Precipitous To A Dollar Decline

[Nbadan]

Dollar's retreat raises fear of collapse
By Carter Dougherty
Published: September 13, 2007


FRANKFURT: Finance ministers and central bankers have long fretted that at some point, the rest of the world would lose its willingness to finance the United States' proclivity to consume far more than it produces - and that a potentially disastrous free-fall in the dollar's value would result.

But for longer than most economists would have been willing to predict a decade ago, the world has been a willing partner in American excess - until a new and home-grown financial crisis this summer rattled confidence in the country, the world's largest economy.

On Thursday, the dollar briefly fell to another low against the euro of $1.3927, as a slow decline that has been under way for months picked up steam this past week.

"This is all pointing to a greatly increased risk of a fast unwinding of the U.S. current account deficit and a serious decline of the dollar," said Kenneth Rogoff, a former chief economist at the International Monetary Fund and an expert on exchange rates. "We could finally see the big kahuna hit."

In addition to increased nervousness about the pace of the dollar's decline, many currency analysts now also are willing to make an argument they would have avoided as recently as a few years ago: that the euro should bear the brunt of the dollar's decline.

The euro, shared by 13 countries, once looked like a daring experiment. But it has gained credibility and euro-denominated financial assets are as good as their U.S. counterparts. With a slow economic overhaul under way in European capitals, and a fundamentally sound corporate structure, a weaker dollar justifiably means a stronger euro.

"The euro has earned what it has gotten," said Stephen Jen, global head of currency research at Morgan Stanley in London. "It is not simply rallying by default."

So long as Americans buy more than they earn from exports - and they did, creating a current account deficit of $850 billion last year - the rest of the world financed the binge by bringing dollars into the United States for investment in stocks, bonds, real estate or other assets, thereby preserving demand for the dollar.

The continued appetite for U.S. investments stemmed from a track record of strong economic growth and a financial system that has been remarkably resistant to shocks.

But the latest turmoil in mortgage markets has, in a single stroke, shaken faith in the resilience of American finance to a greater degree than even the bursting of the technology bubble in 2000 or the terror attacks of Sept. 11, 2001, analysts said. It has also raised prospect of a recession in the wider economy.

While most economists just a few months ago would have dismissed the prospect of a dollar collapse outright, they now are debating the possibility that something on par with the dollar debacle of the 1970s might just happen again.

When a currency collapses, the central bank can push up interest rates to attract needed investment, but strangle the economy in the process. Alternatively, it can let the currency fall and watch prices of imports - and eventually competing domestic goods - rise sharply.

Double-digit inflation resulted in the 1970s and only a global recession brought it to an end.

Today, the dollar's current weakness is being driven by uncertainty over how central banks will react to the turmoil in financial markets, unleashed by the collapse of the U.S. market for subprime mortgages given to borrowers with shaky credit histories.

The European Central Bank put off an interest rate increase it had planned for September, but is still inclined to tighten credit at least one more time by the end of this year. By contrast, the U.S. Federal Reserve has hinted at a rate cut at its meeting next Tuesday - a step that would diminish the appeal of dollar-denominated assets, almost certainly sending the dollar lower.

But across a horizon of 18 months to two years, investors are pondering how quickly the dollar will fall, a question to which there are no easy answers.

After a run of strong growth, the U.S. economy has lurched into a phase of slower expansion, and last Friday the most serious warning sign appeared - an outright deterioration in employment growth.

The data has coincided with profit warnings from major U.S. retailers like Wal-Mart Stores and Home Depot, suggesting that consumer spending, the backbone of the American economy for years, was ebbing. This step would logically follow the rapidly cooling housing market, since Americans have spent heavily with money borrowed against rising home values.

A drop in consumer spending by Americans means fewer imports. The current account deficit peaked at 6.8 percent of gross domestic product in late 2005 and is now running at about 5.5 percent, with figures for the second quarter of 2007 due out on Friday.

A lower deficit means less capital needs to flow into the United States, and is consistent with a steady decline in the dollar. Since the middle of last year, the dollar, weighted for trade flows, has fallen steadily against a broad range of currencies, according to data collected by the Fed.

All this suggests that, in spite of headline-grabbing news about the latest low, the dollar could be adjusting gradually as the U.S. economy becomes driven less by lending on the back of rising home price.

The problem, as every economist knows, is that the current account deficit - about $770 billion - is still colossal in absolute terms.

And foreigners are being asked to provide those dollars at a time when the subprime turmoil is threatening to spill over into the broader economy.

Put another way, at a time when the psychology of crisis has gripped financial markets, intangible attitudes toward the dollar have become all the more important. And with growth strong elsewhere in the world, there are appealing places to go besides the dollar.

"The problem is that the deficit is still very, very large," Jen said. "And there are plenty of other investment opportunities outside the United States."

Pressed to make an educated guess, most economists opt for calm, believing the dollar is unlikely to go into a tailspin even as they mark up the odds of one.

The major holders of dollars - notably the Chinese, with their $1.3 trillion in currency reserves - have little incentive to see the dollar weaken, and their support provides the dollar with a bulwark of strength. And since investors need to stay diversified, and U.S. markets are deep and liquid, abandoning the dollar wholesale is hardly a realistic option.

"Rather than a precipitous decline, we are probably be looking at a move steadily lower," said Simon Derrick, chief currency strategist at Bank of New York in London.

IHT (http://www.iht.com/articles/2007/09/13/news/econ.php)

[BradLohaus]

Wow, the Fed cut by half a point even though the dollar is stuck below 80. Predictably, the Dow is up quite a bit and the dollar is now threatening to fall below the 79 mark. Now we all get to pay for this stock market rebound with higher consumer prices. Hooray for the Federal Reserve! Free market capitalism in its purist form. :downspin:

http://biz.yahoo.com/ap/070918/fed_interest_rates.html?.v=28

[2centsworth]

Wow, the Fed cut by half a point even though the dollar is stuck below 80. Predictably, the Dow is up quite a bit and the dollar is now threatening to fall below the 79 mark. Now we all get to pay for this stock market rebound with higher consumer prices. Hooray for the Federal Reserve! Free market capitalism in its purist form. :downspin:

http://biz.yahoo.com/ap/070918/fed_interest_rates.html?.v=28
Inflation has been tame. Wholesale prices surprisely dropped recently. Fed is here to provide liquidity while keeping inflation in check. They have done a pretty good job of that. Sometimes they drop rates and sometimes they increase rates like they did 17 times between 2002 and 2005.

[Extra Stout]

I do expect significant inflation in the medium term. Luckily, I have a big enough chunk of my portfolio in Euro stocks that I can ride a nice wave of Euro appreciation against the dollar.

I'm thinking it will be $1.50-$1.55 a year from now.

[BradLohaus]

I do expect significant inflation in the medium term. Luckily, I have a big enough chunk of my portfolio in Euro stocks that I can ride a nice wave of Euro appreciation against the dollar.

I'm thinking it will be $1.50-$1.55 a year from now.

Smart move. The dollar has been generally declining against the Euro for years, and only now does there seem to be widespread worries about that, and the Fed isn't in a spot to do anything about it. Really bad signs for the dollar.


Inflation has been tame. Wholesale prices surprisely dropped recently. Fed is here to provide liquidity while keeping inflation in check. They have done a pretty good job of that. Sometimes they drop rates and sometimes they increase rates like they did 17 times between 2002 and 2005.

Is that from their website or Neil Cavuto?

Government and Fed price indices are not to be trusted. It's very hard to collect the data and it is often manipulated downward. The government and the Fed have a very strong incentive to state a lower than reality inflation rate. If the government and the Fed have the same strong incentive to lie, then they lie. I know that this is like the 3rd time that I've posted this graph, but here it is again:

http://en.wikipedia.org/wiki/Image:Components_of_the_United_States_money_supply .svg

The M3 money supply has more than doubled over the last 10 years! The Fed doesn't even report this stat anymore. They say it's because it's not worth it anymore; I, and many others, say it's because it's become too dangerous.

Has our GDP come anywhere close to doubling in the last 10 years? Of course not. So how can anyone believe that inflation is and has been in the 2-4% range over the last 10 years like the government and the Fed tells us? You have seen the price changes at stores over the last decade with your own eyes. I know what my eyes tell me.

[Holt's Cat]

The Left wants cradle to grave care. The Right wants low taxes and to shoot at ghosts in the desert to the tune of a half Tril a year, and hey, some of that cradle to grave shit isn't too bad.

So we get what we have here, which is the way they want it.

[DarkReign]

So we get what we have here, which is the way they want it.
I have never seen that quote used before with any accuracy. cheers.

[Nbadan]

Government and Fed price indices are not to be trusted. It's very hard to collect the data and it is often manipulated downward. The government and the Fed have a very strong incentive to state a lower than reality inflation rate. If the government and the Fed have the same strong incentive to lie, then they lie. I know that this is like the 3rd time that I've posted this graph, but here it is again:

I've seen calculations where the actual annual inflation rate could be anywhere between 12-15%...who you gonna believe, the FEDS, or your own wallet? Not counting increases in housing and energy costs are good examples....

None-the-less, dropping the FEd rate can't be good for the dollar....you should start noticing foreign products, like cars and other non-durables, noticeably higher....

[Extra Stout]

The Left wants cradle to grave care. The Right wants low taxes and to shoot at ghosts in the desert to the tune of a half Tril a year, and hey, some of that cradle to grave shit isn't too bad.

So we get what we have here, which is the way they want it.
Thomas Jefferson said that American democracy would survive, so long as the electorate didn't decide just to vote itself free reign to empty the Treasury.

250-300 years is about the top limit for a particular political system before it comes unraveled. So what shall we adopt next?

[2centsworth]

if we're not going to trust Government statistics of inflation and instead trust Wikepedia, then it's hopeless to argue. btw, my wallet says with a little shopping prices are very good right now.

[Nbadan]

Thomas Jefferson said that American democracy would survive, so long as the electorate didn't decide just to vote itself free reign to empty the Treasury.

250-300 years is about the top limit for a particular political system before it comes unraveled. So what shall we adopt next?

It's already been adopted...just not announced...it's corporate rule. A new form of Oligarchy were power rests with power-full, world-wide business men....

[Nbadan]

if we're not going to trust Government statistics of inflation and instead trust Wikepedia, then it's hopeless to argue.

How can you justify a two-fold increase in energy costs and annual 5-10% appreciation in homes values since 2001 with a supposed annual inflation rate of 2-3%?

[boutons_]

"you should start noticing foreign products"

and 10s of $Bs as foreign corps buy up US corps and divisions.

and foreign indivduals buying up depressed real estate, residential and commercial

[Holt's Cat]

Thomas Jefferson said that American democracy would survive, so long as the electorate didn't decide just to vote itself free reign to empty the Treasury.

250-300 years is about the top limit for a particular political system before it comes unraveled. So what shall we adopt next?


All bets were off after we saw a supposedly "conservative" GOP controlled Congress and President balloon the size and scope of the federal government to unprecedented levels. Think about it, if Clinton had somehow managed to push through that Medicare prescription drugs benefit when he was in office the right wing would still be shouting from the roof tops about "socialism" and what not. Turns out, the Clinton administration (with a little help from conservative Republican congressmen who performed like conservative GOP Congressmen) was more conservative than the current administration. Gridlock isn't a bad thing. Neither is a Demo president who is willing to abandon his 'core principles' to get his ass reelected. I can tell you it's preferable to the GOP version.

[Holt's Cat]

Thomas Jefferson said that American democracy would survive, so long as the electorate didn't decide just to vote itself free reign to empty the Treasury.

250-300 years is about the top limit for a particular political system before it comes unraveled. So what shall we adopt next?

Well, it's either Southern Fried or Urbane Agnostic statism. Depends on your palate, I suppose. Seriously, that's what passes for the great debate in American politics these days. Are you more at home polishing off a 12 pack of Bud watching the little cars go around the track 500 times or are you content to dig through the NY Times while sipping your Grande Latte and perhaps listening to a little Vivaldi on any given Sunday?

[BradLohaus]

if we're not going to trust Government statistics of inflation and instead trust Wikepedia, then it's hopeless to argue. btw, my wallet says with a little shopping prices are very good right now.

It's no secret that the money supply has exploded in recent years. There is just no way that the inflation rate is as low as the government tells us it is when the money supply has increased by so much. I don't know where you shop, but everything I buy is alot more expensive than it was just a few years ago.

Interesting read
http://inflationdata.com/inflation/Articles/M3_Money_supply.asp

Intersting charts
http://www.shadowstats.com/cgi-bin/sgs/data

That guy's takes on inflation are alot more in line with what I see than what the government is telling me.

[Wild Cobra]

I could be wrong, but I think the devaluation of or money is better than outsourcing jobs and manufacturing because it is cheaper.

Either way, we are in for some hard times. At least if we return jobs here, wages can come back and meet inflation.

[BradLohaus]

I could be wrong, but I think the devaluation of or money is better than outsourcing jobs and manufacturing because it is cheaper.

Either way, we are in for some hard times. At least if we return jobs here, wages can come back and meet inflation.

You're right in theory, but the problem is that these manufacturing jobs aren't being outsourced to Canada or Europe; they're being outsourced to 3rd world countries. The differences in costs (wages) between operating in the USA and operating in China, India, etc. are gigantic. Those jobs are not coming back without a major shift in our trade policy, and any president who does not support free trade/globalization is deemed an unelectable isolationist. If a company is paying a factory worker in China $5 a day, then the dollar will have to turn into toilet paper for that job to come back here, so we are screwed either way.

That is the position the trade deficit has put us in. We are only maintaining the status quo at the expense of a higher national (and personal/household) debt and a weaker dollar. The chickens are only beginning to come home to roost. Unraveling this mess would cause a long recession; the Fed is not letting it happen. The politicians don't want that to happen. So it's not happening, and the dollar is paying the price. The dollar can't pay this price forever, but the Fed and the government don't do anything to turn it around. So what happens in the end? The only thing that can happen: a huge collapse in the dollar's value.

[Extra Stout]

That is the position the trade deficit has put us in. We are only maintaining the status quo at the expense of a higher national (and personal/household) debt and a weaker dollar. The chickens are only beginning to come home to roost. Unraveling this mess would cause a long recession; the Fed is not letting it happen. The politicians don't want that to happen. So it's not happening, and the dollar is paying the price. The dollar can't pay this price forever, but the Fed and the government don't do anything to turn it around. So what happens in the end? The only thing that can happen: a huge collapse in the dollar's value.
When the dollar collapses, the result will be hyperinflation like what we've seen in lots of Third World countries as well as Weimar Germany. The result will be economic collapse, and the nation that emerges from that collapse will be quite different from the one we have now. Probably our venerable Enlightenment democratic system will be gone and replaced either with European-style corporate statism or a false-Christian Southern-style autocracy.

One thing that might be different this time is that the global economy no longer gets pneumonia whenever the U.S. sneezes, but rather just a bad head cold. So, when the U.S. re-emerges from the coming economic collapse, it never will regain the economic hegemony it had relative to the rest of the world in its 1945-2000 peak. We'll see the degree to which the new state uses military extortion to get its way.

[xrayzebra]

"you should start noticing foreign products"

and 10s of $Bs as foreign corps buy up US corps and divisions.

and foreign indivduals buying up depressed real estate, residential and commercial

You will also see our exports increase because of the
lower dollar. Which means the lower dollar is not all
bad.

And who the hell cares if they buy our real estate. They
cant take it back home with them. It stays here.

[Wild Cobra]

You're right in theory, but the problem ....
Yes, but proper valuation of the dollar is just one step. Other factors can still offset the wage difference. Think about it. A worker on an assembly line here might make $70 a day vs. $2 a day in a third world nation. Shipping eats up some of that difference, not really much though. If we assume a $65 difference for a given product line and the worker man-hours produces 100 items a day, we are looking at a 65 cent difference on maybe a $100 product. When you look at it in percentages, and what small changes in import and tax policies achieve, there is hope. Corporation count every penny for profits because after a million products, it really adds up. That less that 1% price change is easy to fix with wax policies.

Now in some things, that is an unreasonable example. It is not uncommon for USA jobs to be 20% of the price in manufacturing. Transportation and foreign labor is probably between 1% to 3% at those levels. This is where the tax structure really makes the difference. The end product USA product costs about the same under the fair tax, but would increase the import price by about 20% because it is taxed at the sale, the same as the USA made product. Now don't try to pin me down on these numbers, they are simple examples to invoke thinking. It is not something that would fix all imports, but it's a big step. It would probably fix most imbalances in prices.

I agree that free trade is a noble concept, but it has proven to be a failed policy.

Wages are just one part of the equation. What matters in the end is the retail price and quality differences. The fair tax is also a necessary part of the equation. We tax our manufactured products making them less competitive globally. Other countries tax at the sales level. Therefore, imports effectively do not get taxed, and exports get taxed twice.

Increased oil prices will help a little in offsetting transportation costs. Hopefully, they will bring back tariff. I think the only way to avoid a future recession, when the dollar gets unmanageable, is to get the Fair Tax, or a similar tax concept enacted.

We simply need to band together some how and convince the politicians the trade imbalance is a high priority thing to fix. With a media that only cares about sensationalism, how does one get the word out? Maybe with increased problems with import products we can increase USA jobs with 100% inspections which would also drive up import prices.

[BradLohaus]

One thing that might be different this time is that the global economy no longer gets pneumonia whenever the U.S. sneezes, but rather just a bad head cold. So, when the U.S. re-emerges from the coming economic collapse, it never will regain the economic hegemony it had relative to the rest of the world in its 1945-2000 peak. We'll see the degree to which the new state uses military extortion to get its way.

That's true. All this globalization BS will be the ultimate cause of the loss of our economic hegemony. Why do we want to be more integrated with the rest of the globe? If anything, this country was founded on, and made great by, anti-globalization.


We simply need to band together some how and convince the politicians the trade imbalance is a high priority thing to fix. With a media that only cares about sensationalism, how does one get the word out? Maybe with increased problems with import products we can increase USA jobs with 100% inspections which would also drive up import prices.

You made a good case for a fair tax, but I wouldn't count on convincing enough politicians that the trade deficit is extremely dangerous. Remember when Cheney said that deficits don't matter? I don't know what's more scary: that he's lying, or that he actually believes that.

[Medvedenko]

Our dollar (Canadian) that is...is poised to eclipse the US dollar by the end of the month. It's already @ 0.99....
http://money.canoe.ca/News/2007/09/20/4511649-cp.html



Boosted by high commodity prices and a weakening U.S. dollar, the loonie reached parity with the greenback Thursday for the first time in nearly 31 years, promising to boost the energy and import sectors and give consumers cheaper vacations but spelling more trouble for Canada’s industrial heartland.

The loonie, which has been gaining on its American counterpart since bottoming out below 62 cents in early 2002, has recently been on a spectacular run, up from 95 cents at the start of September and from under 90 cents last spring.

Soaring demand for Canadian commodities, ranging from oil and wheat to coal, potash, nickel and zinc — have helped propel the currency, while a weakening American economy has dragged down the greenback, the world’s most widely held and traded currency.

At 10:58 a.m. EDT, the loonie hit $1.0004, and later traded at 99.86 cents US, up 1.36 cents US from Wednesday.

The last time the dollar was at par with the greenback was Nov. 25, 1976, when Pierre Trudea was prime minister and Rene Levesque had just become premier of Quebec. That high point for the currency signalled the beginning of a long slide for the loonie, as national unity concerns and mounting worries about Canada’s worsening government finances over the next decade or so scared away foreign buyers of the currency.

The loonie began to recover a bit after the former Liberal government began tackling the deficit, but has soared in recent years because of massive global demand for Canadian resources and the solid growth in the economy, especially in the oil-rich West.

“What the story is really saying is that Canadians are getting richer relative to the U.S. and hence Canadian assets are getting richer compared to the U.S.,” said CIBC economist Jeff Rubin.

“It really represents a very dramatic reversal of fortune from what would have happened 10 years ago when our resource economy made us look rust belt compared to the technological dynamo of the U.S. economy.”

The currency had advanced 1.38 cents Tuesday after the U.S. Federal Reserve cut short-term interest rates by half a percentage point, undercutting the attractiveness of the American currency. The loonie was also boosted as crude oil hit new highs solidly above US$80 a barrel.

“It’s been a perfect environment for the Canadian dollar to strengthen,” said Craig Alexander, deputy chief economist at TD Economics.

“You’re getting a stronger Canadian dollar on positive economic news out of Canada, rising commodity prices, improving interest rates spreads and concerns about the U.S. dollar.”

Most forecasters weren’t anticipating the loonie to hit parity with the U.S. greenback at all — much less so soon and so quickly.

The No. 1 reason behind the sudden surge, Alexander said, “is that the U.S. Federal Reserve surprised financial markets by cutting interest rates by half a point at their latest FOMC meeting.”

“That makes the Canadian dollar look more attractive to international investors because it means interest rates in Canada are less below those in the United States.”

The high dollar may make U.S.-made goods cheaper to buy in Canada and is a boon to Canadians travelling in the United States, especially cross-border shoppers and those looking to book winter vacations to Florida or Arizona. Those trips are suddenly much cheaper than they were a month ago.

But the high loonie will continue to put pressure on domestic manufacturers, who have to try to sell goods south of the border at a discount or have been priced out of U.S. markets.

Manufacturers such as lumber exporters, which have not had some insulation from commodity prices and automakers will be particularly hard-hit, as the rising Canadian dollar makes exports less competitive at the same time that the shrinking U.S. housing market is making demand for housing weak.

Tourism in Canada could also be affected, as travel to Canada becomes more expensive to Americans — a drop that will likely ripple through the hospitality industry.

Rubin estimates that the manufacturing sector could see as many as 100,000 more jobs shed over the next 12 or 15 months, calling it the “obvious” loser of the rising loonie.

“It is getting crushed, no doubt about it, we lost a quarter million manufacturing jobs,” he said.

But, he added, “the pain and suffering in the manufacturing sector is nowhere evident when you look at the broad economic numbers.”

While the manufacturing sector has lost 289,000 jobs since late 2002, the economy has created more than one million jobs in resources, construction, services, health care, education and financial industries, leaving the national jobless rate at 30-year lows.

“Even in the province of Ontario, which is after all, the country’s manufacturing heartland, the unemployment rate is at a 20-year low ... the energy sector is basically taking over our balance of payments.”

On the other side of that, importers will win big as the costs of bringing goods into Canada gets cheaper, as will whole sellers — the “middle men” in the economy.

It could also benefit consumers, who will see the purchasing power of their money rise.

But, Alexander warns, the surging loonie hasn’t yet trickled down to consumers.

“It is showing up in some areas like gasoline prices (and) retail areas like clothing and footwear, but broadly speaking, we haven’t seen a significant pass- through yet,” he said.

“Canadians that decide to do some cross-border shopping are benefiting, the increasing popularity of the Internet makes it possible for Canadian to buy things from vendors abroad, and to that extent they can benefit 100 per cent from the appreciation of the Canadian dollar.”

American-dollar weakness was also evident across most currencies Thursday as the greenback slumped versus the euro, the British pound, the yen and Swiss franc.

It dropped to record lows Thursday against the euro, which rose above the US$1.40 level, the highest value for the European currency since its inception in 1999.

The spot gold price, meanwhile, topped US$730 an ounce, trading at US$742.60, up $13.10 on the day. Some foreign exchange analysts in the U.S. have predicted the Canadian dollar could reach as high as $1.05 US if weakness in the American economy persists.

[Nbadan]

When the dollar collapses, the result will be hyperinflation like what we've seen in lots of Third World countries as well as Weimar Germany. The result will be economic collapse, and the nation that emerges from that collapse will be quite different from the one we have now.

The older Argentinians on this board should know first-hand what printing too much money does to a economy....

[BradLohaus]

Fears of dollar collapse as Saudis take fright

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/09/19/bcnsaudi119.xml&CMP=ILC-mostviewedbox

I love that picture of Bernanke on the dollar. There's not a better person to put on a bank note than the head banker.

[Nbadan]

...they don't call him Helicopter Bernanke for nothing....him addressing anybody on the weakness of the dollar is a logical travesty...

[Holt's Cat]

...says Nbadan, PhD, Internets University.

[Nbadan]

...well, MBA and multiple BA and Science degrees...

[Holt's Cat]

Oh, from where and in what fields of study? That is, other than Copying and Pasting.

[Nbadan]

I don't post personal info...but I am completing a Math Graduate program now....

[Holt's Cat]

Ha.

[ChumpDumper]

That seems personal.

[BradLohaus]

Ron Paul vs. Ben Bernanke yesterday

http://www.youtube.com/watch?v=jgnfxtrAFJQ

[PixelPusher]

Ron Paul vs. Ben Bernanke yesterday

http://www.youtube.com/watch?v=jgnfxtrAFJQ
Ok, I have a question that's been bugging me for a while now...I get why basing your currency on an actual commodity like gold is safer than basing it on the future hopes and expectations of an ever growing economy, but why gold? Is there enough "value" in gold to cover our economy? Do we, as people, value gold as much as we used to in "ye olden times"? Something like feudal Japan's currency based on rice seems to make more sense to me (everyone's gotta eat, after all). So anyway, why gold?

[Wild Cobra]

Remember when Cheney said that deficits don't matter? I don't know what's more scary: that he's lying, or that he actually believes that.
I don't remember the context for sure. Wasn’t he speaking of the national deficit and debt? For those, it really isn't that bad. They are still relatively low compared to our GNP. I have always been more concerned about the trade deficit. I will say he must have been high if he was talking about the trade deficit. Can I have some of that good stuff please?

Back to the debt. My conservative instinct tells me that the only time we should run a deficit is during times of war and recession. All other times, we should be paying the interest on the debt, and some principle. If we had always done this, we could afford to make some really grand projects like the past. What if we needed to do something today on the scale of the Manhattan Project, Hoover Dam, or the Interstates? Those projects would not be very viable today as they were in the past, would they?

I am sick and tired of social programs that just create and maintain a class of dependant people. This is the largest unconstitutional spending our government does. It needs to be reigned in, or else we are doomed. I am mixed about Social Security and Medicare because I see it as unconstitutional, but I have no problems helping our seasoned citizens. I think it should be means tested.

Now I’m no economic guru, never studied economics. What would happen if… Rather than using the payroll deductions as part of the budget, take that money out of circulation since it cannot effectively be invested. Wouldn’t it, through supply and demand strengthen the dollar? Then as people need it for retirement, we print more money. What would the pros and cons of that be I wonder? Wouldn't it be better than what we do today, and force a real picure of the deficit and debt? They say Clinton had a budget surplus. That is not true. Besides not counting the interest on the debt, they counted excessive payroll taxes into the formula rather than treating it as a future debt. I wonder how many people don't know that?

[Wild Cobra]

Our dollar (Canadian) that is...is poised to eclipse the US dollar by the end of the month. It's already @ 0.99....
http://money.canoe.ca/News/2007/09/20/4511649-cp.html

At 10:58 a.m. EDT, the loonie hit $1.0004, and later traded at 99.86 cents US, up 1.36 cents US from Wednesday.

Wow, maybe we can start dumping quarters and nickels on them like they do to us?



The high dollar may make U.S.-made goods cheaper to buy in Canada and is a boon to Canadians travelling in the United States, especially cross-border shoppers and those looking to book winter vacations to Florida or Arizona. Those trips are suddenly much cheaper than they were a month ago.

There’s a good think for our sinking dollar.



But the high loonie will continue to put pressure on domestic manufacturers, who have to try to sell goods south of the border at a discount or have been priced out of U.S. markets.

Yep, maybe we will bring more good paying jobs back here again?



Manufacturers such as lumber exporters, which have not had some insulation from commodity prices and automakers will be particularly hard-hit, as the rising Canadian dollar makes exports less competitive at the same time that the shrinking U.S. housing market is making demand for housing weak.

Wow… Maybe more USA made automobiles will be shipped up north! Good for our jobs, right?



Tourism in Canada could also be affected, as travel to Canada becomes more expensive to Americans — a drop that will likely ripple through the hospitality industry.

As with other places in the world. Doesn’t that mean more vacationing people will choose to spend their money here instead of elsewhere?



Rubin estimates that the manufacturing sector could see as many as 100,000 more jobs shed over the next 12 or 15 months, calling it the “obvious” loser of the rising loonie.

“It is getting crushed, no doubt about it, we lost a quarter million manufacturing jobs,” he said.

LOL… Ever think we’d see the day that jobs get sent to us?



But, he added, “the pain and suffering in the manufacturing sector is nowhere evident when you look at the broad economic numbers.”

True, but small changes add up. We learned that the hard way continuing free trade agreements throughout the 90’s.



While the manufacturing sector has lost 289,000 jobs since late 2002, the economy has created more than one million jobs in resources, construction, services, health care, education and financial industries, leaving the national jobless rate at 30-year lows.

That’s the trend we have been having, but it cannot last forever…

[Wild Cobra]

Ok, I have a question that's been bugging me for a while now...I get why basing your currency on an actual commodity like gold is safer than basing it on the future hopes and expectations of an ever growing economy, but why gold? Is there enough "value" in gold to cover our economy? Do we, as people, value gold as much as we used to in "ye olden times"? Something like feudal Japan's currency based on rice seems to make more sense to me (everyone's gotta eat, after all). So anyway, why gold?
precious metals have a historical meaning of wealth. That's all I can think of.

How would we stand by world standards if currency was based on Uranium 235 and Plutonium I wonder?

[BradLohaus]

I don't remember the context for sure. Wasn’t he speaking of the national deficit and debt? For those, it really isn't that bad. They are still relatively low compared to our GNP. I have always been more concerned about the trade deficit. I will say he must have been high if he was talking about the trade deficit. Can I have some of that good stuff please?
Yeah, I'm pretty sure he was talking about the national deficit and debt, but saying that any deficit doesn't matter is wrong. But if someone thinks that the national deficit doesn't matter at all then I doubt that they think that the trade deficit matters much either. The only way you can say that a deficit doesn't matter is if you plan on spending like crazy and defaulting on the debt no matter what... :(


Back to the debt. My conservative instinct tells me that the only time we should run a deficit is during times of war and recession. All other times, we should be paying the interest on the debt, and some principle. If we had always done this, we could afford to make some really grand projects like the past. What if we needed to do something today on the scale of the Manhattan Project, Hoover Dam, or the Interstates? Those projects would not be very viable today as they were in the past, would they?
That's the way it used to be until recently. Take a look at this graph.

http://en.wikipedia.org/wiki/Image:US_Public_debt_per_GDP_1791-2006.svg

You can explain every spike in US public debt with your 2 exceptions except the current one we are living in.

1.)We started with debt from the revolutionary War.
2.)Small jump from the War of 1812.
3.)Big jump from the Civil War.
4.)Big jump from WW1
5.)Big jump from the New Deal programs.
6.)Gigantic jump from WW2.
7.)Big jump from Reagan's defense spending to finish off the Soviets, but this is also the period where our modern permanent debt policy begins - it takes off even higher after the Cold War ended. There was a dip around 2000 because tax revenues were high during that bubble period, but then it goes right back up. The government has adopted a policy of ever increasing debt and trade deficits, and the Federal Reserve has adopted a policy of devaluing the dollar everytime a recession looms.

Free trade as gospel truth started with NAFTA in the early '90s, and it looks like Cheney's opinion on national deficits is widely shared, so that explains the government's side. The Federal Reserve in this Greenspan/Bernanke era seems to think that it has the power to prevent recessions forever on the back of the dollar, so that explains their actions, and here we are today. Unless both institutions reverse their actions in the future there will be a heavy price to pay for these reckless positions they have taken, and the value of the dollar is what will pay that price... along with everyone who uses dollars.

So maybe this period can be explained...We are living on borrowed time from a recession that we are putting off, and the problem just gets worse and worse as we put it off in exchange for short run fixes. That is what is happening right now.


I am sick and tired of social programs that just create and maintain a class of dependant people. This is the largest unconstitutional spending our government does. It needs to be reigned in, or else we are doomed. I am mixed about Social Security and Medicare because I see it as unconstitutional, but I have no problems helping our seasoned citizens. I think it should be means tested.

I can't imagine that the founding fathers intended to allow the federal government to withhold income from workers before they even receive their checks. Always remember that FDR's cheif economic advisor was a communist who wrote about his desire to see the USA's economy become more like Russia's economy.


Now I’m no economic guru, never studied economics. What would happen if… Rather than using the payroll deductions as part of the budget, take that money out of circulation since it cannot effectively be invested. Wouldn’t it, through supply and demand strengthen the dollar? Then as people need it for retirement, we print more money. What would the pros and cons of that be I wonder? Wouldn't it be better than what we do today, and force a real picure of the deficit and debt?
Taking money out of circulation would strengthen the dollar; the Fed does that when it sells some of its Treasury debt and holds the dollars it receives out of circulation. However, if you are just going to print this money again later to cover a debt, then in the end nothing has changed. But you are on to something: monetizing the debt is exactly what the federal government is going to do once the baby boomers' entitlements really pile up; it's that or a massive tax increase. Or some of both.


They say Clinton had a budget surplus. That is not true. Besides not counting the interest on the debt, they counted excessive payroll taxes into the formula rather than treating it as a future debt. I wonder how many people don't know that?
Probably alot.

[Wild Cobra]

That's the way it used to be until recently. Take a look at this graph.

http://en.wikipedia.org/wiki/Image:US_Public_debt_per_GDP_1791-2006.svg

You can explain every spike in US public debt with your 2 exceptions except the current one we are living in.

1.)We started with debt from the revolutionary War.
2.)Small jump from the War of 1812.
3.)Big jump from the Civil War.
4.)Big jump from WW1
5.)Big jump from the New Deal programs.
6.)Gigantic jump from WW2.
7.)Big jump from Reagan's defense spending to finish off the Soviets, but this is also the period where our modern permanent debt policy begins - it takes off even higher after the Cold War ended. There was a dip around 2000 because tax revenues were high during that bubble period, but then it goes right back up. The government has adopted a policy of ever increasing debt and trade deficits, and the Federal Reserve has adopted a policy of devaluing the dollar everytime a recession looms.

This all gets complicated, and I don't see it as clear cut as you made it appear. I'll focus on #7. Look at all the social programs that were one by one added, starting mainly I think in the 70's. We came off the gold standard, and had price fixing too. The cold war was a huge hit in the escalating debt, but necessary, and can easily be supported by constitution. All the social programs developing during the same period cannot be supported by constitution. Then on top of that, we had double-didget inflation. atarting about 1979. With the debt doubling every 5 years with interest on the inflation alone, how can one objectively blame president Regan?

I blame congress for not putting the priorities right. Still, when the GDP graph is looked at, one could say that it increased more under president Bush(41) than president Regan. Two things military wise were occurring. Desert storm, and the five year reduction of forces. It costs money to do the extra relocating, base closures, and replacing some jobs with contractors. There were also tax increases, that decreased the spending power of us citizens. What actual reason? Who really knows. But I find it less than coincidental that the trend started reversing itself when the republicans took over congress. Still, they had too much pork spending. The graph starts to flatten and slightly increase from the 2000/2001 recession.

The graph doesn't really start increase again until about the time of 9/11. Understandable disaster spending, mobilization of troops, Katrina, etc. A few things back to back. If not for these, the graph would have likely continued downward after the little recession we had. Sure the debt continues to rise in dollar amounts, but the shape of the last few years suggect it should stop at about 68%. At least we have real military deployment to allow for an increasing debt.


Free trade as gospel truth started with NAFTA in the early '90s, and it looks like Cheney's opinion on national deficits is widely shared, so that explains the government's side.

I don't like the deficit and debt, but I do believe my view is right. That the debt should only increase in times of war or recession. I can accept the occasional huge program like a NASA project, major infrastructure building, etc. My problem is that the debt is not paid down when it can be, and I blame social spending policies. I don't like the notion that it isn't important, but I agree to the aspect that we are not at dangerous levels. Unless... internal inflation rates go back to high levels.



The Federal Reserve in this Greenspan/Bernanke era seems to think that it has the power to prevent recessions forever on the back of the dollar, so that explains their actions, and here we are today.

I think they do the a pint, but only to the point that the dollar gets less spending power on the international market. This would happen slowly anyway as long as we have a trade imbalance.



Unless both institutions reverse their actions in the future there will be a heavy price to pay for these reckless positions they have taken, and the value of the dollar is what will pay that price... along with everyone who uses dollars.

I agree with you on trade imbalances. As long as we focus on reducing the percentage of debt, we are going in the right direction. It would be preferable to actually pay it down in dollar values rather than percent however. That hasn't happened since Nixon was president, and it was likely just a lucky glitch.



So maybe this period can be explained...We are living on borrowed time from a recession that we are putting off, and the problem just gets worse and worse as we put it off in exchange for short run fixes. That is what is happening right now.

I see it as borrowed time from the trade imbalance, not the actual debt. They both affect our economy, but in different ways. Yet... they have connections too.

The trade imbalance brings us cheaper goods, but at the price of destroying internal supply and demand wages. Rather than workers getting paid more for there work and being able to pay more for USA made products, we settle for cheaper goods. Now this offsets some of the inflation we should have. I don't see our low inflation from treasury control. Prices are increasing. Goods that cannot be outsourced are rising at rates of what our inflation likely should be when averaged. Would this be offset? Hard to say. In general, if we didn't have outsourced products, we would pay more for goods and services, yet make more money too. Inflation would be higher, yet the extra tax revenue would likely keep the percentage of debt neutral. So hard to really say.



I can't imagine that the founding fathers intended to allow the federal government to withhold income from workers before they even receive their checks. Always remember that FDR's cheif economic advisor was a communist who wrote about his desire to see the USA's economy become more like Russia's economy.

Our founding fathers simple never envisioned the huge government we have today. We need to restore states rights and eliminate most of what the federal government has become today.

I don't think we can ever go back to the small government of the past, gut I agree. Taxes on income are counterproductive. Taxes are a necessary evil, so shouldn't we do a better job at collecting them? I say just tax items not essential to living. No taxes on food, toilet paper, toothpaste, etc. Tax the consumption of prepared foods, cars, VCR's TV's luxury items, alcohol, cigarettes, marijuana, etc. Not in a punitive way. Just in the manner of HR 25. The Fair Tax.

[BradLohaus]

This all gets complicated, and I don't see it as clear cut as you made it appear. I'll focus on #7. Look at all the social programs that were one by one added, starting mainly I think in the 70's. We came off the gold standard, and had price fixing too. The cold war was a huge hit in the escalating debt, but necessary, and can easily be supported by constitution. All the social programs developing during the same period cannot be supported by constitution. Then on top of that, we had double-didget inflation. atarting about 1979. With the debt doubling every 5 years with interest on the inflation alone, how can one objectively blame president Regan?
I think we are saying the same thing: deficits used to be reserved for war and extremely negative economic circumstances. But now, because of a bigger federal government (that is the result of increased socialism) we run constant deficts. It is all completely unconstitutional.


I blame congress for not putting the priorities right. Still, when the GDP graph is looked at, one could say that it increased more under president Bush(41) than president Regan. Two things military wise were occurring. Desert storm, and the five year reduction of forces. It costs money to do the extra relocating, base closures, and replacing some jobs with contractors. There were also tax increases, that decreased the spending power of us citizens. What actual reason? Who really knows. But I find it less than coincidental that the trend started reversing itself when the republicans took over congress. Still, they had too much pork spending. The graph starts to flatten and slightly increase from the 2000/2001 recession.

The graph doesn't really start increase again until about the time of 9/11. Understandable disaster spending, mobilization of troops, Katrina, etc. A few things back to back. If not for these, the graph would have likely continued downward after the little recession we had. Sure the debt continues to rise in dollar amounts, but the shape of the last few years suggect it should stop at about 68%. At least we have real military deployment to allow for an increasing debt.
Right now our public debt as a percentage of GDP is higher than it as ever been except for the WW2 period and its aftermath, and 3rd place (New Deal period) is pretty far back. I'm trying to look at that graph and remove the portions that are related to wars: Revolutionary, 1812, Civil, WW1, WW2, Cold, and Current. If you do that, what is happening is obvious: debt for social spending has been increasing since the New Deal. And the biggest social bill in history is about to hit us - thanks to the New Deal. We are becoming more and more socialized. Greater social spending, greater foreign spending - the debt is only going to increase.


I don't like the deficit and debt, but I do believe my view is right. That the debt should only increase in times of war or recession. I can accept the occasional huge program like a NASA project, major infrastructure building, etc. My problem is that the debt is not paid down when it can be, and I blame social spending policies. I don't like the notion that it isn't important, but I agree to the aspect that we are not at dangerous levels. Unless... internal inflation rates go back to high levels.
Agreed, except we are at dangerous levels, and inflation rates are lied about by the Fed and the government.



I think they do the a pint, but only to the point that the dollar gets less spending power on the international market. This would happen slowly anyway as long as we have a trade imbalance.[
It will happen slowly for years; it will have its ups and downs but it will generally decline (1 step forward, 2 steps back, basically), until one day the foreign dollar holders begin to massively move away from the dollar, and then it will start to decline really fast.


I see it as borrowed time from the trade imbalance, not the actual debt. They both affect our economy, but in different ways. Yet... they have connections too.
They are very much connected. Both are completley unsustainable, and yes we are on borrowed time from both of them; both will be corrected, and unless the Fed and the government reverse course, the dollar will be the correction mechanism.


I don't see our low inflation from treasury control. Prices are increasing.

The US treasury has absolutely no control over the inflation rate, as crazy as that sounds. In fact, the US government as no direct control over our monetary policy whatsoever. All official monetary policy is completely in the hands of the Federal Reserve. The Federal Reserve:

Is not a part of any branch of the federal government

Is not under the control of the federal government at all

Is owned by private banks

(Sorry, I haven't had a Fed rant in a while.)



Our founding fathers simple never envisioned the huge government we have today. We need to restore states rights and eliminate most of what the federal government has become today.
Ron couldn't have said it better himself. :toast

[Wild Cobra]

Ron couldn't have said it better himself. :toast
I have noticed for some time now, you and I agree on many things. Sorry if I have to be a spoiled sport about Ron Paul. I like everything about him, except his military stance. Yet... do I really need to repeat that?

Yes, the New Deal... The start of the destruction of America. Is there any practical way to get enough votes to overturn all this bas socialism? I see another revolution coming about in a near few decades to come. Probably another civil war to win back states rights.

[xrayzebra]

I don't post personal info...but I am completing a Math Graduate program now....

Learning your multiplication tables now, are you?

Sorry dan, just couldn't resist it. Damn good degree,
and in great demand.

[xrayzebra]

I don't remember the context for sure. Wasn’t he speaking of the national deficit and debt? For those, it really isn't that bad. They are still relatively low compared to our GNP. I have always been more concerned about the trade deficit. I will say he must have been high if he was talking about the trade deficit. Can I have some of that good stuff please?

Back to the debt. My conservative instinct tells me that the only time we should run a deficit is during times of war and recession. All other times, we should be paying the interest on the debt, and some principle. If we had always done this, we could afford to make some really grand projects like the past. What if we needed to do something today on the scale of the Manhattan Project, Hoover Dam, or the Interstates? Those projects would not be very viable today as they were in the past, would they?

I am sick and tired of social programs that just create and maintain a class of dependant people. This is the largest unconstitutional spending our government does. It needs to be reigned in, or else we are doomed. I am mixed about Social Security and Medicare because I see it as unconstitutional, but I have no problems helping our seasoned citizens. I think it should be means tested.

Now I’m no economic guru, never studied economics. What would happen if… Rather than using the payroll deductions as part of the budget, take that money out of circulation since it cannot effectively be invested. Wouldn’t it, through supply and demand strengthen the dollar? Then as people need it for retirement, we print more money. What would the pros and cons of that be I wonder? Wouldn't it be better than what we do today, and force a real picure of the deficit and debt? They say Clinton had a budget surplus. That is not true. Besides not counting the interest on the debt, they counted excessive payroll taxes into the formula rather than treating it as a future debt. I wonder how many people don't know that?


WC, here is an article written by Walter E. Williams,
an economist. I have posted several of his articles.
He contends trade deficits are not bad. And even cites
the depression era when we run trade surpluses.



Trade Deficits: Good or Bad?
By Walter E. Williams
Wednesday, January 17, 2007

Two recent articles ought to give pause to current political and journalistic ignorance, perhaps demagoguery, about our international trade deficit. In a December Wall Street Journal article titled "Embrace the Deficit," Bear Stearns' chief economist David Malpass lays additional waste to predictions of gloom and doom associated with our trade deficit.

Since 2001, our economy has created 9.3 million new jobs, compared with 360,000 in Japan and 1.1 million in the euro zone (European Union countries that have adopted the euro), excluding Spain. Japan and euro zone countries had trade surpluses, while we had large and increasing trade deficits. Mr. Malpass says that both Spain and the U.K., like the U.S., ran trade deficits, but they created 3.6 and 1.3 million new jobs, respectively. Moreover, wages rose in the U.S., Spain and the U.K.

Professor Don Boudreaux, chairman of George Mason University's Economics Department, wrote "If Trade Surpluses Are So Great, the 1930s Should Have Been a Booming Decade" (www.cafehayek.com). According to data he found at the National Bureau of Economic Research's "Macrohistory Database", it turns out that the U.S. ran a trade surplus in nine of the 10 years of the Great Depression, with 1936 being the lone exception.

During those 10 years, we had a significant trade surplus, with exports totaling $26.05 billion and imports totaling only $21.13 billion. So what do trade surpluses during a depression and trade deficits during an economic boom prove, considering we've had trade deficits for most of our history? Professor Boudreaux says they prove absolutely nothing. Economies are far too complex to draw simplistic causal connections between trade deficits and surpluses and economic welfare and growth.

Despite all the criticism from abroad and the doom-mongers at home, the world finds our economy attractive. Just as we've been chomping at the bit to buy foreign goods and services, foreigners have been chomping at the bit to invest trillions of dollars in the U.S. Mr. Malpass says our 10-year government bonds yield 4.6 percent per year compared with Japan's 1.6 percent; our government debt is 38 percent of GDP versus 86 percent in Japan; and while Europe's debt to GDP ratio is not as extreme as Japan's, it's not nearly as favorable as ours.

Here's a smell test. Pretend you're a man from Mars knowing absolutely nothing about Earth and you're looking for a nice place to land. You find out that there's one country, say, country A, where earthlings from other countries voluntarily invest and entrust trillions of dollars of their hard earnings. There are other countries where they're not nearly as willing to make the same investment. Which one of those countries would you deem the most prosperous and with the greatest growth prospects? You'd pick country A, which turns out to be the United States. As such, you'd be just like most of the world's population who, if free to do so, would invest and live in the U.S.

The late Professor Milton Friedman said, "Underlying most arguments against the free market is a lack of belief in freedom itself." Some people justify their calls for protectionism by claiming that they're for free trade but fair trade. That's nonsense. Think about it: When I purchased my Lexus from a Japanese producer, through an intermediary, I received what I wanted. The Japanese producer received what he wanted. In my book, that's a fair trade.

Of course, an American auto producer, from whom I didn't purchase my car, might whine that it was unfair. He would like Congress to impose import tariffs and quotas to make Japanese-produced cars less attractive and available in the hopes that I'd buy an American-produced car. In my book, that would be unfair.

Dr. Williams serves on the faculty of George Mason University as John M. Olin Distinguished Professor of Economics and is the author of More Liberty Means Less Government: Our Founders Knew This Well.

Be the first to read Walter Williams' column. Sign up today and receive Townhall.com delivered each morning to your inbox.

©Creators Syndicate


Copyright © 2006 Salem Web Network. All Rights Reserved.

WC: I am posting a link to an interview where he
touches on the same subject. But the interview is
something that is so profound, in my estimation, it
touches on a period of my life and the discipline
that is so distant from todays. It is a damn good
read. Enjoy

http://www.objectivistcenter.org/ct-1750-.aspx

[BradLohaus]

I have noticed for some time now, you and I agree on many things. Sorry if I have to be a spoiled sport about Ron Paul. I like everything about him, except his military stance. Yet... do I really need to repeat that?

Yes, the New Deal... The start of the destruction of America. Is there any practical way to get enough votes to overturn all this bas socialism? I see another revolution coming about in a near few decades to come. Probably another civil war to win back states rights.

Yeah I think everything we've been arguing about aside from US ME policy is pretty minor. I couldn't disagree too much with anybody who recognizes that the New Deal was the Trojan Horse of socialism in this country.


WC, here is an article written by Walter E. Williams,
an economist. I have posted several of his articles.
He contends trade deficits are not bad. And even cites
the depression era when we run trade surpluses.

http://www.spurstalk.com/forums/showthread.php?t=58120&highlight=trade+deficit

temujin - you still out there?

[boutons_]

"socialism"

Trotting out that word is typical demagoguery by movement conservatives, you fuckers stick robotiically to your talking points, that's for sure.

Movement conservatives' only objective is to rape the sheeple and country and enrich the corps and top 2%.

America is "socialastic"? GMAFB

[BradLohaus]

"socialism"

Trotting out that word is typical demagoguery by movement conservatives, you fuckers stick robotiically to your talking points, that's for sure.

Movement conservatives' only objective is to rape the sheeple and country and enrich the corps and top 2%.

America is "socialastic"? GMAFB

boutons - don't be so knee jerk in your reactions; you and I obviously agree on alot of important issues. I completely understand how corporatism and globalization are negatively impacting our country. Those things are the antithesis of free market capitalism; they are basically monopolism/oligopolism. Don't lump conservatives in with the neocons. Look at all the Ron Paul supporters here.

But to suggest that the USA hasn't gradually become more socialistic since the New Deal is to ignore reality.

[DarkReign]

But to suggest that the USA hasn't gradually become more socialistic since the New Deal is to ignore reality.

Truer words havent been spoken. Why again, did the New Deal get passed? (rhetorical)

[Nbadan]

Calling out Alan Greenspin....


http://www.imgred.com/http://images.salon.com/comics/tomo/2007/09/24/tomo/story.jpg

[BradLohaus]

Calling out Alan Greenspin....

Too bad Greenspan would never do an interview with someone who might lay it out like that. But even if that happened, Greenspan would just start talking about something else, like Bernanke did with Paul.

Paul: The Fed devalues the dollar to bail out big banks and Wall Street. This housing crises is the result of a near disappearance of risk in the mortgage industry, which the Federal Reserve precipitated by keeping interest rates artificially low for years. What do you have to say about that?

Bernanke: The inflation rate is 2%. Trust me; would a bank lie to you? Next question.


I think these Fed Chairman lie so much for so long that they start to believe their own lies, even when they defy logic and reality. I really do.

[DarkReign]

Paul: The Fed devalues the dollar to bail out big banks and Wall Street. This housing crises is the result of a near disappearance of risk in the mortgage industry, which the Federal Reserve precipitated by keeping interest rates artificially low for years. What do you have to say about that?

Bernanke: The inflation rate is 2%. Trust me; would a bank lie to you? Next question.

Here I thought that was the one and only thing you were never to say if youre being honest. Who knew?