THE ECONOMIC FUTURE OF THE USA

Economics Economics Questions
,
41

That’s true. There is theory called Time Preference. I know Mises has written about it. It correlates interest rates with attitude. Low interest rates imply high time preference, meaning, with low interest rates the activity involved is one of action now instead of waiting and saving for tomorrow (high time preference). The Fed, for the most part, keeps interest rates as low as possible, and I don’t know if it has ever allowed interest rates to rise to the market level based on consumer demand thereby curbing unnecessary malinvestments that come to light especially during bubble bursts.

interesting.

42

What will stop this from happening? I guess you’re thinking political action through the current system. I mean these are contingent discussions, so, it is possible either way.

43

Gerald, have you been listening to Peter Schiff?

I’m amazed how all your posts [but for bribing the unemployed so they don’t riot] are so spot on, and exactly what he is saying.

The difference is, you see the horrible abyss of hyperinflation before your feet, and are stunned. “It can’t be. We’re the United States, for God’s sake, the good guys, not Weimar Germany or Argentina or Zimbabwe or the American Colonies when they printed paper money.”

He, on the other hand, has digested this possibility, as have a few others. They have concluded that, though not absolutely certain, it is a definite possibility. Double digit inflation [not as bad as hyperinflation], with gasoline over ten dollars a gallon, is about as likely as winning a poker hand with four aces. In other words, they think it’s bound to happen sooner or later. I’ve heard “Before Obama runs for re-election” as a reasonable deadline.

So what to do? What I’ve heard is "Buy a gun and a dog and canned food. If you have any US Dollars, find an expert who will help you turn them into something else.

I’m curious how you managed to not lose money in real estate. That is quite a coup. And are you sure your turn won’t come? [In other words, maybe it’s time to get out of Dodge before the collapse in real estate spreads to whatever lucky island you have found].

44

Dear filc:

you stated: “It’s interesting, but unemployment in many engineering based industries is very low. I know of several petroleum engineering positions available that are starting people right out of college at 60k annually. Meanwhile students continue getting political science degrees.”

Where do people with political science and other liberal arts degrees find employment?

My daughter and my son both started college as Mechanical Engineering students. My daughter was an IB High School graduate and then made almost straight A’s at University of Texas Austin majoring in Mechanical Engineering for the first three semesters. In the middle of her sophomore year she decided that there was no economic future in engineering, so she changed to liberal arts. I think that her sorority sisters also made fun of her for studying. I also remember that she told me during her sophomore year Christmas break that she needed to “learn how to party”!

My son, 4 years younger, also saw no reason to study hard and changed his major in the first semester of his freshman year at Texas A&M from Mechanical Engineering to General Studies, and then History. They want to become government bureaucrats or lawyers.

My daughter is now in her last year of law school instead of being an engineer. Whatever, I tried. Maybe this country needs more lawyers.

I give up.

45

To answer sarcastically, they become socialists and work at a office depot as a cashier making 9 bucks an hour. Then complain that they aren’t getting a fair share of society’s “wealth”, as if they had a claim, despite the fact that their productivity is in the red, as they probably owe thousands in school loans.

I’m quiet shocked she decided that there was no future in engineering. The rest of the country has a 9%+ unemployment, IT engineering is like between 2 and 4 %.

Petroleum engineering firms are hiring kids right out of college paying them 70k a year in Houston. Houston is one of the most affordable places to live in the country, making 70k a year there is definitely middle to upper income. Engineers are in huge demand, there is a reason why Microsoft is desperately trying to get more work visa’s every year. That is that they cannot find that work domestically.

46

Dear filc:

and the Fast food industry!

47

Yes, through political action, but it will have to come from the people. For the first time in history the Fed is now under a microscope. Go on their Youtube channel and all the comments on their “instructional” (propaganda) videos are clearly against the establishment and claiming “end the Fed”. Historically, the Fed has been a behind the scenes and got no attention - just the way they wanted it. But the toothpaste is now out of the tube. The Fed will get the blame for everything. They have Ron Paul exposing their activites. They have to tread lightly.

Don’t get me wrong, there will be high price inflation. Many US states are bankrupt as well as our Federal gov’t. The Unfunded liabilities of Medicare/Medicaid a social security cannot be paid. Politicians do not have the political will to do what’s right and default on these obligations. They will print their way out of it. The younger generation that has to pay for the excesses of our grand and great-grand parents, provided to them by our gov’t, all to be repaid by our and our children’s labor, will not stand. The younger generation will shrug. It would rather not pay and see gov’t default. Gov’t will therefore one day be permitted by the citizens to default. If the default is through payment via inflation then that is a default, but a default where everyone pays the price.

Many economists world wide are now advocating inflation to get us out of this debt crisis that all gov’ts are now in. We will get price inflation and will not be getting commensurate rising wages to match. The whole point of inflation is to wipe out creditors for the sake of debtors, and to lower real wage rates (wages won’t rise with price inflation) to reduce unemployment.

48

Aint that the truth!

49

Dear Smiling Dave:

I will google up Peter Schiff, I do not know who he is, but I will find out.

Thank you for putting me onto Henry Hazlitt, he is a good wordsmith.

Instead of the US government just buying some more paper and printing more US dollars (faster and faster) to pay our expenses like Mexico prints pesos, the US government prints US Bonds in whatever quantities are needed to cover the US government expenses and auctions these off at FED auctions to get US dollars back from industrious working individuals that are creating wealth in mostly foreign industrial lands.

The US government wants these industrial nations to spend their hard earned US dollars (that they earned by making consumer products) from US importers/retailers to purchase the freshly printed new paper US Bonds, etc. at the periodic US Federal Reserve auctions. These foreign industrial countries are now offering less and less than the face value or present worth of our freshly printed-paper US Bonds, etc. as the industrial nations confidence in the USA economic system diminishes. If these freshly printed new paper US Bonds were not redeemable for US privately owned property, then foreigners would not bid for, or only bid a fraction of a percent of the present worth or face value to purchase these freshly printed new paper US Bonds.

Every time that Mexico needs money for expenses, Mexico just prints more of their pesos, and the value and buying power of each new and existing printed Mexican peso reduces proportionately. The Mexican peso is not redeemable for gold, silver, or any other valuable. The Mexican peso is not redeemable for existing Mexican property, unless you partner with a Mexican citizen who must have 51% ownership and control of that property.

One US dollar that would buy about 8 Mexican pesos in 1960 can now exchange for as much as 15,000 of the 1960 Mexican pesos today. This is equivalent to about 187,500% inflation over that period. A $2.00 USA loaf of bread would then cost $3,750.00 if the USA implemented Mexican type economic monetary policies. The Peso referred to today in foreign exchange is actually the SuperPeso that is the equivalent of one thousand 1960 Mexican pesos.

The USA is mimicking the Weimar Republic economic policies, in as much as we are consuming wealth created by previous generations, and not creating as much new wealth as we need for a positive Foreign Trade Balance.

50

Gerald,

This is Peter Schiff’s website: Europac and here is his Youtube channel where he does his blog: SchiffReport.

On the right hand side of the youtube page you will see Peter’s uploads. Watch those videos.

Also don’t forget the Mises Institute Video page: Misesmedia

51

Mista G,

Thanks for the kudos of my prior comment but the ‘seed corn’ statement can be attributed to Ludwig Von Mises.

Regarding Jacob and Egypt, doesn’t being a citizen of any state imply being a slave to some extent since the state claims a ownership over its citizens fruits of labor and forces certain forms of behavior upon them? As a government becomes more desperate it will likely attempt to increase the degree of slavery it inflicts upon its citizens.

Regarding your real estate holdings, watch out for a sharp rise in property taxes which will make them less valuable.

Regarding Mexican alien land ownership, I believe the restriction you mentioned only applies to coastal areas?

Regarding hyperinflation, definite possibility at the end of the empire, believe we’re more likely to see a couple decades of stagflation before then. The powers that be have about run out of figurative bullets and this cycle will be unlike the ones in the past. Time to pay the piper, I suppose?

Regarding your discourse in this thread, I’ve enjoyed your perspective and attitude.

Best regards!

52

Dear Smiling Dave

You Said, “I’m curious how you managed to not lose money in real estate. That is quite a coup. And are you sure your turn won’t come? [In other words, maybe it’s time to get out of Dodge before the collapse in real estate spreads to whatever lucky island you have found].”

My innerloop Houston rental properties as appraised by the HCAD are up 80% during the last 4 years, and I have written offers for more than the appraised values that I have turned down.

My one raw land property outside of the loop declined about 20% in value, but so did the property taxes.

53

From my observation Houston and other area’s of Texas where lending was done more responsibly the housting bubble did not effect these area’s as much. As a result their market was more stable and consequently had less of a fall.

Though I haven’t actually investigated this as it has been a casual, at face, observation.

54

Dear bbnet:

I appreciate your response.

I am new to this activity. As an old guy, I might not be around when the economy callapses, but I want for my children to avoid the catastrophe that I believe that the USA is creating.

Many services are required to support the Agriculture, Mining, Technology, Construction and Industrial Production activities of a family, tribe or nation. Civilized nations have always taxed the productive population to pay for National Security, Armed Forces, Crime Prevention, Police, Fire Protection, and other similar items that assist, support and protect and prevent interruption of the agricultural and the industrial production bases that supplied the things that the entire population consumed.

Industrial and Agricultural Bases could not exist with foreign invasion, crime, protection rackets, corruption, sabotage, etc., disrupting the production. A portion of the wealth earned by this productive base of people has always been taken by taxation to pay for governments to prevent these occurrences that would otherwise interrupt the production of the things that the citizens need to sustain civilized life.

Maybe the US government can no longer afford to spend hard earned taxes and borrowed US dollars on wars, social entitlements, welfare, free healthcare, digging holes today then re-filling the same holes tomorrow, pork barrel projects, free educations, free medicine, subsidized housing, humanities, art, music, writing poems, make-work schemes, entertainment, and/or similar things that do not contribute positively to reducing our foreign trade balance. These things are nice but the USA cannot afford these expenses until we re-establish our economic strength. These things take tax US dollars and employ people to do things that do not accumulate wealth for the family, tribe, or nation.

55

Why can’t everybody just be employed by the US government with money borrowed from industrial nations?

New massive US government job creation funds are proposed to be spent to create additional jobs for temporary employment of police, teachers, social services, welfare, environmental, infrastructure construction, and other bureaucratic jobs.

These jobs generally do not produce any of the food, shelter, and clothing required to sustain life, create wealth for the nation, and/or reduce the US Foreign Trade Deficit. Well maybe infrastructure construction will help get products to market.

The citizens who work to produce the necessities of life in every civilization are have always been taxed for a portion of the wealth that they generate to pay the government employee salaries of these government jobs are that are needed to support and protect the citizens that do produce the things that society needs to survive, but a lot of these government jobs could be eliminated.

The communist form of government where everybody works for the government because the government owns everything does produce the food, shelter, and clothing required to sustain life. Most of the individuals in communist countries probably prefer to work at something other than producing the basic food, shelter, clothing and other products required to sustain life for the nation. They usually become a nation of non-producers wanting the disgruntled producers to produce more and more so that privileged individuals of the elite can keep themselves busy as musicians, poets, social workers, philosophers, historians, politicians, bureaucrats, administrators, police, soldiers, etc. The elite will then let, require, and/or force those that the elite have deemed lower class to work hard and produce the food, shelter, and clothing required to sustain the life of the nation, including the members of the elite class of the government bureaucrats and other government employees.

56

Stranger said: The French and Russian revolution had an organized leadership committed to a violent revolution. No such thing exists for America.

Dear Stranger:

Do you believe that a leadership committed to a violent revolution will evolve as unemployment increases?

If our Military and Police cease to be paid, or be paid with currency insufficient to feed their families, do you think that they will protect us from chaos?

Should we take measures to prevent this now? What if we do not?

I visited Michigan last fall, and the unemployed are getting mad.

57

Dear bearing01

The US government is just printing money (periodically buying paper and printing US bonds and auctioning the US bonds off) Just line the Weimar Republic did after WWII.

When foreigners redeem these currencies for title to all of the desirable assets in the USA, the purchasing power of the US dollar will go to Zero!

The only currencies with any purchasing power will be the Chinese Yuan and the currencies of other industrialized wealth creating nations, that redeem their currencies with Gold.