Some Numbers

[Burke]

Two years ago, during the budget hike fight, they were saying that the Federal govt was spending $300 billion a month and borrowing $120 billion of that (40%). I don't know the latest numbers, but we can be sure they are at least no lower, I believe.

About 3 1/2 years ago, I read a speech by the president of a Federal Reserve bank in Texas in which he said essentially that the figure for the national debt that we hear (today $16 trillion) is peanuts in comparison to our real, unfunded liabities which include SS, Medicare, and some other things. He estimated that it was more like $100 trillion and stated that we really don't know our exposure because the govt has done things like insure bank accounts with the FDIC.

Recently, a NY Times article put this true national debt at approximately $88 trillion.

Elsewhere, I've read that it could be as high as $220 trillion.

The GDP of the entire world is only about $80 trillion and of the US, only $15 trillion (last I heard).

When Obama took office, the monetary base (currency in circulation, in bank vaults and something called "central bank money") was about $800 billion. Last I heard it was up to nearly $3 trillion. And about $2 trillion of this is sitting in banks available to be used as reserves for the creation of even much more money in the future.

The Fed is creating about $85 billion a month with its current quantitative easing programs in addition to keeping interest rates at almost zero.

Isn't it obvious that the only way the govt is ever going to "pay" these obligations is by printing even more money than they are printing now?

And that its just a matter of time until the dollar as well as many of the other fiat currencies around the world collapse?

I'm reading report after report that central banks, especially China's, are buying gold.

Isn't it obvious that everyone with any financial savy knows all this and is getting into precious metals and other commodities also?

Including these central banks that are buying gold themselves?

So, what do you think you should be doing?

[gator996]

When Obama took office, the monetary base (currency in circulation, in bank vaults and something called "central bank money") was about $800 billion. Last I heard it was up to nearly $3 trillion. And about $2 trillion of this is sitting in banks available to be used as reserves for the creation of even much more money in the future.

The Fed is creating about $85 billion a month with its current quantitative easing programs in addition to keeping interest rates at almost zero.

Isn't it obvious that the only way the govt is ever going to "pay" these obligations is by printing even more money than they are printing now?

And that its just a matter of time until the dollar as well as many of the other fiat currencies around the world are going to collapse eventually?




You're all over the place on this post...

And some of your facts are wrong.


The money in circulation is reported by the Fed weekly (H.4.1) which for 1/9/13 was $1.16T down .4%.

The reserves you speak of are not "sitting in banks" but are actually sitting on the books of the fed as they have raised the interest rate they pay banks on reserves as an enticement for banks to raise their level of reserves post the financial meltdown.

Higher reserves = less need to be bailed out by taxpayers

In any event, this is not money in circulation.


In regard to quantative easing, money is not being printed out of thin air...

The program has been to buy treasury & distressed bonds...those assets will be sold to take money out of the system...they now have a tactical weapon to fight inflation.


BTW - Going crazy about "unfunded" liabilities is a little off the mark...Over what term is the total unfunded liability?

30, 40, 50 years?

How much will this country earn over the next 3, 4, 5 decades?

The Social Security "problem" is fixed by simply eliminating the limit.

[Burke]

From 996's reply above, with my responses:

"You're all over the place on this post...

"And some of your facts are wrong.


"The money in circulation is reported by the Fed weekly (H.4.1) which for 1/9/13 was $1.16T down .4%.

||The monetary base is more than the money in circulation, as I stated.||

"The reserves you speak of are not "sitting in banks" but are actually sitting on the books of the fed as they have raised the interest rate they pay banks on reserves as an enticement for banks to raise their level of reserves post the financial meltdown.

||The Fed is a bank, and the fact that commercial banks have their reserves there instead of in their own bank is irrelevant.||

"Higher reserves = less need to be bailed out by taxpayers

||And enables banks to create FAR more money in tne fractional reserve banking system we have. And much if not most of their "reserves" are just central bank (created) money, I suspect.||

"In any event, this is not money in circulation.

||Yet, because of the economic downturn, but it will be if and when the economy ever recovers.||

"In regard to quantative easing, money is not being printed out of thin air...

||Yes, its being created out of thin air with a few strokes on a computer.||

"The program has been to buy treasury & distressed bonds...those assets will be sold to take money out of the system...they now have a tactical weapon to fight inflation.

||Which will cause deflation and put us into a severe recession or depression, which they are forestalling now only by all this money creation BS.||


"BTW - Going crazy about "unfunded" liabilities is a little off the mark...Over what term is the total unfunded liability?

"30, 40, 50 years?

"How much will this country earn over the next 3, 4, 5 decades?

||How much more debt will the country be incurring over this period while borrowing 40% of everything it is spending now? And what will the debt payments be when this Fed can no longer keep interest rates at almost zero?||

"The Social Security "problem" is fixed by simply eliminating the limit."

||You mean by turning it into even more of a wealth redistribution program than it is now? Some "fix."||

[Burke]

I might add that the "higher reserves" that banks have now because the Fed bought distressed assets of banks is already a bailout.

Made with created money.

And the Fed paying banks interest on reserves is just a subsidy, probably also being made with created money.

And as far as "going crazy" over the debt, we are already borrowing money to just pay the interest on the debt, I believe.

But I forget, we are in a "recovery," aren't we? That will magically solve all these problems.

Right.

[gator996]

No, actually you have them reversed...

The QE's are not a couple of keystrokes, there's actual collateral & ownership being exchanged...

The reserves at the Fed are book entry transactions...


I also kinda question your understanding of the QE process.

The excess "money" that you're so concerned about is removed from the system as the Fed sells those purchased bonds back to the market...

[gator996]

I might add that the "higher reserves" that banks have now because the Fed bought distressed assets of banks is already a bailout.

Made with created money.

And the Fed paying banks interest on reserves is just a subsidy, probably also being made with created money.


Higher reserves is what the financial system needs so that you don't have to bail them out in the future...

The Fed stepped in when the private sector failed to recapitalize the sector...

Investors wanted nothing to do with the bad assets on the balance sheets of banking sector and corporate America...as crappy as a solution it is, buying in those bad assets saved the global financial system.

[Burke]

Perhaps you should Google "quantitative easing."

It's nothing but money creation.

You can see how much the Fed is creating by looking at its balance sheets and seeing what it bought.

"The QE's are not a couple of keystrokes, there's actual collateral & ownership being exchanged..."

Yes, the distressed assets and govt IOU's you mention.

That is "assets" that are no good and are otherwise nothing but promises to steal wealth from the taxpayers in the future.

[Burke]

The govt hasn't "saved" anything. They've just stolen money from taxpayers and used it to prop up businesses it has destroyed with its own policies.

E.g. With its creation of Freddie Mac, Fannie Mae, and its getting the Fed to keep interest rates low.

And forestalled and made the coming economic crash far worse.

[surfn1080]

996 I am not sure where you are getting your information but here is a great article in regards to the Feds QE.

http://www.forbes.com/sites/charleskadlec/2012/09/14/the-feds-futile-effort-to-bail-out-obamanomics/

[gator996]

Perhaps you should Google "quantitative easing."

It's nothing but money creation.

You can see how much the Fed is creating by looking at its balance sheets and seeing what it bought.

"The QE's are not a couple of keystrokes, there's actual collateral & ownership being exchanged..."




Burke, I think you should go see what market operations are and how they are used...

Actually you're wrong...if you look at the balance sheet of the Fed you'll see the valuation of the assets reflected not the cash value of the transaction.



Yes, the distressed assets and govt IOU's you mention.

That is "assets" that are no good and are otherwise nothing but promises to steal wealth from the taxpayers in the future.

That's why it isn't simply printing money...we're receiving an actual asset which when sold will withdraw that money from the system.


Oh BTW, sales of "other" mortgage portfolios like the collateral sold to the FED?

They've sold for more than what we bought them for....

MLII, I believe was something like a $17B profit for taxpayers.



http://www.newyorkfed.org/markets/maidenlane.html

Milestones


November 15, 2012: Net proceeds from additional sales of securities in Maiden Lane LLC enabled the full repayment of the subordinate loan made by JPMorgan Chase & Co. plus accrued interest. The New York Fed will receive 100 percent of future cash flows generated from the remaining ML LLC assets, in accordance with the ML LLC waterfall.

August 23, 2012: Maiden Lane III LLC sold all remaining securities. Subsequent to the repayment of ML III LLC’s liabilities to the New York Fed and AIG, net proceeds from sales of the securities, as well as cash flow the securities generated while held by ML III LLC, provided a net gain of approximately $6.6 billion for the benefit of the U.S. public.

July 16, 2012: Net proceeds from additional sales of securities in Maiden Lane III LLC enabled the full repayment of AIG’s equity contribution plus accrued interest and provided residual profits to the New York Fed. The New York Fed will continue to receive 67 percent of residual profits generated by future sales of ML III LLC assets.

June 14, 2012: Maiden Lane LLC and Maiden Lane III LLC repaid the loans made by the New York Fed, with interest. The successful repayment of the loans marks the retirement of the last remaining debts owed to the New York Fed from the crisis-era interventions with Bear Stearns and AIG.

February 28, 2012: Maiden Lane II LLC sold all remaining securities*. Net proceeds from sales of all the securities, as well as cash flow the securities generated while held by ML II LLC, enabled the full repayment of ML II LLC's liabilities to the New York Fed and AIG while also providing a net gain of approximately $2.8 billion for the benefit of the U.S. public.




http://dealbook.nytimes.com/2012/06/14/maiden-lane-loans-repaid-but-assets-still-need-to-be-sold/

A.I.G. confirmed in a separate press release that Maiden Lane III, which was made up of collateralized debt obligations that had been held by a once-troubled unit of the insurer, had paid off its obligations to the New York Fed. The loan was paid off through sales of Maiden Lane III assets and cash flows generated by the derivatives.

The Fed said it had been repaid $53.12 billion for the loans plus interest.

The Maiden Lane assets have been in hot demand. This year, several companies — including A.I.G. — expressed interest in buying at least some of the Maiden Lane III portfolio. Citigroup and others have won pieces of the derivatives book so far.
Thursday’s announcement does take the government closer to the day when the 2008 bailouts will be repaid. The New York Fed has already closed out Maiden Lane II, another vehicle created to house A.I.G. assets.

“This is a major milestone for the bank and for the public,” William C. Dudley, the New York Fed’s president, said in a statement. “The successful repayment of the New York Fed’s loans to ML LLC and ML III LLC marks the retirement of the last remaining debts owed to the bank that stemmed from the crisis-era interventions with Bear Stearns and A.I.G.”

[Burke]

Yes, we're just making a killing on all these companies we've been forced to bail out.

You're starting to just repeat yourself.

The fact is that we are spending far more than we are taking in.

We are not going to ever take in enough in taxes to pay the govts obligations.

The attempt to do so with taxes will destroy the economy, if it hasn't already.

Which is EXACTLY why they are printing so much money now.

And will continue to do so at ever increasing rates until the dollar and the economy collapses.

Which is what Obama et al wants, so they can blame it all on "Wall Street" and capitalism.

And "save" us all with handouts and socialism.

[ChartsandGrafs]

Which is what Obama et al wants, so they can blame it all on "Wall Street" and capitalism.

And "save" us all with handouts and socialism.

Welcome to the conspiracy theorist club, Burke.

Glad you could make it.

[g8orbill]

Yes, we're just making a killing on all these companies we've been forced to bail out.

You're starting to just repeat yourself.

The fact is that we are spending far more than we are taking in.

We are not going to ever take in enough in taxes to pay the govts obligations.

The attempt to do so with taxes will destroy the economy, if it hasn't already.

Which is EXACTLY why they are printing so much money now.

And will continue to do so at ever increasing rates until the dollar and the economy collapses.

Which is what Obama et al wants, so they can blame it all on "Wall Street" and capitalism.

And "save" us all with handouts and socialism.

what I believe to be your prez's goal 996

[g8trjax]

And to top it off, the congress just blew the 60b in new taxes on another porkulus bill for sandy victims. Of course they couldn't seem to find ANY way to offset it with spending cuts.

[gator996]

And to top it off, the congress just blew the 60b in new taxes on another porkulus bill for sandy victims. Of course they couldn't seem to find ANY way to offset it with spending cuts.


"blew"???

Rebuilding the infrastructure of NY & NJ is wasting money?


Strictly from an economic perspective, that area would warrant strategic rebuilding more than say the Mississippi or Alabam coastlines...

[corpgator]

"blew"???

Rebuilding the infrastructure of NY & NJ is wasting money?


Strictly from an economic perspective, that area would warrant strategic rebuilding more than say the Mississippi or Alabam coastlines...

And not to mention that the 60B came from those states in taxes anyway, not from the poor Southern states.

[gator996]

Tru dat.

:joecool:

[MichaelJoeWilliamson]

Behavior that can't go on forever, won't go on forever.

Burke, my kids and grand kids and yours will be the ones that pay the piper. And maybe that is how it should be, as the majority of young people voted to continue down this unsustainable path. I do not think most of them realize the consequences of their action.

[Burke]

What we are seeing is the greatest nation in history being overrun by parasites who have been trained virtully from birth to hate and envy everyone who succeeds and the free system that makes success possible.

It's called being selfless and practicing self-sacrifice.

The communists did it to the tune of about 150 million.

That's bodies.

So far, most here have been satisfied to loot the country.

But when they run out of loot, the real fun will begin.

[gator996]

What we are seeing is the greatest nation in history being overrun by parasites who have been trained virtully from birth to hate and envy everyone who succeeds and the free system that makes success possible.

It's called being selfless and practicing self-sacrifice.

The communists did it to the tune of about 150 million.

That's bodies.

So far, most here have been satisfied to loot the country.

But when they run out of loot, the real fun will begin.



I don't hate capitalism...

...but if you have to practice with the "competitive advantage" that some groups
have operated with in this country's history...

...denying civil rights, denying access to capital, biased corrupt control of the legal system, biased corrupt control of the legislative process, biased corrupt control of the judicial system, biased corrupt control of law enforcement...


Who again are the "parasites"?

[MichaelJoeWilliamson]

Every great civilization in history has fallen. To the detriment of mankind. The savagery of the middle ages was not "bad luck." It was brought on by the fall of the Grecian, Arabic and Roman Empires.

(yes, I know these were not all simultaneous.)

[MichaelJoeWilliamson]

I don't hate capitalism...

...but if you have to practice with the "competitive advantage" that some groups
have operated with in this country's history...

...denying civil rights, denying access to capital, biased corrupt control of the legal system, biased corrupt control of the legislative process, biased corrupt control of the judicial system, biased corrupt control of law enforcement...


Who again are the "parasites"?

At its root, capitalism is a win win for humans. A business that harms it customers will not be in business for long. Businesses are not the cause of problems in mankind. Wealth creation has been a great boon to mankind.

Government have caused far more human suffering and death than any single business, or group of businesses. History teaches us this. Yet we ignore it at our own pearl.

[g8trjax]

"blew"???

Rebuilding the infrastructure of NY & NJ is wasting money?

Strictly from an economic perspective, that area would warrant strategic rebuilding more than say the Mississippi or Alabam coastlines...

Always a good reason to SPEND MORE.

[gator996]

At its root, capitalism is a win win for humans. A business that harms it customers will not be in business for long. Businesses are not the cause of problems in mankind. Wealth creation has been a great boon to mankind.

Government have caused far more human suffering and death than any single business, or group of businesses. History teaches us this. Yet we ignore it at our own pearl.


Your first paragraph has been proven to be false.

You must not believe what Alan Greenspan has admitted to...

A business will harm its customers if the immediate payoff outweighs the value of being an ongoing concern...

...hell, they'll do it if they get to take the "wins" and the public (their customers) take the losses...

[corpgator]

At its root, capitalism is a win win for humans. A business that harms it customers will not be in business for long. Businesses are not the cause of problems in mankind. Wealth creation has been a great boon to mankind.

Government have caused far more human suffering and death than any single business, or group of businesses. History teaches us this. Yet we ignore it at our own pearl.

How about the entire oil industry? Or I guess oil spills harm no one.

What about the airline industry? They don't necessarily harm their customers, but they treat them like crap.

How about all of the banks that screwed us over? All still in business.

[wgbgator]

Capitalism has been a boon for the productive capacity of man, not so much of a boon for creating abundance or dignity for all.

[MichaelJoeWilliamson]

Your first paragraph has been proven to be false.

No

A business will harm its customers if the immediate payoff outweighs the value of being an ongoing concern...



Some will. They just don't seem to stay in business long.

[Burke]

People deal by trade or by force.

Dealing by trade is capitalism.

Every alternative to capitalism is force.

Somebody exploiting productive people somehow.

All the criticisms of capitalism are just rationalizations for doing so.

You may as well be trying to justify armed robbery.

[ChartsandGrafs]

You may as well be trying to justify armed robbery.

Government bootlickers have become experts at this.

"But, but, but, it's not armed robbery when the government does it! It's for your own good! It's a social contract thing, you wouldn't understand!"

[wgbgator]

People deal by trade or by force.

Dealing by trade is capitalism.
Every alternative to capitalism is force.

Somebody exploiting productive people somehow.

All the criticisms of capitalism are just rationalizations for doing so.

You may as well be trying to justify armed robbery.

People traded before capitalism, and they will trade after capitalism.

[JerseyGator01]

Any serious similarities between many US industries and capitalism these days is purely coincidental.

[MichaelJoeWilliamson]

How about the entire oil industry? Or I guess oil spills harm no one.

What about the airline industry? They don't necessarily harm their customers, but they treat them like crap.

How about all of the banks that screwed us over? All still in business.

In regards to airlines and oil, I should have said "intentionally harms." That is what I meant. But even if a company unintentionally harms people often, they will also not be in business long.

Don't know what you mean by bankers. Bankers were giving us what we supposedly wanted; mortgages without money down and without regard of the ability to repay.

[MichaelJoeWilliamson]

Capitalism has been a boon for the productive capacity of man, not so much of a boon for creating abundance or dignity for all.

Untrue.

Ask yourself this; are humans better of now compared to 100 years ago? Two hundred? Three hundred?

By many objective measures, human are better off now than we have ever been.

What measures you ask?

Health
Longevity
Civil Liberties
Wealth

In three of those four, we can point directly to capitalism for the improvement. I think one can also make a good case that the people in a wealthy, capitalist society have a better chance for increased civil liberties than poor nations.

Why are we healthier, live longer (including dying due to violence as well as disease) and have more wealth? We are due to the efforts of the people that created and ran those evil pharmaceutical companies and those evil improvements in medicine and those evil energy companies and those evil banks.

The same natural resources were present in medieval times as today. Why are we better off today? Why do we have more money?

Evil Capitalism

[Burke]

If a maid scratches her hand and gets a bad infection today, she can get an antibiotic and be cured. A hundred years ago, the richest, most powerful man in the world with the same problem would have likely died.

Poor people are taught by Marxists to look at the rich as if the rich were exploiting them somehow. The fact is that the poor benefit from the rich far more in relation to their ability than the rich benefit from the poor.

The maids did not create the wonders of the modern world. The rich were far more responsible.

Blacks in America are taught that they are the victims of whites. But if the whites here all suddenly disappeared, what would the lives of the Blacks be like? On the other hand, if all the Blacks here suddenly disappeared, what would the lives of the whites be like?

If you were a plumber, would you want to go into business in a ghetto where they had lots of plumbing problems but little money to pay to fix them or in a suburb filled with millionaires, most of whom don't care what it costs to get a busted pipe fixed. They just want it done NOW.

The fact is that other productive people make your work far more valuable because you can trade with them. And the richer they are, the more your labor is worth. That's because the presence of rich people competing for your services increases the demand side of the supply and demand curves.

Marxism, the claim that the poor are victimized by the rich in a capitalist society, is a monstrous lie.

Instead of looking at the rich with envy and hatred because they don't live like them, the poor here should be looking at the people in Haitii and Somalia and thanking the rich because they aren't living like that.

Because thats the way it really is.

Maids today mostly just swing brooms, etc. and do the things maids have been doing for thousands of years. It's the evil, greedy rich who have made their lives infinitely better.

Bill Gates working in his own self-interest and getting filthy rich in the process has done more for mankind than all the Mother Theresa's in history combined.