Lords of Death Forums Lords of Death Forums LoD General Discussion What does our national debt imply for the future?

like i said, i was tired and lazy and didnt feel like getting into it or putting thoughts down, hence my points are incoherent and are all over the place.....all you seem to do is blame the right side of the aisle and offer up zero solutions to any problem.
And i wouldnt put up the "look up FDR did for the economy" like every other left leaning liberal tries to do.

We are cannibalizing ourselves for dollars which are dropping in value at a record pace.
Inflation adjusted DOW is way way down. Inflation is beating the DOW, so why invest in stock? But they still do because we are near "record highs"! What does that mean? Nothing! The NUMBER for the stock market is in perspective of the inflation rate.
If inflation rises 12%, and stocks go up 9%, do ya make $$$? You and I know the answer, but Joe Sixpack watches ABC/NBC/Fox or whatever and has no clue that it is down 3% adjusted. They see a 9% gain, woo hoo!!!!!! Lets all get on that boat, now, today, immediately!!!!
Most people don't want to be bothered looking under the billboard to see what is under the hood. Either hope, blind political alliance, hope, ignorance, hope, belief in faith, hope..etc.... guid them and they believe what they want to believe.
ie: Hardcore believers of the Bush team think the USD is rock hard solid. You can't convince them that the USD has lost 20% face value this year, they have thier "priests" tell them otherwise.
The USA has a 4.8 trillion dollar deficit for CY 2006, period. Paint that shit how anyone wants, but in my book 4.8 trillion dollars of dillution is a BAD THING, and it makes dollars worth less.
note: 4.8 Trillion is NOT what they want you to hear, so for any "Joe Sixpacks" out there, ignore that big number and go back to believing what you are told by your designated news source! I am simply quoting what comes in versus what goes out (that silly economic balance thing).
If anyone believes the Govt so much, try running your personal expenses the same way and see long it can function. Can't you just tell the power company you have a deficit this year? And every year following...forever....compounding.....accelerating? Will they say "ok, no prob"? or will you be cooking marshmellows over a candle within 30 days?

interesting article...
Myths of the Great Depression

I think we can all agree that if it is mandatory for kids to take gym to fight obesitity that it should be mandatory to take financial guidance classes for better investment strategies throughout life. I think knowing how to invest for your future is much more important than learning that columbus discovered America in 1492 during history class. Sad part is most people don't know these things and it may already be too late to help them - case in point my father in law who is 47 buying plasma tv with a new 8 month old son.
Unfortunetely the burden of national debt won't lie on us, but will be on our children and grand kids. Politicians are so short sided that they only think up until their next election. I don't care what side you are on, it doesn't matter. And it isn't even entirely their fault, it's uneducated voters.
"China holds over 1 trillion USD in reserves (they don't have a debt....yet), and they are looking elsewhere now. Who will buy those USD's every day?"
Good point. The U.S. has been in debt for a loooong time, and it is ok to take on debt to make a profit or improve living standards, but we simply just arn't doing that any more. What does the U.S. do when China finds better investment alternatives besides crapping their money away to the U.S.? Increase interest rates? Imagine what our debt will look like then.

like i said, IT WAS AN INTERESTING ARTICLE, it wasnt an attack on your views....
Fed was created to control the liquidity in the market place and stop the big bankers and investors of the time from twisting the market, which was a good thing....
There are still panics, but the global market place is so huge now with exchanges all over the world that they are now getting smaller and smaller....
1998 a 2 billion hedge fund called Long Term Capital Management got forced into a margin call and almost took the US market place down (Fed stepped in and provided liquidity and extended credit to the banks). September of 2006 a hedge fund called Amaranth had a similar situation happened with a 9 billion hedge fund and the market never blinked....

I wonder what calamity the derivatives market would cause if it started to reverse or tumble. 400 trillion USD is a chunk of change (thats about 4x global GDP if I am not mistaken).

that is the largest concern in the market right now.
You have these large multi-faceted banks that are taking on more and more swap agreements that are backed by little to zero cash. Look at JPMorgans SEC releases. They have something like 3 billion in swap contracts (or trillion i cant remember) that is being supported by 250 million in cash. A huge chunk of that is in the form of Credit Default Swaps.....
This is a situtaion that is very similar to 1987 where investors would write S&P 500 option puts way out of the money and scoop a simple "easy to earn premium"....well the market crashes and went down 20% overnight, forcing these investors to deliver securities or margin calls....put a lot of people out on the street.
What happens if there is a massive collapse in the corporate bond market. The CDS is a swap geared towrads insurance on corporate bonds......if you own protection, you have to deliver the bond to the other party and you receive cash back.......a funny thing happened earlier in the year when a company declared bankrupcy (it was a BBB rated bond), when it did, instead of collapsing from a price stand point, the bond RALLIED up 18 cents on the dollar from 60 to 78, due to people having to buy the bond and force delivery....talk about a weird stance, you got tits up and your bonds rally....
I am very nervous about the swaps and derivatives market....ask Warren and Charlie how their derivative book fared when they were forced to unwind it...

That carries into the banks HEAVILY, I think it is criminal how little is kept onhand. We've taken fractional reserves into uncharted territory towards the extreme. There is only 43 billion in reserves!
All that is needed is one of those calls to unwind or go badly, and we'll see something the size of Wells Fargo or BOFA explode instantly. I could see that as the trigger to a meltdown.
It would make that bank meltdown in England a few years back look like nothing. He took that bank down with a few billion in derivatives that unwound on him.
That would spook everything heavily.

You are talking about Barings bank and their prop trader in Indonesia....
yeah it is pretty scary. To be honset a large percentage of those swap agreements are very plan vanilla fixed/receiver or total return swaps that have little to no risk in the market place (its like a fixed income manager who has a $100,000 buying $10 million in Euro Dollar contracts - zero risk), but it is the Credit Default Swaps and other exotics that have zero liquidity or the notional value is wratched up so much it is crazy.....i cant wait to see GM officially explode and then see what happens.....there is approximately 3.5x the notional value of their outstanding debt in CDS swaps alone