Author Topic: Financial Void  (Read 334 times)

Offline topside

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Financial Void
« on: February 18, 2017, 05:00:52 AM »
Ok - there are probably some terrible questions in this. So play nice - I'm looking to step up my game in this area a little. If I'm asking a dumb question, just say so and tell me what a better question is. I have investigated some of these areas but want to take advantage of what this group knows. I looked over this Forums history and there are a lot of notes on financially / budget related topics, but lots of little pieces. Please help me collect some of your contributions in this thread.

I haven't heard much from this administration on actions that start working toward a beginning at financial responsibility - rather than spending like drunken sailors as BO did. 

Do you think they / we will start paying down the debt? Trump said he intended to burn down the debt - but I haven't heard anything tangible yet. Maybe just too early? It is very important that Trump is trying to put some honest GDP back into our economy where we actually make something that people would pay for - not fake, product-less jobs like the Obamacare marketing hordes (do I have stories about them - and there must be an army of them!). He's probably trying to get some money flowing in the economy first before he addresses this. But I haven't heard much about it since the surface info. in the debates. 

Do you think the administration will try to put out a balance budget soon? I think they can pass a budget at this point - right? Or will some of the Pubs fight against?

I still don't understand the QE1 - 3 shell game. In my so-limited understanding: 1) It seems like BO dug a deep, deep hole in hopes it would shore things up but that there is a risk in it spinning out of control. To be honest, from what I'm seeing, it seems to be holding in the economy but at what cost - I still don't understand why the perception holding our currency stays standing. 2) I don't think there were any money presses rolling but seems that it did have to weaken our currency in some way. Isn't that supposed to be recovered in the near-term at a slow rate to recover some of the debt? 3) How does the QE1-3 paper moves get counted in the debt? 4)  Can anyone point me to something that explains the QE moves to a layman - what I have been able to find leaves me with little understanding. 



Offline Solar

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Re: Financial Void
« Reply #1 on: February 18, 2017, 05:36:29 AM »
Normally this kind of thread is posted in 'Finance', but you're new, so I'll allow it to stay a day or two, then to Finance.
You raise some good questions but I'd like you to look into QE Infinity before I go any further.
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Offline topside

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Re: Financial Void
« Reply #2 on: February 18, 2017, 06:24:07 AM »
Normally this kind of thread is posted in 'Finance', but you're new, so I'll allow it to stay a day or two, then to Finance.
You raise some good questions but I'd like you to look into QE Infinity before I go any further.

Rgr. that ... may be a day or two between things going on.

Offline Hoofer

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Re: Financial Void
« Reply #3 on: February 18, 2017, 06:58:46 AM »
As interest rates creep up, we "inflate" our way out of BO's mess... at the cost of every retiree.

I cannot imagine the economy going so strong, and government ever reining in spending ... they can't even balance a budget for a year, how could they ever pay down existing debt!?   I'm inclined to say, "There are no simple answers..." - but actually there is, the size and scope of government *must* be reduced, even halved, for starters. 

Workfare instead of Welfare - people need a change of heart, a will to work, instead of retire at 20yrs into the welfare system.  The private, "Religious Sector" did a better job handling the disadvantaged, disabled, drunks and down-on-their-luck types.  Local ministries were able to hold individuals accountable - the government just can't do the job effectively.  Reduce the outflow of benefits from the Federal Government, let the State & Local governments do their jobs - encourage them to do so.

The idea of importing "people" and dumping them into states, without "OKing" any local approval (or vote), is something a Tyrant does.
I'd love Trump to turn it on it's head, and declare federal preserves both Obama and Clinton set aside as "Refugee Settlement Areas".
With 20Trillion in debt, sucking more dollars out of the economy, or trying to print our way out, or reduce the debt through inflation - all been tried before, and miss the real power of the economic powerhouse that made America a great nation.

IMO - the longer dollars stay in the public sector, the greater economic activity, and thus the greater the inflow of taxes.
All animals are created equal; Some just take longer to cook.   Survival is keeping an eye on those around you...

Offline Solar

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Re: Financial Void
« Reply #4 on: February 18, 2017, 07:05:30 AM »
As interest rates creep up, we "inflate" our way out of BO's mess... at the cost of every retiree.

I cannot imagine the economy going so strong, and government ever reining in spending ... they can't even balance a budget for a year, how could they ever pay down existing debt!?   I'm inclined to say, "There are no simple answers..." - but actually there is, the size and scope of government *must* be reduced, even halved, for starters. 

Workfare instead of Welfare - people need a change of heart, a will to work, instead of retire at 20yrs into the welfare system.  The private, "Religious Sector" did a better job handling the disadvantaged, disabled, drunks and down-on-their-luck types.  Local ministries were able to hold individuals accountable - the government just can't do the job effectively.  Reduce the outflow of benefits from the Federal Government, let the State & Local governments do their jobs - encourage them to do so.

The idea of importing "people" and dumping them into states, without "OKing" any local approval (or vote), is something a Tyrant does.
I'd love Trump to turn it on it's head, and declare federal preserves both Obama and Clinton set aside as "Refugee Settlement Areas".
With 20Trillion in debt, sucking more dollars out of the economy, or trying to print our way out, or reduce the debt through inflation - all been tried before, and miss the real power of the economic powerhouse that made America a great nation.

IMO - the longer dollars stay in the public sector, the greater economic activity, and thus the greater the inflow of taxes.
It's funny, we all know the answer, but no one even considers it because doing the right thing isn't PC.
Get the Fed out and let the free mkt run it.
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Offline topside

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Re: Financial Void
« Reply #5 on: February 20, 2017, 11:36:19 AM »
Normally this kind of thread is posted in 'Finance', but you're new, so I'll allow it to stay a day or two, then to Finance.
You raise some good questions but I'd like you to look into QE Infinity before I go any further.

Solar ... I spent a few hours looking at this. It's such a shell game and the guys moving the shells move them pretty fast!

So on QE Infinity ... my take is that QE has officially ended (stopped the $40B per month purchases) but the Fed continues the practice at a pace of about $100M per year as the feds continue buying securities with interest on the original securities ... that were generated out of thin air. So - pretty dishonest and I don't know why we don't hear about it. I can't verify that this is really going on, but some sites indicated that it is.

So here's what I think QE is supposed to do. Say that investors are apprehensive and hold their capital. This keeps cash from flowing through our economy - and cash in an economy (business or nation) is like body in the blood - if enough doesn't flow then you die. So to spur cash flow, under QE1 - 3 the FedRes bought securities from banks (bonds = or loans to banks) who agreed to push the cash into the economy. The bonds don't seem to have a maturity date?

This effectively creates more money - just as if we printed it. So the dollar was diluted although perception seems to have kept it from falling ... somehow, so far. We should be seeing inflation but haven't so far.

And it gets worse. We created a lot of money flowing and the BO administration amassed about $10T of additional debt. One site said that QE pushed 3.5T into the economy ... so BO basically blew all the money that was generated on false jobs (those that don't generate anything tangible) and liberal dung.

This is a very complex system that we've messed with. An unstable equilibrium is when a system is on the precipice of falling apart (going unstable). Like holding a marble on top of a bowling ball - you can do it, but it takes constant attention - and if the marble gains too much inertia it will roll off no matter what you do. QE may have setup for such a massive earthquake, we won't survive if the marble falls off.

What is to be done? It seems that we should start simple. Establish a budget and keep it. Try to keep the debt from growing. And diffuse the QE to an end - not too abrupt as to dump the marble fast. Then we could start selling back the securities over some amount of time. That should be more feasible if our economy actually starts producing something of value again - if real GDP rises.

I'm for a free market, but we've mucked with it now and have to try and coach the marble into a stable condition without having it fall on the floor. At some point, we need to let the market go again and take our lumps. You'll probably disagree with continued futzing, but it is true that we do things like build dams that control water so we can get a desired result. At this point, we've built a giant dam with a ton of financial pressure behind it and if we just breach the dam it will be a complete disaster. Better to let the water off slow and take the dam down a foot at a time. It may still breach, but we should at least try to let the pressure off easy. 

Whenever it goes, the administration at the time will take the hit. God forbid it happens now for then I fear we'll see something worse than the Great Depression and those currently defending our Republic will take the blame even though they inherited the greatest economic mess of all time based on what Bush and BO did to our debt and monetary position vie QE.   

Ok ... so that's how I've filled in from my oh-so naive and limited understanding of the financial system. Am I too doom and gloom here? What do think is going on under Trump? 

This probably should move under financial ... how do I get it moved over?







Offline Solar

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Re: Financial Void
« Reply #6 on: February 20, 2017, 12:24:00 PM »
Solar ... I spent a few hours looking at this. It's such a shell game and the guys moving the shells move them pretty fast!
Now you know why we have a seperate forum for these types of posts, there's never a one answer fits all becaause the rules are constantly changing.
Something that should never happen in a true free mkt.

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So on QE Infinity ... my take is that QE has officially ended (stopped the $40B per month purchases) but the Fed continues the practice at a pace of about $100M per year as the feds continue buying securities with interest on the original securities ... that were generated out of thin air. So - pretty dishonest and I don't know why we don't hear about it. I can't verify that this is really going on, but some sites indicated that it is.
Yeah, that was the illusion anyway.


It's called "Govt Picking Winners and Losers" a totally unconstitutional move.

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This is a very complex system that we've messed with. An unstable equilibrium is when a system is on the precipice of falling apart (going unstable). Like holding a marble on top of a bowling ball - you can do it, but it takes constant attention - and if the marble gains too much inertia it will roll off no matter what you do. QE may have setup for such a massive earthquake, we won't survive if the marble falls off.
As by design, so convoluted, that no single individual will ever be able to fix it.

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What is to be done? It seems that we should start simple. Establish a budget and keep it. Try to keep the debt from growing. And diffuse the QE to an end - not too abrupt as to dump the marble fast. Then we could start selling back the securities over some amount of time. That should be more feasible if our economy actually starts producing something of value again - if real GDP rises.
We used to when the dollar was anchored to gold.

Quote
I'm for a free market, but we've mucked with it now and have to try and coach the marble into a stable condition without having it fall on the floor. At some point, we need to let the market go again and take our lumps. You'll probably disagree with continued futzing, but it is true that we do things like build dams that control water so we can get a desired result. At this point, we've built a giant dam with a ton of financial pressure behind it and if we just breach the dam it will be a complete disaster. Better to let the water off slow and take the dam down a foot at a time. It may still breach, but we should at least try to let the pressure off easy. 
This is the point I keep making, we don't have a free mkt, not even the illusion of one anymore.

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Whenever it goes, the administration at the time will take the hit. God forbid it happens now for then I fear we'll see something worse than the Great Depression and those currently defending our Republic will take the blame even though they inherited the greatest economic mess of all time based on what Bush and BO did to our debt and monetary position vie QE.   
There is but only one way to fix the system, and that is to let it fail, then let the free mkt pick up the pieces.

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Ok ... so that's how I've filled in from my oh-so naive and limited understanding of the financial system. Am I too doom and gloom here? What do think is going on under Trump? 
Your guess is as good as mine....
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This probably should move under financial ... how do I get it moved over?

I'll move it.
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Offline expat_panama

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Re: Financial Void
« Reply #7 on: February 21, 2017, 06:44:38 AM »
...start paying down the debt?...
Maybe you can tell me what I'm missing but as far as I can see we want our gov't to be able to borrow.  The thing is that it won't if the American taxpayer can't afford the interest payments when rates go back up  or if the American entitlement receiver wants more benefits than can be bought with more borrowed money.

One fact is that rates are going up, so we've got to either cut spending, or cap spending and grow the economy.  Another fact is that we can not afford new entitlements and we've got to cut the ones we got.

If Trump pulls this off then fine, if he thinks he can't then he'll be forced to do so  by economic reality.

Offline Hoofer

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Re: Financial Void
« Reply #8 on: February 22, 2017, 08:00:51 PM »
I work in an industry that is sort of the leading edge in technology.  5-6 years of barely moving along, but the spring of last year, it started getting busier and busier - and has not let up at all.  We have had all those years of building infrastructure, upgrading, increasing potential capacity, delivery costs have come way down - and it's all ready for another surge in activity.

Not saying it's gonna happen, just saying, the likelyhood is much greater than it's been in a long time... this is a big time of business transition.
All animals are created equal; Some just take longer to cook.   Survival is keeping an eye on those around you...

 

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