Has the debt economy reached its limit? Solutions?

J

Joh17

Verified User
It does seem like the economy are very close to falling apart. Inflation is high and will continue higher but Federal Reserve sems to be powerless.

In our economy debt must grow. Only new debt can pay for old debt. At some point debt can not be repayed.

So a new system is necessary. Something with much more control over each individual. People have to live in fear so they do not revolt when their standard of living plummets. The few that are left because they do not want billions of people. Something similar to Chinas social credits. And only digital currencies so everyone will know they are watched in real time.


But Covid fascism is not working well enough for them.

So my question is, can war be a solution for them? A larger one where people feel that fascism/communism is nothing in comparison. Because i am spiritually told that some in the Biden administration want war.

Also please discuss solutions. If we have reached the limit for the debt economy can we through cooperation between the larger nations cancel debts without turmoil in markets? The problem for them may be that in such a solution they will lose influence.


https://twitter.com/x/status/1389696282957029377
 
There is no solution, it is way too late for solutions....We will have collapse.....then a depression which I expect will be hard and long....and then a new global economic system will be built with the Chinese in charge, not the dying West.

What these fucks who run America seem to not comprehend is that debt levels will matter as the new system is made....that the Chinese will insist.
 
Joh17 said:
Has the debt economy reached its limit?
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We would know that debt was reaching its limit when the cost of holding the debt starts getting very high. Right now, the interest rate is below the inflation rate, so in effect people are paying the government to take their money. This is literally as far from the limit as one can be.
 
Walt said:
We would know that debt was reaching its limit when the cost of holding the debt starts getting very high. Right now, the interest rate is below the inflation rate, so in effect people are paying the government to take their money. This is literally as far from the limit as one can be.
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It´s a distorted market. Central banks are printing money to buy bonds so to keep interest down. Greece 10 year rate was almost 30% in 2012 if i remember. Now about 1%. But now we may have an inflation problem instead.
 
Joh17 said:
It´s a distorted market. Central banks are printing money to buy bonds so to keep interest down. Greece 10 year rate was almost 30% in 2012 if i remember. Now about 1%. But now we may have an inflation problem instead.
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If the Central banks were printing money out of proportion with needs, we would be looking at rapid inflation, double digit at least. And that would lead to high interest rates. There is no way to keep interest rates and inflation low, if the market is being distorted.
 
Housing, healthcare, and education are intentionally excluded from inflation. Add them in and we're close to 20% inflation.
 
goat said:
Housing, healthcare, and education are intentionally excluded from inflation. Add them in and we're close to 20% inflation.
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None of those are excluded from inflation. Energy and food are excluded from core inflation, but are included in regular inflation. Pretty much everything legal that has been around for more than a decade is included in inflation.

That does mean that illegal goods are excluded from inflation. So illegal drug prices, and stolen car prices are not included in the inflation numbers. Also very recent products are not included, because the government has not included them yet.
 
Joh17 said:
Has the debt economy reached its limit?
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There is a theory that there can be a sharp rise in interest rates, but even that theory would mean there would have to be some rise in interest rates. Right now, interest rates are around historic lows. There is no evidence we are anywhere close to a limit... Which is shocking.

Japan's borrowing is at close to the USA's rate (compared to GDP) during the worst of WWII. Japan is having trouble with too low inflation and interest, the exact opposite of what is to be expected. The rules of economics are being rewritten before our very eyes. At the same time, Republicans are quoting rules that never existed.

As a consequence, the flow of red ink this year tests the limits of comprehension. Japan will issue government bonds worth roughly 40% of the size of its economy. All else being equal, borrowing could account for nearly 60% of the government’s revenue in 2020. A third spending programme cannot be ruled out. Soaring borrowing and falling output together promise to push Japan’s level of gross government debt well above the already vast level of about 240% of gdp.
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https://www.economist.com/finance-a...04/japan-probes-the-limits-of-economic-policy
 
Happens ever time when a democrat get in office, teabaggers (www.teaparty.org) whine about the debt, been happening since Reagan tripled our debt.

“Reagan proved that deficits don’t matter,” Vice President Dick Cheney said when the Bush administration sought a second round of tax cuts in 2003.

Yeah, when THEY'RE in office.
 
Walt said:
There is even a section of the inflation report on "Housing at school, excluding board1". Yes, education, housing, and healthcare are all included.

https://www.bls.gov/news.release/pdf/cpi.pdf
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Don't believe what government tells you, Walt.

Of particular concern is also the weight that the government assigns to particular expense items in the inflation index. The things that consume an ever-growing part of the (former) middle class’s income – housing, healthcare, education – do not have the proper weight in the index. As a result, it looks like cost of living hadn’t gone up as much because people do supposedly not spend so much money on these necessary services.

Economists like Paul Craig Roberts have argued that the inflation measures are tampered with in order to avoid cost-of-living adjustments for Social Security recipients and worker’s contracts, which would be due when according to actual inflation.

https://www.awaragroup.com/blog/the-inflation-measurement-scam/
 
goat said:
Don't believe what government tells you, Walt.
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The CPI is extremely transparent in its creation. I will believe their numbers above your bizarre conspiracy theories. Education, housing, and healthcare are all included in the CPI.

goat said:
The things that consume an ever-growing part of the (former) middle class’s income – housing, healthcare, education – do not have the proper weight in the index.
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You started by claiming that they were excluded, and now you admit that was just a lie, but are claiming they are not weighted properly. If prices go up, then it will be a greater weight of income, so your claim falls apart. Lets say the basket includes 4% of a year of college tuition. If the cost of a college tuition doubles, that will be a larger share of the basket.

What could change the weight is if more people went to college. Lets say the average person is paying for 5% of a year of college, not 4%. That would throw off the calculations... For a while. Every couple of years, they readjust the basket items.

goat said:
Paul Craig Roberts
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Roberts is an 82 year old Holocaust denier, who has not done any academic economic work in nearly 50 years.
 
Walt said:
The CPI is extremely transparent in its creation. I will believe their numbers above your bizarre conspiracy theories. Education, housing, and healthcare are all included in the CPI.



You started by claiming that they were excluded, and now you admit that was just a lie, but are claiming they are not weighted properly. If prices go up, then it will be a greater weight of income, so your claim falls apart. Lets say the basket includes 4% of a year of college tuition. If the cost of a college tuition doubles, that will be a larger share of the basket.

What could change the weight is if more people went to college. Lets say the average person is paying for 5% of a year of college, not 4%. That would throw off the calculations... For a while. Every couple of years, they readjust the basket items.



Roberts is an 82 year old Holocaust denier, who has not done any academic economic work in nearly 50 years.
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The CPI is a scam that is intentionally skewed to hide real inflation. I'm willing to go through the method government uses to give the appearance of low inflation as long as you no longer cite the government as proof for your assertion.
 
goat said:
The CPI is a scam that is intentionally skewed to hide real inflation. I'm willing to go through the method government uses to give the appearance of low inflation as long as you no longer cite the government as proof for your assertion.
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The CPI underestimates substitution, and underestimates new technologies. Both those drive down inflation, but are underestimated by the government. If milk prices go up, people are more likely to switch to orange juice, but the CPI does not take that into account. The CPI ignores new technologies that drives down prices. Who cares how high the cable bill is, when most young people watch TV on their computers (or more likely their cell phones now).

And inflation is easy to spot. If it gets out of whack with government numbers, you would realize it. Lets say we had hyperinflation (about 50% a month, or about 10,000% a year), but the government claimed we only had 2% a year inflation. A year later, candy bars would cost $200, and you would know the government numbers were all a lie. Any store trying to sell a candy bar for $2 would quickly be cleaned out. I have been to countries like that, and the USA in 2021 is not one of them.
 
Walt said:
The CPI underestimates substitution, and underestimates new technologies. Both those drive down inflation, but are underestimated by the government. If milk prices go up, people are more likely to switch to orange juice, but the CPI does not take that into account. The CPI ignores new technologies that drives down prices. Who cares how high the cable bill is, when most young people watch TV on their computers (or more likely their cell phones now).

And inflation is easy to spot. If it gets out of whack with government numbers, you would realize it. Lets say we had hyperinflation (about 50% a month, or about 10,000% a year), but the government claimed we only had 2% a year inflation. A year later, candy bars would cost $200, and you would know the government numbers were all a lie. Any store trying to sell a candy bar for $2 would quickly be cleaned out. I have been to countries like that, and the USA in 2021 is not one of them.
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Can we agree the CPI intentionally skews the inflation of housing, healthcare, and education?
 
goat said:
Can we agree the CPI intentionally skews the inflation of housing, healthcare, and education?
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No, we cannot agree. If anything, the CPI has been proven to overstate inflation on Social Security recipients. It is targeted at urban office workers who have to buy their own houses, pay for new education, and pay for their own healthcare. Most retired people already own a house, or live in an apartment with more stable rent. They are unlikely to be taking on a new mortgage. They are even less likely to be paying for education. There are 70 year olds in college, but that is the exception, not the rule. And most importantly, Social Security recipients have Medicare, so are not paying the full force of their medical expenses.

Study after study shows that inflation on Social Security recipients is overstated, not understated... Or to be more accurate, most of the time. When inflation happens quickly, it takes Social Security a year to catch up, so we are in for a few bad months for Social Security recipients...

But there were some very good years there, where Social Security recipients got bigger increases from a year before than they were seeing when they got it. And there was even deflation where Social Security recipients did not see their Social Security checks go down.
 
Walt said:
No, we cannot agree. If anything, the CPI has been proven to overstate inflation on Social Security recipients. It is targeted at urban office workers who have to buy their own houses, pay for new education, and pay for their own healthcare. Most retired people already own a house, or live in an apartment with more stable rent. They are unlikely to be taking on a new mortgage. They are even less likely to be paying for education. There are 70 year olds in college, but that is the exception, not the rule. And most importantly, Social Security recipients have Medicare, so are not paying the full force of their medical expenses.

Study after study shows that inflation on Social Security recipients is overstated, not understated... Or to be more accurate, most of the time. When inflation happens quickly, it takes Social Security a year to catch up, so we are in for a few bad months for Social Security recipients...

But there were some very good years there, where Social Security recipients got bigger increases from a year before than they were seeing when they got it. And there was even deflation where Social Security recipients did not see their Social Security checks go down.
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By Charles Hugh Smith, Oct. 05, 2017

It's not exactly a secret that real-world inflation is a lot higher than the official rates--the Consumer Price Index (NYSEARCA:CPI) and Personal Consumption Expenditures PCE). As many observers have pointed out, there are two primary flaws in the official measures of inflation:

1. Big-ticket expenses such as rent, healthcare, and higher education - expenses that run into the thousands or tens of thousands of dollars annually - are severely underweighted or mis-reported. While rents are soared, the CPI uses an arcane (and misleading) measure of housing costs: owners' equivalent rent. Why not just measure actual rents paid and actual mortgages/property taxes/home insurance premiums paid?

Healthcare is 18% of GDP but only 8.5% of CPI. To those exposed to actual costs of healthcare, 8.5% of the CPI is a joke.

The same can be said of higher education: households paying tuition and other college costs are exposed to horrendously high rates of inflation, as illustrated in this chart:

saupload_CPI10-17.png


https://seekingalpha.com/article/4111845-be-careful-what-you-wish-for-inflation-is-much-higher-advertised
 
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