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Very Hot Topic (More than 25 Replies) Why the market/economy isn't crashing (Read 701 times)
kaz
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Why the market/economy isn't crashing
Jan 11th, 2020 at 9:31am
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This is for Chief.  It's not an insult OP in any way.  I want to explain why the market isn't crashing despite your accurate portrayal of the effect of our government monetary policy.



1) As I said, your portrayal of the effect of things like printing money and government spending and lending is accurate.  It has the effect on the economy you think it does and government is stealing from the people



2) However, as for today, it isn't at the level you think it is.   If I take a bucket and start emptying a pool, it may take a few hours, but the effect on the water level would be quickly noticeable and eventually impact the safety of swimming in the pool.  If you go to a local lake and start emptying the lake with the same bucket, you'd probably never notice.  The lake would keep filling in from local streams and never be noticeable.


3) So how big is the impact?  How big is the lake?  So to address this, I go to secondary measures.  Inflation is low.  True, it's higher than government portrays it, but it's still low.   Companies are making real profits (not just nominal profits).   Productivity keeps increasing (this is a huge one). Unemployment is zero.  If you want a job, you can get one.  Also, US currency is holding strong against foreign currencies.

Any economic collapse wouldn't be sudden.  We would see effects in those other measures first.  Those effects would start and then grow.  But those measures are good compared to the past, not bad.  There is no sign of any imminent collapse


4) So as of today, when I look at the other measures, my view is that the government is not stealing our bank account, it's stealing from the income coming into the bank account.  The Fed are master criminals.  They know how much they can steal and not collapse the economy.  It's still dilutive, it's still stealing.  But the collapse thing isn't happening based on current rates of stealing.  You can embezzle from your employer and not cause your company to collapse if you keep your embezzlement in certain ranges.



5) So what about the future?  What scares me is not so much the rate they are stealing now so much as the growth.  Democrats throw tens of trillions in proposals around like chump change.  That would cause our collapse.  That would drain the lake.  Also, deficits are growing way too fast.  The long range prospects are scary.  That's why I don't speak up when you say that.  I think you're over stating where we are, but not where we're going.

You and I will be dead before the chickens come home to roost.  But I care what world we leave our children
  

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yamcha
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Re: Why the market/economy isn't crashing
Reply #1 - Jan 11th, 2020 at 10:20am
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It's not just the economy.  It is the values.  America died quite a while back and it is obvious.  Just ask yourself if in 1980 you would ever imagine things coming to this.

Did we really win the real cold war?

Chief understands what you are saying and he knows.  That is why he is burying gold.  He just doesn't understand the future collapse will not just be of the fiat currency or lack of gun rights.

I don't even understand why none of you appreciate what I am saying about future weapons either.  Guns are already obsolete.
  
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Re: Why the market/economy isn't crashing
Reply #2 - Jan 11th, 2020 at 11:23am
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kaz wrote on Jan 11th, 2020 at 9:31am:
. . . So what about the future?  What scares me is not so much the rate they are stealing now so much as the growth.  Democrats throw tens of trillions in proposals around like chump change.  That would cause our collapse.  That would drain the lake.  Also, deficits are growing way too fast.  The long range prospects are scary.  That's why I don't speak up when you say that.  I think you're over stating where we are, but not where we're going.
Yes, I have predicted a devastating economic collapse for the US.   Devastating not meaning zombies walking the streets or a 'lights-out' scenario.  Devastating meaning that 85% of Americans will lose everything.

I wisely didn't put a time stamp on it.  It might happen in 5 years, it might happen in 15 years, it might happen in 35 years.

Bubbles can only be inflated so much.  Eventually, they pop.   It will be devastating for most people.  Smart people who move their wealth into 'hard' assets (not 1s and zeroes in a bank's database) are better positioned to survive. 

Today, the US dollar enjoys being the World Reserve Currency.   How long can that be sustained?  I have no idea. What I do know is that other strong countries would love to become the new World Reserve Currency.  China and India are stockpiling gold.  That's a strong indicator that they are preparing for an economic paradigm shift.

They are positioning.

kaz wrote on Jan 11th, 2020 at 9:31am:
You and I will be dead before the chickens come home to roost. 
We hope!  Grin
  

Governments will always devise ways to deprive an honest man of his money or property, and claim that it's legal.
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kaz
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Re: Why the market/economy isn't crashing
Reply #3 - Jan 11th, 2020 at 11:38am
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SkyChief wrote on Jan 11th, 2020 at 11:23am:
Bubbles can only be inflated so much.  Eventually, they pop.   It will be devastating for most people.  Smart people who move their wealth into 'hard' assets (not 1s and zeroes in a bank's database) are better positioned to survive


The problem with that is the low returns over time.  A diversified portfolio will provide a lot more retirement money over time.   Mine is heavily international.  Granted that doesn't protect me from a global collapse.

SkyChief wrote on Jan 11th, 2020 at 11:23am:
Today, the US dollar enjoys being the World Reserve Currency.   How long can that be sustained?  I have no idea. What I do know is that other strong countries would love to become the new World Reserve Currency.  China and India are stockpiling gold.  That's a strong indicator that they are preparing for an economic paradigm shift.

They are positioning.


China and Europe have tried to be the world reserve currency for a long time with no success.   That was one of the big goals behind the creation of the Euro.  BTW, China lies all the time about their economics.  The lies themselves are also a deterrent to them being the world reserve currency since no one trusts them.  The Euro seems to just not be on a path to overtake us.

As to how long it can last, right now, it seems like it can last until the Democrats start implementing their trillions of dollars are like water spending plans and they out socialist Europe

SkyChief wrote on Jan 11th, 2020 at 11:23am:
We hope!  Grin


Yes, in a hopefully we'll survive the Democrat's plans a long time and not that we embrace Mommy's Little Man's death pact proposal
  

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Jeff
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Re: Why the market/economy isn't crashing
Reply #4 - Jan 11th, 2020 at 12:56pm
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kaz wrote on Jan 11th, 2020 at 9:31am:
This is for Chief.  It's not an insult OP in any way.  I want to explain why the market isn't crashing despite your accurate portrayal of the effect of our government monetary policy.



1) As I said, your portrayal of the effect of things like printing money and government spending and lending is accurate.  It has the effect on the economy you think it does and government is stealing from the people



2) However, as for today, it isn't at the level you think it is.   If I take a bucket and start emptying a pool, it may take a few hours, but the effect on the water level would be quickly noticeable and eventually impact the safety of swimming in the pool.  If you go to a local lake and start emptying the lake with the same bucket, you'd probably never notice.  The lake would keep filling in from local streams and never be noticeable.


3) So how big is the impact?  How big is the lake?  So to address this, I go to secondary measures.  Inflation is low.  True, it's higher than government portrays it, but it's still low.   Companies are making real profits (not just nominal profits).   Productivity keeps increasing (this is a huge one). Unemployment is zero.  If you want a job, you can get one.  Also, US currency is holding strong against foreign currencies.

Any economic collapse wouldn't be sudden.  We would see effects in those other measures first.  Those effects would start and then grow.  But those measures are good compared to the past, not bad.  There is no sign of any imminent collapse


4) So as of today, when I look at the other measures, my view is that the government is not stealing our bank account, it's stealing from the income coming into the bank account.  The Fed are master criminals.  They know how much they can steal and not collapse the economy.  It's still dilutive, it's still stealing.  But the collapse thing isn't happening based on current rates of stealing.  You can embezzle from your employer and not cause your company to collapse if you keep your embezzlement in certain ranges.



5) So what about the future?  What scares me is not so much the rate they are stealing now so much as the growth.  Democrats throw tens of trillions in proposals around like chump change.  That would cause our collapse.  That would drain the lake.  Also, deficits are growing way too fast.  The long range prospects are scary.  That's why I don't speak up when you say that.  I think you're over stating where we are, but not where we're going.

You and I will be dead before the chickens come home to roost.  But I care what world we leave our children
You make a lot of assumptions, and are selective about what you choose to look at.

For instance, real inflation is close to 10%, and has been since 2001...

http://www.shadowstats.com/alternate_data/inflation-charts

Real unemployment is over 20%, and has been since 2009...

http://www.shadowstats.com/alternate_data/unemployment-charts

Some companies are profitable, but very many are losing money.

Corporate debt is at an all time high. The national debt is astronomical. Most state governments are carrying huge debt. Unfunded liabilities are at an all time high.

The Fed is pumping 'money' into banks at an unprecedented rate.

To top it all off, real GDP growth has been negative since 2005, and in 2009 was negative 6%...

http://www.shadowstats.com/alternate_data/gross-domestic-product-charts

Honestly, I don't think the rise in the stock market even matches the year-over-year inflation rate of 10%.

Even I will be around to see the crash. Shocked



  

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SkyChief
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Re: Why the market/economy isn't crashing
Reply #5 - Jan 11th, 2020 at 1:04pm
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Jeff wrote on Jan 11th, 2020 at 12:56pm:
For instance, real inflation is close to 10%, and has been since 2001...

http://www.shadowstats.com/alternate_data/inflation-charts
I've been saying this for years.

Now I have something to reference it to.   Smiley
  

Governments will always devise ways to deprive an honest man of his money or property, and claim that it's legal.
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kaz
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Re: Why the market/economy isn't crashing
Reply #6 - Jan 11th, 2020 at 1:09pm
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Jeff wrote on Jan 11th, 2020 at 12:56pm:
You make a lot of assumptions, and are selective about what you choose to look at.

For instance, real inflation is close to 10%, and has been since 2001...

http://www.shadowstats.com/alternate_data/inflation-charts

Real unemployment is over 20%, and has been since 2009...

http://www.shadowstats.com/alternate_data/unemployment-charts

Some companies are profitable, but very many are losing money.

Corporate debt is at an all time high. The national debt is astronomical. Most state governments are carrying huge debt. Unfunded liabilities are at an all time high.

The Fed is pumping 'money' into banks at an unprecedented rate.

To top it all off, real GDP growth has been negative since 2005, and in 2009 was negative 6%...

http://www.shadowstats.com/alternate_data/gross-domestic-product-charts

Honestly, I don't think the rise in the stock market even matches the year-over-year inflation rate of 10%.

Even I will be around to see the crash. Shocked





The musings of a drunken know it all hillbilly drinking whiskey on his front porch.  Your knowledge of finance couldn't power a night light.  I'll comment on a couple
  

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kaz
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Re: Why the market/economy isn't crashing
Reply #7 - Jan 11th, 2020 at 1:10pm
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SkyChief wrote on Jan 11th, 2020 at 1:04pm:
I've been saying this for years.

Now I have something to reference it to.   Smiley


This is absurd.  You realize that 10% real inflation would mean that either you doubled your salary in the last 7 years (with compounding) or you can buy half the stuff.

I don't argue that the government statistics are accurate.  But 10% is preposterous
  

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kaz
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Re: Why the market/economy isn't crashing
Reply #8 - Jan 11th, 2020 at 1:12pm
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Jeff wrote on Jan 11th, 2020 at 12:56pm:
Real unemployment is over 20%, and has been since 2009...


First, you don't know what you're talking about.  Unemployment means you're looking for a job, not that you're not working.   Mothers at home for example are not "unemployed" if they don't want to work

Second, I defined what I meant by zero.  If you want a job, you can get one.  Being an idiot you redefined the term rather than addressing what I actually said
  

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kaz
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Re: Why the market/economy isn't crashing
Reply #9 - Jan 11th, 2020 at 1:13pm
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Jeff wrote on Jan 11th, 2020 at 12:56pm:
Some companies are profitable, but very many are losing money


Thanks, boondocks market guru for that incredible insight
  

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