tag:blogger.com,1999:blog-816559531110064247.post7831639691026872602..comments2024-03-08T01:03:44.522-08:00Comments on Humble Student of the Markets: Inflation or Deflation? Cancer or heart attack?Cam Hui, CFAhttp://www.blogger.com/profile/09672203690656029787noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-816559531110064247.post-1195562335154754612010-02-16T08:43:01.055-08:002010-02-16T08:43:01.055-08:00Mr Hui--
Military spending could be reduced somew...Mr Hui--<br /><br />Military spending could be reduced somewhat, although if the US is to remain a global economic power, it must also remain a military power (some cuts are possible, but not much)<br /><br />The obvious thing that will be cut that you are choosing to overlook is so called entitlement spending -- social security and Medicare<br /><br />While baby boomers consider this the "third rail" of politics, cutting entitlements is the only thing that makes any sense at all.<br /><br />Benefits have been cut before, means testing introduced (which is a cut by another name), and some benefits have already become taxable (another cut by a different name).<br /><br />The most dishonest way of cutting benefits is to rig the CPI figures (which drive COLA in Social Security) to be less than actual cost of living increases -- again, this cut is already being made.<br /><br />For those born after the baby boomers, entitlements are an empty promise. They will not be there for GenXers and beyond -- not even if one uses government accounting methods that would be considered fraud if committed by a private entity.<br /><br />Simply put, GenXers (and younger) have "no skin in the game", and no reason to care **WHEN** (not if) entitlement programs get eliminated.<br /><br />In all probability, entitlement programs will be transformed into elderly welfare programs, available to a limited group of retirees<br /><br />******************<br />The second obvious source of spending cuts is in government payrolls. Government bureaucrats in the US make almost double what private sector counterparts make, especially after factoring in the obscene public sector benefits<br /><br />No one in the private sector gets a pension anymore -- so why should our so called "public servants"? Why do they get paid more, work less, and then get better benefits?<br /><br />Slashing government payrolls is a second no brainer.<br /><br />German polls show the German population doesn't want to work 90 hour weeks so Greeks can go lounge by the ocean -- and I would bet younger workers are not going to support entitlement spending and bureaucracy that doesn't benefit us in any way<br /><br />Those are two obvious spending cuts. Older generations are going to have to learn to think "outside the box" (or remember some history). You cannot spend money you don't have, no matter how popular that spending might be to an elitist political classGaryhttps://www.blogger.com/profile/13335751305150509057noreply@blogger.comtag:blogger.com,1999:blog-816559531110064247.post-91926341425494429902010-02-15T21:57:23.666-08:002010-02-15T21:57:23.666-08:00Gary,
While it is theoretically possible to cut s...Gary,<br /><br />While it is theoretically possible to cut spending, it is not politically possible.<br /><br />IMHO, the one spending category that the US government could cut to balance the budget would be to drastically cut the military budget.Cam Hui, CFAhttps://www.blogger.com/profile/09672203690656029787noreply@blogger.comtag:blogger.com,1999:blog-816559531110064247.post-41472420289887153932010-02-15T13:18:26.294-08:002010-02-15T13:18:26.294-08:00Sir -- while many investment managers were not aro...Sir -- while many investment managers were not around for the 1970s and may have trouble adjusting, you appear guilty of a similar offense.<br /><br />There are four choices, not three. You forgot to mention the most obvious choice: CUT SPENDING<br /><br />Societies cannot spend money they don't have. The baby boomer generation in the US (and its counterparts elsewhere) are the most selfish generation ever to have lived. <br /><br />They have lived well beyond their means, and history shows they will either live below their means in their retirement / twilight years -- or else there will be revolution.<br /><br />The existence of both the US and Canada are testimony to this -- both countries exist because the King of England (and France to a lesser extent) thought there were only three choices.<br /><br />Both monarchies have ended, and the USA / Canada were created to implement choice #4 -- CUT SPENDING<br /><br />It will happen, the only question is howGaryhttps://www.blogger.com/profile/13335751305150509057noreply@blogger.comtag:blogger.com,1999:blog-816559531110064247.post-10221459734271574232010-02-15T06:50:09.204-08:002010-02-15T06:50:09.204-08:00The current economic environment is indeed tough a...The current economic environment is indeed tough and what is important to understand is the sheer magnitude of the debt problem facing the United States. With the total debt (both private and public) at 60 trillion dollars, or 400% of the GDP, the annual interest expenditures of 3 trillion merely to service this debt is an enormous drag on economic activity. <br /><br />Inflating the debt away is however extremely difficult in the current climate, this is why I believe that the Washington Elite considers an attack on Iran a viable option out of this. By creating an oil shock the mechanism of cost-push inflation can be activated, with the help of which debts can quickly be inflated away as they were in the 1970s. <br /><br />To find out more about this option please read http://financialmarkets2007.blogspot.com/ <br /><br />you will also learn about how this current situation came about into being and why deflation is such a sinister possibility for the US economy.Michael Asus https://www.blogger.com/profile/04473412676373140371noreply@blogger.com