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With the Dollar constantly becoming weaker and weaker to the rest of the world economies and with the possibility of China stopping purchasing the dollar. Could it cause the Dollar to freefall and require it to be devalued.
What effects will this have apart from the obvious major job losses and the world economy taking a real strong hit. Will it destroy any financial plans that the USofA has.
And what can be done to stop it and should it actually be tried. Why has it happened and is it the result of Americas massive deficit.
Chan eil mi aig a bheil ùidh ann an gleidheadh an status quo; Tha mi airson cur às e.
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The dollar will only die with the bourgeoisie, which is envitable so there is no need in trying to perserve it.
The MiniTruth passed its first act #001, comname: PATRIOT ACT on October 26, 2001.
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As I understand it, America's rising debt is making it less likely people will want to keep lending her money at the present exchange rate so she can finance her spending. For this reason, the exchange rate will have to alter - downwards.
But this needn't be a disaster, if it happens in a gradual and orderly fashion. In fact, it's a like a pressure-relief valve, a corrective process, because a weaker U.S. dollar means it will cost Americans more to buy foreign goods, while making American exports cheaper for the rest of the world to buy. Obviously, this will enhance U.S. exports and reign in imports, which will, in turn, improve the deficit and relieve downward pressure on the U.S. dollar.
Unfortunately, even if the decline in the dollar is gradual and therefore less likely to cause major disruption to international trade etc., the resultant rise in the price of imported goods in the U.S. will tend to increase inflation. Since inflation is recognised as the number one enemy of economies everywhere, the Federal Reserve will probably raise interest rates to discourage borrowing and spending. This 'chokes off' the money supply to an extent and takes the heat out of inflation. But, of course, if interest rates are higher, borrowing money for business enterprises is higher too, and this tends to reduce economic expansion.
So, while a gradual and orderly devaluation of the U.S. dollar will help alleviate the deficit problem (reduced government spending would be helpful too, of course), it will reduce growth in America's GDP. There may be some belt-tightening necessary in some quarters if and when this translates into increased unemployment.
[DISCLAIMER: I am not an economist and neither am I a financial advisor. The above is information I've gleaned from perusing the financial press over the years. Before making any financial decisions based on this summary, you would be extremely well-advised to seek competent professional guidance!!! :laugh: ]
The word 'aerobics' came about when the gym instructors got together and said: If we're going to charge $10 an hour, we can't call it Jumping Up and Down. - Rita Rudner
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I'm uncertain if ~Eternal~ is joking or not...
The main reason the dollar was strong was because of neomercantalist nonsense from overseas, where you'd artificially keep the dollar strong so you could export like crazy. Generally speaking, you export to the US, receiving dollars, then reinvest in the US economy to get those dollars back in the US and keep the dollar strong. Otherwise, you can't maintain lopsided trade surpluses forever. Not that you can anyways; the dollar weakening now is an excellent example of what happens when too many countries start playing that game.
The US is not in bad shape economically, especially compared to the rest of the world. It's likely to be the *least* affected, overall, by a sudden collapse of the dollar. The real victims are going to be the countries which played this game for years, because their economies are going to take a bath when the dollar weakens, and the investments they made to get rid of dollars are going to take an even bigger bath. Some countries - I'm thinking of Japan - will be in serious shit...
You know what the best analogy is? You know that "The Day After Tomorrow" movie, where global warming over decades one day suddenly reverses ocean currents in the Atlantic and storms from hell rip up the globe? This is the economic equivalent of it, caused by trying to game global trade. It's going to cause major trouble, especially in the countries responsible, but also going to trash lots of innocent bystanders.
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I'm uncertain if ~Eternal~ is joking or not...
No, I am not, and to prove I am not, I will state this once and only once.
I am a Marxist-Leninist-Trotskyist-Syndicalist-Ecologist.
The MiniTruth passed its first act #001, comname: PATRIOT ACT on October 26, 2001.
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The dollar's fall will be bad for American consumers but good for American workers. The average American will end up less wealthy, but America will gain back manufacturing jobs that it has lost.
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The dollar's fall will be bad for American consumers but good for American workers. The average American will end up less wealthy, but America will gain back manufacturing jobs that it has lost.
Yeah, that about sums it up, at least on the US side. Countries that have been playing games to keep artificial trade surpluses, on the other hand, will take a triple-play beating: hurt exports, lost jobs, and a major pain in their investments. In the short term, there's also likely to be a seismic but fairly short-term quake in the stock market if a devaluation occurs suddenly... however, the market should bounce back pretty quick, since the US economy has no particular systemic flaw that created the dip in the market, just foreign investors panic-selling if the dollar goes down. Good time to buy on the cheap, is my thought. ^_^
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It depends at the moment most oil prices are classed as how much a barrel of oil costs in dollars. This is superpower status what happens when it becomes how many euros to a barrel etc. what political power is lost in that equation.
You must remember that that many countries are about to impose political and economic sanctions on the US as a result of its protectionism of the steel industry. These will increase the costs of american goods abroad.
So United States exports are due to fall rather than rise so exponentially increasing the dollars fall.
Chan eil mi aig a bheil ùidh ann an gleidheadh an status quo; Tha mi airson cur às e.
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You know, after a few days of thinking about this, I've come to the conclusion that a 'dollar collapse' might end up transforming the US from the major world importer to a quasi-autarkic state. The probable response by the US manufacturing sector - while likely to have an uptick on employment in this portion of the economy - is going to involve automation, given US wage levels. To put it simply, it's cheaper, once initial capital costs come into play, to build a factory in the US staffed by dumb robots than it is to hire workers in some third world country. And with exchange rates messed up, it probably will make more sense from a business standpoint. That could give economic globalization a hard knock...
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You know, after a few days of thinking about this, I've come to the conclusion that a 'dollar collapse' might end up transforming the US from the major world importer to a quasi-autarkic state.
We will still have to import a lot of resources, especially oil, even if the US manufacturing sector grows.
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As an aside the economic growth of the US will be about 3.3% and the United Kingdom about 3.7%. This is compared to the growth of the China at a minimum of 12%.
At this rate of increase the Chinese will leap from the 6th economy in the world to 4th next year(bipassing Britain). and at this increase it will bypass the US in 10 years.
So from a space perspective it will look very much that the Chinese goverment will be needing resources soon and that its spare cash will allow it be able to promote its space program.
Chan eil mi aig a bheil ùidh ann an gleidheadh an status quo; Tha mi airson cur às e.
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As far as China goes there are some serious questions outstanding about the sustainability of their growth.
Also whenever there is an increase in the American manufactering sector that hurts the PRCs economy, which is still almost entirely based around exports. China and Japan are likley to be the two countries hurt the most by a weaker dollar.
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At this rate of increase the Chinese will leap from the 6th economy in the world to 4th next year(bipassing Britain). and at this increase it will bypass the US in 10 years.
I think that you are mixing measurement units here. It could go from 6th to 4th in exchange rates measurement of GDP this year, but it would still take several decades of growth at this rate to catch up with the US by this standard. However, in PPP measurement China is already 2nd and is on track to pass the US within 10 years.
Also whenever there is an increase in the American manufactering sector that hurts the PRCs economy, which is still almost entirely based around exports. China and Japan are likley to be the two countries hurt the most by a weaker dollar.
A weak dollar actually helps Chinese exports. The reason is that the renminbi is pegged to the dollar, so a weak dollar means a weak renminbi. The US is currently only China's third largest trading partner(after the EU and Japan), so any decrease in Chinese exports to the US will more than be made up for by increased exports to the EU and Japan.
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There has been much talk on this issue before
The dollar is dropping
It's ridiculous the Dollar is a Total disaster, maybe I'll come into the USA when a few pounds,
Yen, Reminbi ( Yuan ) and Euro and I'll buy the Unied Staes for a couple of quid at discount price. It's not clear that the USA coming out of it's recession or that the US isn't sinking back into one (despite emergency low interest rates).
Thos ocst of Iraqw and oil prces have hurt the US economy, Iraq is not being paid for, social-security is bloat,
hi-tech factories moving overseas. Deficits are killing the US economy, while the maturing euro, China role undercut benchmark. The US trade deficit soared to a record $46bn , as imports to the US economy. The Booming oil prices with the Arabs sucking the dollars out of the US economy
which have reached 21-year highs were also a factor in these eocnomic problems, as the US trade gap rose by 9.1%. A vital question raised by the USA's external debt and deficits is, "can the dollar remain the world's dominant currency, and in particular the favourite asset in government holdings of foreign exchange reserves, while the USA continues to build up external liabilities at the recent rate?" Further, if the dollar's pre-eminence is weakened by the USA's external imbalances, "what other reserve asset can compete with it?" These questions have become more relevant with the introduction of the single European currency, the euro. Several leading European statesmen have said -- openly and in forthright terms -- that one aim of the euro is to supplant the dollar as the world's principal currency.
The dollar's prospects are also fundamental to the future monetary role of gold. Gold has diminished sharply as a share of international reserves since the 1970s and we all know the madness and economic impact of Nixion policy such as trying to sell of US gold stocks on the open-market. Although many explanations could be provided for the reduced official demand for gold, undoubtedly important have been the decline in inflation and the restoration of respect for paper currencies. Under the guidance of two outstanding chairmen of the Federal Reserve, Paul Volcker and Alan Greenspan, American monetary policy has successfully lowered the USA's inflation rate and so, by example, played a central role in the reduction of inflation around the world. Are the USA's large external deficits a sign of a weakening of anti inflationary resolve? Do they foreshadow a collapse in the dollar? And would a collapse in the dollar not only benefit the euro's international prestige, but also renew gold's monetary role?
The economic policies of the George W. Bush Jnr Administration are essentially a joke they have caused huge damaged to the US economy. Baroness Thatcher remains somethingof a heroine to the Neoconservative right in the USA. They, of course, did not have to suffer the consequences of her economic policies which wiped out
for good much of the UK's manufacturing base - in particular the automobile, coal, steel and shipbuilding industries. "Our nation remains at war," Mr. Bush declared in his budget message. "This nation has committed itself to the long war against terror. And we will see that war to its inevitable conclusion: the destruction of the terrorists."
The president's plan for the 2005 budget year, which begins next Oct. 1, proposes spending $2.4 trillion for all government activities, up 3.5 percent from the current year. Revenues will total $2.04 trillion, a sizable 13.2 percent increase that the administration forecasts will occur from growing tax receipts.
The estimated population of the United States is 294,033,049
so each citizen's share of this debt is $24,281.66. The National Debt has continued to increase an average of
$1.58 billion per day since September 30, 2003!
Concerned? Then tell Congress and the White House! President Bush already sent Congress a $2.4 trillion election-year budget featuring big increases for defense and homeland security but also a record $ billions in deficit. On 6th February
2002 Bush dumped his Treasury Secretary Paul O'Neill and his top economic adviser Lawrence Lindsey. The move was seen as an attempt by the President to find more effective spokesmen for his bad economic policies which were seen as his greatest political vulnerability. Moreover, the obscene
squandering of over $72 billion thus far in Iraq, with recurring costs of $4 billion per month, is insane-- and Bush is now forced to seek help from "Les Enfants Terribles" and "Old Europe" whom he treated infamously, simply because they insisted that inspections should continue, and war should only be employed as a last resort. The Neo-Relevant United Nations is Now Needed to Clean-Up the Bush Regime's Fiasco in Iraq! I wonder what cheney ( Mr Apartheid ) is thinking about the Bush economic policy. The nation's fiscal outlook has now come full circle in three years: from sunny surplus to deficit overcast as far as economists can see.
Things have become so bad that some analysts believe President Bush may be starting to scale back aspects of his domestic spending agenda. Although the Mars plan was recently rushed through it is faces the possibility that it might not go ahead just like his father's plans for going
back to the Moon & manned missions to Mars. Bush has only redoubled calls to make his tax cuts permanent, and there's increasing evidence that such a move might make it extremely difficult to fulfill another of his pledges - halving the deficit by 2009.
"Extending the tax cuts is the largest single policy change they're talking about - that alone would expand the deficit by $2.2 trillion over 10 years," says Robert Bixby, executive director of the Concord Coalition, a fiscal watchdog group in Washington. A new forecast issued by the Congressional Budget Office (CBO) emphasized the scale of the deficit problems ahead. Foreign investors hold 43% of the US national debt. But now they're backing away - Asia and the Middle East have been running away from the dollar and toward the euro. Interest rates in the US have no choice but to go up. Meanwhile, whatever the George Bush II administration's feelings toward Europe may be, America needs Europe as a customer and can only afford to hurt this major trading partner so much before the pain is shared on both sides of the Atlantic. I suspect the overall strategy of managing America's record deficit may hinge quite a bit on the fact that China's sweetheart deal with the WTO (Chinese currency pegged to the US dollar) expires in 2008. Hmm, and that's also an election year. Interesting... US Trade Deficit Soars to $43 Billion Despite Weak Dollar. This US deficit will be a record in dollar terms, at $477 billion, according to CBO. That's quiet a large percentage of the nation's gross domestic product. When it comes to jobs and the economy, the The record US trade deficit and a rise in the price of oil were the big risks. The increased demand, especially in China, is pushing up the price of all commodities and could lead to inflationary pressures, said the Organisation or Economic Cooperation and Development, an organisation of the world's richest countries. There's also a chance - although a relatively small one - that sustained deficits might cause other nations to lose confidence in US economic stewardship, and foreign investors to begin pulling money out of the US. That could cause US interest rates to spike even higher.
Just as it supplanted the British pound after World War II, the dollar stands to lose its lead position if the United States fails to shrink record trade and budget gaps with dispatch, some analysts argue.
Its natural successor would seem to be the five-year-old euro. Some argue China's expanding global position could vault its currency to lead status. Central banks and multinational corporations might simply hold a mix in their portfolios, forgoing a reserve currency like the dollar that helped build an economic powerhouse. There is no doubt that Europe and the Euro zone have become an economic superpower. Some people have also pointed out that the Japanese and EU economic zone are gathering forces to scold the USA on its weak Dollar policy and any currency interventions. The last time there was an Economic battle between the Euros and the USA, the US lost out badly and had to shutdown much of its Steel industries
putting workers back on the welfare line. One of the most recent reports was issued in 2004. It is signed by Treas Secty John Snow, backed by a report from the
General Accounting Office. Not to keep you in suspense, the report reveals that the negative net worth of the US government at the end of FY 2003, including unfunded Social Security and Medicare promises, was more than $34 trillion. That's over $100,000 for every person in America, including the elderly, disabled, babies, and teenagers ... probably about $200,000 for every working stiff in America.
The report reveals that the finances of the Defense Department are completely out of control (probably because of the black budget). Toward the back of the 147-page report are charts showing Social Security and Medicare deficits going exponential, blowing out the trust funds, and shooting like rockets off the right top corner of the graph.
To be blunt: if you are operating under the delusion of receiving a pension and health care from the USG during retirement, you will be forever disabused of that notion by reading this report. The debts -- and worse, the unfunded empty promises -- are hopelessly beyond the range that could ever be raised by taxing and borrowing. (Only hyperinflation could make them go away.) And as the report admits, nothing is being done to address the shortfall;
it is only snowballing year after year. Plan Bush was to get shuttle up again and go back to the Moon and maybe create a launch pad that will eventually send a mission to Mars. However, the budget only contains $1 billion in new money for the effort over the next five years with another $11 billion reallocated from current NASA programs say goodbye to all those nice projects. George Bush is attempting to "sell" his fiscal policies to the US public and the bankers of the world on the basis that his record deficit is a temporary blip resulting from his "War on Terrorism".
Richard Kogan has pointed out in a report entitled "War, Tax Cuts and the Deficit for the Center on Budget Policy and Priorities, that tax cuts not the war are responsible for most of the Bush Administration's deficit.
The main debt problems have come from bad budget managements, stupid economic policies and tax cuts. The cost of war, though by no means trivial, is responsible for only a small share of the deficits we face. The President’s tax cuts are a much more significant cause. Congressional Budget Office data indicate that in 2003 and 2004, the cost of enacted tax cuts is almost three times as great as the cost of war, even when the cost of increases in homeland security expenditures, the rebuilding after September 11, and other costs of the war on terrorism — including the action in Afghanistan — are counted as “war costs,” along with the costs of the military operations and subsequent reconstruction in Iraq." The government's $4 trillion debt could more than double if President Bush succeeds in making permanent an array of tax cuts that are set to expire by 2011, the CBO's annual budget report added.
America's in an economic hole right now, and it will have a bit of trouble getting out of it. No one wants to see a massive US dollar devaluation because of the instablity it would cause. That's why so many are nervously looking at the dollar, at the massive current acount deficit and the federal budget deficit which adds a billion dollars a day to the $7.5 trillion debt. The sad fallout for America is that its status as world's banker, as world's currency, as world's driving economy may be permanently damaged by the irresponsible fiscal management by the current administration.
'first steps are not for cheap, think about it...
did China build a great Wall in a day ?' ( Y L R newmars forum member )
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bump another for inflation
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This week in Bidenomics: Debt bomb
https://finance.yahoo.com/news/this-wee … 20709.html
President Biden is proud of the declining budget deficit under his watch. But lucky timing will turn against him if he runs for a second term in 2024.
The Congressional Budget Office updated its 10-year budget outlook on May 25, and the short-term news is encouraging. The federal budget deficit will drop from $2.8 trillion in 2021 to around $1 trillion this year, and to a bit less in 2023. That’s a better forecast than CBO’s 2021 outlook. The improvement reflects a sharp increase in government tax revenue resulting from a strong recovery from the COVID recession of 2020. Government spending is also down sharply this year as the final batch of COVIID stimulus, passed last year, runs out.
The longer-term outlook is pretty horrible, however. All the structural problems with the U.S. fiscal situation remain. Spending on Medicare, Social Security and other “entitlement” programs will continue to rise as a percentage of federal outlays, as the population ages and health care costs continue to rise. That will leave a shrinking portion of money for “discretionary” spending on infrastructure, transportation, aid programs and many other things, including defense, even with the infrastructure law Congress passed last year.
The most ominous change is ballooning federal outlays on interest payments, given that inflation is much higher than it was last year and interest rates are rising as a result. Net interest payments in 2021 were $352 billion, or a manageable 5.2% of all outlays. By 2032, CBO expects net interest payments to triple to $1.2 trillion, which would be 13.4% of all outlays. That’s money the Treasury will be paying to bondholders just for the right to borrow. It won’t finance anything for taxpayers and will leave even less money for other programs.
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Peter Schiff: Biden Uses Yellen To Validate His Economic Agenda, Even If It Is To The Detriment Of The U.S.
https://www.realclearpolitics.com/video … he_us.html
U.S. Climate Envoy Kerry to talk energy with Mexican president
https://financialpost.com/pmn/environme … -president
Is The Global Debt Bubble About To Burst?
https://finance.yahoo.com/news/global-d … 00595.html
Ever since civilization began, a combination of (a) energy consumption and (b) debt has been required to power the economy.
Under the laws of physics, energy is required to power the economy. This happens because it takes the “dissipation” of energy to perform any activity that contributes to GDP. The energy dissipated can be the food energy that a person eats, or it can be wood or coal or another material burned to provide energy. Sometimes the energy dissipated is in the form of electricity. Looking back, we can see the close relationship between total energy consumption and world total GDP.
Last edited by Mars_B4_Moon (2022-06-15 06:00:31)
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Russia Slams Default Threat as ‘Farce,’ Pays Interest in Rubles
https://www.bloomberg.com/news/articles … -days-away
Veronique de Rugy: Biden's budget deficit victory lap is unearned, unjustified
https://www.yahoo.com/entertainment/ver … 16838.html
Russia is struggling to make $100 million in debt payments because of US sanctions, and Moscow may see its first default in a century
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President Biden forgives nearly $4 billion in student debt -- what's next?
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Inflation Costing Average American Family $11,500 This Year
https://www.theepochtimes.com/inflation … 47369.html
Truss' energy deal with Macron a blow to Putin but 'no guarantee' of stopping blackouts
https://www.express.co.uk/news/science/ … ckouts-gas
DATACRUNCH: Europe's energy crisis in charts
https://www.intellinews.com/datacrunch- … ts-256815/
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Americans are set to pay an extra $11,500 this year if they want to enjoy the same standard of living they maintained in 2020, according to new estimates from NerdWallet.
Analysts said 2020 was the “last full year when inflation was relatively stable.” In that year, the U.S. inflation rate was 1.23 percent.
As of August, inflation in the United States stands at 8.3 percent, according to BLS data.
“In all of 2020, American households spent $61,300, on average,” the analysts wrote. “This number includes everything we spend our money on housing, food, entertainment, clothing, transportation, and everything else.
“In 2022, it stands to reach $72,900, a difference of more than $11,500 if consumers want to maintain the same standard of living.”
According to analysts, total monthly household expenditures are up by $961 from 2020, while spending on groceries is up by $101. Shelter is up by $120 and household utilities are up by $70 per household, while gasoline has risen by a whopping $209.
A separate analysis from the Republican members of the House Joint Economic Committee estimates that inflation is now costing U.S. households an extra $717 each month, although that’s even higher in the states of Colorado ($937), Utah ($910), and Arizona ($833).
On an annual basis, the committee estimates that households will have to pay an extra $8,607.
The Federal Reserve approved another 75 basis points hike on Sept. 21 to a target range of 3 percent to 3.25 percent and indicated that more large increases were on the way in an effort to cool down red-hot inflation.
Depending on your local you could be quite a bit less while others are even higher for that level of inflate earnings needed to live like you did 2 years ago.
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Argentina inflation smashes past every forecast to hit 109%
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Shadowstats provides an alternative measure of inflation with hedonics removed, using the same measures applied until the 1990s. Likewise, it provides a measure of unemployment using more traditional measures that actually count people that have given up looking for work.
http://www.shadowstats.com/alternate_data
Using these more traditional measures, US inflationand unemployment rates stand at 15 and 25%, respectively. These are levels that have not been seen since the early 1980s. The government may fiddle the figures, but real people aren't so stupid that they don't know that they are getting poorer. Inflation also fails to capture the impact of rising prices for the average Joe, who is far more heavily impacted by food and energy prices, which are paradoxically not included in official inflation figures.
The data also confirms that real US GDP has not grown much since 2000. Given that US population has grown considerably since the turn of the century, we can deduce that the average American has been getting poorer for at least that long. This is a pattern repeated for advanced economies across the globe.
Last edited by Calliban (2023-05-15 11:21:13)
"Plan and prepare for every possibility, and you will never act. It is nobler to have courage as we stumble into half the things we fear than to analyse every possible obstacle and begin nothing. Great things are achieved by embracing great dangers."
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Calliban,
We're not as dumb over here as a lot of people like to believe we are. We all know we're getting poorer, but the Federal Reserve keeps printing money and our government keeps squandering it. Short of a violent revolution, no matter who we elect, the only constant is that the Fed prints more money. As a result, we keep losing the value of our money to currency devaluation (inflation) and energy. If we stop printing money, the result is worse.
There's a pervasive belief amongst rich people that poorer people will stop working for them if they become content with their lives. The only people who do that are already doing that. If I became a multi-millionaire tomorrow, I would not stop doing what I'm presently doing. Why should I? It makes no sense. I happen to like the things I get from "the system". I know that the only place that someone's supply chain is going to run if I quit working, is straight into the ground. I no longer need to worry about bills or living expenses, but the idea of walking away from what I spent my entire life doing is asinine. I'm not "taking time off" or "reconsidering my options" or any other such nonsense. I have a job, I'm good at it, and I'm going to keep doing it come hell or high water. One particular job at one particular company may "go away" over time, but there are always others.
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Stocks tiptoe toward US debt denouement; Japan sparkles
https://www.channelnewsasia.com/busines … es-3516716
What is the US debt ceiling and what will it mean if it isn’t raised?
https://www.telegraph.co.uk/business/20 … omy-biden/
'President Joe Biden on debt ceiling: We will not default'
https://www.youtube.com/watch?v=B3mSf798lpE
Can Biden use the 14th Amendment to thwart a debt ceiling default without tanking the economy?
https://uk.news.yahoo.com/can-biden-use … 39069.html
'An emerging legal theory argues that that the president has then power to simply ignore the debt limit'
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