it's fixed term but there is a possibility of countries defaulting (mainly due to the stupid set up of the ECB).

Any debt can be called on to collect. And inability to pay results in default. The danger is enormous. Its as simple as our creditors refusing to accept US currency due to its devalued state. The dollar would collapse. The only thing keeping it afloat now is the continued belief that it will somehow maintain its value. A task growing more difficult and unlikely with each passing day.

Explain how the US debt can be called in and collected.

The means and methods of default are too numerous to list. However, a debt is a debt and they all have to get paid. This answer at Quora said it well I think.

link

And this from BBC News.

link

The first link regards loans from the IMF which the US does not have.

The second is a commentary piece discussing the potential consequences of default without ever mentioning what would cause a default in the first place.

Neither of which answer the question of how US debt could be 'called in'.

Soverign debt is completely different from personal debt and discussing it in similar terms is pointless or misleading.

Yes, the first link describes IMF loans. But it also describes how debt is called in and what could happen if it is not paid.

I said very clearly the methods and means of a default are too numerous to list. It could be any of a variety of things. "Calling in" the debt is nothing more than demanding it be paid. I don't know what you are trying to accomplish by maintaining that position. And you keep drawing a comparison between personal debt and sovereign debt. Since the thread concerns global economics it is more likely to be sovereign debt than personal so your point is moot. Debt is constantly being financed and refinanced. That will continue until the debt is considered too high a risk to refinance. If it does get refinanced it is at a rate so high default is almost guaranteed. the bonds could never generate enough revenue to cover their own interest let alone maintain a viable government infrastructure. At that point governments shut down, vital services are cut, etc. It has happened before and it will happen again. It just hasn't happened to the US as a full default yet. And the only reason it hasn't happened is because failure of our economy would cause many others to fail as well. That false security will fade when the debt is too great to ignore.

If you don't understand the concept of calling on a debt to be paid and the penalties for default perhaps global finance is not a topic you should be discussing. I honestly don't mean to be rude, but the two points you keep banging on about are entirely irrelevant.

a reply to: ScepticScot

The United States lost its top-tier AAA credit rating from Standard & Poor’s on Friday in an unprecedented blow to the world’s largest economy in the wake of a political battle that took the country to the brink of default.

Reuters

The move reflects the deterioration in the global economic standing of the United States, which has had a AAA credit rating from S&P since 1941, and it could have implications for the U.S. dollar’s reserve currency status.

It has been suggested recently that something other than the USD be the reserve currency due to this very issue.

S&P’s move is also likely to concern foreign creditors especially China, which holds more than $1 trillion of U.S. debt. Beijing has repeatedly urged Washington to protect its U.S. dollar investments by addressing its budget problems. “China will be forced to consider other investments for its reserves. U.S. Treasuries aren’t as safe anymore,” said Li Jie, a director at the reserves research institute at the Central University of Finance and Economics.

a reply to: FamCore

I think Russia has set up Trump to be the fall guy that oversees the final economic destruction of the US. The world will gather to gather and decide that our country has lost it's way and our economic petrodollar will be the one to take the hit. Then other nations will rally around and become the new world currency and enjoy a great economic boost.

a reply to: Vroomfondel

The point I am making is it can't be 'called in' and no one can demand it be paid. It's inaccurate financial doom porn to in anyway suggest it can.

As you mention in your own post it's paid back on a continual basis and new debt reissued. The debt is fixed term and owned by millions of individuals, companies and governments worldwide. The is no big scary debt collector to turn up and demand money with menaces.

The debt is also entirely denominated in a currency the US government issues. It cannot under any circumstances be forced to default. It could for some spectacularly stupid reason choose to but it can not be forced.

US issued debt is also one of the most liquid investments on the planet. If someone holding the debt wants out then they can simply sell it.

People want to hold US debt. The large debt isn't a sign of weakness but of confidence. Over the last twenty years the Chinese and other nations have sold trillions of dollars of real goods to the US in exchange for US debt. You really think they are doing that because they think the US dollar is on the verge of collapse?

Finally the US government does not need to issue debt order to finance it's operations. If demand for US debt ever was to drop then it can simply finance them directly. Circa a third of all US debt is already held this way.

The reason I keep mentioning the difference between personal and soverign debt is its important not to get hung up on the negative connotations of the word debt. Soverign debt is by itself not a bad thing.

originally posted by: EA006

originally posted by: ScepticScot

originally posted by: Vroomfondel

originally posted by: ScepticScot

originally posted by: Vroomfondel

originally posted by: ScepticScot

originally posted by: Vroomfondel
I think in the end it will be not one but a whole fanfare of swans to choose from.

The financial situation we find ourselves in is completely untenable. Our entire economy at this point is nothing more than a giant Ponzi scheme. We have flooded the global market with so much cash trying to keep our economy alive that at some point, when the debt is called in, not just ours but many governments are going to find themselves in hot water. You simply can not solve a credit crisis with more credit. it only delays the inevitable and actually makes it worse.

Right now we are stuck in some kind of Wile E. Coyote moment where we have stepped off the cliff and are just waiting for gravity to notice. Our government keeps printing more cash and piling it up beneath us seemingly without realizing that its the weight of that cash that is going to cause the collapse. To make things even worse, our government shoved billions of dollars at large corporations so the corporations could start R&D and production and put people to work, in turn stimulating the economy. Instead of doing that the corporations just stockpiled the cash. Now the corporations have enormous cash reserves with little to no tangible value attached to it. The perfect storm is brewing.

The moment of insolvency will be when the debt is called in. It is impossible to pay. Not difficult, impossible. Its just a matter of time until we find ourselves in a Wiemar, Germany situation. We will go to bed one night with $10,000 dollars in the bank and wake up with $1,000 Patriot dollars or America bucks or whatever they will be called. It is the only way to avoid the 'wheelbarrow full of cash to buy a loaf of bread' scenario.

In the 1930's only one in four Americans lived in a family where someone had a job. From the high of 1929 to the mid thirties the stock market lost 90% of its value. All of the markers that were present in 1929 are here now, only worse. The average American today knows something is wrong but can't do anything about it. There will be many factors involved in the end and a buffet of choices as to which was the final straw that broke the camel's back. But that will be an academic argument because the real issue will be a huge segment of the population not knowing where its next meal is coming from.

National debt isn't anything like personal debt. It can't 'called in' and there is no risk of an involuntary default for the US or other countries that issue debt in their own currency.

The situation is slightly different in the Eurozone. The debt still can't be called in as it's fixed term but there is a possibility of countries defaulting (mainly due to the stupid set up of the ECB).

Any debt can be called on to collect. And inability to pay results in default. The danger is enormous. Its as simple as our creditors refusing to accept US currency due to its devalued state. The dollar would collapse. The only thing keeping it afloat now is the continued belief that it will somehow maintain its value. A task growing more difficult and unlikely with each passing day.

Explain how the US debt can be called in and collected.

The means and methods of default are too numerous to list. However, a debt is a debt and they all have to get paid. This answer at Quora said it well I think.

link

And this from BBC News.

link

The first link regards loans from the IMF which the US does not have.

The second is a commentary piece discussing the potential consequences of default without ever mentioning what would cause a default in the first place.

Neither of which answer the question of how US debt could be 'called in'.

Soverign debt is completely different from personal debt and discussing it in similar terms is pointless or misleading.

It was misleading a bit...

If the u.s doesn't pay its debt, bond holders lose out? Is that it?

If the US failed to pay on debt issued it would be bad for the economy. However baring some major economic event there is no need for it not to pay.

Where many people get confused is thinking the debt itself is, or will lead to, a a major economic event.

a reply to: ScepticScot

I see what you are saying but i do not agree with your belief that sovereign debt can not be called on to collect. If it couldn't there would be no such thing as sovereign default. This is the most recent example of how it happens. Not the only example, just the most recent.

August 28, 2014 Argentina moved into effective default on Wednesday 20 July after failing to reach an agreement over outstanding debt. It is now playing the blame game with the US and threatening to take the matter to The Hague. The country defaulted on its sovereign debt, after vulture fund investors demanded a full payout of bonds they’re owed.

link

When your credit reaches a point that you can no longer refinance your debt and the creditors demand payment either you pay or you default. The demand can be made even on sovereign debt and default is a real possibility, even in a single currency debt. It is rare and conditions have to be harsh for it to happen but it is possible. And that is without ulterior motives such as intentionally causing a strategic default.

It is not unusual for major world governments to bend as many rules as they need to in order to avoid things like this since it would almost certainly affect the majority of the planet. But even having said that, there are circumstances in which a default could greatly benefit one nation at another's expense. And the fallout, though significant, is not radioactive making it a more attractive attack than military options.

a reply to: Vroomfondel

Argentina's default was based on dollar denominated debt. It is completely different to the US debt which is in its own currency.

No one can demand that the US pays back it's debt.

If for example China was to decide it no longer wanted to hold US debt, all that would happen is that over time an interest bearing liability (the bond ) would be exchanged for a non interest bearing one (dollars).

Now China may then start buying stuff from the US or it may exchange them for other currencies (who will then use then to buy goods or even debt in the US). However China can't do this all at once as it can't call in the debt (the point I was making) it can only redem it over time as the bonds mature.

It can try and sell the debt quickly which could force the US to raise interest rates if it wanted to protect the exchange rate of the dollar, however this would be massively more damaging to Chinese economy than the US.

Now something may happen in the real economy that makes defaulting a more attractive option, however it can't be forced and it certainly can't be caused by the current level of debt.

a reply to: ScepticScot

But the only reason US currency has any value at all is due to the belief in the strength of our nation and our economy. As I indicated earlier the credit rating of the US is slipping and bond holders, like China, have openly stated that if the trend continues they will be forced to look elsewhere. If we can't sell the bonds we can't finance the debt. This could be severely compounded by a change in reserve currency, which other nations including China have recently suggested. If that happens it is unlikely that we will be issuing bonds in our own currency. Not that we wouldn't want to but who would buy them?

The scenario you described of constantly changing and refinancing of debt is real only as long as other nations are willing to continue doing it. At least part of me believes that if it truly becomes a strategically viable option to undermine the US economy that someone will eventually do it.

The success of our economy is based on the idea that it will continue to grow. The idea that there will always be more tomorrow fuels the desire to accept debt today. Willingly accepting debt with no foreseeable means of repaying it is drunken monkey economics. It is easy to roll over financed debt when you know the economy is stable enough to allow for steeper credit lines and increased debt. So what happens when the economy stops growing but the debt doesn't? Bonds don't sell. Credit ratings drop. Native currency loses value. Fiat currency is only as good as the reputation (read credit) of the issuer.

a reply to: Vroomfondel


Historically it not new, they print, or in this case they create digital money, the end result is always inflation, and collapse. It just takes a while to get going. The problem now is that it got so dire the Central banks are rigging the PM's and the stocks and Bonds, because they can!, and can do it indefinitely. Capitalism only works when their is constant expansion, so the borrowed money's interest can be paid back. For the average man on the street, jobs will get scarce and the jobs you do get will not pay enough to keep up, with the cost of living. The inflation is now grabbing hold the trucking industry, is starting to show ominous signs that the cost of moving goods from A to B have gotten very expensive. We are in a command economy, at the moment , not a Capitalist one where price is reflected in supply and demand, where even the news is choreographed. Definitely new territory, interesting times.

a reply to: anonentity

Thats a good point.

I agree, capitalism is going to have to be re-tooled if it is going to survive. But that won't happen because the only people who like change are wet babies. As you said, capitalism only works when there is constant expansion. Unfortunately, this economy will stop growing and fairly soon. It is happening as we speak it just hasn't hit home yet for many people.

You simply can not fix a credit problem with more credit. You can delay the inevitable, but it is still inevitable.

As you said, this is new territory. It could only take one significant event to start something big economically. Empires rise and without fail empires fall. Ours will be no different. The names will change but the story will be the same.

a reply to: Vroomfondel

If China wants to stop holding US debt then China is going to have to stop running a trade surplus with the US. At some point this might be the case but there is little indication so far. If they did it would take place over years or even decades. The Chinese economy is set up to produce goods for western nations and turning round an economy that size takes time.

If China did take that action what would happen? The US would either start importing more goods from other countries or start producing more internally. Isn't that what the current US government wants anyway?

The majority of US government debt is held domestically and the amount held overseas is split across many nations and state and private ownership. The idea of an belligerent nation using it's debt holdings as an economic weapon is just fantasy.

The US is in no way reliant on foreign nations to finance it's governent spending. It is reliant on foreign nations to finance it's trade deficit.

People can't get away from the idea if debt being intrinsically bad as from a personal view point it generally is. However you have to remember that one person's debt is another person's asset. US treasury debt is just savings held by the private sector. Then US government shouldn't ever be concerned with balancing it's books but with the health of the economy.

Is there a limit to economic growth? Maybe somewhere in the far future but we are no where near yet. Japan has struggled with growth for two decades, has a far higher debt ratio than the US and yet remains one of the highest standard of living in the world with no sign of economic collapse on the horizon.

a reply to: anonentity

Every developed country in the world uses a fiat currency of some sort. Economy keeps growing and standards of living keep improving. Which is not to say there are no issues but that is much more to do with inequality and poor government than currency or government debt.

a reply to: ScepticScot

You make some good points.

I do disagree, however, on economic growth. The economy is slowing and it will eventually stop growing altogether. It has to. And the culprit behind it will be energy. Rising energy costs are driving prices up across the board. Food travels an average of 1500 miles before it lands on our plates. That energy cost is increasing and as a result so are the food costs. Incomes are not increasing nearly as quickly and in recent years have been largely stagnant. High paying jobs are being lost and the largest employment growth segment is at or near minimum wage.

As these trends continue more and more of our personal income will be directed to basic necessities. For many the cost of basic necessities is already more than their incomes can bear forcing a greater reliance on assistance. Discretionary spending is decreasing rapidly at most income levels except the highest, of course. That equates to businesses closing and lost jobs. That is the trend we have to avoid to keep the economy growing, but I do not see it happening. Capitalism depends on the idea that there will be more tomorrow than there was today. That can not last indefinitely.

originally posted by: Vroomfondel
a reply to: ScepticScot

You make some good points.

I do disagree, however, on economic growth. The economy is slowing and it will eventually stop growing altogether. It has to. And the culprit behind it will be energy. Rising energy costs are driving prices up across the board. Food travels an average of 1500 miles before it lands on our plates. That energy cost is increasing and as a result so are the food costs. Incomes are not increasing nearly as quickly and in recent years have been largely stagnant. High paying jobs are being lost and the largest employment growth segment is at or near minimum wage.

As these trends continue more and more of our personal income will be directed to basic necessities. For many the cost of basic necessities is already more than their incomes can bear forcing a greater reliance on assistance. Discretionary spending is decreasing rapidly at most income levels except the highest, of course. That equates to businesses closing and lost jobs. That is the trend we have to avoid to keep the economy growing, but I do not see it happening. Capitalism depends on the idea that there will be more tomorrow than there was today. That can not last indefinitely.

Income is growing fine for those at the top of the economic ladder. Increasing inequality is holding back economic growth and causing more economic damage than government debt ever will.

I will accept one of the problems with state debt is that it can be distribute wealth upwards, however that is better dealt with by tax policy than monetary.