Posted on 02/26/2006 3:43:27 PM PST by peyton randolph
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Dissenters say our prosperity is hollow. While the economy appears healthy, a disease is eating away inside, a disease that Dr. Greenspan has been treating with oxycontin. The chairman, they say, was a friend to presidents and kept them happy and himself in power by the greatest expansion of money and credit in history. And just as the easy-money Fed policies of the Hoover-Coolidge era led to the crash of ’29, a day of reckoning is ahead.
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(Excerpt) Read more at amconmag.com ...
Pat is the best analyst around. He is right that making China a permanent favorite trading partner is bad for our citizens. Pat is a prophet. Like all prophets he is despised for calling attention to fault. That was no more acceptable in the past than it is today in the era of the happy face.
P.S. He is gradually being proved right that invading and occupying Iraq instead of getting bin Laden's terrorists was also a mistake.
Thanks for confirming what I thought. :-)
No, but let's keep things in perspective. The last trade surplus we had was during a recession. The best way for us to achieve another trade surplus is to have a recession. Japan and Germany regularly run trade surpluses. Would you prefer Japan's deflation and no growth economy or Germany's 12% unemployment and no growth economy?
Consumption debt may be up but it's because we're worth more now, make more now and tend to borrow more when interest rates are low. Our debt to asset ratio was very low when Carter gave us 18% interest rates. Home ownership being at an all time high (69.1%) will also contribute to an increased debt load. All that notwithstanding, our household net worth is more than $51 trillion now which is more than double what it was in 1994.
The United States is losing its manufacturing base.
Yet, we manufacture and export more now than at any other time. We manufactured $3 trillion in goods last year which is more than every other countries total GDP except Japan!
If I pay cash for a CD player that's made in Japan, how is any debt created? It isn't. I get their CD player and they get my dollars. If they use my dollars to buy goods from us no deficit is created. If they use those dollars to invest in our economy instead, a current account deficit is recorded but a capital account surplus is also created and they balance out. The balance of payments is fine and that's all that really matters. All this says is that the U.S. is currently the best place to park one's money right now. The fact that we run a capital account surplus is an unambiguous market signal that our economy is vibrant and the best place to invest. Money flows to where it's treated best. This flow is providing us with the capital to grow our $12 trillion economy at 4% a year.
..buy U.S debt at what they perceive to be interest rates that will provide reasonable compensation [or at the very least allow their export driven economies to continue to export to the U.S.]
Central banks will manipulate their currencies to help their export driven economies. That's true. It still doesn't account for all the others who choose to buy our treasury debt and it most certainly doesn't offer any validity to the assertion that trade deficits cause debt. Government spending more than it takes in is what causes debt. Period.
Does that make Pat's statement "ridiculous" or only technically incorrect?
Pat should know better. That he does this to rile those who don't know any better makes him, and his statement, ridiculous.
the debts both internal and external will remain to be repudiated [through outright default];
Believe what you want but despite the increases in debt, both consumer and external, our household net worth has reached a record $51 trillion. Since Bush took office our external debt has grown by $2 trillion. However, our household net worth has increased by more than $10 trillion. Our net worth is increasing five times faster than our external debt and you think, because of this, the party's coming to an end and we're at risk of default?
The fact is public debt as a percentage of household wealth is shrinking. In addition, household credit is hardly a problem and public debt as a percentage of GDP is also decreasing.
inflated away through inflation; or continue as a drain on the taxpayer / average Joe homeowner.
Inflation has averaged about 2% annually over the past 20 years and average Joe homeowner is doing better than ever. Even if inflation weren't tame, it's great for those who own tangible assets.
Now, if you could just come up with the earnest money.
Except for those living in the Midwest--who are really left behind.
Only if you define a "true conservative" as someone who goose steps and waves a Swastika.
Show me the photo.
Walter Williams demolishes this line of thinking quite handily almost every time he subs for Rush.
L
Well, that's a good question. But the premise is that Greenspan is so smart, something I've never asserted. Time will tell, but whatever bad may happen will now be blamed on Bernanke.
This is a new low, even for you.
If you borrowed money that China lent back to us by refinancing your home, that's how.
So we're exporting IOU's?
Let me take this opportunity to thank you for providing reason and logic to back up your criticism of Mr. Buchanan's statements. The others lack the knowledge to argue points, I suppose. FR should be more than that. Thanks again.
Personal attack, lad. Ad hominem instead of reasoning.
Your condescending tone, old man*, is underwhelming.
Here is one reason (although there are many): Every argument Buchanan is making now was made by him and other protectionists against Japan in the 1980s and early 1990s - a parade of imaginary horribles summed up in a book and related movie called "Rising Sun."
* With age does not necessarily come wisdom.
There are plenty of elderly fools on the planet.
They thought exactly the same just before the Great Depression.
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