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Everything you buy is about to get more expensive

Discussion in 'Political Discussion' started by The Brandon Five, Apr 18, 2011.

  1. The Brandon Five

    The Brandon Five Rookie

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    #75 Jersey

    FT.com / Capital Markets - S&P sounds alarm on US debt


    Wall Street shares slump as S&P downgrades US debt outlook | Business | The Guardian

    The smart-a** in me wants to point out that S&P completely whiffed in the run-up to the financial crisis in 2008, but in this case maybe they have learned their lesson and are being more conservative, or--dare I say-- objective.
  2. Real World

    Real World Moderator Staff Member

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    The fat lady is looking for some lemon juice to gargle.
  3. Patters

    Patters Moderator Staff Member PatsFans.com Supporter

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    I think we'll need to raise taxes. Starting with Reagan's ridiculous tax cuts and record deficit spending (for the time), our deficits have grown bigger and bigger. Once we restore a more progressive tax system and make some cuts, our economy will be just fine.
  4. Titus Pullo

    Titus Pullo Banned

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    I'd like to hear the OP's opinion on why he thinks "everything you buy IS about to get more expensive." What caused it?

    If he agrees with the link, he's no doubt correct. But I wonder if he knows how deep this rabbit hole goes.
    Last edited: Apr 19, 2011
  5. DarrylS

    DarrylS PatsFans.com Supporter PatsFans.com Supporter

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    From my POV everything has been getting more expensive.. this has been a trend for sometime now, and is not unique to this time.
  6. wistahpatsfan

    wistahpatsfan Rookie

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    #75 Jersey

    I think that the profit margin for those things that cost more stays the same, right? So guess who doesn't get hurt by these price increases.

    Same old same old. I have concert ticket stubs from the late 70s priced $18 and a Sox standing room stub priced $1.25. My first set of tires on my first jalopy cost new $160 for four.

    Jeeziz! People act like this is something new! I guess in this ADD society, it might seem that way.
  7. PatsWSB47

    PatsWSB47 Rookie

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    #12 Jersey

    You''re right as long as its sold out's like the Sox and Pats but people cut back on many things when prices are out of reach so what good does the margin do then?
    Last edited: Apr 19, 2011
  8. The Brandon Five

    The Brandon Five Rookie

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    #75 Jersey

    I'd say (in no particular order):

    - Running deficits for fifty years straight
    - Cutting taxes while increasing spending to the point where they are below the range for "Hauser's Law"
    - Our position as the world's reserve currency has allowed us to behave badly for a long time with less consequences than might be expected from the two items above, thus acting as an enabler of more bad behavior

    I realize that everything has already gotten more expensive but given our reliance on imports (not just for oil) a sharp decline in the value of our currency will greatly increase prices. Look out above.
  9. reflexblue

    reflexblue PatsFans.com Supporter PatsFans.com Supporter

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    #91 Jersey

    I had never heard of Hausers Law so i looked it up. When i did besides the conservative think tank the Hoover institute i also ran across the Heritage foundation, the Tea Party, and Laffer curve. David Stockman laughed at the Laffer curve he couldn't believe people bought into it. Your trying to sell Dime Store economics AKA Reganomics again. It doesn't work no matter how you dress it up "Housers law" its still a pig.

    http://www.presimetrics.com/blog/?p=241

    http://www.presimetrics.com/blog/wp-content/uploads/2010/11/Hausers-Law-Figure-11.bmp

    OK. So, Hauser’s point is clear – no matter what happens to taxes, the government only manages to collect about 19% of GDP. Presumably then, from a perspective of paying down debt, there’s no benefit to raising taxes and plenty of benefit to cutting taxes. (Later he goes on to argue that lower taxes = faster growth, which I’ve dispensed with in the past – latest example here.
    The graph tells the story.
    Last edited: Apr 19, 2011
  10. Titus Pullo

    Titus Pullo Banned

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    So these things, mitigated for decades, are all simultaneously a problem now due to coincidence? It goes no deeper than flawed fiscal policy?
  11. The Brandon Five

    The Brandon Five Rookie

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    #75 Jersey

    Well, obviously the phenomenon is range-bound. There has to be not only an upper limit, but also a lower limit. Otherwise, you can just cut rates to zero and have infinite economic growth! The recent experience suggests that we had gone below that lower limit. That was my point.
  12. The Brandon Five

    The Brandon Five Rookie

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    #75 Jersey

    Yeah, simpletons like me assume that having a mountain of government debt is a result of fiscal policy.

    I await your brilliant (yet vague) rebuttal or (more likely) empty snark.
  13. PatsFanInVa

    PatsFanInVa PatsFans.com Supporter PatsFans.com Supporter

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    What we're seeing is the announcement that we're being looked at as shaky because we can't conclude what to do about debt, according to S&P.

    I read that to mean "because we are actually realistically making noises about defaulting on our debt."

    We're a riskier bet because we're talking about not paying what we owe when next the debt ceiling comes up for a vote. So it is riskier to lend us money. Our official government representatives are making stupid noises like, "hey here's a good deal -- let's just not pay!!!"

    Ergo, the outlook for lending money to Washington is negative. The next step is a downgraded credit rating, something that's never happened to the U.S.

    Gold surged on the news. Gold surges on uncertainty, and this is definitely uncertainty.

    But here's the thing: The OP seems to be linking difficulty borrowing money with headline inflation, as the main cause/effect here, based on the threat of downgrade on the part of S&P.

    Maybe at the threat level, a weaker dollar will be the result. But at the level of the actual vote on the debt ceiling, the biggest result will be the caving of the economy again, but much, much worse.

    In such a depression, headline inflation is likely to decrease, or even to reverse into deflation, as we just experienced when our liquidity crisis was generated by a mere economonic meltdown, as opposed to the historic and unprecedented defaulting on our own loans.

    Weaker dollar? Huh, sure, fine, I'll buy that... but I think it's worrying about whether 65 degrees is a little cooler than you'd like at the beach when oh, by the way, the ocean just turned into ammonia for some reason and the sky turns blood red.

    Think very deep unemployment, for a very long time, with a great number of shuttered businesses, and the government having less, not more abililty to intervene.

    PFnV
  14. patsfan13

    patsfan13 Hall of Fame Poster PatsFans.com Supporter

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    No the markets are reacting to the Boehner getting rolled and the realization that Obama is gonna keep spending with no real spending cuts. Look at the last few TBill auctions no one wants to buy our paper ie no one to finance the debt.

    The Japanese will be floating their own paper and cashing in some of there TBills and the Chicoms are getting out of T Bonds along with big funds like PIMCO.
  15. The Brandon Five

    The Brandon Five Rookie

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    #75 Jersey

    Another sign that nobody in Washington yet takes any of this seriously:

    U.S. Treasury Criticizes S&P Move - Washington Wire - WSJ

    Meanwhile, here on earth:
    Enron Writ Large - By Kevin D. Williamson - Exchequer - National Review Online

  16. patsfan13

    patsfan13 Hall of Fame Poster PatsFans.com Supporter

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    Our principal Mortgage holder (the Chicoms) aren't happy with the profligate spending by the US.

    China warns of 'dollar trap' - Street Sweep: Fortune's Wall Street Blog



    We are insolvent as B5 points out there isn't enough capital out there to support the spending Obama wants and the enormous debts that are incured.

    When the interest rate goes up it will be game over.
  17. PatsFanInVa

    PatsFanInVa PatsFans.com Supporter PatsFans.com Supporter

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    ... say the guys that voted for borrow-and-spend republicans for 30 years, then started crying when it turned out you can't always get something for nothing.

    Forgive the rest of us if we don't trust every assertion the granny-evicting right bubbles up.

    Yes, with the orgy of irresponsibility of the last 30 years - excepting the clinton year - we've got a debt problem. And with the demographics being what they are, it's demographically weighted.

    No, you don't have to pay back all 16 trillion at once, morons. That's the good news.

    Yes, we need revenue that matches outlays. That's the bad news.

    We got to 16 T trying to correct the economic policy blunders of the last borrow-and-spend twit, regardless of what drudge tells you.

    So yeah there's gonna be some pain now that the party's over for the "wahhhh you can never tax anybody ever," something-for-nothing crowd.

    The needle's about to come out of that well-worn "no new taxes" groove. Look at what pubbies do when they're governors and they have revenue problems: they raise taxes. They do it as regressively as possible, but they raise them.

    I love how the same bozos crying -- without any evidence -- that national health care would mean there would be "death panels," are now crying that "medicare and medicaid are unsustainable."

    You're like trained parrots.

    Rawk. Death panel. Rawwwk, unsustainable.

    PFnV
    Last edited: Apr 21, 2011
  18. PatriotsReign

    PatriotsReign On the Roster

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    It doesn't matter how we got to this point or whose fault it is.

    Our country is like a family that lived large for years on borrowed money. Even though mommy warned daddy for a long time that it would catch up to them, she still helped spend the money. Everyone in that family loved "the life" and no one complained. But suddenly, the bank came to foreclose on their house.

    Daddy shouted, "We can still get another loan or a credit card to hold us over until things get better", while mommy knew deep in her heart that the gig was up.

    Another stimulus would exactly like that family asking for another loan.

  19. The Brandon Five

    The Brandon Five Rookie

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    #75 Jersey

    So because those on the other side of the political aisle were insufficiently concerned about this previously everything's cool?

    Medicare and Medicaid are small potatoes sustainability-wise. The future of our republic is what is at stake now.
  20. Titus Pullo

    Titus Pullo Banned

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    LOL... Jezus, put the gun away, combative one. Between the two of us, only you are being snarky in this thread.

    Debt is what if not the promise of more tomorrow? What if there was no longer promise of "more tomorrow?" The world is in the early stages of coming to grips with that fact.

    I'll let the former chief petrol geologist at BP explain it better:

    YouTube - Colin Campbell predicts credit crunch due to peak oil 2005
    Last edited: Apr 21, 2011

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