Where is the US economy headed?

Yeah, they're doing that to every high credit line, no big deal there.

I doubt inflation is going to run at 10% annually for 6 years straight...

Cycloptichorn

I disagree. I think runaway spending, accelerated big time by Obama, and printing of more dollars does encourage inflation. If you have more dollars in circulation, which represents the amount of money available to buy and trade the assets available in the economy, it obviously devalues the dollar. If the assets are not grown in number but dollars to buy them are, the price will inflate at some point.



It now has everything to do with Obama. Unless you haven't heard, he is now president and he is getting virtually everything he has asked for, and even Bush started the ball rolling before Obama even took office by saying he would okay bailouts if the new administration wanted him to, remember? Obama has instituted a budget that will almost reach 2 trillion in deficits in one year, an uprecedented deficit that we have never come close to doing in the past.


I blame the people as well, but the politicians are more to blame. They are directly responsible and they can choose to promise the people a free lunch just o get elected, but it isn't required. I would not run for office one reason being I would not promise a free lunch and therefore I would not stand a chance of being elected. One big example, the Social Security program was a Ponzi scheme from Day 1, and has been misrepresented, and it is based upon deceit. One example of this is deducting half of the tax from the payroll and the other half from the employer, imparting the false idea that the employer pays half, when in reality it is money it costs to employ the person, so a more honest approach would have been to deduct the entire amount from the payroll. The self employed pay the entire amount so they are entirely aware of how much money is being taken from the people and spent, it is not in a retirement fund at all. The whole program is corrupt and always has been.

I don't think we'll see 10% the NEXT 6 years, but when I look at the SSN, the Medicare numbers, and our 10 year deficit numbers, coupled with the fact that China and other foreign investors ARE becoming less likly to finance our debt....what else can we do besides print more money....and it's looking like trillions of dollars in new money.

Please excuse the source...but this is interesting....and shows ZERO signs of stopping anytime soon.

http://www.glennbeck.com/content/articles/article/198/20816/

No reason to excuse the source in my opinion. People like Beck are the ones that are giving us the straight scoop on what is going on.
I like the graph in your link, as follows:

That chart is just disgusting.

I think 10% annual inflation is going to be an understatement. If we've been steadily seeing 3% annually over the last several years when we're pumping 30-50 billion into the system per year, I'm afraid of what pumping 4000 billion into the system over the next 3-5 years (and unknown billions once SS outcome exceed income, and Medicare, etc) will do to inflation.



Buy hey, silver lining, I will be buying my house for penny's on the dollar in just a few years.

Good evening, all. I won't challenge, maporsche, your prediction of 10% annual inflation. I think you are a bit high (not you-rather your prediction). I would go for 8% for about each of the next 3 years. But that is picking nits. I do note that my SS retirement benefits rose almost 6% from 2008 to 2009. That was more than I expected.
Here are a few thoughts:
^ The $ has been slipping a bit vs the pound and the euro. I haven't checked the yen for a few days. That will make imports more expensive.
^ Our exports become cheaper, but we will not be exporting cars or aircraft or construction equipment soon.
^ Oil is denominated in $ and the Saudis et al are making noises about curbing production while we can't seem to curtail our addiction to consumption. As long as we are into predicting, I would suggest $4 a gallon by Thanksgiving. And this time it will be a $4 price that is not a blip but a sustained increase.
^ That, of course, will result in higher shipping costs for food etc.

I would like to close with this set of thoughts. I know a bit of s*it about economics. More than some of yall; less than others. I try to report stuff as neutrally as I can. It is generally known that I am a Democrat (Dys describes me as a commie pinko, but yall know Dys). President Bush, in the closing months of his administration, dipped his toe into the "bailout" of banking. President Obama got into it even deeper, much deeper. Some folks say: let the banks fail; let GM go out of business or whatever.
I can only say this, from the vantage point of a redneck in the mountains of VA. We came perilously close to a total freezing up of our banking system. More then you read about and it aint over yet. We will pay a price in inflation, but the alternative would be much worse.

Thank you for taking the time to read this. -Johnboy-

rjb, Well balanced and reasoned response; I have little to disagree with your opinions. However, I do not believe we will suffer from inflation any time soon. The reason I have come to this conclusion is very simple; there is not much cash in circulation at the consumer level, so there isn't more demand than there are supplies. We still see factory closings and layoffs which means even at this low level of production, there's still little demand. If we had more cash in circulation, people will be buying all those bargain products and services, but our economy is still losing jobs by the thousands.

The only higher prices we now see is in oil/energy costs, but that's because OPEC has cut production even as demand has slowed. If OPEC continues to cut production to increase price, demand will only lessen, because many people can't afford to buy gasoline at $4 - $5/gallon.

I believe we are a few years from seeing any inflation within our economy. Some of the pundits are saying housing prices are now bottoming out, but I do not believe that to be true as long as thousands of people continue to lose their jobs.

It's going to take over five years for our economy to see any improvement (that's MHO).

Yeah. I wouldn't bet on housing bottoming out anytime soon. The numbers are still horrible, there is another big round of foreclosures coming in a few months, and prices sure as hell ain't flattening out, let alone bottoming!

Cyclotpichorn

You raised a couple of points I had not thought about, Tak. I want to leave room for other folks to comment. I'll be back tomorrow or Saturday re inflation.

My comment, is the Republicans obviously have better ideas, such as drill, as in Alaska, offshore, lots of places, go nuclear, develop wind and solar, all of the above. Do not coddle the unions, another big problem. Investigate Fannie and Freddie, prosecute the criminals, fix the reasons these organizations caused the housing bubble. Inject competition into education, return it to local control, and inject more competition into medical care. That would be a good start to fixing this mess.

Johnboy, you say you are pretty savvy about the economy. Anyone that runs their own business successfully has savvy. So have I, as have millions of people in this country. Something Obama has never done, and many of his advisors and economists have not either. Fact is, the head of the IRS evaded taxes. Firing him would be another first step to fixing the mess we are in, and getting somebody that is more competent and more responsible.

People talk about high energy prices. What do they expect when we don't aggessively develop our own? Some of this is so obvious, and so frustrating to watch incompetence run the country into the ground.

Okie wrote:


I disagree. I think runaway spending, accelerated big time by Obama, and printing of more dollars does encourage inflation. If you have more dollars in circulation, which represents the amount of money available to buy and trade the assets available in the economy, it obviously devalues the dollar. If the assets are not grown in number but dollars to buy them are, the price will inflate at some point.

It now has everything to do with Obama. Unless you haven't heard, he is now president and he is getting virtually everything he has asked for, and even Bush started the ball rolling before Obama even took office by saying he would okay bailouts if the new administration wanted him to, remember? Obama has instituted a budget that will almost reach 2 trillion in deficits in one year, an uprecedented deficit that we have never come close to doing in the past.

Maporsche wrote:

Re: Cycloptichorn (Post 3662119)
I don't think we'll see 10% the NEXT 6 years, but when I look at the SSN, the Medicare numbers, and our 10 year deficit numbers, coupled with the fact that China and other foreign investors ARE becoming less likly to finance our debt....what else can we do besides print more money....and it's looking like trillions of dollars in new money.

Realjohnboy wrote:

Good evening, all. I won't challenge, maporsche, your prediction of 10% annual inflation. I think you are a bit high (not you-rather your prediction). I would go for 8% for about each of the next 3 years. But that is picking nits. I do note that my SS retirement benefits rose almost 6% from 2008 to 2009. That was more than I expected.
********************************************************************

If RealJohnboy is correct and I think he is, although a little off on his figure(I predict 10%) then an automobile that costs $20,000 in 2009 will cost $40,000 in 2018 ---nine short years from now,

There is no question that Obama thinks he is still on the South side of Chicago.
Does he really want to destroy our economy?

The following article is ominous--

Government Finance 101
Now that we know the real numbers, the question then becomes how the federal government intends to pay for all of these programs. Remember, the federal budget deficit is already scheduled to exceed $1 trillion this fiscal year, so where is all of this money going to come from?

That's a very good question. The answer may appear to be very basic, but please bear with me as it leads into more important matters below. The US government essentially has three ways to deal with budgetary issues. First, it can reduce spending on other programs in order to fund the bailouts. Of course, we all know that politicians will never cut spending, so there's no use in even entertaining this option.

Next, the federal government can increase revenues by raising taxes. President Obama has already indicated that he wants to raise taxes on those making over $200,000 to $250,000 a year, but has also lowered taxes (or increased giveaways, as the case may be) to those with lower incomes. To fund the bailouts, however, would require a massive tax increase that may even be more than liberals could bear.

Consider this: the total amount of personal income tax revenue received by the federal government in 2006 (latest data available) was just over $1 trillion. With trillions of dollars of bailouts either enacted or proposed, a tax increase in an amount to cover these expenditures would likely be dead on arrival in Congress, and certainly would make the economy even worse.

Numerous studies have shown that as you tax income at higher and higher rates, there is less of an incentive to take the risks necessary to invest in new businesses. This, in turn, can lead to reduced economic activity. In other words, higher income tax rates could stall the very economic recovery the bailouts seek to bring about. This is just another reason that increasing income taxes to fund the bailouts is not a good idea.

A final way to fund the activities of our federal government is through the issuance of debt securities. Accordingly, the Treasury Department issues a variety of T-bills, notes and bonds to finance budget shortfalls. Currently, the total debt incurred by the federal government (the “national debt”) is just over $10 trillion. That amounts to over $32,000 for every man, woman and child in America based on the Census Bureau's population clock. The annual interest on this debt amounted to over $454 billion in 2008, including interest accrued by bonds held by the government itself.

As you might expect, Treasury Department officials have indicated that money to pay for past and future bailouts and stimulus legislation will be funded by borrowing through the issuance of additional Treasury securities. That being the case, it might be interesting to see who currently purchases these debt instruments, and whether they have appetites for more.

By far, the single largest entity holding Treasury securities is the federal government itself. According to the recent Government Account Office's Schedules of Federal Debt, as of September 30, 2008 over $4.2 trillion of government debt is categorized as “Intragovernmental Debt Holdings.” Of course, the largest among this group is the Social Security Administration, but this category also includes various federal retirement funds, health care funds and agency trust funds.

The remaining $5.8 trillion of government debt held by the public is spread among a variety of holders, including Federal Reserve Banks, state and local governments, foreign governments and central banks, pension plans, trusts and many individual investors. By far, the greatest percentage of publicly held debt is owned by foreign interests, reaching a total of $2.8 trillion as of September 30, 2008. China has recently become the largest foreign holder of US debt, followed by Japan, the United Kingdom and a host of other countries owning smaller amounts.

Ron Paul adds:

Ron Paul: Right. We can’t pay the bills and we’re not productive enough or smart enough to quit spending and pay the bills off. So what we’ll do is we’ll literally pay. You know, we owe China about a trillion. Well, they’re going to get paid, but they’re going to get paid with money that is worth a lot less.

So Bernanke doubled the money supply in the past eight or nine months. Now, that hasn’t translated in doubling all the prices, but it will eventually and maybe it will be a lot worse, then the dollar is only worth 50 cents on the dollar, so we are liquidating debt.

Our national debt, as horrible as it is, is actually going to be going down without taxation. But believe me, it’s a lot worse than paying your bills and working our way out of it because runaway inflation is just horrendous.

We need to keep an eye on this, which nothing would surprise me with these jokers in Washington. This is the kind of stuff that will inevitably happen when the government involves itself with businesses. I certainly would not want Obama to run any business of mine, after all, the guy doesn't know what he is doing, plus he will undoubtedly be adding political considerations to the management of Chrysler, GM (Government Motors), and any other business they become involved in.

http://www.washingtonexaminer.com/opinion/blogs/beltway-confidential/Furor-grows-over-partisan-car-dealer-closings-46261447.html

"Furor grows over partisan car dealer closings

Evidence appears to be mounting that the Obama administration has systematically targeted for closing Chrysler dealers who contributed to Repubicans. What started earlier this week as mainly a rumbling on the Right side of the Blogosphere has gathered some steam today with revelations that among the dealers being shut down are a GOP congressman and closing of competitors to a dealership chain partly owned by former Clinton White House chief of staff Mack McLarty.
The basic issue raised here is this: How do we account for the fact millions of dollars were contributed to GOP candidates by Chrysler who are being closed by the government, but only one has been found so far that is being closed that contributed to the Obama campaign in 2008?

...."

When are you going to get it through your thick skull that Obama is not going to run any of the businesses? Please show us where Obama said he's ready to run any of the companies that received any bailout funds?

You are very good at arriving at conclusions not found anywhere except your own brain. Get a a life - preferably in a school environment where you might learn to apply opinions to reality!

Periodically, the IRS seizes profitable businesses for nonpayment of taxes. Often, when the taxpayer owns the business, the agency will run it until such time it can be sold off to benefit the taxpayer.

However, this is a completely different issue than the stimulus plan and the administration taking over managing the company's day-to-day operations.