Inflation, depressions and possible paths for the USA
Inflation, depressions and possible paths for the USA
Posted by: Barthélemy Barbancourt
on Jun 02, 2009 
Tagged in: Obama
This is an open discussion thread about what we expect to happen if/when the Obama Administration bankrupts that United States of America.
I know that some are hording gold, silver, ammo and even water. I'm not doing any of thiose things as I don't think hyper-inflation and a bankrupt federal government will effect me as much as it will effect the unionized government employees and the moochers.
If you have an idea of what you think WILL happen, please let me know. If possible draw an parallel to a country or society where this has happened. Hyper-inflation is hardly new to the globe so we should have some guidelines as to what we should expect.
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written by Kermit , June 02, 2009
That ship has already sailed. The question is what if anything will be adequate to restore prosperity.
The bill will come due, and we may not have the economic means to pay the interest, let alone the principle. What happens then?
There are many doomsday scenarios, and they all look very, very bad.
written by Il Duce’ , June 02, 2009
If you think that we are already headed for a very deep fiscal disaster, please describe what you think will actually happen.
CA is thinking of cutting off all welfare payments, which would have absolutely no effect on people like me. They are also firing govt. employees which again would have little to no effect on me if that was done in MN.
In some ways a major financial event could be a really good way to clean house and get people to focus on what is really essential; water, waste and cops and what is non-essential; welfare, green anything, dog catchers, etc.
written by Il Duce’ , June 02, 2009
I just don't see that happening. The USA is too fractured politically and so far Obama has left the farmers alone.
We might lose some farm subsidies (highly doubtful thank to Iowa) but lack of food will probably not be a problem. Plus Americans have massive and efficient distribtion systems that are privately controlled (Walmart, etc.) It could be said that after a while the roads would no longer be passable, but that would take years and I doubt we would even get that far into the whole. Most people put roads next to cops and fireman (OK, sane poeple, not bike seat sniffers and MMGW jagoffs)
written by Nobody , June 02, 2009
think Weimar Rep. When the riots start going off in MSP over food, look out.
written by A. J. , June 02, 2009
http://en.wikipedia.org/wiki/A...ic_crisis_(1999–2002)
Though certainly not identical to America’s problems, there are significant similarities:
First, imports were cheap due to the imposed peso-dollar currency peg. This caused domestic industries to wither and die.
Second, the IMF continued to loan them vast amounts of money they could never repay. Like US-China today?
Third, international investors lost confidence and began to pull out. Argentines started pulling their own money out. Unemployment soared and the government was finally forced to decouple the Peso peg to the dollar that was causing much of the trouble.
When the peso was unpegged its value plummeted rapidly from the pent-up pressure. The economy collapsed and every peso lost over 75% of its value. It made Argentina potentially competitive once again but at the cost of the previous standard of living of its people. The government worked to rebuild its lost domestic industries and investment returned.
I think the parallel here is that the dollar is the current global reserve currency. This is a kind of artificial "peg" that props up the dollar because it is needed to buy oil and other international commodities which are transacted in dollars worldwide. If the dollar loses global reserve status the value of our currency will surely plummet. This will spike the cost of all imports from other countries and usher in an era of far lower living standards.
The potential silver lining in this is that there will be an incentive to rebuild American industry and our products would once again be competitive worldwide. It will take time and investment capital to accomplish. But is the country goes Socialist, that capital will never come and we will find ourselves in a persistent economic depression. America may no longer be a global superpower and think what that might bring to the global balance of power.
written by Dougie_D , June 02, 2009
People are really concerned about this? We are still paying farmers not to plant fields. Let Cargill loose with the genetically engineered corn seed and you will be able to grown enough corn in the cracks of your sidewalk to feed a family of four for a year.
I have already seen things that point to a turn around. A friend that working in the printing field just called back a bunch of press operators. The large employer I work for is calling back laid off workers.
Some belt tightening will likely occur but I think the bottom is past.
We may never seen unbridled expansion like we did during the mid 2000's. But as we know that was completely unsustainable.
written by MoonliteSonata , June 02, 2009
I huge corporation, already responsible for the demise of the family farm as a true instituion in this country, and you expect them to feed the masses without a heafty price attached? I don't doubt they COULD, but they WOULDN'T.
As for the rest, well, I would hope you're right, but my daughter and son still can't find a job, and we're letting part time people go where I work now, for the first time in company history. They're also asking for voluntary cuts in hours, or they will make it mandatory. I don't think we've gotten over the hump. I think we're only about 2/3 of the way to the top.
written by A. J. , June 02, 2009
With a decline in the value of the dollar, American agricultural produts will gain market share globally. If the dollar drops a very long way, which I doubt, but it helps illlustrate the principle, Americans cost of food will skyrocket because the price will be set by the international market where Cargill would get more for it. In Cuba, one of the worlds largest sugar producers, sugar workers who steal what they harvest are executed by the regime. Cubans do not consume high-quality Cuban sugar - it is ALL for export. Cubans consume much lower quality sugar from South America.
written by Il Duce’ , June 02, 2009
let alone start dropping. Things are definitely going to get worse before they get better.
Obama has made several wrong moves and we are just starting to see the consequences. The next 12 months ill be terrible as the results of Obama's mistakes work their way through the system.
So how do you make money with 12% inflation and 15% unemployment? That is the question to ask yourself.
written by A. J. , June 02, 2009
In my field there is no sign of any recovery. The norm has been layoffs, mandatory across-the-board salary reductions, and the like.
The top local industrial services company mass fired all their employees a few weeks ago. Then they offered back jobs only to those who would agree to a 20% pay cut with no vacation time. Then they said they would be forced buy business conditions to do the same thing once again in September for another 20% reduction if there was no turnaround by then.
written by Nobody , June 02, 2009
Duke, I'll tell you how easy. Make sure your margin is 24%. My neighbor just walked away from his house. Just left it to rot. So here's a growth industry: boarding up houses. Or lawn mowing. I made money during the Carter era. This is Carter redux on steriods.
written by A. J. , June 02, 2009
http://in.reuters.com/article/...9220090602
Will Obama usher in the fall of the US by building a Socialist welfare state on a foundation of printed money? It sure looks like it to me. This has never ended well any place it has been tried. Be wary of the Change you Hope for.
written by Dougie_D , June 02, 2009
I sure hope you people are getting help for the depression. I know that they only way you can get this country back to what you think it was is by Obama failing but the US is still the greatest nation on earth with one of the highest standard of living. If you think that will all fall apart because of one Federal Budget you don't have a very good grounding in history.
written by Il Duce’ , June 02, 2009
Rough back of the envelope has my last project at 167% ROI. I'd like to do a few more of these but cash is getting real hard to come by and the market for finished properities is softening as we speak.
I might do one more this year and then wait to see what happens next year.
written by Kermit , June 02, 2009
I think we've pretty much settled on the fact that our current slump while probably cyclical was hugely exacerbated by the idiotic policies of Fannie, Freddy, Barney and Dodd.
It's not under or over regulation. It's smart regulation. The clowns in charge now are so clueless it's pretty scary.
written by A. J. , June 02, 2009
I agree to some degree. But there are other major factors:
The US over-consuming and under-producing. The rest of the world propped up this fundamental imbalance by buying our debt. This is an unsustainable model that was destined to end.
Because of its reserve currency status, the dollar is overvalued. Born of a time when the US was clearly the dominant industrial power in an underdeveloped world, the dollar made sense. Now it increasingly does not. If we managed our economy better, it still might survive as the reserve currency, but that is not the case anymore. I believe it may lose reserve currency status before the end of 2010.
The clowns in charge now do not understand economics. Prior to the Obama Administration, the only time the Fed bought Treasuries was at the height of WWI. Now they are running a money printing press at full speed to fund even more unsustainable social entitlements - when those in now place are already unsupportable long term. This is not going to end well.
America will eventually recover from what is going to happen, but it will take years - maybe decades - of far more competent leadership than is currently in place. And the point we recover to will be below what we are used to.
written by A. J. , June 02, 2009
The underlying conditions have been building unaddressed for a long time.
But it is Obama that is pushing the button to trigger the economic earthquake. The worst scenario I have heard, though unlikely, is that they know exactly what they are doing, and are actually trying to create the worst crisis of all time. So they can exploit it to blame capitalism and usher in an era of totalitarian statist Socialism on the model of the Soviet Union. If this is their real aim, this country will be ripped apart by civil unrest. No less than noted future trend prediction expert, Gerald Celente, is predicting the violent breakup of the United States in only a fer years. Gawd, I hope he is wrong.
written by K-Rod , June 02, 2009
Their plan is not too much of a secret.
This is what happens when the media is totally in the tank for a candidate.
I hope it doesn't get too bad, yet I want America to wake up. My strong technical and engineering background should insulate me from real pain.
The longer this all last and the deeper Obama digs us into depression... the more it proves conservatives right in that government should never have gotten involved. Let the market work and let the chips fall, no matter how ugly it would have been quicker...
written by kow , June 02, 2009
"So how do you make money with 12% inflation and 15% unemployment?" (Duce')
How can that be? Just last week Obama said his stimulous package has saved 35,000 jobs.
Look at what happened today. It looks like China will be taking over the manufacuring of the Hummer. Isn't the Hummer as American as apple pie? Wasn't it's popularity based on the use of it by American troops at war? Now China will be getting all that money from NFL players, thugs and wannabees.
With China holding most of the cards (money), it won't just be Hummers.
written by Nobody , June 02, 2009
Ah, kow, the "hummer" is just a Surburban with different tin. I worry about the "service economy". We need to be building stuff. FDR's "Arsenel of democry" was US manufacturing.
written by auntypsychotic , June 03, 2009
Last night I went to the store for some stuff. It was late enough that I thought it would be a quick trip. I was wrong, of course. Apparently, it was WIC and welfare day at the grocery stores. The baby mama's were out in droves.
The one ahead of me got all the goodies permitted for brats and some VERY nice steaks and lobster tails. I'm not kidding or exaggerating.
I got thru the checkout quick and was heading to my truck when I saw one such couple get into a nice enough car, fairly new but nothing obscene. Then I saw Miss Surf and Turf get into a brand new (new car temp plates) revoltingly yellow Hummer.
Gods Bless Bamby and his all girl orchestra.
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