more bad news for the dollar

[bishop]

pat.. just to further my view that krugman is solely out there for the publicity - i doubt you'll see him criticizing greenspan for these comments:

http://money.cnn.com/2005/03/15/news...reut/index.htm

[PatrickHenry]

Hold on there, bishop! He already did so in the source I quoted:

he asserted that there would be large budget deficits for the foreseeable future, leading to an unsustainable rise in federal debt. But he counseled against reversing the tax cuts, calling instead for cuts in Social Security, Medicare and Medicaid. Does anyone still take Mr. Greenspan's pose as a nonpartisan font of wisdom seriously?

http://www.truthout.org/docs_2005/030405K.shtml
See? He's saying that Big Al's call for a balanced budget is predicated on the demise of the SS/Medicare safety net.

[bishop]

heh.. even though greenspan says that the reform must be slow and gradual so that it is done right.. he treats the issue with a sense of urgency because the future fiscal problems those programs pose is not to be ignored (perhaps krugman thinks they should be ignored?).. not to be confused with greenspan saying that they should urgently, and hastily, reform the system.. the problem with the social security debate is that older generations are worried that the system won't be able to pay them what they've been promised - and on the other side of the coin, younger people like myself rightly worry about the huge taxes they'll face in the future in order to fund the system. quite the dilemna - the "don't change it" crowd doesn't care about younger workers, and the hasty crowd doesn't care about retirees. something has to give.

personally, i don't agree with everything greenspan says - i don't think that reversing the tax cuts would be a bad thing.. i should note, though, that the traditional dogma of economics states that less taxes are better, so i wouldn't give a knee-jerk reaction and accuse him of being partisan solely because of that. in his "younger" years, greenspan has proven to be a huge deficit hawk - actions speak louder than parsed words imo.

[PatrickHenry]

I am no taxer either, bishop. I just want the taxes to go for their stated purpose. I favor reducing taxes AND spending, especially on the bloated US Military. Militarism DESTABILIZES the world, but a DEFENSE regime could conceivably bring conditions for renewal. This is the reason for my preoccupation with the global Empire that America has become, and my hopes for a return to constitutionalism, a fading dream...

I would argue for allowing the taxpayer to opt out of all safety net options, keeping their own money for their own purposes. But that would require a serious debate on how to help the unfortunate who wind up on the bottom with nobody to help. Should we just let them drown? Or let charities pick up the pieces where they can?

[bishop]

i don't remember if greenspan has ever commented specifically on military spending... but he has definitely argued against deficits, and military spending is a primary contributor to our deficits. greenspan's a career economist, swimming with political sharks - it's understandable that he would refrain from talking about cutting military spending as a specific way to reduce today's current deficits.

since he wants the budget balanced, without raising taxes, you do the math... he doesn't want hasty s.s. or medicare reform, so those fixes won't affect today's deficits. while pork spending is high, eliminating that won't do enough to balance the budget.. greenspan has publicly stated that the government should take a more pro-education stance so that we can compete in the global economy.. what else can be cut, if not defense spending?

your last statements... i think we've debated that before. i don't entirely remember though..


just to get back to talking about the dollar - when greenspan warns of higher future interest rates, a big reason why he's saying that is because the long-term projection is that the dollar will continue to lose its value. the only way to compensate foreign debt holders would be to raise rates at a pace that would at least parallel the rate of the dollar's depreciation. if the rate of depreciation accelerates, then so too must interest rate hikes so that foreigners continue buying our debt.

and, the dollar will continue its downward spiral so long as we have all these fiscal deficits. how is the country going to fare when we have all of today's debt (including the $3+ trillion bush almighty gave us) - and then we could struggle for a couple decades to return to some sense of fiscal sanity. what's happening right at the same time? more and more baby boomers begin to retire, continuing our fiscal woes...

despite the fact that they aren't the most exciting reads out there, i frequently read what greenspan and the various fed governors have to say about topics like this.. they always tend to explain their reasoning along the lines of what i said above. when i see people like krugman making a living by parsing out a couple words, and manipulating them like every other pundit, i can't say i'm very impressed.

[PatrickHenry]

Heh, I know wht you're saying, bishop. But the fact is that Big Al is a front man for the financial elite that own the debt, and profit from it. I know you don't, but most Americans believe that the Federal Reserve is a government institution. Nothing could be further from the truth. They are a PRIVATE, FOR-PROFIT group led by Rockefeller interests that have no conscience, pursuing only the bottom line.

Right now it seems there is an agenda to beggar the dollar for some ulterior purpose. Will they crash the economy to scoop up bargains in the chaos? Will they sow instability to create even bigger statist solutions to the problems we already see looming?

[bishop]

i'm not so quick to demonize greenspan.. like i've said, he has a long history of being a deficit hawk. he once voiced what seemed like support for the gold standard..

there is a reason why the fed was created as a private institution, and it's not nearly as insidious as you might suggest. the fact of the matter is that congress had been abusing the nation's banking system and policies for years, and that the system was corrupt to the core. this hit a peak in a financial debacle, and the fed was created as a consequence. it wasn't simply some nefarious idea that they dropped on us to enslave the working man..

and i dare say that throughout the history of enterprise, the bottom line has always superceded moral concerns.


everything greenspan's been doing has been to continue to push the dollar as an attractive investment for foreigners - because we need them to finance our trade deficit. he has to do this, because if they stop buying our currency, we'll see serious inflation that could be comparable to germany's situation preceding ww2.. congress also has to do its part - but neither they nor the people who voted them in seem to give a damn about the deficit.. they collectively believe that it simply doesn't matter... people had a similar mindset before 9/11, and all of a sudden, people began to see terrorism as a big deal.. seems that we'll have to be hit with a financial meltdown before the self-important american public gets with the program and realizes that the deficits DO matter.

[PatrickHenry]

Quote by: bishop there is a reason why the fed was created as a private institution, and it's not nearly as insidious as you might suggest. the fact of the matter is that congress had been abusing the nation's banking system and policies for years, and that the system was corrupt to the core. this hit a peak in a financial debacle, and the fed was created as a consequence. it wasn't simply some nefarious idea that they dropped on us to enslave the working man..

I disagree with the factuality of your statements. The Fed was created for the sole purpose of financial control by elite financial interests. http://www.apfn.org/apfn/reserve.htm

Quote by: bishop everything greenspan's been doing has been to continue to push the dollar as an attractive investment for foreigners - because we need them to finance our trade deficit. he has to do this, because if they stop buying our currency, we'll see serious inflation that could be comparable to germany's situation preceding ww2.. congress also has to do its part - but neither they nor the people who voted them in seem to give a damn about the deficit.. they collectively believe that it simply doesn't matter... people had a similar mindset before 9/11, and all of a sudden, people began to see terrorism as a big deal.. seems that we'll have to be hit with a financial meltdown before the self-important american public gets with the program and realizes that the deficits DO matter.

Well said my friend. Here's an English translation of a French look at the big Ponzi scheme that is the current rage in America just now: http://www.truthout.org/docs_2005/032405H.shtml

For most economists, this system is dangerous and cannot persist. Federal Reserve President Alan Greenspan is one of the optimists. "The flexibility of the American economy will allow it to progressively regulate the present difficulties with regard to trade and savings," he declared two weeks ago before the Council on Foreign Relations. Other experts forecast a painful outcome. When central banks stop buying dollars, the world economy will undergo a wide scale shock. That's the conclusion of a study by Ixis CIB economists. They judge that the imbalances cannot be corrected without a recession in the United States, and afterwards, undoubtedly, the world. "The date of this recession may be belated (2007, 2008 or 2009), since it must wait for the drawbacks of dollar stabilization to exceed the advantages (support for exports) in those countries that make exchange rate interventions," writes Ixis CIB. Without financing from foreign central banks, the United States will be forced to reduce its trade deficit to a fundable level. Since American industry is incapable of replacing part of United States imports, adjustment can occur only through a reduction in the demand for foreign products. For that to happen, the depreciation of the dollar has to be sufficiently pronounced that the rise in prices of imported products reduces Americans' purchasing power. They will consume less and save more, sparking a strong reduction in economic activity, calculated by Ixis CIB to be at least 2%. It appears that the shakeup for the rest of the world will be at least as severe. The decline in exports to the United States will be accompanied by a loss of competitiveness on world markets.

[bishop]

i skimmed throught the afpn link and completely disagree. (found it to be very haphazard as well) barely any mention about the banking panics of 1873, 1884, 1890, 1893, and 1907 - which led to the fed's creation. now regarding the interests of financiers and their companies - isn't it reasonable that financial companies would be interested in the creation of a stable national banking system? obviously here you get grey areas, but i don't believe that because if it's in the interest of wall street, that it's instantly against my interests (or our national interests). a stable banking system is good for the country - lest you end up with banking crises every 5 years or so. is that really better? i believe we've only had two banking crises since the fed was created - during the great depression and the s&l crisis.

god only knows how poorly things would be run now if monetary policy were in congress's hands.. would the republican controlled congress (fully indoctrinated into the church of voodoo economics) be raising interest rates right now? the rates should've been increased a good year or two before the fed finally did begin to raise rates. the only reason why the fed stalled, imo, was because of the highly politicized environment it operates within. nonetheless, without independent control of monetary policy, it's likely imo that the republicans would've maintained low interest rates - if only for dogma's sake.