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Old 08-05-2011   #21
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Why do you think I'm practising primitive technology? When all hell breaks loose I'l have the comfortable ability to gather food, make shelter, collect water and keep warm. Besides, it's fun!
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Old 08-05-2011   #22
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To appreciate capitalism one needs to understand it. Of course capitalism is good and holy, because that's what we've been conditioned to accept. It should not be studied. Study could lead to independent thought and those who can think represent a threat to those in control. Anyone with the gall to question an economic system are, therefore, considered unpatriotic. So, let us all be good citizens and not challenge the weakness of our respective economic and civic system.

For those who don't read long posts, I'll be brief. Totality of circumstance is vital to complete understanding but totality and completeness can't be accomplished in 500 words or less. Here goes:

At the root of "Capitalism" is the word capital, or money. Business needs capital. Money to start-up, to purchase raw material, to fund labor for projects, those things. Where does capital come from? Banks. Banks, from the federal reserve to the local 1st National of your hometown, are the holders of capital. So capitalism is not the philosophy of free-enterprise as many confuse it to be, but the supreme power of financial influence. It's sort of the golden rule: He who hath the gold, makes the rule.

In economics, it is the preservation of the capitalists (or banks) that tops the list. In capitalism about 10% of the population controls 90% of the wealth (or money). In civics, money speaks louder than voices. This is why it is the money interests that are represented in government (the minority of people) rather than the populous (majority of people). Another reason why the success of a politician's candidacy is measured by the money he collects. Bet you grew up thinking that buying votes was illegal. You also grew up thinking any kid in America could someday grow up to be president. Well, he can when he can prove that he has enough money support that his loyalty will be to the money mongers.

Capitalism is about domination, not equity. Greed and ambition drives capitalism. In order for money to work, it must circulate like blood in the body. If there is a disruption then catastrophic results occur. If the body bleeds out more blood than the marrow can replace the body can die; if the blood pools in one area, another will go necrotic, and if a clot should obstruct a major artery sudden death can happen.

If the country bleeds externally (money going out of the border and not returning) or internally (domestic funding of un-paid for benefits) it surely will die. Should the banks hold their funds and not loan or invest then the necrosis in a segment happens. And if all the capitalists hoard the money the entire system dies. The federal reserve protects the money system by keeping enough money in circulation that the system doesn't die.

And those of us who represent the smallest vessels of the circulatory system? When we stop spending money and stop borrowing it, it chokes off the flow too. Consumers don't represent the most money but the highest volume of spenders and we're spread across the entire socio-economic system. If consumers loose confidence in the economy and stop spending, the body turns on it as if it is an infection.

Who is taxed in disproportionate percentages, Wage earners, corporations or banks? Who are demanded to make sacrifices and lower their standard of living in time of trouble Congressmen or Citizens.

There's capitalism.
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Old 08-05-2011   #23
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BBC Breaking News:
New York's Dow Jones up 0.5% at closing bell
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Old 08-05-2011   #24
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"Buy on fear, sell on greed"!

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Originally Posted by meinster View Post
Careful, look at who is selling. it is all the large funds that are creating a panic because of the debt fears in Europe and the U.S.

I do not know about anybody else, but for me this is an opportunity to buy. They are making the shares cheaper.

My $.02, I think it is all fear driven, everybody is buying into it and the media is happy making 'news' stories out of every little bit of bad news. One thing that we must really look at are the fundamentals, they are still strong. Everyone expected the economies to bounce up fast with all the QE that was taking place. Billions spent in infrastructure projects, etc. and when that did not happen, everyone panicked and went 'oh oh, we are in trouble'.
Economies are still growing, people are still buying, companies are still selling. Just not at the rate when money was really cheap and everyone was giving it away. We can not expect to go back to the consumer spending levels before the crisis hit. Consumers are now going to think hard before spending the money, BUT they are still going to spend. This is a major adjustment to the world economy that had to happen. We were using our resources too fast, too irresponsibly and were driving prices just on the fear that we are going to run out (and supply/demand) for the speculators that were making all the money. Now we are settling into a more sustainable growth that will provide longer term benefits.

In short, I do not buy into the fear. the market is down 500 points, well, I have long term investment horizons. The market will recover and now.. well thank you for making my money go further. I buy using dollar cost averaging (invest fixed amounts every month)

Cheers to all and happy investing..
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Old 08-05-2011   #25
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"Buy on fear, sell on greed"!
I like that one
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Old 08-05-2011   #26
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Originally Posted by Songman45 View Post
Crazy isn't it? The US has found that the word, "crisis" attached to any situation gives decision makers wide and extreme latitude. So, any absurdity can be exercised when it is in response to a crisis. Situations like budgetary deadlines which come in the normal course of business are not crises. Equate the recent debt ceiling circumstance to something like your household electricity bill which comes due on a regular cycle. The bill's due date is not a crisis. Ignoring that it must be paid in order that your electric power continue is not a crisis. Now, not having the money to pay the bill might be, unless of course the money was taken out of the budget and spent on booze and gambling. But the regular bills are not themselves crisis events. Waiting till the power is shut off to scramble around scraping up the money to pay the bill (and reconnection plus penalties) is a manufactured crisis. A crisis is something that is catastrophic in proportion and is un foreseen. Like an accident, injury or sudden illness.

For the US's part, our leaders made no preparation. In fact, we've had no plan of action to bail out the sinking ship for decades. So, here we were, presented with an economic crisis situation which demanded decisive action in a short period of time. I suppose no one on Capitol hill owns a calender, except the ones with congressional breaks and vacations marked on it. The deadline to do something was dramatically pressed to the limit. The president signed the bill into law 10:10 before the manufactured deadline. All the battling reported by the press was democrats fighting republicans and the president not coaxing congress but fighting his political foes. No one wants to admit it, and no one wants to be the bad guy but the US is broke. All the congressmen and the president want to be re-elected. The way to do that is to make constituents happy, the voting public is happy when the status quo is undisturbed. No additional taxes, not pet project cuts.

Out of all the drama and debate, what resulted in the debt ceiling legislation was borrowing more money to pay debts we cannot pay, and reducing additional spending by inconsequential amounts. For I don't know how many times the US is using borrowed money to pay past debts while not generating enough money to pay current or past debts.

What idiotic logic to say, "if we don't borrow more money we'll default on our debts" and not add to that, "We've got to cut up the credit cards" and "We going to make more money". Yet this is the action the US has taken. While publicizing to the US public these goings on, the rest of the world was listening. One of the compelling reasons the government gave for the necessity of raising the debt ceiling was to prevent US default and to prevent a panic in stock markets. Well we see that happened.

Some financial talking heads maintained that the debt crisis was a non-issue from the start. Again, we've been force fed the notion that we must do a thing, for to not do this thing would spell destruction for sure, and this thing is the only option. The economic stimulus, the bank and automobile industry bail-out and the waging war on three different fronts against an invisible enemy we're all told are/were absolutely necessary to preserve the interests and security of the US.

I guess the holders of the collective purse have been awakened and it brought to their attention that the US cannot and will not live within its means, cannot and will not pay their debt, cannot or will not generate enough new revenue to sustain itself. Going into default isn't much different than borrowing money that cant be paid back to keep the wolves away from the door.

Guess what? The US is not the only country caught up in the Ponzy scheme economy. Other countries have employed the same philosophy.

On a more grand scale, international debts and loans work just like the failed mortgage situation which was pre-dated by the S&L debacle. Country A holds debts from Country B. Country A needs immediate currency so borrows money from Country C, using the debt notes from A as collateral. The debts are bought and sold as if they are valuable investments. So many mortgage companies traded paper, loans were bundled up and sold as package deals. The hope being that the bad debts being encapsulated in a package would simply be absorbed. When the mortgage bubble popped and defaults out ran the good notes problems started. Some defaulted property could not be foreclosed on, because it was impossible to determine who the mortgage holder was. International debts are the same.

I predict there will be a complete zeroing out, a wiping clean of the slates and a total devaluing of currencies. Quite frankly money is nothing more than fancy printed paper. If it's used to represent the worth or value of an asset that's one thing, when it only represents the worth of a different colored piece of pretty printed paper, that's another.

Capitalism cannot sustain for indefinite periods. It grows like a soap bubble then pops and another soap bubble has to be blown. Capitalist like to trade money for money. Somewhere the money's value has to be attached to something tangible and life sustaining, not a future value of a thing.

We're all broke. Now we're going to learn what are necessities and what are luxuries.
While I agree with a lot of what you say here the fact is this didn't just start 10 or 20 or 30 years ago. It started much earlier. Since I retired I have had a lot of time to research this subject of the national debt.

To understand it you have to kind of step back and take a look at the larger picture. It started when WWII came along. The country was not in very shape in the late 30s due to the stock market crash of 1929. Recovering but very slowly.

When WWII came along the country borrowed vast amounts of money (for the size of the economy at the time) but that money was put to use in the war effort creating jobs for anyone willing to work. At wars end the military dumped serveral millions of men on the job market. That really didn't matter to much because business simply put these men to work making products to sell both at home and overseas since the US was just about the only place the war didn't touch.

Taxes were high but everyone (unless you were a woman or a person of color) was doing very well with a bright future. The debt racked up was paid down and everything remained very good throughout the 50s.

As the 60s came so did a lot of young people born right after WWII (the baby boomers). Things were up and down in the 60s but by and large there was employment and the debt was still manageable despite a war and the Civil Rights movement. This continued throughout the 60s and into the 70s. Taxes were lowered and inflation was high but massive spending was taking place for the space program. This did however create a lot of jobs in the US. What was happening was other nations around the world were competing with us and starting to take jobs away from US workers.

Along came the 80s and a very popular president, Ronald Regan. He looked at the state of the military and decided we needed a 600 ship navy. He convenced congress to not only to authroize the borrowing the money for building up the navy but also to lower taxed. It is worth noting that he did ask Congress to raise some taxes before his term ended.

The elder Bush was elected and the lower tax rates continued until he saw the government needed more revenue because of the Middle East war. This made him a one term president because he had said before his election "No more new taxes". He asked the Congress to raise taxed and they did.

No need to go into the last 3 admin. because we can see what has happened. Too much spending, not enough revenue. We now have a massive debt which needs to be paid down.

Why did the American people let this happen? Because they keep electing people who keep telling them they can spend more and lower taxes. Can't be done. The government needs to spend money when the economy is poor and pay the debt off when times are good. That has not been done.

People tend to blame the President when taxes go up or spending is too much. They are blaming the wrong person. Only the House of Representives has the ability to authorize anything to do with money. Only a member of the House can introduce a funding or spending bill. Not the President, not the Sentors. The President doesn't even have a vote in the matter. We the people are the ones to blame for whatever happens because we voted them into office.

Dwight
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Old 08-05-2011   #27
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Pretty accurate post but overlooked a couple of important issues, the early '70's because of out of control spending brought about interest rates of 21 to 22 percent. The other item overlooked was the rampant, out of control spending for entitlements that continue to this day. You can't spend more on social programs than you are willing to tax in the same proportion.
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Old 08-05-2011   #28
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Thank you Dwight, very informative post. That's sort of the fallacy in a Representative republic. The electorate selects representatives from local districts and that representative is supposed to vote the conscious of the people. That's the principal. The practice is money interests elects the representative who votes the wishes of the money.

When we look at some of the decisions made by representatives we can tell they aren't for the good of the nation. Some are short sighted but how many terms does a representative really need to serve?

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Old 08-06-2011   #29
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Quote:
Originally Posted by Sidebyte View Post
Pretty accurate post but overlooked a couple of important issues, the early '70's because of out of control spending brought about interest rates of 21 to 22 percent. The other item overlooked was the rampant, out of control spending for entitlements that continue to this day. You can't spend more on social programs than you are willing to tax in the same proportion.
Everthing you say is correct. I do remember the high interest rates very well. You most certainly have to balance spending with revenues, something it looks like the American people have forgotten.

Quote:
Originally Posted by Songman45 View Post
Thank you Dwight, very informative post. That's sort of the fallacy in a Representative republic. The electorate selects representatives from local districts and that representative is supposed to vote the conscious of the people. That's the principal. The practice is money interests elects the representative who votes the wishes of the money.

When we look at some of the decisions made by representatives we can tell they aren't for the good of the nation. Some are short sighted but how many terms does a representative really need to serve?

Steve
I have voted in every election since 1960. Some I have voted for won and some lost but in every case I thought these people were all good people trying to do the best they could for our country as they saw it. As I look at it now it seems that money has become more important than the good of the country as a whole.

It has gotten so bad that that right after the President was sworn in a member of Congress got up on the floor and stated that the 1st priorty of his party was to make the new President a one term President. This tells me two things. One; the system is broken and two; they are not going to be doing their job which is represent the people who elected them.

All Presidents have good ideas and bad ideas. No President has had all good or all bad. The same is true with Congress. We expect the people who we have elected to sort this out and reach some comprise on the important issues. We have reached an impass in Congress because radicals on both sides refuse to comprise at all. Without comprise there is no progress at all. This is not good for the American people as a whole no matter which side of the issue your on.

People talk about term limits. We have term limits. They are called elections. When people talk about terms they usually mean term limits for someone elses representive not their own. Its too bad more people don't have the time I have had since retiring to sort through all the BS and see what really is happening and not vote for a person just because they tell you what they think you want to hear.

Dwight
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Old 08-06-2011   #30
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Nice historical perspective Dwight. Perhaps it's worth adding that the end of WWII brought about a new, permanent manufacturing sector - Defense. Prior to that time, other industry was retooled in times of need to produce weaponry. Since then it has been big business (for better or worse) that has contributed to the manufacturing sector of the economy. Personally, I think defense spending needs to be reduced. But it nonetheless will hurt the economy. And if the new 'Super Congress' doesn't reach an agreement on future cuts, there will be deeper defense cuts that further depress the economy. It will be interesting (and probably frustrating) to see how this pans out. I've heard it described as two sacred cows strapped together with a time bomb (the other cow being entitlements).

Steve, as usual I find your logic reasonable. But I'm not exactly sure what you're advocating. Are you bemoaing the inequities of capitalism or saying you'd prefer an entirely different system? I certainly agree that financial interests have severely corrupted our politics. The Citizens United case will make that worse. Congress can't be effective at much more than naming post offices. The US has essentially become a corporate aristocracy where the wishes and needs of the majority are subjugated to the interests of a very, very select few. I'm not sure how that dilemma is remedied.


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