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The Dilemma (Read 1660 times)

perceptions_now

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The Dilemma
Jun 13^th, 2012 at 2:25pm

The following article provides some reasonable indicators of where the Global Economy is placed & also the reasons why we have an intractable dilemma.

==========================
The Unavoidable U.S. Reality: The Upcoming Economic Collapse

The US, and much of the world, faces an unavoidable reality. There must be a severe economic collapse before we can proceed with the next period of sustained economic growth. This scenario is based on fundamental economic theory and a long history of what happens when the current economic conditions persist and are worsening.

This unavoidable reality is clearly demonstrated by the fundamentally opposing policies of the American right and left. The right, represented by the Tea Party, has both the clearest policies and the least supportable views in terms of economic theory and the real history of the world. The Tea Party's economic plan is to lower taxes, primarily to the richest. To balance the budget, it plans to cut benefits, primarily to those most in need. This strategy will do severe damage to the pretense of a social safety network. A fundamental reason for cutting taxes to the rich is that they will invest and thereby enrich the whole community.

The Tea Party plan fails based on three critical parameters:

Classic economic theory.
Historical fact in similar circumstances.
Common sense.
First, let´s discuss classical economic theory. GDP (Gross Domestic Product) is the measure of how an economy is doing. GDP is the measure of our total annual income. When GDP goes up, people naturally tend to invest. When it goes down, people naturally tend not to invest. GDP is the sum of all spending by the people (the private sector) plus all the spending of the government (government sector) plus net exports (the net balance between exports and imports). If exports are greater than imports, the net balance adds to the GDP. If imports exceed exports, the net balance decreases the GDP.

The Tea Party Plan will substantially lessen the government spending. First, it plans to bring deficit under control, apparently very quickly. Total US government income in 2012 is $2.5 trillion and expense is $3.8 trillion, meaning there is a 50% shortfall in income. (Any private business that spent $3 for every $2 of income would be out of business long ago!) However, any meaningful Tea Party cut in government spending will have enormous negative effects on the GDP.

Furthermore, there is the multiplier effect. The multiplier effect is the reduction in spending by all classes except the richest because they have less to spend, particularly when many lose their job. In short, reducing government spending by one dollar will end up reducing GDP by much more than one dollar because of the multiplier effect. Classic economic theory is clear that reducing GDP is not the way to create growth and wealth in the US.

To see this empirically, we can look at the second measure of the Tea Party Plan, which is the historical fact in similar circumstances. First, let´s look at England today. England is a government that is taking a measured, middle of the road approach with some spending cuts, but with consideration for the social safety net. Actually, England's GDP is declining year after year, with great frustration for it´s government.

Then we can look at an out of control situation such as Greece. Each cut in government spending simply makes matters that much worse for the country. And finally, I strongly recommend Rogoff's and Reinhart's book, "This Time is Different" - which looks at hundreds of years of history and countries all over the world. When countries get to the position of the US, one of two things happen. The amount of indebtedness becomes so high, the world loses faith in the country to pay. The result is sky rocking interest rates and financial collapse. You can see this movie in real time looking at Greece and Spain at this moment.

Alternatively, the country tries to deal with the problem by cutting expenses, but brings on the problem sooner. The tendency of the US is to "kick the can down the road". It makes the US today to seem to be following Greece and Spain.

Thirdly, let´s discuss common sense as the third measure where the Tea Party Plan fails to work. The allegation that lower taxes will produce the incentive to invest is simply not true. People invest because they believe they can make money. The cutting of government expenses will dramatically cut GDP with the multiplier effect. People invest in a growing economy and new opportunities. People do not invest in a shrinking economy without good opportunities. Investors invest to make money. If the economy is falling, no one will invest even if the tax rate is zero.

In short, the Tea Party Plan fails to make sense by three powerful criteria. The Tea Party Plan will fail, and bring on the economic collapse. Perhaps its only virtue is that it will bring on the economic collapse problem sooner than the Democratic approach, which ultimately tends to be more painful because the taxpayer ends up owing much more.

The Democratic position is best represented by Paul Krugman. Krugman's position comes down to Stimulus is the only remedy given where we are. He does not argue that it will go on forever, but simply long enough to get us out of the problem where the economy can then survive on its own.

I do not agree that stimulus can fix the problem. Stimulus, like cocaine, is addictive. We have now ballooned the deficits to a place where there is no way to go back without the horrific economic adjustment.

Does stimulus work?
Now, however, we have to ask the question "Does economic stimulus work?" Since this is the principal downturn fighting tool currently being used by major governments, the question and its answer is very relevant.

One of our brightest academics is Paul Krugman who in his recent book The Return of Depression Economics and the Crisis of 2008 analyzed whether stimulus works. He comes to the surprising conclusion that sometimes it works and sometimes it does not work. But he doesn't know why. I do know why it sometimes works and other times do not work.

I call this concept the 'Limitation to Stimulus'. Stimulus works in the beginning and middle of economic cycles but does not work at the end of the economic cycle. At the beginning and middle of the economic cycle, there are useful areas to invest stimulus money. At the end of the economic cycle, there are no useful areas to invest in and the money goes to worthless investments that ultimately go broke.

In short, much of the money invested in stimulus at the end of a major economic cycle simply defers the moment of truth and builds a larger bubble to blow up a little further down the road. Much of the money now being invested in stimulus will ultimately be lost and make it infinitely worse for the citizens who will inherit staggering losses of their government and have to pay ultimately much higher taxes.

Let's summarize the position on Stimulus. It will fail this time because we are at the end of a historical bubble where there are very few worthwhile investment opportunities. The multiplier effect on stimulus money has been reduced to near zero for lack of a favorable investment environment.

In short, stimulus will fail because of inadequate places to profitably invest the money. The four points below illustrate the complexity of Stimulus.

1. The safety of US Government Debt.
For most of us, this is sacred. Yet, behind the scenes of the stimulus, lies the disguised reduction of interest rates as a major strategy to keep the US debt sales viable in international markets. While debt has increased by 90% in the last six years (from $8.4 trillion to $16 trillion), the cost of the funding this debt is essentially the same at $400 billion. The average interest rate paid is down from 5% p.a. 6 years ago to 2.7% p.a. today.

The Fed has driven the short, medium and long-term interest rates to the lowest level in history as part of the Stimulus program. Interest rates exceeded 12% when Fed Chairman Paul Volker dealt with the last big bubble in the early 80s. US government interest costs have averaged about 6% during the last 50 years. Interest costs of 16% p.a. would mean the entire tax revenues of the US government would go to pay the debt and there would not be any money to pay for any US government costs, including Social Security, Medicare and defense.

Since interest rates hit near 12% the last time we had to fix the debt problem with Fed Chairmen Volker, we must see the high probability that the cost of US interest will increase dramatically at some time in the future. Reinhart and Rogoff estimate that the relation of debt to GDP over 90% is generally an indicator of a country with a structural debt problem that is likely to end in collapse.

This year, the United States passed the 100% mark for debt to GDP. Furthermore, debt is growing over a trillion dollars per year. The stage is set for a catastrophe, where the cost of interest on the US debt can soar, making it obvious to creditors of the inability of the US to pay its debt obligations. While we do not know the date this catastrophe will happen, it will become inevitable assuming the present trend continues. See Greece and Spain for what they are: the present day reality for them is what the US will experience later with the current deficit trend.

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perceptions_now

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Re: The Dilemma
Reply #1 - Jun 13^th, 2012 at 3:47pm

The Unavoidable U.S. Reality: The Upcoming Economic Collapse (Con't)

2. The safety of the derivatives market.
There is approximately a $600 trillion notional value market in derivatives. The derivative market is designed to fundamentally be a means of eliminating risk. If you have a variable cost loan, you can buy interest rate swap that permits you to lock in you cost. If you are concerned that your loans to Italy are at risk, you can buy a derivative to protect you. So in theory, this is a market of large numbers, but in theory should have very little risk.

In reality, this is the biggest casino in the world for a small part of the total players. Principally, the risk is concentrated in those selling the coverage, not those buying the coverage. Yet it takes only one important player a la AIG (American International Group of insurance companies) to bring the system down. The US government had to put in $150 billion to save AIG in 2008. If the US had not done so, it would probably have brought down Goldman Sachs and many others in addition to AIG.

One big player that defaults puts the whole system in risk of default as one bank collapse brings on another bank collapse. It would take a 3 % loss in the derivatives market to wipe out the worldwide capital of the banking system in the world. The probability that numerous of the world's major banks will fail in the coming years due to derivatives is extremely high, putting at risk the solvency of the worldwide banking system.

3. Making the US Banking System Safer.
Stimulus has lowered the long-term cost of funds to be very similar to the short-term cost of funds. Therefore, traditional banking has very little ability to make money the old-fashioned way as most of the profit has disappeared from its traditional form of making money because Stimulus has pushed long and short rates down so far.

The US banking system is being driven to take higher risk bets because its traditional profit structure has been harmed by Stimulus. Most of the higher risk items are closer to betting at the casino than traditional banking. There is a high probability that many of the world's major banks fail in the coming years, primarily because of lower gross margins on lending, bad credit or high risks on derivatives. This week, Spain's largest bank, Bankia, failed due to bad real estate loans and has to be bailed out with $125 billion of government funds. The financial cost for bailouts will begin to soar shortly, first in Europe and later in the US.

4. The safety of the US residential and commercial real estate markets.
While the perception exists that the real estate market may be on the mend, the fact is average prices are down over 19% on average since 2007. Untold losses still exist there, but most people could not take another 20% to 30% drop in prices. If any one of the three issues above explodes, it will inevitably lead to another round of declining prices in real estate - which affects not only the individual homeowners, but the viability of the banking system and the enormous bond and derivative market associated with the underlying real estate loans.

The above explains why stimulus cannot work at this time and the negative unintended consequences for large parts of our financial system coming from the well meaning Stimulus by the Fed.

Furthermore, we must now add in the polarization of the political process between the Tea Party on the right and the Democratic left. The traditional US government is effectively paralyzed due to the inability of the parties to find common ground. This is largely, but not exclusively due to Tea party intransigence. The political process is effectively paralyzed and cannot take essential decisions to solve the problem.

Furthermore, it is my belief that the polarization of the political parties is not the cause of the problem, but a consequence of the problem.

In January 2011, I wrote an article "A Possible Market Timeline to 2015". This article made a number of predictions about how this market would develop in the coming years. This article predicted the Southern European countries banks would fall and this would invariably lead to contagion in Europe that would then follow to the US. These scenarios seem to be playing out very much as described in this article of 18 months ago. This article in some ways complements the views expressed here, although it focused more on the coming events than the underlying causes for why they will happen.

Summarizing:
The Tea Party position is shown to be not practical by three critical measures: economic theory, historical fact in similar circumstances, and common sense.
The Democratic position supports Stimulus as the solution. But stimulus will only defer the problem; it is not capable of solving the problem at this stage of the economic cycle. We are at the end of a historical bubble where there is no real place to profitably make new investments that will have a positive multiplier effect on the economy, an essential condition to making stimulus work.
The inevitable consequence is that shortly (possibly months or a couple of years), the US and most of the developed world will enter into a several year-long major economic decline causing terrible consequences. Nearly all people will be affected negatively, including billions of the world's inhabitants that will experience truly terrible economic upheaval. An extremely small minority will see and understand the coming collapse and be able to actually improve their economic position. I hope to be among them.
As always with economic and business cycles,

the downturn will end after several years and the world will begin a major new cycle of economic renewal and growth.

Link -
http://seekingalpha.com/article/652661-the-unavoidable-u-s-reality-the-upcoming-...
===============================

As I said earlier, this author does provide some reasonable indicators of what is happening & why.

In fact, IF this current scenario had happened at nearly any other time during the modern era, say over the last 150-200 years, I would also agree with his final assumption that

the downturn will end after several years and the world will begin a major new cycle of economic renewal and growth.

However, whilst there are a great many things that can & do, affect the everyday health, wealth & general lives of every human, it is also true that there are only a few things that affect humanity on a global basis, over time.

Of these, the most influential have been, are now & will be over the coming decades -
1) Demographics - It has been & will continue to be, the major influence on Global Economics, as it provides the basis for Demand of the full range of "Products & Services".

Since the Global birthrate bottomed out around 1933 and then started to grow, including the massive additions of the "Baby Boomers" from 1945-1964, Demographics has virtually guaranteed grow in the Global Economy, albeit within the usual "Boom/Bust" Economic cycles.

However, this situation has started to wind down, via the massive Baby Boomer generation. As they first go into retirement & then leave us forever, the Boomers are leading Demand irrevocably lower, as they go into a more frugal retirement mode and by virtue that the numbers in following generations are too few to regenerate Demand, particularly in the Larger end of the housing market.

2) Energy - Along with Demographics, the other great influencer of modern Economics & indeed life in general, has been the sheer abundance of Energy to fill our Energy needs, the cheapness of that Energy & the amount of Spare capacity in the Global production of Energy.

First via Coal & then via Crude Oil, that situation enabled a massive increase in productivity, which literally fueled the massive jump in the modern Global Economy, along with Population increases.

However, that has also started to wind down, with many countries already experiencing a slow decline in the Production of Coal, including the current production being of lower grades and therefore less Energy output, but also & more importantly the decline in Crude Oil Production, which is now relentless and has already seen the Oil Price per barrel go from $10 to nearly US$150 per barrel, from 1999 to 2008, before falling back to around US$35 per barrel, then regaining ground to trade etween US$80-100.

As the Global Economy slows again, the Oil Price will again fall, perhaps not as much this time, before finally starting a relentless rise, due to the imperatives of "Demand & Supply".

Unless a new, currently unknown Energy source comes from a well hidden place & does so very quickly, then the impact on Demand & Economics in general will be truly massive!

3) Climate - We, the Human Race, have experienced a very favourable climatic period, for thousands of years, with the minor impact of the Medieval "Little Ice Age".

This period assisted our agriculture, our transport & in enabling our Populations to grow, assistling in the growth of our modern Economy.

However, scientific records of our past shows a long record of climatic swings between heat & cold and we are now nearing the end of that usual warm period, before the natural climate again swings towards a colder period ahead.

Whether the current climatic change has been "assisted" by human input, via additional & vast amounts of Carbon Dioxide & other Greenhouse Gases in still being debated by some, although the general concensus amongst scientists clearly says WE HAVE PUSHED THE CLIMATE CHANGE FURTHER & FASTER, than what may have otherwise happened.

The upshot is, it will also make our agriculture less productive, which means it will be more difficult to support the current population!

In short, this time is different!

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perceptions_now

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Re: The Dilemma
Reply #2 - Jul 18^th, 2012 at 1:21pm

How Bernanke will cause the next crash before 2014

“Massive wealth destruction coming,” warns Hong Kong economist Marc Faber, one of many “Dr. Dooms” we’ve featured over the years. Faber warned in a recent interview on CNBC: The Super-Rich “may lose up to 50 percent of their total wealth.”

How? “Somewhere down the line we will have a massive wealth destruction. That usually happens either through very high inflation or through social unrest or through war or credit-market collapse.” And as if to punctuate his message, in Barron’s recent “Midyear Roundup,” Faber was asked, “Will things get worse before they get better?”

Answer: “Yes, possibly much worse,” adding “most markets peaked in May 2011.” He expects “further weakness in the second half of the year. Corporate profits will disappoint … stock markets are oversold. The U.S. government-bond market is overbought. The U.S. dollar is overbought, and gold is oversold near term.” Worse, he’s “very negative about the outlook longer term.”

In spite of his doom and gloom about America and the world economy, when pressed Faber did recommend some China REITs. And waffled a bit on America: “It is safest to buy U.S. Treasurys because the U.S. can print money” and “pay the interest. But you are earning only 1.6%, and the cost of living is increasing by about 5% a year around the world. You are getting a negative real return.”

Not very promising in today’s uncertain world, where the American elections are unlikely to solve the economy’s core jobs problem, no matter who wins in November.

So when comes the change? “Down the line.” “The breaking point could be three, four, five years away. The world is heading toward a major crisis.”

OK, he hedges his bet on timing. But he’s very clear on how and why: The collapse will be “caused by Federal Reserve Chairman Ben Bernanke and the Federal Reserve’s continuous printing of new money.” The “bailout and money printing” since the 2008 Wall Street Crash did not “create any long-lasting wealth or create healthy growth.” Nor will the next president. So investors must hedge longer-term bets.

New crash coming before Bernanke leaves Fed by early 2014
The next “collapse will come on Bernanke’s watch.” Warning to investors: Bernanke’s second four-year term as chairman of the Fed ends Jan. 31, 2014. (He will remain a board member until 2020.)

Get it? There will be another crash. The crash will ignite before 2014 when Bernanke’s term ends. The crash will be worse than 2008. Bernanke will be the cause. He will be clueless about the unintended consequences of his policies (like his predecessor Alan Greenspan, who ultimately had to admit to Congress “I really didn’t get it until very late.”)

Bernanke’s no different. When reappointed in 2010, “Black Swan” author Nicholas Taleb said Bernanke “doesn’t even know that he doesn’t understand how things work.”

Same mistakes? You bet. In mid-June 2008 just before the collapse we listed several years of warnings about a coming global economic and market crash. And they were not just a ragtag bunch of “Dr. Dooms.” Read the whole list of who was predicting the meltdown of 2008, a “Who’s Who” of American leaders in finance, business and government.

Here’s a selection of the warnings of a crash coming, all made years before the 2008 global meltdown … Two Fed Governors beginning in 2000 … then in 2004, former Secretary of Commerce Pete Peterson … hedge fund managers like Rodriguez and Soros ... in 2005, economist Nouriel Roubini and the IMF’s Chief Economist, Raghuram Rajan … also a Special Report in the Economist on the 75% appreciation in global real estate in just five years … in 2006 Texas billionaire Rainwater warned us in Fortune; collapse warnings from Faber, from economist Gary Shilling in Forbes, also bond king Bill Gross, and Warren Buffett in Fortune … and a Harpers special on coming collapse in real estate … then in August 2006, the new Treasury Secretary Hank Paulson privately warned Bush’s staff at Camp David ... in 2007, more warnings, from money manager Jeremy Grantham, economist Gary Shilling in his Insight Newsletter and former SEC Chairman Arthur Levitt in the Wall Street Journal … at the same time our new Treasury Secretary was quoted in Fortune: “Strongest economy in my lifetime.”

How can investors prepare for the coming crash of 2013?
So what an investor to do? Start by lowering your expectations. Then look with enormous skepticism on any returns that exceed roughly five percentage points over the inflation rate. And stop listening to happy talkers, Wall Street hustlers and cable’s talking heads.

Remember, their advertisers need you to keep chasing hot stocks and the hottest sectors hyped in the press. That’s a bad strategy given the big risks dead ahead.

But that’s not enough. Here’s your No. 1 strategy: “The critical question over the next decade isn’t ‘Where will my returns be highest’?” warns Faber. Instead, ask: “Where will I lose the least money?”

Get it? Invest to lose the least money. Yes, capital preservation. That’s also Uncle Warren Buffett’s “rule No. 1.” And it should be your rule No. 1 for the rest of this decade: “Never lose money.”

Need whole new mind-set. Why? Optimism is a portfolio killer
Many of you are contrarians, free-market individualists and macho traders who will think Faber is just another crackpot “Dr. Doom.” And that all those many other warnings between 2000 and 2007 were just lucky guesses by perennial Doomsday Cassandras and Chicken Littles “crying wolf” one time too many.

Ignore warnings at your peril. Remember the catastrophic $10 trillion-plus market losses after the 2000 dot-com crash? Another multitrillion loss after the 2008 meltdown? In all, Wall Street lost an inflation-adjusted 20% of America’s retirement money through that decade.

Imagine Wall Street banks in virtual bankruptcy, again, like 2008, begging Congress for yet another bailout, as America sinks into a longer double-dip recession.

Warning, next time there will be no trillion-dollar giveaways, like Paulson and Geithner did with our too-big-to-fail banks during the 2008 meltdown. We’re already hearing grumblings about the J.P. Morgan Whale and the Libor scandals. More is ahead. Banks are too-big-to-manage, will fail. Expect government to extract a heavy price in the next bailout. Assuming politicians and the public are willing to add another $29.7 trillion debt.

Recently Faber warned that our brains are our worst enemies, captured in one word: overconfidence. Check out his GloomBoomDoom.com site: Investors are “deeply asleep at the switch.” Investors feed on happy talk. Investors minimize warnings, hard facts and the truth: “My experience has been that most investors (including myself) who lose money fail because of overconfidence … convinced that an investment will be highly profitable and seldom consider that they could be wrong.”

Final warning: Remember Dr. Doom’s Rule One: “Invest where you’ll lose the least amount of money!” Why? Because “massive wealth destruction is coming.” A time when “the rich may lose up to 50% of their total wealth.” With Bernanke the trigger.

Link -
http://www.marketwatch.com/story/how-bernanke-will-cause-the-next-crash-before-2...
=================================
I don't think Bernanke is THE problem, but he certainly isn't THE solution!

In fact, there are a number of basic influences directing the Global Economy & have been for some time.

However, Politicians, Economists & TPTB have elected to ignore these influences, in the HOPE that the problem will magically disappear or at least arrive whilst on their watch!

Well, THE MAIN EVENT is already under way, has been for some 5 years & it will continue for several decades, irrespective of what any Politician may say.

So far, what we have seen has been relatively minor, but the next few years will see some much more serious ramifications.

As one comment, on a US website put it, we are in for SCREWFLATION, which simply means everything the average family buys will go up in price and everything they own will go down in value.

So, good luck & watch the Debt!

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perceptions_now

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Re: The Dilemma
Reply #3 - Dec 17^th, 2012 at 5:25pm

The dilemma continues !

perceptions_now wrote on Dec 17^th, 2012 at 5:18pm:

Japan next PM Abe says eyes big extra budget to beat deflation

Japan's next Prime Minister Shinzo Abe said on Monday an extra budget his government plans to compile will be large in size given the country's output gap, which is behind deflation.

For the attention of OZ Politicians & their Political Social media "helpers" -
The old Economic remedies of Stimulus & Aus-terity, worked because they had the re-inforcement of positive Demographics & Cheap Energy AND THAT IS NO LONGER THE CASE!

So, AS THE BASIC DRIVERS ARE DIFFERENT THIS TIME, it must also follow that THE POSSIBLE REMEDIES MUST ALSO BE DIFFERENT!

He also told a news conference the government will reinstate the Council on Economic and Fiscal Policy, a key panel that was in place when his Liberal Democratic Party was previously in power, and will ask the governor of the Bank of Japan to attend its meetings.

He said he will form his cabinet on Dec. 26, and once it is created he will instruct ministers to work with the BOJ in issuing a joint statement setting a 2 percent inflation target.

He also said he wants the central bank to take into account the fact that the public supported his views on monetary policy when it hold a policy meeting on Dec 19-20.

The conservative LDP surged back to power in an election for parliament's lower house on Sunday, just three years after a devastating defeat, giving Abe a chance to push his hawkish security agenda and radical economic recipe.

Link -
http://www.reuters.com/article/2012/12/17/japan-politics-abe-idUST9E8LV01J201212...
=================================
What this means is, Japan's Conservative Government is about to increase their already massive Debt!

Now, I have to make the obvious observation, which is why would another BIG stimulus, make any different result, than the other stimulus the Japanese have tried since 1990, which have only achieved an ever growing Debt problem?

For our OZ Pollies & their helpers, it should be noted that the old remedies of Stimulus & AUS-terity are no longer guaranteed to fix the problems.

In fact, they MAY simply make the problem/s worse, as can be seen in Japan, Europe & the USA!

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it_is_the_light Gold Member Offline Christ Light Posts: 41434 The Pyramid of LIGHT Gender:	Re: The Dilemma Reply #4 - Dec 17^th, 2012 at 5:31pm you seem worried... this is ok and cool and has no effect unto the divine plan... many will try to eat money so be it freewill you see? be at peace namaste -:)
Back to top	ॐ May Much LOVE and CHRISTS LIGHT be upon and within us all.... namasté ▲ - : ) ╰დ╮ॐ╭დ╯ IP Logged

perceptions_now Gold Member Offline Australian Politics Posts: 11694 Perth WA Gender:	Re: The Dilemma Reply #5 - Dec 17^th, 2012 at 5:56pm it_is_the_light wrote on Dec 17^th, 2012 at 5:31pm: you seem worried... this is ok and cool and has no effect unto the divine plan... many will try to eat money so be it freewill you see? be at peace namaste - So, is a major Global Economic Collapse, Part of the Divine Plan OR Part of free will?
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Ex Dame Pansi Gold Member Offline Australian Politics Posts: 24168	Re: The Dilemma Reply #6 - Dec 17^th, 2012 at 6:03pm Good information perceptions. Someone should email that to Wayne and Joe, so they can at least toss a few ideas around the treasury. They're both still backing the growth fairy.
Back to top	"When the power of love overcomes the love of power, the world will know peace." Hendrix andrei said: Great isn't it? Seeing boatloads of what is nothing more than human garbage turn up..... IP Logged

it_is_the_light

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Re: The Dilemma
Reply #7 - Dec 17^th, 2012 at 6:11pm

perceptions_now wrote on Dec 17^th, 2012 at 5:56pm:

it_is_the_light wrote on Dec 17^th, 2012 at 5:31pm:

you seem worried...

this is ok and cool and has no effect unto

the divine plan...

many will try to eat money

so be it

freewill you see?

be at peace

namaste

-

So, is a major Global Economic Collapse, Part of the Divine Plan OR Part of free will?

it is both..

this will be interesting to see how you

overcome these obstacles

be at peace within and through

as much

namaste

ॐ May Much LOVE and CHRISTS LIGHT be upon and within us all.... namasté ▲ - : ) ╰დ╮ॐ╭დ╯

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perceptions_now

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Re: The Dilemma
Reply #8 - Dec 17^th, 2012 at 6:15pm

[quote author=it_is_the_light link=1339561528/7#7 date=1355731866][quote author=perceptions_now link=1339561528/5#5 date=1355730966][quote author=it_is_the_light link=1339561528/4#4 date=1355729477][s]you seem worried[/s]...

[u]this is ok and cool[/u] and [highlight]has no effect unto

the divine plan...[/highlight]

many will try to eat money

so be it

freewill you see?

be at peace

namaste

-:)[/quote]

[b]So, is a major Global Economic Collapse, Part of the Divine Plan OR Part of free will?[/b][/quote]

it is both..

this will be interesting to see how you

overcome these obstacles

be at peace within and through

as much

namaste

-:)[/quote]
[b]
I see you also struck the same problem with the icons![/b]

Oh btw, I won't overcome, WE MAY, but I suspect Not!

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perceptions_now

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Re: The Dilemma
Reply #9 - Dec 17^th, 2012 at 8:15pm

Those Dilemma's, they just keep rolling on & in!

AND, you will note that most of these dilemma's, are of our own making, because we refuse to face reality!

perceptions_now wrote on Dec 17^th, 2012 at 8:12pm:

Are Intragovernmental Holdings Real Debt?

As everyone who is paying attention knows, the amount of US debt outstanding is fast approaching the $16.4T limit. But whom do we owe it to? Most of the debt, about $11.6T of it, represents debt held by the public.

Intragovernmental Debt represents money we owe to ourselves. At $2.8T, the Social Security Trust Fund is the largest and most recognizable portion, with most of the balance being similar programs for government employees and the military. All of this adds up to $4.8T.

At this point, you may be wondering how exactly one would go about getting in debt to his/herself. For an example, let's take a trip back in time and assume that in a given month, the government collects $75B in Social Security taxes deducted from paychecks, but only makes Social Security payments of $50B. The $25B balance is spent by the general fund, and a $25B I.O.U. is penciled in on the balance sheet as "Intragovernmental". So the real question becomes, can you really owe yourself money? I think the answer is no, and that the whole concept of Intragovernmental Holdings is just an accounting farce. In reality, the $4.8T balance of Intragovernmental Holdings simply represents an up to date tab of the amount already spent.

So what does this mean? Should we all breathe a sigh of relief and simply write off the $4.8T of Intragovernmental debt on our books? No on the relief. Yes on the write off. The truth is the internal debt has never really mattered, so admitting to ourselves what it truly represents doesn't change anything other than the magnitude of lies we tell ourselves. The problem is, if we stop pretending that we owe ourselves money, we also have to stop pretending that the social security trust fund exists. Then, we would have to stop pretending that social security isn't a run of the mill welfare program and stop pretending that FICA isn't just a regular old ~15% income tax. Are we allowed to say any of that out loud?

Are we, as a nation, ready to start telling ourselves the truth staring us in the face? I really doubt it. But pretending something isn't true doesn't change the facts.
As it stands, we have a debt outstanding of somewhere between $11T, and $100T, depending on what accounting standards you happen to believe in.
On top of that, we have a structural cash deficit in excess of $1T per year and no realistic plan to materially change any of this. And yet if something doesn't change, it virtually guarantees that sometime in the future, both on and off balance sheet liabilities will be defaulted on, one way or another. 30 years of history suggests that whatever "fiscal cliff" compromise is reached over the next few weeks will be woefully inadequate, but most of us will probably pretend otherwise.

Link -
http://seekingalpha.com/article/1066631-are-intragovernmental-holdings-real-debt...
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Now, what was that, about ROBBING PETER, TO PAY PAUL?

AND, the elephant in the room is that, within a few short years, the income derived from the FUS ICA Tax.
http://en.wikipedia.org/wiki/Federal_Insurance_Contributions_Act_tax

So, very soon annual Retirement payouts, will start exceeding annual FICA income AND the problem of ROBING FROM THE FUTURE (Peter) TO PAY PAST GENERAL EXPENDITURES (Paul), WILL START TO COME HOME TO ROOST!

Oh & the FICA program is the Federal Insurance Contributions Act (FICA) tax is a United States Federal payroll (or employment) tax imposed on both employees and employers to fund Social Security and Medicare —federal programs that provide benefits for retirees, the disabled, and children of deceased workers. Social Security benefits include old-age, survivors, and disability insurance.
http://en.wikipedia.org/wiki/Federal_Insurance_Contributions_Act_tax

IF they had retained the unspent funds raised, instead of simply throwing those unspent funds into the funding of general Expenditure/Debt, then they would have had a reasonable chance at keeping US Debt to a more managable level AND they would have POSTPONED THE DAY DAY OF RECKONING ON FUNDING BABY BOOMER RETIREMENTS, for a few years longer.

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it_is_the_light Gold Member Offline Christ Light Posts: 41434 The Pyramid of LIGHT Gender:	Re: The Dilemma Reply #10 - Dec 17^th, 2012 at 8:19pm you seem at odds with that which is exterior to the inner tuition within you do you approve of these dilemmas or not? be at peace.. namaste -:)
Back to top	ॐ May Much LOVE and CHRISTS LIGHT be upon and within us all.... namasté ▲ - : ) ╰დ╮ॐ╭დ╯ IP Logged

perceptions_now Gold Member Offline Australian Politics Posts: 11694 Perth WA Gender:	Re: The Dilemma Reply #11 - Dec 17^th, 2012 at 8:28pm it_is_the_light wrote on Dec 17^th, 2012 at 8:19pm: you seem at odds with that which is exterior to the inner tuition within you do you approve of these dilemmas or not? be at peace.. namaste - They are dliemma's that should not be, BUT are. AND, whether I approve or not, is irrelevant, because they will still be there!
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