Debt ceiling fiasco

[hex11]

Maybe this guy was on to something after all. :D

[999cop]

holy moly! tons of essays written on here and i dont think i wanna go through all of them

But its worth to mark as dow has lost 500 points on a single day today, havent seen things going this wild in a long while but whatever, it was expected, saw that coming since the due date of QE2 was out

The next billion dollar question is, what should the Fed do next?
QE3? raise interest rates? raise taxes? force job placement? lots of stuff to ponder on...

All above it will hit everyone no matter what to choose, all choices are sorta experimental and theres no guarantee as to whether to work or not....but of all the above I think raising interest is the most viable way to cut the pain.

Raise interest rate -> stronger dollar -> lower inflation -> stronger consumer purchasing power

Now of course, the backdrop to this is increase in cost of investment and operation costs...but one thing to count on is that, most major corporates should have already stacked up enough cash to handle the rise of costs. Apple has more cash than enough to save the entire US. It's only a matter whether the corporate snakes are willing to stop being greedy and give up the high standard of living.

The end-winners will be the ones who are holding the most gold, China and India have been very active in this area of investment for quite some time. Also, most profits, as in cash, are generated from Asia in the past few years. So what America should be doing is to produce what Chinese and Indian people WANT in order to generate more revenue.

For instance, white people need to learn to accept doing dirt cheap jobs at lower rates if they want to stay employed. There's a huge demand in small businesses for replacement of mexican workers by tradition.

Someone mentioned about "limited resources" before a page or two ago. Planting in your backyard is impossible for everyone, BUT planting somewhere in the US is absolutely doable. Only 300m population in US vs 1.6b population in China and 1b population in India, and India is only 1/4 of the size of US so do the math yourself.

Lastly, produce what Chinese and Indian consumers want. Chinese and Indian people are known to show off, just like New Yorkers, so jack up their market with luxurious brands and affluent services. China is strong in demand for reliable and healthy food products, such as baby milk powder.

stop blaiming on Obama, sitting still on unemployment paychecks, and start innovating and producing!

[Quast]

999cop said:

Someone mentioned about "limited resources" before a page or two ago. Planting in your backyard is impossible for everyone, BUT planting somewhere in the US is absolutely doable. Only 300m population in US vs 1.6b population in China and 1b population in India, and India is only 1/4 of the size of US so do the math yourself.

There is very little arable land in the united states that isn't already being used for growing crops. Population density here is very, very low, even in many urban areas. Everything is spread out and taking up space.

[999cop]

Quast said:

There is very little arable land in the united states that isn't already being used for growing crops. Population density here is very, very low, even in many urban areas. Everything is spread out and taking up space.

I doubt that is true and there are more uses for land resources than just growing crops. With so many open spaces, energy is always high in demand for commuting. There is so little for American consumers to cut back on. You have the civil engineers, city planners, and city developers to blame.

[Sharessa]

Yeah, at least 95% (I'm estimating) of farmland in America is owned by corporations. When shit hits the fan, and people can't afford food, no one is going to be able to grow anything for themselves because all of the fertile land is owned already. The corps will just go "problem, poorfags? <trollface.jpg>" and people will start starving to death. Hooray!

[hex11]

Maybe they'll allow those serfs to work the land, in exchange for the majority of the harvest.

[yourusernamee]

Stop pissing away countless hours playing Farmville or whatever and just do the real thing already. But who wants to get their hands dirty these days, your touchscreens wont take too well to soil and such.

[999cop]

yourusernamee said:

Stop pissing away countless hours playing Farmville or whatever and just do the real thing already. But who wants to get their hands dirty these days, your touchscreens wont take too well to soil and such.

mexican workers would gladly take over all your jobs for low rates, just grant them with legal work authorization and possibly US citizenship

[Aliotroph?]

yourusernamee said:

Stop pissing away countless hours playing Farmville or whatever and just do the real thing already. But who wants to get their hands dirty these days, your touchscreens wont take too well to soil and such.

This is bad policy. Farming can be done efficiently with few people and a lot of semi-automated tech, so that's how it should be done. Put people in jobs that need people to do them. Societies with everyone working the land don't invent nice things like spacecraft, heart transplants and DOOM.

[hex11]

Gold/Platinum ratio is 0.99 today:
http://www.kitco.com/market/

Who's buying gold when you can get a more precious/rare metal for the same price?

[AndrewB]

hex11 said:

Gold/Platinum ratio is 0.99 today:
http://www.kitco.com/market/

Who's buying gold when you can get a more precious/rare metal for the same price?

Gold and silver are particularly valuable now because of their historical status of being money.

[hex11]

True, but unlike centuries and millenia past, we now have platinum coins and bars which can also serve as money. Silver and gold don't really have anything special going for them in that department. If the ancient people had discovered platinum, would they not have used it as well?

Oooh, look at all them cool designs:
http://en.wikipedia.org/wiki/American_Platinum_Eagle
I never got into Pokemon, but this is tempting. :D

[GreyGhost]

AndrewB said:

Gold and silver are particularly valuable now because of their historical status of being money.

Is it just me or is AndrewB starting to sound like Glenn Beck?

[dew]

using gold for money is a waste. the world would be a better place if we used it all for corrosion resistant electrical wirings. :)

[999cop]

as long as they are physical assets, doesnt matter if its gold or rare metals, its still all good. The strategy of investing in it is to diversify. No one really invests 100% in gold/rare metals for their portfolios that those lack of liquidity. Rare metals can be used for industrial purposes, whereas gold is purely safe haven trade for hedging against hyperinflation. It's always as important to have tons of cash to make yourself liquid, put your money in debt-less foreign currencies like Yuan, Yen, and Swiss Franc are your best choices to hedge against the continuous decline of USD and Euro

[dew]

999cop said:
...
put your money in debt-less foreign currencies like Yuan, Yen, and Swiss Franc are your best choices to hedge against the continuous decline of USD and Euro [/B]

hahaha... oh man, that was a good one. japan's public debt is the largest in the whole world. china isn't entirely debtless either, the CIA factbook says they hide debts of local governments off the book. you may have a point regarding switzerland, their policies of hoarding stolen jewish gold and sheltering tax evaders make their currency rock hard.

[999cop]

dew said:

hahaha... oh man, that was a good one. japan's public debt is the largest in the whole world. china isn't entirely debtless either, the CIA factbook says they hide debts of local governments off the book. you may have a point regarding switzerland, their policies of hoarding stolen jewish gold and sheltering tax evaders make their currency rock hard.

Yes, I should've made myself clear on that one that I did not mean that Japan or China are debtless. My point is that Yen and Yuan are safe haven currencies to buy against the continually devaluing dollars and euros. Yen is just always a popular pick on the other side of USD in the basket. If you prefer holding something for longer term and less volatile, the better is to put money in southeast asian currencies like Singapore and Malaysia dollars.

Note: Japan's debt wont have much effect on the decision of buying Yen at this point. You're simply buying Yen on the weakness of USD, of which the effect is obviously currently in work.

[DooMAD]

GreyGhost said:

The good news is - imminent disaster's been averted. The bad news is - it'll be worse when it eventually hits.

Sums it up nicely. There's an impending train wreck looming in the distance and all they've done is add another carriage.

[Koko Ricky]

So, how long until this train wreck? Months? Years? Decades?

[Grazza]

The train wreck could well be in progress.

Of course, that depends on how you look at it. This could just be an excellent buying opportunity. The problem for many people is that they have been waiting for a buying opportunity, but now that it is (or might be) here, they are too scared to take it up.

[Csonicgo]

GoatLord said:

So, how long until this train wreck? Months? Years? Decades?

Looks like it was this morning.

[999cop]

GoatLord said:

So, how long until this train wreck? Months? Years? Decades?

depends on how you define a train wreck

This is an opportunity for sure ahead of QE3
You buy on QE3 -> market rallies
6 ~ 18 months later when QE3 is used up
<history repeats itself just like what you're seeing now this week>

Another buying opportunity on QE4
You buy on QE4 -> market rallies once again
Another 6 ~ 18 months QE4 runs out
<history keeps repeating itself>

on, and on, and on, etc...

Until you roll into hyperinflation and eventually the US govt will have to replace what is now still known as the US dollar

Good luck, America

[AndrewB]

hex11 said:

True, but unlike centuries and millenia past, we now have platinum coins and bars which can also serve as money. Silver and gold don't really have anything special going for them in that department.

They have precedent, which is the key.

GreyGhost said:

Is it just me or is AndrewB starting to sound like Glenn Beck?

Only because nobody is bothering to start a debate about science or religion.

[Csonicgo]

We shouldn't be talking about the time that AndrewB raped and killed a woman in 1990. Because for starters, it's not true!

[Technician]

Csonicgo said:

We shouldn't be talking about the time that AndrewB raped and killed a woman in 1990. Because for starters, it's not true!

"God created Vaseline" comes to mind.

[AndrewB]

Would you guys please start making some sense at some point?

[hex11]

Why do you only consider precedent? Things change over time. Long ago, people also used copper coins, beads, and other items as money. Anything that has value can be used as money, or otherwise be traded for whatever currency is in use at the time. The only thing that matters IMO is that whatever you buy, be it copper, silver, gold, platinum, or anything else, is that its value remains relatively preserved over time (unlike fiat currency). Even fine art would do the trick, although there it's harder to gauge an item's worth, unlike metals or other commodities which trade at a specific price.

[AndrewB]

hex11 said:

Why do you only consider precedent? Things change over time.

There's a risk factor. If you buy all this palladium and then when the hyperinflationary nightmare comes, it doesn't catch on as a mainstream form of money, you just blew away a bunch of your wealth. Again, silver and gold have been (by far) the two most widely used forms of money for millenniums. I really don't understand why you wouldn't value this precedent greatly.

Something to consider is that industrial metals such as steel, copper, etc, depend on consumption and they tend to do well in healthy economies when products are in high demand. The opposite of true of silver and gold, especially gold. Their value is primarily monetary value, and so they do extremely well when other forms of money fail. So while cheap metals make a good inflation hedge, they're not nearly as good a disaster hedge.

You mention things like using fine art as money. This so obviously wouldn't work. There's great value in the simplicity of using one or two forms of money that everyone recognizes. Bartering is an inefficient, confusing system, which is why it is very quickly abandoned by most societies.

[GreyGhost]

AndrewB said:

Bartering is an inefficient, confusing system, which is why it is very quickly abandoned by most societies.

If you have something edible to trade, you'll fare better in a barter system than someone with a pocket full of shiny metal.

[AndrewB]

GreyGhost said:

If you have something edible to trade, you'll fare better in a barter system than someone with a pocket full of shiny metal.

Like I said, barter systems don't hold up. Money is always needed in any kind of society. Maybe you think we're going to embrace the ways of the aboriginal people and worship trees and cooperation and the spirit of the wolf and tobacco and all that. Failing that, my theory will work out better.

Also, what will you do when you finally run out of canned beans? What if you want some fresh fruit, meat, or bread? Would you rather be the person with shiny metal in his pockets, or the person without?