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Seeing we are in lala land already, if the Fed can create money out of thin air, why can’t the government repay it out of thin air?
I’m not sure what this would look like but t hey seem to come with the unimaginable time and time again.
Bear with me, Thinkor, I’m trying to figure all this out and have a few questions and comments and I’m going to play the devil’s advocate. Why can’t QE go on indefinitely? Who is going to tell the US they cannot monetize the debt. The big economies of the world need the US to exist. They don’t want to see financial Armegeddon because it would be suicide for them. It seems logical that for the US to collapse, something else is going to take it’s place, because the oligarchs need some place like the US. Who might that be? Is it not possible that if they create wealth in the financial markets, and some of that wealth will find it’s way into the housing market, and unemployment will abate and they will point to it and shout, look, look, the probem is fixed. The US can fix the problem if they increase their income other than by printing money. They do have the power to tax. They have not used that power in order to avoid a deeper recession, but when the numbers begin to correct, it will come. that is why so many with money are screaching about loss of liberty and freedom because they see it coming. That is why they are moving their money. They know they are targets and if the US needs money and the US is going to go down and collapse or it is going to pass some laws to confiscate their money, you can guess what they are going to decide.
Look at this situation in Japan, all the stuff they cannot make, cannot use, etc. Will not this be an economic advantage for the US businesses? We’ll be be shipping goods, cars & heavy equipment, helping rebuild Japan. Won’t this translate to some economic activity.
If by reducing entitlements, you mean delaying the age for SS, making it need based, I don’t see that as a big problem. They are already talking about it. Other than SS and Medicare, other entitlements are such a small part of the budget, much smaller than the interest on the debt (which is huge) that it probably would not make much of a dent. As to the interest on the debt, when the Fed does QE, doesn’t the interest the gov pays the fed gets go right back to the Treasury, at least most of it does. I’m not sure how that gets booked. I don’t see why the US would borrow from other countries if they can do QE and get the interest back themselves. What am I missing here?
And while I’m at it (playing the devil’s advocate) even if there is a shortage of oil in the world, is it really going to hurt the US? As long as we are standing first in line and we get our 26%, we’re okay, right? And we’ve been camping the oil, we’ve built an embassy in Iraq the size of Vatican city, have been protecting the Saudi’s. There is no rival militarily, so who is going to say that we are not going to get our 26% of the oil and be first in line. It reminds me of the story: If you are out camping with a bunch of guys and a bear shows up, you don’t have to run faster than the bear, but only faster than the slowest guy. What makes anyone think that a shortage of oil is going to impact every nation proportionately? Won’t the guy with the big guns be the last man standing? Oh yes, the shortage of oil, will cause the price to spike, but I doubt the Saudi’s are going to overcharge us who keep them in power. (I wonder what message they are getting from the forment all around them?)
I’m not saying I’m right about any of this……..these are just the thoughts that keep me awake when I’m trying to decide who to listen to, what to believe. I like to look at all sides of the issue. so please, someone, straighten me out if I’m off base.