Deficits should be viewed as a % of GDP, IMO, and Drew presented this data from US gov stats a few weeks ago.
Being on the gold standard meant that you couldn't print up more money than you could cover with your gold reserves without risking national default. And the predominantly domestic sources of credit meant that any large scale government loans would suck up a lot of that credit, crowding out private individuals and enterprises seeking investment capital, and so harming the economy. Now, a couple of things have changed since then. First of all, the need for massive loans and the ability to boost spending through monetary inflation during the war years and the Depression lead to most western nations dropping the gold standard. And more recent decades have seen the birth of a vast global integrated capital market, where credit can be summoned from any corner of the globe at the touch of a button. Which brings us to today...
Now, a couple of things have changed since then. First of all, the need for massive loans and the ability to boost spending through monetary inflation during the war years and the Depression lead to most western nations dropping the gold standard. And more recent decades have seen the birth of a vast global integrated capital market, where credit can be summoned from any corner of the globe at the touch of a button. Which brings us to today...
What can not go on, will, sooner or later, stop. But what is going to give, and what will the aftermath be?
By the way, I see larger gains in silver going forward than gold now. There's a deficit there too, in mining versus demand. And stockpiles laid up in the 70s are being drawn down. Bitsofnews.com Giving you the latest bits.
There's some evidence to suggest, as I understand it, that gold is in shortage right now -- that the rising price has had little, if anything, to do with expected future inflation, which is always the party line among gold bugs. That seems reasonable when we look at long-term interest rates, too.
First of all, the need for massive loans and the ability to boost spending through monetary inflation during the war years and the Depression lead to most western nations dropping the gold standard.
My understanding is that the main reason for why Britain and the US, for example, dumped gold was that the BoE and the Fed were viciously attacked by speculators. Britain couldn't defend the exchange, and dropped the standard in '31. The Fed successfully defended it -- it was attacked shortly after the BoE's exchange fell and the sterling was allowed to float -- but at a cost of very high interest rates and increasing contraction. America finally dumped it in '33, obviously. Another slap in the face to Herbert Hoover (who, as I understand it, was a wonderful man, but a horrible, and sickeningly naive, president).
Gold can be a great investment, but it's incredibly dangerous to tie currencies to it, in my opinion.
In the long run, I'm bullish on the American economy, despite some factors that worry me today. Americans are highly educated. They're the world's binge-spenders. (I promise you: China needs America a hell of a lot more than America needs China.) And America is still strong on innovation. One thing that truly worries the hell out of me is all the talk in America of, "Too many foreigners coming in and taking our jobs." If America begins closing to foreigners, it will be in trouble. What America and Europe should hope to do is attract highly-skilled foreigners and provide them green lights to work and, eventually, become citizens.
That will also help the two powers keep their welfare states up and running. Immigration rates should be increasing, in my opinion. I'm probably more liberal than my fellow citizens on this, mainly because I've grown up in an area that has a high immigrant population (both skilled and unskilled), and I've always found them to be good, hard-working people who usually find success.
I do think -- and I know it's unpopular to say -- that Europe needs to loosen its labor market, and I think it will, eventually. Everyone seems to talk about it. Nobody seems to propose anything that's worth the paper it's printed on. I'm bullish on Europe, too, in the long run, as well, though I think it's going to take some time for Europe to catch up to America's growth rates. It will, but I'd give it ten years.
I'm not bullish on China, in the long run. China's growth is due to it's enormous labor supply and truly massive inflows on investment. That's a recipe for spectacular growth in the short run, but diminishing returns will kick in, eventually. The Communist Party may be investing in education and areas where it can help to produce innovations, but I don't think it's going to pan out.
There was a really great column in the FT a week or so ago that covered the problem of Asian culture as it relates to innovative ideas. It was titled, "A Korean Lesson for Asia," or something along those lines. (Jerome can probably tell you.) It's worth thinking about. I question whether societies that place too much value on order will allow for the freedom of thought, criticism, and experiment necessary to make an innovation-driven economy work. Conservatives want live babies so they can raise them to be dead soldiers. - George Carlin
I do think -- and I know it's unpopular to say -- that Europe needs to loosen its labor market, and I think it will, eventually. Everyone seems to talk about it. Nobody seems to propose anything that's worth the paper it's printed on.
I don't understand the reasoning behind making it difficult to fire people. It's not right, in my opinion, to try to force companies to keep poorly-performing workers. If I'm going to take a chance on a business -- take out a loan, and all of that good stuff -- then I should be able to hire and fire people as I see fit. In that case, it's my credit rating and source of income that are on the line.
It's a similar argument to the one I made about smoking in bars. If I take out a loan to start a pub in Newcastle, I should have the right to decide whether I allow people to smoke in my pub, and I'll probably decide whether or not to allow it based upon how much I can expect to earn in each case.
Now the argument could be made that, well, smoking is unhealthy and it puts strains on the NHS, and I havelittle doubt that this is true, but are we going to start telling restaurant owners that they can only serve a fixed portion of food, too? Because overeating is certainly just as unhealthy as smoking. There's a whole host of other problems that we could get into discussion on. Conservatives want live babies so they can raise them to be dead soldiers. - George Carlin
. Why is this such a bad thing? If the worker performs well, the company will keep him. If not, it will fire him.
In any case, there isn't a real problem getting rid of incompetent workers.
Sometimes that happens, of course. A lot of times, actually. But often it does not.
Of course you start companies within the context of the existing conditions. I'm not denying that. I'm saying that the conditions could be better. Conservatives want live babies so they can raise them to be dead soldiers. - George Carlin
Smoking is always damaging your health, and that of those nearby, but you can go without. You can damage yourself by eating, but you can't go without food, and you don't indirectly damage others (ignoring the bio-industry).
So that comparison didn't ring so well with me. Problem is: if you leave the choice up to the pub owner, every pub will allow smoking, since no one will want to block some 30 percent of their clients voluntarily. But not everyone of that non-smoking 70 percent agrees with smoke - so should that, say, 10 percent set up their own non-smoking bar? I don't suspect it's profitable enough, if ordinary pubs are still around.
And Colman's previous argument stands. To let non-smokers work in a smokey environment which is damaging to their health shouldn't be allowed. It works like this for me: you're free to do what you want until the moment your actions discomfort or harm others; that's where the line is drawn. Smoking is the perfect example here. On the food, you've a point, but I'm not qualified enough to mingle in the actual debate. That's why I prefer to stand on the sideline and launch offtopic comments at people. Glad to be of service.
BTW, the majority of the Italians are exceptionally pleased by their non-smoking regulations. As true Italians, they now comment they can taste the food and wine in restaurants much, much better. For Italians, that says something...
Now, that 70% of people don't smoke, and don't want to be around smoke, doesn't change anything. They can still demand that the owner ban it in his pub, or they can accept the fact that people are going to smoke, or they can leave. They're not forced to go to the pub. If you siphon off that 10% from multiple bars, I have very little doubt that you could probably make a profitable business.
Most major cities in Britain, from what I've seen, are much larger than the city I live in, in terms of population. (Greater Nottingham, alone, is roughly six times the size of Tallahassee, and I don't think Nottingham is very large by English standards. I could be wrong.) We have many smoking and non-smoking bars, some right next to each other, and all are profitable. (It's a college town. There are a lot of bars.) I'm sure the market would be large enough.
Non-smokers shouldn't have to work in smoke-filled offices, and they don't. They don't have to take the job. Again, I stand by my point that, if someone takes out a loan to start his or her own business, he or she should be able to set these sorts of rules, because it's that person's money and credit on the line. Conservatives want live babies so they can raise them to be dead soldiers. - George Carlin
Non-smokers shouldn't have to work in smoke-filled offices, and they don't. They don't have to take the job.
Nonetheless, your point is well taken. Conservatives want live babies so they can raise them to be dead soldiers. - George Carlin
If America begins closing to foreigners, it will be in trouble.
Not to speak of the chilling effect that the awareness of rising xenophobia has on applicants, as well as the growing antipathy for all things American courtesy of the shrub.
Really sad...
And, on top of that, up-and-coming graduates like you and MfM give serious thought to emigrating for advanced study because of economic and political reasons...
I wonder how long it will be before the brain drain officially reverses. The massive outsourcing of white-collar jobs out of the US isn't making matters any better. guaranteed to evoke a violent reaction from police is to challenge their right to "define the situation." --- David Graeber citing Marc Cooper
The entire visa process is a mess out in California, and I can't stand Diane Feinstein. I wish Cindy Sheehan had decided to run against her. everytime I see Feinstein on "Meet the Press" or "Face the Nation," she spends an hour debating without actually saying anything important. Feinstein is like Hillary Clinton, but even more of a Republican-lite piece of garbage. I don't know why we can't get any strong, liberal Democrats to run in ultra-liberal California. The state is a lock for Democrats. If you win LA and San Francisco, you've practically won the state already -- and the Democrats always crush the GOP in those two cities. And yet we keep getting these weak-kneed Know-Nothings in the House and Senate. Conservatives want live babies so they can raise them to be dead soldiers. - George Carlin
What matters is the ability of the government in question to pay. The US enjoys the benefit of having never defaulted, so its credit rating remains strong. Currently, our interest payments make up somewhere between seven and 10% of the federal budget. The problem is that this percentge is rising fairly quickly. As long as we can continue paying the interest, we'll be able to borrow.
It is a problem, though, in the sense that governments should try to maintain low debt levels, so that they can spend if they need to. Why put down your weapon if the enemy won't put down his?
We've run deficits in all but four years over the last half-century -- '69, '98, '99, and '00 being the surplus years. (Check me on 1969, though. It was somewhere around that time.) But, up until Reagan, the deficits were falling as a percentage of GDP. That's not wholly Reagan's fault. The Democrats -- remember, this is the latter portion of the era of Democratic dominance in Congress -- in Congress at the time were not exactly fiscal saints, themselves. And both had to deal with the Fed purging inflation and sending the economy into the worst recession since the '30s (based on unemployment). Conservatives want live babies so they can raise them to be dead soldiers. - George Carlin
So growth alone won't paint the picture rosy. Bitsofnews.com Giving you the latest bits.
