Political Ramblings

[hemet dennis]

Besides overspending being a real issue: The debt is now so high that it is outstripping the secured assets to cover it many times over. This is the same issue that the investment banks found themselves in. Leveraging capitol always has had dire end consequences.

When it all comes home to roost the whole political machine will claim they didn't see it coming.

Well the banks got in trouble by following the Governments wish for everyone to own a home. When you lend $300,000 to a person with questionable credit on a house that's worth $150,000 things wont turn out well.

 

[kstaven]

They loaned out many times more money than the value of the held assets. So their are two sides to the story. The people who bought under those circumstances and the con artists who sold to them. Eventually it would have kicked back even with a pool of people who paid their debts. Loaning out $110.00 on an item worth $2.00 always has and always will cause an economic backlash.

Now we place bandaid on bandaid hoping we are dead and gone before it all blows to bits.

 

[hemet dennis]

They loaned out many times more money than the value of the held assets. So their are two sides to the story. The people who bought under those circumstances and the con artists who sold to them. Eventually it would have kicked back even with a pool of people who paid their debts. Loaning out $110.00 on an item worth $2.00 always has and always will cause an economic backlash.

Now we place bandaid on bandaid hoping we are dead and gone before it all blows to bits.

If the people had payed what the contracts that they signed called for there would have been no problem. But they thought when there interest only loans ran out their $300,000 home would be worth $500,000 and would refinance it.

 

[kstaven]

But they thought when there interest only loans ran out their $300,000 home would be worth $500,000 and would refinance it.

That is what the investment banks tried to do with their own funds and assets and lost the same way. In the end they couldn't pay their debts either because they had extended so many times past any assets or viable income that they had.

 

[kstaven]

In the end the government and the investment banks both have the same greed and control mindset that gets us into these problems. Then it is the whole country that suffers, while they sit there and say "they didn't see it coming". That isn't true that they didn't know it would happen. The party just ended and things collapsed quicker than they hoped. Now they just move on to the same game with different assets.

 

[hemet dennis]

In the end the government and the investment banks both have the same greed and control mindset that gets us into these problems. Then it is the whole country that suffers, while they sit there and say "they didn't see it coming". That isn't true that they didn't know it would happen. The party just ended and things collapsed quicker than they hoped. Now they just move on to the same game with different assets.

I don't think it's greed of Government. I think it's the people voting for the ones that will give them the most. In the last election it was the rich that were the lambs, and guess what the foxes decided to have for lunch.

 

[rufus]

All good points about inflation. But as I said if inflation was to rise to much then the FED could start to contract the money supply right away. If it was left up to Congress then it would take months if not years to get it done.

Yes I have seen times when the FED hasn't bought U.S. bonds. It was good economic times and the FED wasn't needed to buy them. When the Government is spending over a trillion dollars more then they take in they have to sell more bonds. If you take that trillion dollars from the investment people who will have the money to invest in business ? So business will contract and lay off millions of workers. You cant put the blame on the FED, it's the Government overspending that's the problem. What do you think the Government would do if no one bought any bonds ? Do you think they would stop spending ? Do you think they would stop printing money ?

So if we ended the FED what then ?

And just how would the Fed contract the money supply? Take from the deposits of the member banks? I sure don't see that happening. Maybe they could sell some of those government bonds that the Treasury sells them. But the reason that the Fed had to buy them was because the Arabs and Chinese stopped buying them. The world market for US government bonds is pretty much saturated. When the run on the dollar starts, the world can send more dollars onto the market faster than the Fed shrink the money supply.

They could raise the reserve requirements of member banks, but that would send our economy into deeper depression.

Again, we are reduced to the Treasury selling dubious bonds to the Fed in exchange for dollars that are losing their value. I don't see a happy future there.

 

[kstaven]

Pendulum swings both ways Hemet. Take care of me has replaced a society that knows how to take care of themselves. This is where the whole system fails. Founding fathers of this country had many warnings in their notes and quotes about giving control of the systems to the government and the people losing control of the overall system.

 

[kstaven]

And just how would the Fed contract the money supply? Take from the deposits of the member banks? I sure don't see that happening. Maybe they could sell some of those government bonds that the Treasury sells them. But the reason that the Fed had to buy them was because the Arabs and Chinese stopped buying them. The world market for US government bonds is pretty much saturated. When the run on the dollar starts, the world can send more dollars onto the market faster than the Fed shrink the money supply.

They could raise the reserve requirements of member banks, but that would send our economy into deeper depression.

Again, we are reduced to the Treasury selling dubious bonds to the Fed in exchange for dollars that are losing their value. I don't see a happy future there.

In the end all parties concerned sell the illusion of eternal growth to the public at large and we tend to buy into it for the most part. Every market and system has a saturation point and we are just seeing the first real edge of this iceburg. We really should rename the currency the "titanic" In both circumstances the controlling crews partied while approaching the collision neared and then said they didn't see it coming.

 

[hemet dennis]

Quote:
The FED could do both, sell bonds and raise the reserve requirements.

The Arabs and the Chinese stopped buying U.S. bonds because the interest rate is so low on them, Not because the market is saturated. Why do people buy bonds from Spain and Italy ? Do you think there's the same risk as U.S. bonds ? No it's the higher return.

Another thing the FED doesn't buy any U.S. bonds from the treasury, they only buy on the open market.