Home › Forums › Financial Markets/Economics › Stagflation hits the main stream press!!!
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JWM in SD.
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February 26, 2008 at 9:21 PM #160849February 26, 2008 at 9:36 PM #160790
SD Realtor
ParticipantKewp I have thought for years that our creditors would someday stop financing out debt. I understand what you are seeing but I don’t know why it hasn’t happened yet.
Personally I think they will not do it without some sort of geo-political crisis as part of the deal. I think they will simple leverage the threat as a means to achieve geo-political goals like Taiwan and such. Just a hunch…
To me, China is much stronger by continuing to keep America addicted. Ultimately making America take financial medicine that is needed will only make America much stronger in the long run. So I acknowledge your statements as making alot of sense, but not so sure the end game is as imminent as you make it sound.
Believe me I am not married to my opinion either though.
SD Realtor
February 26, 2008 at 9:36 PM #160772SD Realtor
ParticipantKewp I have thought for years that our creditors would someday stop financing out debt. I understand what you are seeing but I don’t know why it hasn’t happened yet.
Personally I think they will not do it without some sort of geo-political crisis as part of the deal. I think they will simple leverage the threat as a means to achieve geo-political goals like Taiwan and such. Just a hunch…
To me, China is much stronger by continuing to keep America addicted. Ultimately making America take financial medicine that is needed will only make America much stronger in the long run. So I acknowledge your statements as making alot of sense, but not so sure the end game is as imminent as you make it sound.
Believe me I am not married to my opinion either though.
SD Realtor
February 26, 2008 at 9:36 PM #160859SD Realtor
ParticipantKewp I have thought for years that our creditors would someday stop financing out debt. I understand what you are seeing but I don’t know why it hasn’t happened yet.
Personally I think they will not do it without some sort of geo-political crisis as part of the deal. I think they will simple leverage the threat as a means to achieve geo-political goals like Taiwan and such. Just a hunch…
To me, China is much stronger by continuing to keep America addicted. Ultimately making America take financial medicine that is needed will only make America much stronger in the long run. So I acknowledge your statements as making alot of sense, but not so sure the end game is as imminent as you make it sound.
Believe me I am not married to my opinion either though.
SD Realtor
February 26, 2008 at 9:36 PM #160758SD Realtor
ParticipantKewp I have thought for years that our creditors would someday stop financing out debt. I understand what you are seeing but I don’t know why it hasn’t happened yet.
Personally I think they will not do it without some sort of geo-political crisis as part of the deal. I think they will simple leverage the threat as a means to achieve geo-political goals like Taiwan and such. Just a hunch…
To me, China is much stronger by continuing to keep America addicted. Ultimately making America take financial medicine that is needed will only make America much stronger in the long run. So I acknowledge your statements as making alot of sense, but not so sure the end game is as imminent as you make it sound.
Believe me I am not married to my opinion either though.
SD Realtor
February 26, 2008 at 9:36 PM #160462SD Realtor
ParticipantKewp I have thought for years that our creditors would someday stop financing out debt. I understand what you are seeing but I don’t know why it hasn’t happened yet.
Personally I think they will not do it without some sort of geo-political crisis as part of the deal. I think they will simple leverage the threat as a means to achieve geo-political goals like Taiwan and such. Just a hunch…
To me, China is much stronger by continuing to keep America addicted. Ultimately making America take financial medicine that is needed will only make America much stronger in the long run. So I acknowledge your statements as making alot of sense, but not so sure the end game is as imminent as you make it sound.
Believe me I am not married to my opinion either though.
SD Realtor
February 26, 2008 at 9:50 PM #160777kewp
ParticipantIt hasn’t happened yet because it hasn’t happened yet.
Simple as that.
The analogy I like to use is someone living off of credit cards and using cash advances from one to pay the balances of the other. If someone can get enough credit cards, they can keep this game going for years. If they could get an infinite supply, forever. But in a world of finite credit supply, it will all ultimately come crashing down.
For America, the credit cards are creditor nations. And there are enough of them to have kept us solvent up till now.
Something that kept the game going for as long as it has is that Wall Street managed to convince the world that the bond ratings were actually meaningful. Once enough AAA stuff turns to junk over the next year or so you can bet they will stop financing our debt.
February 26, 2008 at 9:50 PM #160864kewp
ParticipantIt hasn’t happened yet because it hasn’t happened yet.
Simple as that.
The analogy I like to use is someone living off of credit cards and using cash advances from one to pay the balances of the other. If someone can get enough credit cards, they can keep this game going for years. If they could get an infinite supply, forever. But in a world of finite credit supply, it will all ultimately come crashing down.
For America, the credit cards are creditor nations. And there are enough of them to have kept us solvent up till now.
Something that kept the game going for as long as it has is that Wall Street managed to convince the world that the bond ratings were actually meaningful. Once enough AAA stuff turns to junk over the next year or so you can bet they will stop financing our debt.
February 26, 2008 at 9:50 PM #160467kewp
ParticipantIt hasn’t happened yet because it hasn’t happened yet.
Simple as that.
The analogy I like to use is someone living off of credit cards and using cash advances from one to pay the balances of the other. If someone can get enough credit cards, they can keep this game going for years. If they could get an infinite supply, forever. But in a world of finite credit supply, it will all ultimately come crashing down.
For America, the credit cards are creditor nations. And there are enough of them to have kept us solvent up till now.
Something that kept the game going for as long as it has is that Wall Street managed to convince the world that the bond ratings were actually meaningful. Once enough AAA stuff turns to junk over the next year or so you can bet they will stop financing our debt.
February 26, 2008 at 9:50 PM #160795kewp
ParticipantIt hasn’t happened yet because it hasn’t happened yet.
Simple as that.
The analogy I like to use is someone living off of credit cards and using cash advances from one to pay the balances of the other. If someone can get enough credit cards, they can keep this game going for years. If they could get an infinite supply, forever. But in a world of finite credit supply, it will all ultimately come crashing down.
For America, the credit cards are creditor nations. And there are enough of them to have kept us solvent up till now.
Something that kept the game going for as long as it has is that Wall Street managed to convince the world that the bond ratings were actually meaningful. Once enough AAA stuff turns to junk over the next year or so you can bet they will stop financing our debt.
February 26, 2008 at 9:50 PM #160763kewp
ParticipantIt hasn’t happened yet because it hasn’t happened yet.
Simple as that.
The analogy I like to use is someone living off of credit cards and using cash advances from one to pay the balances of the other. If someone can get enough credit cards, they can keep this game going for years. If they could get an infinite supply, forever. But in a world of finite credit supply, it will all ultimately come crashing down.
For America, the credit cards are creditor nations. And there are enough of them to have kept us solvent up till now.
Something that kept the game going for as long as it has is that Wall Street managed to convince the world that the bond ratings were actually meaningful. Once enough AAA stuff turns to junk over the next year or so you can bet they will stop financing our debt.
February 26, 2008 at 10:35 PM #160492DWCAP
Participantadmittedly I am new to the geopolitical power plays, so please dont jump down my throat if I say something dumb. But I think you guys are missing a very key piece of the picture when you wonder why they keep financing us. ‘What the hell else are they gonna do with this money?’
China, Japan, Saudi Arabia have been gaming the system for years to make sure their export laden economies at turning at full steam. They invent very little, relying on their amazing if limited natural resources or pure cheap muscle to grow themselves. This brings in huge numbers of dollars, way more then their economies can absorb without runaway inflation and chaos. They have to put this stuff outa the country and where better than where it is coming from? They lend because they HAVE to lend. If they didnt, their curriencies would appreciate rapidly as wealth flowed into the country and didnt leave. This would eventually crush export laden economies as labor is always cheap somewhere, and oil has substitutes at the right prices. So for all the worry about their rising power, remember America can simply say “we wont buy from you anymore” and set up shop in Vietnam, or Kenya, or Mexico if it is close to home and get our oil from Canado and Norway. Their economies would CRASH, I dont care how many chinese their are, the home market just isnt mature enough to drive itself.
So if you wonder why this has gone on so long, I think it is because we have created a system where we have both a country that constantly is inventing massive amounts of wealth (internet anyone) but is debt laden, vain and stupid, AND a network of creditor countries unable to support themselves. We have to borrow, but they have to lend. Holding out on the USA gets them nothing but a crashed economy and rapidly appreciating curriencies, further crashing their economy.February 26, 2008 at 10:35 PM #160889DWCAP
Participantadmittedly I am new to the geopolitical power plays, so please dont jump down my throat if I say something dumb. But I think you guys are missing a very key piece of the picture when you wonder why they keep financing us. ‘What the hell else are they gonna do with this money?’
China, Japan, Saudi Arabia have been gaming the system for years to make sure their export laden economies at turning at full steam. They invent very little, relying on their amazing if limited natural resources or pure cheap muscle to grow themselves. This brings in huge numbers of dollars, way more then their economies can absorb without runaway inflation and chaos. They have to put this stuff outa the country and where better than where it is coming from? They lend because they HAVE to lend. If they didnt, their curriencies would appreciate rapidly as wealth flowed into the country and didnt leave. This would eventually crush export laden economies as labor is always cheap somewhere, and oil has substitutes at the right prices. So for all the worry about their rising power, remember America can simply say “we wont buy from you anymore” and set up shop in Vietnam, or Kenya, or Mexico if it is close to home and get our oil from Canado and Norway. Their economies would CRASH, I dont care how many chinese their are, the home market just isnt mature enough to drive itself.
So if you wonder why this has gone on so long, I think it is because we have created a system where we have both a country that constantly is inventing massive amounts of wealth (internet anyone) but is debt laden, vain and stupid, AND a network of creditor countries unable to support themselves. We have to borrow, but they have to lend. Holding out on the USA gets them nothing but a crashed economy and rapidly appreciating curriencies, further crashing their economy.February 26, 2008 at 10:35 PM #160823DWCAP
Participantadmittedly I am new to the geopolitical power plays, so please dont jump down my throat if I say something dumb. But I think you guys are missing a very key piece of the picture when you wonder why they keep financing us. ‘What the hell else are they gonna do with this money?’
China, Japan, Saudi Arabia have been gaming the system for years to make sure their export laden economies at turning at full steam. They invent very little, relying on their amazing if limited natural resources or pure cheap muscle to grow themselves. This brings in huge numbers of dollars, way more then their economies can absorb without runaway inflation and chaos. They have to put this stuff outa the country and where better than where it is coming from? They lend because they HAVE to lend. If they didnt, their curriencies would appreciate rapidly as wealth flowed into the country and didnt leave. This would eventually crush export laden economies as labor is always cheap somewhere, and oil has substitutes at the right prices. So for all the worry about their rising power, remember America can simply say “we wont buy from you anymore” and set up shop in Vietnam, or Kenya, or Mexico if it is close to home and get our oil from Canado and Norway. Their economies would CRASH, I dont care how many chinese their are, the home market just isnt mature enough to drive itself.
So if you wonder why this has gone on so long, I think it is because we have created a system where we have both a country that constantly is inventing massive amounts of wealth (internet anyone) but is debt laden, vain and stupid, AND a network of creditor countries unable to support themselves. We have to borrow, but they have to lend. Holding out on the USA gets them nothing but a crashed economy and rapidly appreciating curriencies, further crashing their economy.February 26, 2008 at 10:35 PM #160789DWCAP
Participantadmittedly I am new to the geopolitical power plays, so please dont jump down my throat if I say something dumb. But I think you guys are missing a very key piece of the picture when you wonder why they keep financing us. ‘What the hell else are they gonna do with this money?’
China, Japan, Saudi Arabia have been gaming the system for years to make sure their export laden economies at turning at full steam. They invent very little, relying on their amazing if limited natural resources or pure cheap muscle to grow themselves. This brings in huge numbers of dollars, way more then their economies can absorb without runaway inflation and chaos. They have to put this stuff outa the country and where better than where it is coming from? They lend because they HAVE to lend. If they didnt, their curriencies would appreciate rapidly as wealth flowed into the country and didnt leave. This would eventually crush export laden economies as labor is always cheap somewhere, and oil has substitutes at the right prices. So for all the worry about their rising power, remember America can simply say “we wont buy from you anymore” and set up shop in Vietnam, or Kenya, or Mexico if it is close to home and get our oil from Canado and Norway. Their economies would CRASH, I dont care how many chinese their are, the home market just isnt mature enough to drive itself.
So if you wonder why this has gone on so long, I think it is because we have created a system where we have both a country that constantly is inventing massive amounts of wealth (internet anyone) but is debt laden, vain and stupid, AND a network of creditor countries unable to support themselves. We have to borrow, but they have to lend. Holding out on the USA gets them nothing but a crashed economy and rapidly appreciating curriencies, further crashing their economy. -
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