Our economy and looking forward.....how bad is it?

[lawpoke87]

I'm hoping someonw smarter than me will chime in. My understanding is that the fed buys our bonds to artificially keep the rates low in order to maintain low interest rates, money supply, low inflation, etc.. We basically borrow money to purchase the bonds we borrow it with. In conjunction with this we've been borrowing roughly $1T a year since the last year or two of Dubya and throwing that money back into our economy. So basically we're incurring debt then pumping said money into our economy and calling it growth...right?

Now my questions: What is our real growth rate (taking out that part attributed to the borrowed money)? What happens to the economy when the fed stops buying it's own debt (they obviously can't do this forever)? Higher interest rates, tighter money supply, inflation, deflation, no GDP growth, etc... Should the fact that we're losing full-time jobs, have higher poverty, now have half of our population cashing some type of federal entitlement check with the fed doing everything they can alarm us? Aren't we simply putting off the inevitable crash when we stop pumping borrow money into our economy and pretending we have real growth in GDP?

 

[WATU2]

The Fed has had to pick up the slack to stimulate the economy because the Republicans in Congress have cut back and cut off all other forms of stimulus. If the Fed was not keeping rates low we would share in the same experience as Spain and the rest of southern Europe where they implemented huge spending cut backs as a response to their economic woes. Spain now has about 25% unemployment. How do you pay off debt by cutting your ability to compete and produce?

We should be investing in job producing, positive ROI aspects of the economy: job training, education, infrastructure, R&D, and cutting back on trillion dollar fighters that do not fly and billion dollar tank programs the Army does not want. The former Chairman of Lockheed Martin said last week that the military could cut another $40B from the DOD budget if they were allowed to do it intelligently instead of via sequester. He would put the money into higher education and R&D.

As long as we obsess on a single measure with a single solution and prefer the prescriptions of TV bimbos to Noble Prize winners, we deserve this crappy economy.



This post was edited on 10/25 11:38 AM by WATU2

 

[lawpoke87]

This isn't a partisan question or topic. We didn't start borrowing upward of a Trillion dollars a year and pumping that back into the economy because of Congressional Republicans. Dems controlled the Congress and we had a Republican President. The Feds keeping rates articially low also has nothing to do with Congressional spending. It has everything to do with money supply and interest rates.

Like I've said before, I see a lot of polictical capital and attention going into Obamacare and imigration. Where is the push for good jumps and economic growth? Surely you can see that the Fed is borrowing money to keep this economy afloat. A tactic that cannot continue indefinately and has dire long-term effects. Yet, no one wants to talk about it.

 

[WATU2]

Lowering interest rates is what the Fed does to stimulate the economy. Look back at 2001. This is Economics 101.

Originally posted by lawpoke87:
The Feds keeping rates articially low also has nothing to do with Congressional spending. It has everything to do with money supply and interest rates.

This post was edited on 10/25 1:05 PM by WATU2

 

[lawpoke87]

Agree....but back to my original question. What happens when that doesn't work? What happens when the Fed has done all that it can do for years and can no longer borrow this type of money? What would our GDP look like if it weren't inflated with almost a Trillion dollars a year of debt? What's the solution going forward when the Fed finally is forced to allow the economy to stand on its own? That time will come.

 

[WATU2]

If we do nothing else we will look more and more like Southern Europe. Our ability to compete will erode, subsidies will continue to send jobs overseas, foreigners who earned PhD's in the US will be forced overseas because of immigration policies, the ranks of the poor will continue to grow and middle class shrinks, the dollar will be replaced as a reserve currency, tech industries will find better educated work forces and more modern infrastructure outside the US...that sort of thing.

Originally posted by lawpoke87:

Agree....but back to my original question. What happens when that doesn't work?

 

[lawpoke87]

That sounds like exactly what's now occurring with unprecented fed pumping.

You're kidding yourself if you think immigration reform is about keeping those who get PHDs on student visas to stay in this country. They are here legally and already have a path to citizenship which millions currently take. Very little will change for the highly educated who get their degrees here on student visas. I have two neighbors who are both doctors. One is from India and other from Pakistan. While I wouldn't call their path to citizenship an easy road (lots of gov't redtape) it was certainly not exceedingly difficult.

 

[WATU2]

Don't kid yourself with your two docs. First they are not PhDs and as for visas, the Microsofts, Amazons, and Googles of the world don't agree with you. Neither did the former CEO of Lockheed Martin who spent quite some time supporting his argument last Saturday. They can't get the engineers and PhD's they need and have research centers in India and China for that very reason.

And as for stimulus, if it had not being going on, we would already be back in a deep recession.

Originally posted by lawpoke87:

That sounds like exactly what's now occurring with unprecented fed pumping.

You're kidding yourself if you think immigration reform is about keeping those who get PHDs on student visas to stay in this country.

This post was edited on 10/25 3:24 PM by WATU2

 

[lawpoke87]

So we should limit immigration reform to those who are here legally on visas if the primary need is for technical and medical people? Fine...let's grant fast path citizenship to those who have earned advanced degrees here in the states. Such a measure would get broad support in both the House and Senate.

Don't kid yourself, the bill as proposed effects almost exclusively those from Mexico. Only a very small percentage of those effected have a college degree or higher.
This post was edited on 10/25 3:32 PM by lawpoke87

 

[lawpoke87]

As for the stimulus, we have been pumping since 2000. After Dubya got in they opened the money spiggots and spent somewhere around a trillion a year of borrowed money. The wars were "off the books". Trillions were spent but not shown in the official figures.

When the free money stopped flowing to the banks and mortgage/housing industry via fake mortgages and inflated home prices in 2007 you saw what happened.

Dubya sent Henry Paulson to congress to ask for a trillion dollars overnight or there would be a complete collapse of the financial system. Been pumping another trillion a year in ever since.

The problem is that they cannot accept that a contraction is inevitable. So instead of accepting that it's necessary and allowing it to happen they continue to artificially inflate the economy. It's problematic and IMO only ensures a bigger contraction when inevitably they are forced to stop borrowing.

Ultimately the 1% and corporations that have seen all the gains in the last 20 years will be forced to realize they need the other 99%. See the Roman Empire, French revolution, Russian etc. etc.

We are living in a house of cards. The amount of money our government has used to inflate our economy over since 2008 is staggering and shows no signs of stopping despite Obama's earlier statements about deficits and putting our obligations on our children. This is going to get ugly and at this point I don't see a way out.

 

[aTUfan]

Everytime you allow someone who is here illegally to stay and then GIVE them benefits; welfare, foodstamps, in-state college tuition, a drivers license, rights to practice law, right to sit on a jury, . . . you are violating my Civil rights as a Citizen as well as the civil right of those immigrants that have come here the RIGHT way and those that have been naturalized.

 

[rabidTU]

Originally posted by WATU2:
If we do nothing else we will look more and more like Southern Europe.



You mean like the European "SOCIALIST" countries don't you? Does that mean that socialism doesn't work and isn't working there and we'd be better served to stay away from that model?

Limited govt (that does not waste money) and free enterprise work, and is the tried and true way to prosperity. It works everywhere. Socialism (and its bros Communism/Fascism) is a slow economic death (with the one possible exception of forced slavery). Slavery also works because wages "don't matter" anymore. Neither do freedoms.

Believe it or not, the ones who have most to fear in totalitarian big govt socialism are minorities. Right now that minority may be the Tea Party since it is stylish to degrade and humiliate those moms, pops and grams in the media for public scorn, but later it may become gays, blacks, jews etc. Look at Germany, USSR, the muslim theocracies, N Korea, Kampuchea etc. It always becomes something that wasn't intended.

That should be the fear of big govt. That it will morph into something sinister during tough times.

Only through smaller, leaner govt are our freedoms secured because the govt is working for us.

 

[WATU2]

Here's another group that is kidding themselves. See link.

------------------------------------------------------------------------------------------
Lawpoke:
You're kidding yourself if you think immigration reform is about keeping those who get PHDs on student visas to stay in this country.

This post was edited on 10/31 11:32 AM by WATU2

Others who are kidding themselves

 

[lawpoke87]

I'm not against changing current immigration laws. However, I'm also a realist and understand that providing a path to citizenship for the 11 million illegals here in the states is the focus of the current immigration reform. Those currenty here on student visas getting advanced degrees aren't included in this group. The new law may effect a few of the students we're talking about but the vast majority of the illegals granted a path to citizenship aren't here on a student visa.

 

[rabidTU]

Originally posted by lawpoke87:
I'm not against changing current immigration laws. However, I'm also a realist and understand that providing a path to citizenship for the 11 million illegals here in the states is the focus of the current immigration reform. Those currenty here on student visas getting advanced degrees aren't included in this group. The new law may effect a few of the students we're talking about but the vast majority of the illegals granted a path to citizenship aren't here on a student visa.

Another reason why Bush was a crappy president. He opened the gates to illegals even further since he was so "compassionate to them" (instead of the real citizens who are stuck with politicians like him).

Now, we have an even greater threat in BO to our freedoms. Does anyone really think BO was telling the truth when he said that learning English would be a requirement for citizenship? Another lieberal lie. Amnesty - a word that the lieberals don't like, but applies here, is when all is forgiven and everything wiped clean. Citizenship will be granted while america sleeps - thats how the illegals got here in the first place.

Being a realist and not standing for our principles in the face of tyranny means we will eventually accept that tyranny - in the name of social justice or my terminology "social revenge". Why is it "just" and fair to change the law out of political expediancy? A simple question.