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President May be in Trouble

We have not been lifted out of a recession by no means. I don't know what fantasy world you live in but here in America we are still deep in a recession.
 
I see some factors that look better, such as houses selling more quickly and less numbers of foreclosures this past year. And prices are up in many areas, at least a little.

BUT - a person or a family can continue a posh lifestyle for quite a while after they are headed for bankruptcy IF they have enough credit cards that haven't been revoked YET. But sooner or later the debt catches up, and there is no more credit.

It is true that families don't get to print up new money like the Feds can. But there are repercussions for that, such as inflation. As far as I know, there is no free ride - at least not for an unlimited time. At some point, we won't be able to even pay the interest on all that debt. What happens then? My guess is print more money, which devalues it.

I don't know how quickly it will happen. But every administration always pulls any strings they can for the several months before an election, to make the economy look as good as possible. That is why I am worried, no matter what short term benefits the politicians are able to use to put off the inevitable payback - for now.
 
Heck, I guess in some respects, any government that owes a lot of money can use the inflation card to help them out of debt. Let's say your debt is $10 trillion and you print up enough money to pay that debt so that the inflation rate makes that $10 trillion bill that is due only really worth $5 trillion in REAL value. Guess what? You just halved the debt you owe. The debts won't be increased to cover the loss of value caused by inflation. So yeah, you are still paying $10 trillion but that money is really only worth HALF of that face value when the debtor gets it in their pocket.

And guess what happens to income collected as taxes? Well if your income is increasing any based on inflation (which, granted, not likely to keep pace), then not only are you paying more in taxes because of that increase in income, but also you will likely get pushed up into a higher tax bracket which causes you to have to pay even more taxes at a higher percentage rate. Sure, go ahead and send the IRS half of what they say you owe them, claiming that you are paying with pre-inflation dollars. I'm sure that will work out fine for you.

So what do most people do? Hell, spend the money today before it becomes worth even less tomorrow. So it appears that the economy is on an upswing with retail buying "improving", and manufacturing increasing to keep pace with the increased sales figures. So pats on the back all around to the guys and gals in Congress for pulling us out of a recession! The "news" will post glowing reviews and articles about how the recession is over with and the economy is improving by leaps and bounds. Things MUST be improving because people have more money to spend on commodities, right?

Yeah, inflation isn't all that bad if you are on the receiving end of the positive aspects of it, I guess.

Of course, from OUR perspective (who will not be the beneficiaries at all in all this), we are going to come out holding the very short end of that stick. Paying $100 for a loaf of bread is going to be a bitter pill to swallow while the government plays these sorts of games with the value of our money. This sort of thing has already happened to countries whereby the people had to buy wheelbarrels in order to be able to carry enough money to the grocery store to buy basic food items. Can't happen here? So, why not? Ask your grandparents how much a house cost to build back when they were your age. How much does it cost now? The COST of a house did not go up. The VALUE of your money has just gone DOWN that much. REAL value is still the same. Heck when I was a teenager, it was costing me around 33 cents for a gallon of gasoline. What does it cost now?

Want to look at a rather interesting site to see what prices were back in those dark ages? -> http://www.1960sflashback.com/1967/economy.asp

So the government has this tiger by the tail, trying to figure out how best to hang on knowing that either yanking too hard, or holding the tail too loosely will cause them to lose control completely. All the while smiling to us saying everything is perfectly under control while the white knuckles are out of camera range.

It's a VERY dangerous game they are playing. Imagine how pissed people will be to find out that their life's savings became basically worthless because of these shell game they are playing. Imagine how much ammunition the SSA will need to have stocked on the shelves when that tiger's tail HAS to be released and "the people" go looking for those responsible......

Yeah, people are going to get HURT, no matter what they might say to the contrary.

IMHO, of course....
 
Rich, why did you have to do that? You have put my thoughts and fears into words that I hate to think about. I so hope you are wrong! But what you are saying is (unfortunately) the only thing that makes sense to me, given our (federal) financial situation now.
 
Rich Z said:
Heck, I guess in some respects, any government that owes a lot of money can use the inflation card to help them out of debt. Let's say your debt is $10 trillion and you print up enough money to pay that debt so that the inflation rate makes that $10 trillion bill that is due only really worth $5 trillion in REAL value. Guess what? You just halved the debt you owe. The debts won't be increased to cover the loss of value caused by inflation. So yeah, you are still paying $10 trillion but that money is really only worth HALF of that face value when the debtor gets it in their pocket.

And guess what happens to income collected as taxes? Well if your income is increasing any based on inflation (which, granted, not likely to keep pace), then not only are you paying more in taxes because of that increase in income, but also you will likely get pushed up into a higher tax bracket which causes you to have to pay even more taxes at a higher percentage rate. Sure, go ahead and send the IRS half of what they say you owe them, claiming that you are paying with pre-inflation dollars. I'm sure that will work out fine for you.

So what do most people do? Hell, spend the money today before it becomes worth even less tomorrow. So it appears that the economy is on an upswing with retail buying "improving", and manufacturing increasing to keep pace with the increased sales figures. So pats on the back all around to the guys and gals in Congress for pulling us out of a recession! The "news" will post glowing reviews and articles about how the recession is over with and the economy is improving by leaps and bounds. Things MUST be improving because people have more money to spend on commodities, right?

Yeah, inflation isn't all that bad if you are on the receiving end of the positive aspects of it, I guess.

Of course, from OUR perspective (who will not be the beneficiaries at all in all this), we are going to come out holding the very short end of that stick. Paying $100 for a loaf of bread is going to be a bitter pill to swallow while the government plays these sorts of games with the value of our money. This sort of thing has already happened to countries whereby the people had to buy wheelbarrels in order to be able to carry enough money to the grocery store to buy basic food items. Can't happen here? So, why not? Ask your grandparents how much a house cost to build back when they were your age. How much does it cost now? The COST of a house did not go up. The VALUE of your money has just gone DOWN that much. REAL value is still the same. Heck when I was a teenager, it was costing me around 33 cents for a gallon of gasoline. What does it cost now?

Want to look at a rather interesting site to see what prices were back in those dark ages? -> http://www.1960sflashback.com/1967/economy.asp

So the government has this tiger by the tail, trying to figure out how best to hang on knowing that either yanking too hard, or holding the tail too loosely will cause them to lose control completely. All the while smiling to us saying everything is perfectly under control while the white knuckles are out of camera range.

It's a VERY dangerous game they are playing. Imagine how pissed people will be to find out that their life's savings became basically worthless because of these shell game they are playing. Imagine how much ammunition the SSA will need to have stocked on the shelves when that tiger's tail HAS to be released and "the people" go looking for those responsible......

Yeah, people are going to get HURT, no matter what they might say to the contrary.

IMHO, of course....
Click to expand...

kathylove said:
Rich, why did you have to do that? You have put my thoughts and fears into words that I hate to think about. I so hope you are wrong! But what you are saying is (unfortunately) the only thing that makes sense to me, given our (federal) financial situation now.
Click to expand...

This is EXACTLY the conversation my husband and I are having, and have had for a few years now. And we have no doubt it is going to happen, probably sooner than later. We really are at a loss as to how to prepare for it too. I believe that the last years of my life are going to be pretty darn interesting.
 
I graduated high school in 1970. In my last couple of years of high school, I can remember putting $.50 of gas at a time in my car, lol! I can remember newspaper ads for new houses for $20K. And I think I remember TV ads for a new Gremlin car for $2995 (although it could have been $3995). Even in the mid to late '80s, I remember a TV ad for a basic Mazda pick up truck for $5995. We bought our first new vehicle, a Nissan king cab pick up with a/c and a few other nice options, for around $7900 in the early '80s. And when I got my first job as a senior in high school, the minimum wage was about $1.20 per hour, or something similar to that.

That gives some of the younger people an idea of price changes in the last few decades. If we print too much money too quickly ("quantitative easing", anyone??), I think we could see "price adjustments" WAY faster than that!

My father was in the army at the end of WWII in Germany. He told me about people carrying wheelbarrows full of money just to buy simple items. And the fact that people couldn't get rid of money fast enough - they wanted to buy ANYTHING of value today because it would cost more tomorrow. We had a little taste of that here in the US in the mid / late '70s. People wanted to buy durable things like houses because of inflation. In turn, that pushed prices higher because more people wanted them, which caused more inflation. It was a vicious cycle.

Is anyone here old enough (besides Rich!) to remember those old political buttons that said "WIN" - "Whip Inflation Now!" on them (http://en.wikipedia.org/wiki/Whip_inflation_now)? It was the main topic of conversation back then. I'm sure you can Google some historical info about it if you are interested. I never studied it - just lived through it, lol! I was pretty young then, and not totally tuned into all of the political and economic stuff back then. But they were "interesting times", too. But the times to come may be even "more interesting".
 
Zero inflation is a sign of a stagnant economy. A low inflation rate, about 3% I believe, is healthy. Inflation happens as an economy grows. When it spikes, 5 or 8%, then usually the Federal bank steps in and raises interest rates to slow buying to force the interest rate back down.

http://inflationdata.com/inflation/Inflation_Rate/CurrentInflation.asp

August's inflation rate was less than 2%. In 2009 the average rate was less than 0, likely driven by crashing home prices. Unless we see a spike in prices in the next few months, 2012's average will be less than 2011's.
 
I am not worried about inflation too much right at this moment. But what happens if they get serious about printing more money in a big way? And what other choice do they have once they (politicians / leaders) can't afford the interest and payments on the federal debt? If you don't think the huge (and quickly growing) national debt is a fiscal cliff that sooner or later will cause crisis, I would be interested in hearing how we will deal with it in a non-disastrous way.
 
Nova_C said:
You'd have to ask Reagan about that:

http://www.snopes.com/politics/taxes/cellphone.asp

The program dates back to the 80s and was updated to include cell phones in 2008 before Obama got elected.
Click to expand...
Huge difference! The original program was enacted to provide as many as possible with landline 911 service. It is total fallacy that you need service on a cell phone to access 911 in the US. Even a cell phone without service will call 911 and also the original provider. All Obama did was add another welfare program. (aka buy votes ... See video!)
 
I would but Reagan is dead.
2r5wbqh.jpg
 
tsst said:
Huge difference! The original program was enacted to provide as many as possible with landline 911 service. It is total fallacy that you need service on a cell phone to access 911 in the US. Even a cell phone without service will call 911 and also the original provider. All Obama did was add another welfare program. (aka buy votes ... See video!)
Click to expand...

Wait, the cell phones were added before he was elected. How exactly is he responsible for this? The video is typical cherry picking ignorance on both sides.
 
This one actually ISN'T Obama's fault.

However, it IS just one more example of the problems with our current "more and more" Entitlement State thinking that seems so prevalent these days.

Problem is, if you defund or dismantle this program now that it's firmly entrenched (and growing); you'll be called a Racist, Greedy, Hate the Poor, etc...
 
"Snopes is a Leftist site run by Leftist activists who use their False Authority to promote the Leftist Agenda."

The level of discourse in that thread astounds me.
 
Wait, so that thread of anonymous posters simply saying "She's a witch!" is the equivalent of Snopes articles that cite their sources, attribute authors and put their real name on what they say?

No. Not it is not. If an astrophysicist tells you that stars eventually die and collapse, you do not give equal weight to the guy on the corner holding a sign that says stars are torches held by angels.

Sometimes there is only one side. If they offered any evidence of their assertions, I certainly didn't see it and a bunch of monkeys howling on the internet does not a compelling argument make.
 
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