Global Impending Economic Doom Thread.

Important question, what will the United States economy do November 6-7?

 

It will not collapse!!

Top 10 Reasons Why the U.S. Economy Won't Collapse

1. The U.S. debt is $21 trillion, more than the economy produces in a year. Though the debt-to-GDP ratio is in the danger zone, it's not enough to cause a collapse.

2. Obama added to the debt to get us out of recession, not send us into collapse. Many of these doomsters accuse Obama of deliberately increasing the debt to destroy the United States.

3. The United States won't default on its debt.

4. China and Japan are the biggest owners of the U.S. debt. But they have no incentive to create a collapse.

5. If anything, the dollar would slowly decline instead of collapse.

6. The dollar won't be replaced as the world's global currency. The doomsayers point to gold, the euro, or Bitcoin as a replacement. China would like the yuan to replace the dollar. None of these alternatives have enough circulation to replace the dollar.

7. The Fed's quantitative easing program and low fed funds rate won't cause
hyperinflation.

8. The stock market hit new highs in 2015 and 2016. Stock prices are based on corporate earnings, so that’s a sign of business prosperity.

9. Consumer confidence hit a nine-year high in 2016. Consumer spending drives almost 70 percent of the economy.

10. Economic growth is slow but stable.

Before you run out to buy gold or stock up on canned goods, do two things...
First, read the articles linked in the 10 points above.
Or read "How the U.S. Economy Works."

Second, understand what a real economic collapse looks like. On September 17, 2008, the U.S. economy almost collapsed. That's when companies pulled out trillions of dollars from money market accounts. It would have created a severe cash crunch had it continued. The nation's trucking industry would have ground to a halt. Gas stations would have gone dry. Grocery store shelves would have gone empty.
But those things didn’t happen because the Federal Reserve prevented the collapse. It guaranteed money market accounts and restored confidence.

Read more in detail here:
https://www.thebalance.com/us-economy-wont-collapse-3980688

 

Sorry Jazz, but that article has state propaganda written all over it. I've studied economics for many years now and can tell the difference between state propaganda or what is reality. That article has delusional magical unicorns written all over it.

 

Posters contradict your OP and assertions with sources and your response is " I studied this and that with magical unicorns " ???

Get this trifling waste of a fkn thread out of here and dont @ me if all you have is that garbage. Im bookmarking this charlatan thread just in the hopes you havnt deleted this account when the sky doesnt fall in a year.

Vets here have long memories heh

 

Aww... I'm sorry, Carl, my knowledge of theses complicated things is like nil. Still, I find it hard to believe a collapse will happen... unless it would benefit the elite, the shadow government or the Jews and their banks.

 

Dont encourage him her. You made some solid points w sources and he came back w.. witchcraft.

Fk that noise. And gdamn any more graphs and video propaganda too...make/defend a gdamn point or take the crap to twitter

 

Calm down man, have some civility dude.

Alright you disagree with me, we'll find out in the next couple of years who is right and wrong, yes? Could of just left it with that instead of the whole vehement hostility.

 

Well then your rookie arse should look who hes @ing cuz son I reckon theres plenty of folks around here who can attest to my fairness but civility? Fk that dont waste our gdamn time w a bunch of bs vids and graphs that dont mean sh1t and when a respected poster throws you a counter? you cite your own studies and witchcraft.

So. Winter is coming.

 

A warlock am I to be accused of? So be it, honestly I expected better from you which is why I invited you here to begin with.

Yes, winter is coming and we'll see many frozen assets at least on the side I'm betting on if this was a game of high stakes poker anyways.

 

The stock market in general is not -rigged. While rigging happens - don't get me wrong - at the end of the day if there is more people that wake up in the morning and buy than sell - the price goes up and vice versa.

Rigging is more common on a single commodity or a single stock where folks can collude to influence price movement. This is not so easy on the entire NY Stock Exchange.

 

1) Debt to GDP is one measure of fiscal stability but in many instances -not a particularly good one. For example - GDP can fall quickly during a black swan event or due to other factors. Not so much the case with Debt. The other problem with GDP is it does not tell you how much revenue the Govt is taking in.

The IMF uses the ratio of interest on a nations debt to income. If the interest payments hit 30% of income - red lights go off - the ship is taking on water faster than it can be bailed out.

Due to "Reaganomics" aka spending like a princess with a credit card - by the time Clinton took office the interest on our debt exceeded 25% of income. It is not that Clinton and the GOP congress wanted to reign in spending (this would be an anathema to Gov't) - they had to.

When the debt was 20 Trillion (not to long ago) the ave interest was 2.25% = 450 Billion. On roughly 3.3 Trillion in income this works out to roughly 14%.

Great right ? .. way below the 30% threshold. Well ... not so much. Increase the interest rate by 2.25% to 4.5"% (which is below the historical average) and keep increasing the debt and we quickly are in a world of hurt.

3) The US will default - this is a historical imperative. It is just how things go. The question is when. 5 years, 25 years ? Most serious prognosticators are predicting less than 25 years but - that we will default at some point is a historical certainty.

6) It is not "replacing" the dollar that is the question. The question is if there will be a competitor to the US dollar as the "SOLE" world reserve currency. An viable alternate system of international payments. The world has been harping for a competitor for many years. That said, a couple years ago I would not have predicted the rise of a serious competitor for at least 10 years. Its happening right now.
Its not here just yet but its happening way faster than I would have predicted.


So long as the USD remains the "Sole" WRC - method of international settlement - we have a tremendous ability to manage our debt (this is a separate thread - but in a nutshell - one of the main things is that this helps our ability to keep interest rates low) so people are right that there is little chance of "default" while we have this status.

Should we lose "SOLE" WRC status - the history books will record this event as the defacto end of the US economic empire.

9) "Consumer confidence hit a 9 year high in 2016" ! This is somewhat humorous as this is generally a very bearish indicator.

 

I don't quite agree with that logic. It is true that Reganomics was a sham. It was ultimately just mundane Military Keynesianism. However, I do think that Clinton and co's understanding of macroeconomic policy was corrupted by neoliberalism. Believing in a false economic consensus over fiscal and monetary policy, they sat on their hands and ensured structural deficiency in the economy went unchallenged.

 

You say:
"3) The US will default - this is a historical imperative. It is just how things go. The question is when. 5 years, 25 years ? Most serious prognosticators are predicting less than 25 years but - that we will default at some point is a historical certainty."
Of course, that is an easy prediction at a time
when 3 great powers are competing on the world market;
when the 3rd WW is already in progress, and
the USA is showing serious deterioration in its morals and quality of life.

A breakdown/default under 25 years? lol That is almost even with "some point" in history.
I wager a prediction of 5 years... the USA will still be here and doing o.k. in FIVE (5) years.

 

My prediction is that we'll see widening economic cracks in the United States by the end of 2019 and where between 2020-2025 a major economic crash in the United States.

It will be an economic collapse of the United States but more importantly for the entire world. It will be a global event or crisis.

 

O.k., you live in the States and have a better view, or rather, feel of things going on.
As a German I am used to tightening my belt and make do with little. As a kid, my mother would sew me a "new" dress by turning one of her old, sun-bleached dresses inside out.
I will survive whatever economic crisis is headed our way. But are you spoiled American kid ready??

 

The objective is to destroy the dollar, western civilization, and nationalism in order to usher in a new world order of transnational or international globalism. Sounds conspiratorial I know but that's the objective goal I think.

As for me I've lived my entire life in poverty, destitution, isolation, and nothingness so calling me spoiled or privileged is nonsensical. I wish that I was privileged but privileged I am not.

I will be fine, I've spent years struggling, living in the wilderness, in poverty, or in extreme situations surviving where most in my place would of contemplated suicide a long time ago. I nonetheless endure, continue living, and survive carrying on.

I'll be just fine as pain, misery, and extreme hardship is all I have ever known where all three have been great teachers to me as their pupil.

 

And we will be doing OK even after default - we should have done it in 2008- we would be steaming along way better than we are not had we done so and the world would be a safer place. Russia and Argentina defaulted back in 1999 - they are still around. The Brits were the last economic empire .. no longer what it once was but, still a player in world affairs - member of the security council and so on.

25 years is a relatively short time frame when you are talking default of a world economic empire.

Regardless - the article stated "US will never default"... which is just silly.

You are correct in relation to some of the factors which are in play but, missing the "we are funding our lifestyle - deteriorating as it is" through massive credit card spending. Just intuitively someone with little knowledge of how these things work should be saying "something is wrong with this picture - money does not grow on trees"

 

I won't pity you, Clausewitz... I admire you!!

 

Most of that is wrong or misleading.

The USA debt alone wont cause a collapse. The collapse comes when people and nations stop funding the debt - when they stop buying Treasuries.

The USA wont just deliberately default on its debt, but no nation does. Nations default when they cannot fund their debt - when people and nations stop buying Treasuries.

The US$ is being replaced as the global currency right now. It does not happen overnight, its a process in which nations extricate themselves from the US$. It takes decades, and its been going on for 20+ years. China, Japan, the BRICs, the OPEC nations, EU, and others have all proposed various alternatives. Most are baskets of currencies, not a single currency. And certainly not Bitcoin.

Some nations already buy and sell oil in other currencies (not the US$). t was the requirement that oil be traded in US$ that made the US$ the global currency.

QE has not caused hyperinflation, but the conditions are not right for hyperinflation. The Fed has written extensively on this issue.

The Fed has injected a huge amount of cash into the economy, that cash is just sitting idle - hence no inflation. When the economy recovers and that cash starts moving, the Fed has to raise rates and retract that cash out of the economy before the "velocity of money" reaches a point that creates inflation or hyperinflation. Its a huge gamble.

 

I disagree, such a default that we're talking about here would take at least 75-85 years afterwards to recover from economically.

 

No way it will take that long. What is there to recover from ? The slate is wiped clean .. debt gone. The difference will be that we will have to get by on what we earn. In a year or so we will be able to get credit again.

 

The dollar will die under this scenario and our country is almost completely deindustrialized where there is virtually no manufacturing sector here. As I said, 75-85 years to recover and that is being optimistic.

 

We do have manufacturing .. we also have a huge amount of resources and so on. We have international corporations that operate all over the world. Sure Apple does not manufacture here in the US but, the majority of profits do not reside in china .. 3-5%

We produce a huge amount of goods and services. When Russia defaulted - and the ruble went into the toilet in the late 1990's they were back on their feet in 5 years - and we produce way more than Russia.

Keep in mind that it will not just be the US that goes down .. Most every other nation will go down with us.

 

Loved this comment. First, it's ultimately a continuation of the false monetarist narrative that the macroeconomy is understood with simple maths (in contrast to complexity economics approach). Essentially it's all just down to the identity MV=PT. Second, it makes spectacular use of assumption over lags in the made up vertical Phillips Curve. Thus, we are merely delaying inflationary certainty. Hyperinflation could be just down the road. We just need economic boom.