How do you borrow 1.75 trillion?

[Puppycow]

It is for these reasons that I reject all fiat money

I'm curious how you go about your daily life.

Which country do you live in, and don't you participate in its economy? Do you carry around gold coins in your pocket or something? Are you employed? What does your employer give you as compensation?

 

[kevinquinnyo]

Right now I am waiting for the prices to drop enough for me to buy an apartment in Copenhagen cash.

Haha that reminds me of this...

Camel Cash Gaining Strength Against The Dollar from The Onion

 

[oggiesnr]

Yes RPI is currently lower, not all plans work (even the government's) and it has happened often.

When I say "it doesn't reflect normal spending" I mean it doesn't reflect the way that most people spend their income. If you use the personal inflation calculator then what happens is that the higher your discretionary income the nearer you are to the published indices.

The second half of my post (I'll make the split more obvious next time) was about what I'm seeing in spending patterns on a micro level at the moment rather than a critique of the indices.

Steve

 

[Thunder]

That's the newly projected deficit for this fiscal year. In all seriousness, how do you borrow that amount of money? From whom? What do you have to do to convince people to lend it to you? If you decided to do a "stimulus package" of 10 trillion dollars, could that be done?

I know that people sometimes talk about the government "printing money", but I know it doesn't really work that way. I suppose the government could loan money from the Fed to member banks, who could then turn around and invest that money in Treasury Bills, giving them a low risk investment, but wouldn't that be just like, well, printing money, and wouldn't that make inflation skyrocket?

1.75 trillion is more than 5,000 dollars for each man woman and child in the United States. We aren't talking about small potatoes. Who has that kind of money to lend?

we go into debt by selling bonds. people buy our bonds. thats how we go into debt.

 

[Almo]

Deflation is a boogie man scared up to protect vested interests. I live in a deflationary business and have for 25 years. It's tricky but if we ALL took the view that good things will get cheaper and our pay cheque will go farther next year it would be an excellent mind shift.

I really don't think this is accurate. Imagine you're a business with $100,000 to invest in infrastructure. You probably don't REALLY need to do it quite yet.

1) With inflation, you're encouraged to invest the cash before it depreciates.
2) With deflation, you're encouraged to hang on to the cash as it will be worth more next year.

Deflation has the nasty effect of rewarding people for not spending their money. Economies only work when money is spent.

Yes this is an oversimplification, but I think it illustrates the point.

 

[macdoc]

No - it's a ******** concept. People do things when conditions are correct to succeed... ( there are huge variables in that )
I've lived in a depreciating business environment for a 1/4 century where ALL things get less expensive sometimes next month and yet has grown like a weed.

That old myth is too protect vested interests who do not like things to get cheaper.

We MUST get back to a vibrant economy driven by how much MORE real value we get for our dollars next month or next year or next decade ( automakers are just getting there now ).

 

[Almo]

A depreciating business environment in a single sector isn't even remotely the same as system-wide currency deflation.

 

[Francesca R]

I've lived in a depreciating business environment for a 1/4 century where ALL things get less expensive sometimes next month and yet has grown like a weed.

A wild guess tells me that these things get less expensive because they are rapidly disrupted by quality advancements? If that's the case, likening it to general deflation is a bit like comparing apples to rat turd.

 

[macdoc]

No- they remain useful hard goods unlike unsavoury noisome latter example.

It puts paid to the "we'll wait to buy" mantra that gets circulated.

People don't sit and wait in a large scale - they buy what they need when they need it and clever manufacturers like Apple hold their monetary price points and offer more value for the same money each round.

It's a mindset that could use to be far more widespread . Demand for real value, and more again next year.....for less of my breadwinnings.

If shelter say were viewed as a vehicle instead of an ATM in the making the decision making in assessing would be very different.

( sote voce "pssst.....buddy this car is going to skyrocket in value..." )
That's laughable but the house mindset was not????

The economy is contracting in the metrics the bodies charged with such charting supply.
The ATM is closed, the realtor says the house is "worth" way less.

Same real shelter value it always was.

We'll get there at some point....my figuring is landing zone real world a North American economy about the size it was in the mid 90s. in current monetary terms.

I note the DOW around there now in "value" and there may actually be some sustainable value/viability there for some companies. Ford might be getting to it.
North American vehicle sales might be too.....10 million a year might be doable, 16 million ongoing was "exuberant".....

 

[Francesca R]

No- they remain useful hard goods unlike unsavoury noisome latter example.

What type of goods are they?

 

[Tippit]

A depreciating business environment in a single sector isn't even remotely the same as system-wide currency deflation.

Neither is the deflationary shock of a fiat money driven credit boom, the trough of the business cycle, to be confused with natural monetary disinflation aka the productivity norm.

 

[macdoc]

Francesca wrote

What type of goods are they?

Exactly the type through the entire chain from your desk to my eyeballs that allows this exchange. Some in that chain are ancient ( in tech years ) other are SOTA.
What you need when you need it as the task is the critical aspect.

I have a hard time with some of my clients number crunchers who cripple their expensive employees productivity for lack of $3 a day lease on decent gear.

In my view people view "things" as investments ( I'm going to "invest" in a computer ) instead of services to accomplish a goal...and in my view the mantra each year for the planet should be more services ( value ) for less monetary cost.

Parts of the global economy do provide that mindset. Not enough. Some few cannot ( a hydro facility for instance tends to be resistant to large efficiency gains tho in theory we should see smaller heads able to be used ).

I'm waiting for nuclear to break out - Toshiba's mini reactors might be the key.

 

[Francesca R]

What goods are they?

 

[macdoc]

Hard drives, RAM, monitors, network gear, servers ad infinitum .....localizing, we all know that next year the cell phone, HDTV, laptop, GPS et al will be cheaper with more features....you see anyone "holding off"???? - they buy what they need when they need it for the task at hand.
Extending it - you don't stop building a needed highway to the next town waiting for it to get "cheaper" - the activity is driven by the circumstance of task, timing and urgency and desire for immediate fulfillment in many cases or the the task has to fit within a time sensitive plan.

It's a false bogeyman to keep the banks et al happy that their security value is safe......can't have that getting "cheaper".
Party's over......despite McCains' huffing and puffing about we must support housing prices....

The used car salesman as slippery Sam has been supplanted by the used house salesman as popular villain.....then of course the view of "bankers".... shades of Steinbeck.

No fan of Sam Walton in his labour practices but "cheaper every day" is working even now.

Target sales down, Wal-Mart up -
5 Mar 2009
Wal-Mart Stores Inc., Target’s main competitor, reported that same-store sales were up 5.1 percent in February

When we get to that more value for less money mindset with shelter ( Ikea's flat pack house is a start ), transport ( wow some really good vehicles lately for less ), energy ( actually here in the form of "using less," ) as we have in other venues.
...I'll be thrilled.....not sure about you.

 

[Francesca R]

Then it is exactly as I said in post 88. There is no comparison between the workings of Moore's law and general deflation. This is a red herring.

 

[macdoc]

Moore's law has little or nothing to do this...what does Moore's law have to do with cellphones other than in a very incidental way......useable function for all but the most demanding application was passed for most situations years ago and Moore's law does not impact that......your use of this as a diversion is a red herring.

Bottom line buy what they need at the time and don't wait. There a dozens of other forces than cost. The deflation fear is bred in the minds of those that desire "fixed" or appreciating hard assets in a world that has very few.

Time for renewed metrics.

Capital asset managers get all gnarly about the cost of tools and forget about the tool users.....too hard to quantify for them.

I don't care if it will make you twice as efficient - it's not in the budget, hire a temp....

At least Obama kept his Blackberry.

 

[Francesca R]

Sorry but prices have not been falling in your business because demand was cratering all that time. They we're falling because people kept making things better really fast. Yes of course that describes handsets too. And hard drives and cameras and almost all of it.

Bringing it up has almost zero relevance to general deflation. Maybe stick to what you do know.

 

[drkitten]

Moore's law has little or nothing to do this...what does Moore's law have to do with cellphones other than in a very incidental way

Moore's law makes the components substantially faster, smaller, less power hungry, and cheaper.

The key phrase there is the last one. If there are $200 worth of chips in your cell phone, you're not going to be able to sell it for less than about $500 retail. If there are $20, then you can sell it for $50.

 

[macdoc]

Does your 4 year old cell phone work? Does an HDTV that has dropped a$1k a year for a while now depend in any significant way ??? No and people KNOW that it will be cheaper and they still buy what they want and need when they want it or need it.......waiting is a banker's bogeyman they like to throw up.

Moore's law is a density issue

1958, the number of transistors that can be placed inexpensively on an integrated circuit has increased exponentially, doubling approximately every two years

It topped out a while back and we simply add more cores now....

The point is people KNOW that this occurs and still buy like gang busters...it's a false bit of nonsense that keeps fixed asset types up at night.

or now......out of job.

The flip side of this is also in play now - there are millions of vehicles out there on no national economic metric providing service long beyond their "depreciation" date.

It points up a flaw in what we measure and how. Do I have an answer?? no.....beyond that "more" is not the metric we need to be peering at but "better" may well be.

••

Hey Francesca, you are clearly a smart girl and a survivor - honestly, when did you know the financial services world wide Caligula party was going to be over.....???

 

[drkitten]

Does your 4 year old cell phone work?

Depends on what you mean by "work." It doesn't offer a lot of features that are practical conveniences (such as cameras). It has substantially less battery life. It gets substantially less reception, is heavier, and is inferior in lots and lots of ways.

No and people KNOW that it will be cheaper and they still buy what they want and need when they want it or need it.......waiting is a banker's bogeyman they like to throw up.

Just because you repeat a wrong statement doesn't make it right, I'm afraid. One of the major issues in buying computers is that people do not buy excess capacity, precisely because it will be cheaper later. In almost any other purchase, people tend to overbuy (as an inflation hedge); if we need 20,000 square feet of office space, the company will build 80,000 square feet (and rent out the rest until the company grows into the building). If we need a 10,000 liter storage facility, the company will buy 20,000 liters worth of tanks so that we can keep up with expected growth in capacity.

The notable exception is computers. If I need 2PB of storage, I will buy as close to 2PB as I can, precisely because if I need another 2PB next year, it will cost half as much.

Moore's law is a density issue

No, it's not. Because "denser" transistors are by definition smaller, and smaller transistors are faster, cheaper, and require less power.

It topped out a while back and we simply add more cores now....

Nonsense. The reason we "simply add more cores" is because Moore's law allows us to make the cores smaller, so we can (literally) fit more cores into the same area. If you buy a quad-core CPU, it comes on a single chip, just like a single-core CPU used to (and before that, like the fixed-point processor did and you had to buy a second chip for the floating point processor).

Far from topping out, Moore's law is the REASON we have multicore processors.