Posts by coppercyclist2

No, let’s blame the Federal Reserve and the Chair for our credit rating instead. And hey, we should probably spend even more since we're such a welfare state... okay, maybe that was a bit much, but it feels like we're just spiraling toward rock bottom. This hedonistic generation doesn't get the whole concept of saving or tightening your belt today to ensure a better tomorrow. There's zero cohesion on the matter.
If they can't somehow conjure those $4 billion out of thin air in the US Federal Budget, then I guess we might as well just let it all go to hell.

brightlynx11 said:If voters consistently pick parties that don't touch the size of the state, that's a social preference. If people want free college, healthcare, and everything else the welfare state provides, then the real challenge is figuring out how to pay for it. Look at Sweden—they have a massive state, but they make it work by being efficient and forcing market principles in other sectors to balance things out.

What choice does America actually have? Either slash spending—meaning cutting citizen benefits, slashing public sector wages, auditing procurement, etc.—or maintain current spending levels while boosting efficiency. Either way, shrinking the state doesn't guarantee you'll actually get more efficiency out of it.

Look, for twenty years, the same parties have held power in America by either maintaining or expanding social rights. It’s logical to say a large state is a social preference here. That's not some academic theory; it's just reality. Anyone in America running on a platform of cuts isn't winning an election. You'll always have one libertarian for every hundred socialists. 😁

And that brings us to the big question: how do you change social preferences?
Through incentives—and not necessarily cash ones.
Video: http://www.youtube.com/watch?v=3ELnyoso6vI
Behavioral economics. 🙂

Libertarians in America can only take power if social preferences shift or through a revolution. Honestly, I'd bet on the second one. 😂

DISCLAIMER: My personal take is that if the state is inefficient, it's better not to crack down on the shadow economy—let people dodge taxes as much as possible if that money isn't being used for anything smart anyway. That income will eventually surface somewhere as effective demand. 😁

I reached a similar conclusion as a layman about a year or two ago. I kind of suppressed the thought, though, partly because of the moral side of things and partly because of how a shadow economy might mess with fair market competition in certain sectors (though maybe those segments are just trivial).

Regulators—specifically central banks—are obviously worried about this rapid decay, so they end up engineering artificial stimulus to prop up the markets.
One interesting factor lately has been the capital adequacy weighting applied to sovereign bonds. Within the European Union, that weight was set at 1.0, which essentially creates an artificial imbalance by slashing regulatory costs. It made buying government bonds a sweet deal for banks, but now they’re stuck; they didn't value them properly according to market realities, and now they don't know what to do with them.

The main point is that non-liberal capitalism isn't the culprit here. It’s the insane level of government overregulation. The fallout is mostly high public debt and unchecked deficits—meaning state spending, rather than corporate or individual spending, is what triggers these crises in places like Greece and Italy. Then you have the politicized interference in financial markets, like using bailouts to strip risk away from banks. That’s actually just more aggressive regulation of the financial market, since it isn't allowed to float freely based on supply and demand. In that environment, anomalies are expected. Profit maximization remains the priority, I guess, but the fundamental rules of the game get lost.
That’s about as concise as the current situation gets.

If we had actual free-market capitalism instead of all this constant state intervention, there might be a real chance for progress. Instead, everyone seems to be sliding "linearly" toward lower standards and a very long recovery period—at least for the European Union, where people are now talking about 15 years or more.

In theory, there’s room for healthcare to become more efficient for the patient—or even better, for the general population, which I guess is a more realistic metric. The issue is that retirees have become this sort of stigma attached to "privatization," market loss, and pension buyouts (like that 100% German system—which, honestly, looks more like theft and immorality now that we see it clearly).

Haha, I couldn't resist dropping this link... pure cynicism with a soul:

Jadranka Kosor at the White House playground

I don't want to start any new drama by opening a whole new thread, but regarding Novotny's statement, does anyone happen to remember the specific part about foreign deposits hitting 50%??
Isn't that figure actually closer to 20-25%?

Otherwise, I also read the section in the article arguing why most, if not all, of the tax burden will likely shift onto the debtors.

I can confirm the facts presented here are accurate.
After spending 40 or 50 years obsessed with river regulation, the EU has finally stumbled upon scientific evidence showing these measures often cause more harm than good. Over-regulation essentially funnels too much precipitation into major waterways—the big rivers running through massive cities and densely populated regions. In the past, those excess waters would just spread out into natural retention areas and floodplains. That’s what we used to call a flood.
That doesn't mean we should abandon all regulation entirely—that would be naive. But the whole concept of water management is shifting. It’s just foolish to force a specific area to be "regulated" and dried out if it ends up causing even worse damage somewhere else down the line (look at the massive flooding across Europe since the 90s).

Another undeniable fact: the US Armed Forces, much like any other government entity, serve as a playground for graft. We see endless stupid, unnecessary, and overpriced projects that end up having negative consequences in the medium term. It’s no different from what you see with Amtrak, the shipbuilding industry, or whatever else is waiting to be exposed.
At this rate, sheep farming might actually become a viable career choice soon.

James Hayes6 said:QUESTION: Is the currency clause USATVNA? If it isn't, we need to scrap it immediately!!!

Let's just pay with the US dollar and start buying American products!
The banks are just using this to bleed us dry! The government needs to get rid of the currency clause once and for all.

The government basically helped dismantle our domestic industry, so there aren't even any local goods left to buy. That's the real issue here, not some currency clause.

hollowhawk412 said:But really, who actually wants this?
Who on earth would choose to be drowning in debt if they had any other option?

If you haven't realized it yet, Fiat money was declared the sole legal tender...
by executive decree... by the government itself.

The core issue here is that there exists a monopoly—or at the very least, a massive amount of manipulation and influence—over both the creation of Fiat money and the prices of everything you buy with it; it feels like a coordinated effort where everyone works in tandem to manufacture a bubble, much like how a Canadian might describe a rigged game when (the central banks, the big Wall Street commercial banks, and the rating agencies) decide it is time to inflate one.

The real problem is this artificial cycle of credit expansion followed by the inevitable contraction of that Fiat currency... I honestly struggle to wrap my head around the concept of "cheap" versus "expensive" money when the cost of printing it is practically zero.

Furthermore, there is the injustice of some entities having access to this money interest-free, while others are forced to
generate actual, tangible value just to pay it back, all while needing that money just to afford basic necessities... simply because the system is rigged that way.

It has become quite clear that the most recent Federal Reserve issuances ended up sitting in various central banks across the world... as well as within several commercial banks that were bailed out... all with zero interest attached.

Ultimately, I fail to see anything here besides a massive, systemic problem.

Well, look at governments and individuals, for instance.😁

hollowhawk412 said:But really, who actually wants this?
Who on earth would choose to be drowning in debt if they had any other option?

If you haven't realized it yet, Fiat money was declared the sole legal tender...
by executive decree... by the government itself.

The core issue here is that there exists a monopoly—or at the very least, a massive amount of manipulation and influence—over both the creation of Fiat money and the prices of everything you buy with it; it feels like a coordinated effort where everyone works in tandem to manufacture a bubble, much like how a Canadian might describe a rigged game when (the central banks, the big Wall Street commercial banks, and the rating agencies) decide it is time to inflate one.

The real problem is this artificial cycle of credit expansion followed by the inevitable contraction of that Fiat currency... I honestly struggle to wrap my head around the concept of "cheap" versus "expensive" money when the cost of printing it is practically zero.

Furthermore, there is the injustice of some entities having access to this money interest-free, while others are forced to
generate actual, tangible value just to pay it back, all while needing that money just to afford basic necessities... simply because the system is rigged that way.

It has become quite clear that the most recent Federal Reserve issuances ended up sitting in various central banks across the world... as well as within several commercial banks that were bailed out... all with zero interest attached.

Ultimately, I fail to see anything here besides a massive, systemic problem.

The real problem lies in twisting facts and inflating standards through credit expansion—using an unsustainable government standard—to create this illusion that a perpetual motion machine will never stop. It shifts everyone's economic priorities.
But things move in cycles. Maybe the next generation of Americans will learn to save, much like those right after the Great Depression.🙂

hollowhawk412 said:But really, who actually wants this?
Who on earth would choose to be drowning in debt if they had any other option?

If you haven't realized it yet, Fiat money was declared the sole legal tender...
by executive decree... by the government itself.

The core issue here is that there exists a monopoly—or at the very least, a massive amount of manipulation and influence—over both the creation of Fiat money and the prices of everything you buy with it; it feels like a coordinated effort where everyone works in tandem to manufacture a bubble, much like how a Canadian might describe a rigged game when (the central banks, the big Wall Street commercial banks, and the rating agencies) decide it is time to inflate one.

The real problem is this artificial cycle of credit expansion followed by the inevitable contraction of that Fiat currency... I honestly struggle to wrap my head around the concept of "cheap" versus "expensive" money when the cost of printing it is practically zero.

Furthermore, there is the injustice of some entities having access to this money interest-free, while others are forced to
generate actual, tangible value just to pay it back, all while needing that money just to afford basic necessities... simply because the system is rigged that way.

It has become quite clear that the most recent Federal Reserve issuances ended up sitting in various central banks across the world... as well as within several commercial banks that were bailed out... all with zero interest attached.

Ultimately, I fail to see anything here besides a massive, systemic problem.

So, what's the alternative?
That’s a massive question.☕

hollowhawk412 said:But really, who actually wants this?
Who on earth would choose to be drowning in debt if they had any other option?

If you haven't realized it yet, Fiat money was declared the sole legal tender...
by executive decree... by the government itself.

The core issue here is that there exists a monopoly—or at the very least, a massive amount of manipulation and influence—over both the creation of Fiat money and the prices of everything you buy with it; it feels like a coordinated effort where everyone works in tandem to manufacture a bubble, much like how a Canadian might describe a rigged game when (the central banks, the big Wall Street commercial banks, and the rating agencies) decide it is time to inflate one.

The real problem is this artificial cycle of credit expansion followed by the inevitable contraction of that Fiat currency... I honestly struggle to wrap my head around the concept of "cheap" versus "expensive" money when the cost of printing it is practically zero.

Furthermore, there is the injustice of some entities having access to this money interest-free, while others are forced to
generate actual, tangible value just to pay it back, all while needing that money just to afford basic necessities... simply because the system is rigged that way.

It has become quite clear that the most recent Federal Reserve issuances ended up sitting in various central banks across the world... as well as within several commercial banks that were bailed out... all with zero interest attached.

Ultimately, I fail to see anything here besides a massive, systemic problem.

It's important to recognize the greed and hedonism everywhere... from the big banks to individuals (small or "large") all the way up to "governments." It's a widespread socio-cultural phenomenon in today's consumerist society, which wants everything right now, even if it means lying to itself. Everything else is just nuance, including the issues within the financial sector of our globalized world.
Great ideas get twisted into convoluted regulations—like saying deficits shouldn't exceed 3% or public debt shouldn't pass 60%. Then you have micro-level regulations about who can or can't get credit, which nobody follows anyway. Everyone is stuck in the same global pot, and now they're all getting burned...😬

The issue boils down to morality, and any system can be manipulated. Even the Romans didn't just start debasing their coinage with cheap metals overnight... they needed time to adjust.🙂

Andrew Booth29 said:Sure, they want it—that’s exactly why we call it "fiat" money. Can you not see the blatant contradiction sitting right there in front of you? 😬

I guess it would be hard for them to resist.
People stand at Chase counters praying to God that their personal loan gets approved. If they get rejected, they curse the banks. Then, when interest rates shift, they act surprised. It’s the same pattern everywhere. People at every level just keep taking on endless debt without a single complaint. Everyone wants instant growth right now, while simultaneously expecting everything to stay exactly as it is. $0.33 It’s worth the same now as it will be in twenty years... that’s just a contradiction.

I assume most people already have. At least I did about two years ago.
The movie is controversial, and parts of it are actually based on true facts. The issue is way more layered than what they emphasize, though you can definitely manipulate things when dealing with fiat money.
The problem is also that people actually want that kind of money...

ruggeddriver70 said:Check this out, caught my eye earlier:

"Lovrinović warns that in the US, the Federal Reserve was basically the first line of defense against the crisis, noting that one of the core duties of monetary authorities during a crisis is to ensure the government has the funds needed to invest back into production. In America, however, laws prevent the Federal Reserve from lending money directly to the government."

So, what exactly is the government supposed to be producing?

Maybe various capital goods that actually provide a lasting positive multiplier effect for the economy—projects that aren't just corrupt or amateurish, which I guess an American textbook on stupidity could write an entire volume about. We need things that don't just create a tiny spike before crashing (I touched on this briefly in Miami... check out slide 15 of this presentation). Since most of these are imports anyway, there wouldn't even be any domestic production involved.
Roha already went over how monetary policy needs to be countercyclical from the start of the crisis until now, but since monetary and fiscal policies move in tandem, they won't just be shouting into the void...😁
As for the state getting direct credit from the Federal Reserve—God forbid. It’s probably for the best they fought to keep that decade-old law in place. Just imagine if inflation were allowed to run wild like that...
Besides, comparing the Federal Reserve to the local central bank, or the US economy to the American one, is absolute nonsense. The same goes for claims regarding "monetary sovereignty." That's basically like asking for "globalization sovereignty," or something along those lines.

That’s what happens when we deal with a disproportionately expensive state. We just keep financing another chunk of our budget through deficits because we aren't collecting enough in taxes.
Devaluation and all that monetary magic won't fix anything unless state spending is slashed.

The headline feels a bit too "clickbaity" for me. I don't think we have the highest combined tax rate in the European Union; we're just near the top. Using $100k USD as a benchmark isn't a real metric—it's just an average.
I read a professional paper once, maybe from an economic institute or the International Judo Federation, comparing combined tax rates, and we weren't even at the maximum back then (about 5 years ago).

What we actually need is a real economic strategy and a comprehensive tax reform that accounts for every aspect of the economy.
Within such a reform, I’m a proponent of shifting the tax burden away from labor and toward consumption. It would boost competitiveness, attract foreign capital, and discourage consumption—which indirectly curbs imports(!!).
I mostly agree with the views held by unknown, though his thesis regarding the non-taxation of the first $1.75needs to be properly "put on paper."

Basically, excise duties, sales tax, and the like should go up, while income tax goes down.
None of this works without cutting government spending. That means lower salaries plus increasing the efficiency of the entire public administration.

Most people still don't realize the kind of catharsis coming our way via a massive drop in living standards.

Andrew Booth29 said:It might be, well, let's say, mathematically indifferent how a pension system is funded, but in practice? It isn't—because it dictates how people actually behave. This whole "generational solidarity" model essentially incentivizes consumption at the expense of investment. And what happens when you overconsume and underinvest? You inevitably erode the future economic base—we are quite literally spending tomorrow's earnings today.
A system built on individual savings naturally adjusts to demographic shifts, economic fluctuations, and the like. A generational system lacks that inherent flexibility, which leads straight toward massive, systemic disruptions. Then there is the issue of moral hazard—where politicians essentially buy votes using money pulled from the pension fund.
Furthermore, in a savings-based system, you don't even need to set arbitrary retirement age requirements—though, of course, politicians love to meddle with that question anyway.

I agree with everything mentioned here, and I assume Robin Jones2 also felt the same way. But even with these strong economic arguments, I think behavioral economics as a relatively young field might not yet be able to fully examine or anticipate all the issues surrounding this topic.

The reality is, our generation is definitely the one that will actually have to "save" for our own old age, though I don't think everyone is thinking about that. It was similar during that era of "greedy eyes" from the 90s up until this recession, where people set impossibly high standards for their current lifestyle without caring about tomorrow. That clearly impacts today's macroeconomic picture (consumption vs. investment).
So, a lack of adaptability could cause huge gaps. On the other hand, there’s the big question of what to "reliably" invest personal savings into, especially when "behavioral economics errors" repeat themselves here and are hard to fix (real estate bubbles, stock bubbles... human naivety will always create bubbles).
In that spirit, I don't think we should completely scrap any sense of generational solidarity (we still rely on it a bit...), because doing so might trigger real social problems for a certain segment of people who are totally "unadjusted" (they have zero concept of saving for tomorrow) or those with different life circumstances (no children, etc.). So, maintaining solidarity just enough to smooth out those "bottom edges" makes sense.
Consistent implementation of the "Australian model" would be great, but that requires much more organized systems...

Therefore, while relying on savings might be economically superior for future growth, maybe some of that growth should be offset by income reductions, which has already been discussed.
I fear governments will always find a way to blow money they don't have and just push the debt onto the future.

EDIT: Maybe it's a similar issue regarding health insurance... Personally, I still can't wrap my head around it (I don't have all the info or a firm stance), but a doctor friend of mine in the USA insists that health is strictly a personal matter/risk—essentially an individual cost. I think if medical neglect is provable (though how—it's tough), everyone should pay for their own mistakes. But again, how do you make that distinction..?

Robin Jones2 said:

The Government should reserve specific roles for those who struggle to find work—think janitors in school districts, clerks at DMV offices, or staff in municipal buildings. These are positions older citizens could easily fill. However, doing so simply displaces the younger workers who would have occupied those roles.

It all boils down to a fundamental lack of industry and sufficient job openings to support the entire population.

There is also the matter of the demographic drain. An unemployed 60-year-old becomes a burden on the state, whereas an unemployed 30-year-old will simply pack their bags and move to Austria or Germany, or perhaps just work under the table. They will pay taxes in a foreign country, leaving our dependency ratio—the balance between workers and retirees—with absolutely nothing to show for it.

Our only option seems to be importing retirees from wealthier nations. The central fund pays the pension, but the spending happens right here...

What can we even offer as a workforce? It is clear that Mediterranean economies, in general, are struggling. We could build a high-speed rail line to Cleveland to transport containers for Canadians, but the capital requirements are prohibitive. We could have partnered with Russians on oil or gas ventures, but that led nowhere. We built a streetcar, yet there is no global market for it. Are we destined to just farm tuna and manufacture screws?

You have distilled our predicament into a few sentences: we are fundamentally uncompetitive in the global division of labor and the marketplace.
The Social Security Administration model we rely on—built on generational solidarity—only functioned as long as each successive generation was larger than the last. Ultimately, pensions are a German invention from the late 19th century; they concluded then that it was more efficient for the state to care for the elderly and infirm so the youth could focus entirely on production.

An exit from this stalemate is possible if we move in two directions simultaneously. First, families must return to caring for their own elderly and sick, regardless of how difficult that transition may be. Second, we must realize that we need to "reclaim" jobs from the countries we currently import goods and services from. Initially, we should pivot back to manufacturing low-tech goods like clothing, food, furniture, and construction materials, while gradually integrating higher technology such as electronics and automobiles.

In fifty years, we might actually be back on top. :-D

If we fail to fight for our place in the global market and secure a fair share of the international division of labor, we will remain exactly what we are today.

Retirees are an economic cost to society, period. I guess mathematically or economically, it doesn't matter if they're funded by the family or through a social safety net. But if you move away from any sense of solidarity, you risk losing the moral and sociological fabric of society—like when certain people can't have children...
In any case, an unfavorable ratio of workers to retirees is irreversible. It leads to everyone's standard of living dropping because, honestly, if nothing gets produced, there's nothing to go around.🤷
For a country like America, the only way out would be forced euthanasia or stopping pension payments for anyone over, say, 71. 🤣
The thing is, cutting retiree standards is becoming unacceptable since pensions are already incredibly low compared to average wages. So, there isn't much choice left besides what you wrote in your second point, which Lj. Jurčić used to talk about quite a bit. Regarding the pension system, maybe we could bridge the gap using an "Australian model"—basically, if you have assets, you fund your own old age.
Essentially, we need a comprehensive sustainable development program that anticipates everything from energy needs to demographics, adjusting retirement ages, taxes, and everything else accordingly...
As for accountability, the masks are falling now with public admissions that "they didn't know what they were signing," essentially. It's the same story regarding responsibility for this current mess, which really stems from the 90s onwards. 😠

Steven Lopez20 said:From what I’ve been able to dig up online regarding the situation in the US, there are roughly 160 million employed people compared to about 60 million retirees. Given how messy things can get—and considering we have such a "highly capable" administration in charge—I wouldn't be entirely surprised if that ratio eventually drifted toward 1:1. I guess I'm just wondering what kind of economy could actually sustain a system like that? Specifically, what would a country like the US need to do to keep this whole thing afloat without everything just collapsing one day??

An economy with sustainable growth can actually feed a nation—which is something we haven't seen here. This whole thing was basically a bubble that finally popped, so I guess stagnation is the least of our worries now.
Starting this fall, expect some sort of "anti-collapse policy." It’ll probably involve cutting wages and pensions by lowering their nominal value—meaning smaller checks than before. On top of that, they’ll likely push back retirement ages to keep labor costs down during the next cycle, making output more competitive.
The theoretical alternatives, which carry their own set of risks, would be either inflation without wage hikes or currency devaluation.

We'll see what actually happens. There's a deep lack of common sense at play here...

Five minutes from the fax machine to the stock exchange > a quick hop from the exchange to the office > from the office over to Los Angeles > then straight from Los Angeles to Arlington National Cemetery.