American Economics Thread
- Thread starter Bernard
- Start date
The US economy is caught between two fires. On the one hand you have rising inflation and on the other hand you have a growing debt and asset bubble. If they fight the inflation its going to burst the asset bubble, but if they support asset prices inflation will rise out of control. They will in the end choose to inflate as that is the only way to kick the can down the road in the short run. As a asset price collapse in the US will cause a financial and economic crisis that will dwarf the great depression in a very short order. But this course will be worse for the US and the world in the long run.
And smoldering in the background is forbearance that allows people to postpone the payment of their rent, mortgage, student loans, car loans and thanks to president Trump's executive order aka presidential decree also payroll taxes. There is a huge mountain of unpaid bills in the US that is growing larger by the month. And there is no solution for this and that is why they have kicked this can down the road too by extending forbearance to the end of june from the end of march.
The only thing that is keeping up the appearance in the US of a functioning economy is:
*Massive government deficit spending
*Massive easing by the Federal Reserves
*People and businesses not paying their bills
*The media putting up a brave face in the light of this catastrophic situation.
The US media today is not much different from the Soviet media of the 1970's and 1980's touting their own virtues while ignoring the catastrophe that is in front of them.
And smoldering in the background is forbearance that allows people to postpone the payment of their rent, mortgage, student loans, car loans and thanks to president Trump's executive order aka presidential decree also payroll taxes. There is a huge mountain of unpaid bills in the US that is growing larger by the month. And there is no solution for this and that is why they have kicked this can down the road too by extending forbearance to the end of june from the end of march.
The only thing that is keeping up the appearance in the US of a functioning economy is:
*Massive government deficit spending
*Massive easing by the Federal Reserves
*People and businesses not paying their bills
*The media putting up a brave face in the light of this catastrophic situation.
The US media today is not much different from the Soviet media of the 1970's and 1980's touting their own virtues while ignoring the catastrophe that is in front of them.
Although our current home loan is about 2.5%As far as I'm told, applicants are stressed tested at a loan rate of 5% to reduce the possibility of defaulting on the loan. Does that not happen in other parts of the world.
Many countries do have stress test for a loan. For Example, Canada introduced a law few years ago that required stress test for applying or renewing a home loan even with a good credit and large down payment. However, in the US, the stress test applies if your down payment is low. I believe 20% is the minimum. If your down payment is less than 20%, then you need to buy mortgage insurance to increase your chance of approval.
very rare article on america gigaton debt. Now they are talking about a miracolous biden stimolous (more debt plain and simple in world ridden of debt). I live in italy (a country were things started to go bad when our national debt reachet 100% of gdp) where are stuck in economic stagnation from 20 years and thing are starting to deteriorate from 10 years. American economy will look like italy's economy in the 80's when a hated political class searched legitimity with massive public spending and welfare for all (hiring in state companies was secure for all) for a few years we had a booming economy (we was the fifth economy in the world in front of france and britain) but the last 30 years have been only stagnation and climbing down the ladder of world powers.
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I personally find that when a country's debt to GDP ratio hits 100% then the country finances start to show cracks. Now for the US that threshold is much higher as it holds the dollar which is the reserve currency and can continue printing dollars.
The point is that the rest of the world doesn't want to subsidise this printing except some vassal States (e.g Japan, Taiwan etc). So it is just a matter of when this house of cards collapses.
China introducing the DCEP digital currency and then internationalising it will be a blow to the dollar. In addition you can see that by China investing these dollars in the BRI and commodities instead of holding as much treasuries bonds as before
That explains why the US is so hard core obsessed with stifling any and all Chinese tech; can you imagine if every WeChat or TikTok account had the ability to use the DCEP?
That's every American oligarchs' nightmare right there.
@styx I think the main reason for the stagnation is the EURO and the austerity measure impose by EU for the bailout. I think if you maintain the LIRA, you can export your way out of the crisis.
