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  • On 21 Jul 2014 in The stock market is not going to crash and will soon make new highs, Bellingham Bill said:

    yeah, as I say, for the crash to come, something has to fail.

    In the 1920s it was buying stocks on margin, people playing momentum instead of fundamentals.

    dotcom crash, same thing plus all the corporate fraud & vendor financing shenanigans going on

    in the recent crash it was our Potemkin Economy that was juiced with the $100B/month of consumer credit expansion:

    YOY consumer debt growth as % total wages

    Made this graph, thought it was pretty funny:

    per-capita gov't spending (excluding DoD spending)

    As long as spending is elevated, I don't see a crash anytime soon.

    Cut spending, sure.

  • On 21 Jul 2014 in Is this thinking wrong ? Please advise, Bellingham Bill said:

    komputodo says

    why are rates at historical lows and savers are only getting 1% or less?

    China has been expanding its money supply to keep its currency cheap compared to ours to maintain the trade surplus they need.

    This is a win-win for them as they suck capital out of our country -- not financial capital but the hard capital of physical plant and a [less un-] skilled workforce to operate it.

    Blue is the US money supply, red is China's

    So China wants to be #1 and we don't know how to deal with this.

    Having a nation of a billion people willing to import our inflation has been a pretty good deal for us -- they've given us so much wealth -- trying buying a durable good that wasn't made in China, good luck! -- in return for our FRNs.

    This has been great unless you're in manufacturing of course.

    http://research.stlouisfed.org/fred2/series/MANEMP

    shows we've lost 1 out of 3 mfg jobs since 1990

    US mfg had the same challenge with Japan, but they were a nation 1/3 the size of us, not 3X . . .

    Plus since NAFTA we've run a large trade deficit with Mexico, too. 1990-94 we were in trade balance, but 1995 was -$16B, 2000 -$25B, 2005 - now has been $50B to $60B annual trade defiits.

    Clearly we want or are ignorant of these trade deficits; I watched a few Republican primary debates and this topic wasn't mentioned once.

    But these deficits create trillions of what was called the "Global Saving Glut" last decade -- trillions ripped out of the paycheck economy (a deflationary effect) and now seeking yield (which pushes down interest rates)

    I don't know where I'm going with this, other than our politics are utterly detached from the reality of our situation. Lambs to the slaughter, maybe.

  • On 21 Jul 2014 in Is this thinking wrong ? Please advise, Bellingham Bill said:

    iwog says

    I don't consider the fed to be relevant to our present economy.

    I don't know how MZM expands tho . . . thinking about it hurts my head

  • On 20 Jul 2014 in U.S. smokers say higher cigarette taxes are unjust, Bellingham Bill said:

    In 1997, a group of scientists at Erasmus University in Holland famously showed that smokers have lower total life-time health-care expenditures than non-smokers. Smokers do cost a lot more per year of life, but because their lives are so much shorter on average, the non-smokers end up with higher costs in the long run.

    http://healthland.time.com/2009/08/04/does-prevention-really-cut-health-care-costs/

    Japan's baby boom (born 1947-1950) smoked like chimneys, so maybe they'll all just keel over now.

    Or not.

  • On 20 Jul 2014 in Raising minimum wage actually increases job growth, Bellingham Bill said:

    Having said that, the minimum wage is a very blunt instrument that doesn't actually fix what's wrong with our economy.

    Minimum wage is a rent-subsidy in disguise, and I have the chart to prove it:

    BOHICA

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