Everyone must watch this

[warhawke]

A 4 minute video that show graphically just what a mess the economy is in.

http:
//www.youtube.com/watch?v=pZsY1rFr_yw&eurl=http://www.garynorth.com/public/4527.cfm



SFW, show everyone.

[Ocin]

For an actual comparison you need to adjust the figures mentioned in the video for inflation. If you do that with an average inflation rate of 3.5% annually you need to adjust the figures with some 22 or 23 fold.

Another way however to measure a countries national debt is offset it against the Gross Domestic Product, estimated to be some USD 14,000 trillion for 2008. There are countries even deeper in debt then the USA when you follow this formula.

[tombogan03884]

For an actual comparison you need to adjust the figures mentioned in the video for inflation. If you do that with an average inflation rate of 3.5% annually you need to adjust the figures with some 22 or 23 fold.

Another way however to measure a countries national debt is offset it against the Gross Domestic Product, estimated to be some USD 14,000 trillion for 2008. There are countries even deeper in debt then the USA when you follow this formula.

Is that as a percent of GDP or actually owing more money ?

[Ocin]

Is that as a percent of GDP or actually owing more money ?

As a percentage of the GDP. Several European countries are up to 100% of their GDP in debt, Japan even up to 200%. My point is that the financial position of the USA is very difficult indeed, the amounts mentioned are staggering. But the situation is in no way hopeless, as suggested in this and some other YouTube videos.

Currently, one of the largest problems, according to "experts" (you know, those who said that the financial system could never melt down) is the fact that the American consumer has stopped spending and started saving, resulting in a serious downfall of the economy.

That in itself may be true, but I, as a layman, believe that that change from spending to saving is the best and only way to get the US treasuty finances back in order for the longer term.

[tombogan03884]

Thank's for the clarification. I agree that saving is better in the long term, then spending like drunken sailors.

[Sponsor]

[deamonpi]

Currently, one of the largest problems, according to "experts" (you know, those who said that the financial system could never melt down) is the fact that the American consumer has stopped spending and started saving, resulting in a serious downfall of the economy.

maybe not saving, but paying off their credit cards.

For an actual comparison you need to adjust the figures mentioned in the video for inflation. If you do that with an average inflation rate of 3.5% annually you need to adjust the figures with some 22 or 23 fold.

Another way however to measure a countries national debt is offset it against the Gross Domestic Product, estimated to be some USD 14,000 trillion for 2008. There are countries even deeper in debt then the USA when you follow this formula.

Thank you if you hadn't said it so eloquently...I would have had to say something not quite so well but in the same direction.

[fullautovalmet76]

For some perspective $1.00 in 1929 would be worth $12.42 in 2008, according to the Bureau of Labor and Statistics. Even adjusting for inflation, the level of borrowing from the Fed is unprecedented. As Ocin stated consumers have sharply curtailed their spending, which accounts for 70% of our economy. Add to that the banks (many of whom received bailout money) have stopped lending or have sharply tightened lending standards. This is a recipe for sharp price deflation and a significant recession. I know you can not tell by the price of your ammo, but eventually the macro economic forces in play will catch up to that segment of the market.

I should point out that this expected price deflation is only temporary. When consumers get back into the game and the banks start lending, all of that pent up cash is going to flood the system, which produce a very strong upswing in inflation. The way this will not happen is that our productivity grows faster than we can spend the money. Since our economy is the most developed and mature in the world, I would not count on producing and innovating our way out of an inflationary problem 2 - 3 years from now. Keep an eye out on the gold market over the next 6 - 18 months. This market is usually a harbinger of things to come- higher gold prices usually correlate with higher interest rates and inflation.

[warhawke]

Actually, the reason we are not yet seeing inflation effecting prices is because the money the Fed is pouring out is simply replacing the Trillions which have been destroyed in the Real Estate bubble collapse, combined with the forced liquidation of assets to support cash positions. Deflation is only temporary, inflation is coming, every bailout, every nationalization, every action the government takes is based on creating more money and more debt to prop up the facade of our economy. The Fed and the government can only continue to create "Money" out of thin air to pay the bills or allow the current system to collapse, which do you think they will choose?

As far as the GDP effect, the biggest single segment of US GDP is FINANCIALS! Stocks, bonds, banking, derivatives and the rest, given the collapse of these how do we expect the numbers to do anything but follow suit?

Current "Public Debt" in the US is shown as 65% of GDP, however, if one includes future liabilities like Medicare, Medicaid and Social Security the current US debt is 59.1 Trillion USD, against a GDP of 13.8 Trillion (2007). Now add 12.7 Trillion USD in private debt and (IIRC) 27 Trillion USD in State, County and Municipal debt and you can forget it. 88+ Trillion USD in current debt against a 13+ Trillion dollar (and dropping) GDP? P.S. US Dollars are themselves A DEBT, we barrow the money from the Fed who then sell bonds on which we pay interest, bonds they can no longer sell because the world has awakened to the scam, the debt will never be paid and we won't be able to pay the interest much longer.

One thing about the video, they only showed Emergency Borrowing, not the T.A.R.P., not the bailouts, not the aid to the auto companies. The US government and the Fed have poured more than 2 Trillion USD into the rat-hole in the past 12 months, the video only shows part of that.

As far as the consumer not spending? Spend what? For years US domestic consumption has been fueled by credit, either credit cards or home-equity, the difference is that the lack of credit has reduced the ability of people to live beyond their means. Hell, the US savings rate is FALLING! People are spending everything they make to survive, there is no money to spend on anything else. The prop of being able to refinance your debt has been removed from the equation and people must now try to service current needs and debt out of current income and they can't, they only thought they could before because their "Assets" kept appreciating and they could use the difference as found money. It was artificial, it was a bubble and it has popped, get over it.

Saving is the worst possible thing you can do right now. Asset prices are falling, as they should, but the Fed won't let the system die. They will keep pumping out the "Money" in ever greater quantities in an attempt to disguise the fact that the "Money" is a lie and the economy built on it is fictitious. The thing to do now is spend. Your money will buy less in 6 months than it will today so buy while you can, but buy smart, get the things that will help you survive when you can't go to the store for what you need (either because your "Money" won't by much or the store ain't there anymore). Buy tools, books, canned goods, seeds, guns, ammo, knives. The problem with that as far as the economy is concerned is that you don't have enough to spend on houses and cars and other big ticket items that keep the factories running (mostly in China) but who cares, it is raining and you had better get the Ark ready fast. Want to see what America is heading for?

http://www.cathybuckle.com/index.shtml

http://ferfal.blogspot.com/

Go to their earliest posts and read.

Our system is broken, it always has been, and what is occurring was inevitable. The system was built on debt and payed the bankers and pin-stripped bandits handsomely over the years but the bill is now coming due. They want the system reset to Zero, they want to let the system crash and build a new one just like it, as evidenced by the central bankers having meetings to discuss a "New Bretton Woods" and a new "International Banking Systems" so they can get another hundred years of slave labor out of the workers of the world. I don't think it will work because the damage is too severe and the collapse we are facing is just too big. Why do you think I moved out here in the hinterboonies? When things get ugly I plan to survive and you should do the same while there is still time.