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alstry (35.38)

The DME.......the ONLY important number

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October 06, 2010 – Comments (7)

The DME is short for the Deficit Multiplier Effect.  In essence, how much does each dollar of deficit convert into a dollar of GDP.

For example, the government borrows a dollar and pays a doctor through medicare....the doctor pays the nurse....the nurse goes to Target.....and the Target employeee gets a paycheck.....and along the way a little bit in taxes is taken out in most of the transactions.

The more geared to a service economy, the higher the DME is for that society as the money simply gets passed between the population servicing each other.  The DME can come from private sector borrowing or public sector...it really doesn't matter.

The key to the DME is the deficit, because the deficit is taking dollars that didn't exist before and putting them into service.....such as the concept of turning "equity" from one's home into dollars...the equity was based on a perceived value at the time....the dollars can actually be spent......the more people that do that, the more dollars flowing into the system and the higher values go.....for just about everything.

The same is true for government....by borrowing money that really doesn't exist prior to the loan, it fuels the economy with new money......and as that money is spent....it multiplies along the way by the over 200,000,000 million Americans directly and indirectly receiving a government payment.

Right now, the Institute of Alstrynomics calculates the DME at appromimately 4.4-5.3X.....in other words, about half of the GDP is simply a result of the U.S. Deficit....

This has NEVER happened before in our nation because never before did we run such a large deficit when such a large percentage of our economy was simply SERVICE based.  Any nation in the world would have a massive GDP if their economy was similary structured running such a massive deficit.  Government would simply be printing money and handing it to its people.....much like we are doing now.....

This is clearly an unsustainable path, especially when the allocation of deficit money is unfairly distributed.......the productive class will start to rebel....as is beginning to happen now....and social breakdown will result.

The Institute of Alstrynomics saw this coming a few years ago....anyone who has read the book Atlas Shrugged knew this was coming...Greenspan said the book changed his life, he was good friends with the author....most successful businessmen have read the book.....and now we are reverse engineering it.

It is pretty amazing if you think about it....we only have a "service" economy in America because government is borrowing money, handing it to us, and we are spending it so we can service each other....

What is even more amazing is the person WORKING behind the cash register is likely getting less money for servicing the unemployed person buying something from them.  Crazy times indeed....as long as government keeps borrowing/printing money....we have a "service" economy.....once it stops....watch everyone, especially politicians and bankers, run for cover.

7 Comments – Post Your Own

#1) On October 06, 2010 at 9:37 AM, alstry (35.38) wrote:

WHAT IF THE TICKER IS JUST A FRAUD.....AND THE MOST OF THE TRADES REALLY ARE NOT TAKING PLACE OR SIMPLY A FEW COMPUTERS TRADING BACK AND FORTH TO EACH OTHER........

WHAT IF THE SOCIETY IS BEING ZOMBULATED AND THEY ARE ALL BASICALLY CLIENTS OF MADOFF AND MADOFF IN THIS CASE IS WALL STREET AND THE FED?

Private Sector Hiring in Sept. Falls 39,000...
POLL: Working-class whites shun Dems...
Middle Class Slams Brakes on Spending...
GOLDMAN SACHS: Economy 'fairly bad' or 'very bad' over next 6 months...
New Yorkers' Income Falls for 1st Time in 70 Years...

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#2) On October 06, 2010 at 9:39 AM, mtf00l (45.26) wrote:

I haven't seen any "Trilateral Commissions" or "Bildeberg Group" mentions in any of your blogs.  I see them popping up elsewhere here. What's your take?

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#3) On October 06, 2010 at 9:59 AM, alstry (35.38) wrote:

I try to focus only on the FACTS....I don't have much FACTS about any of the above either way.....if you pay me enough per hour, I could make equally strong arguments pro or con....once I had the FACTS.....I could draw conclusions.

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#4) On October 06, 2010 at 10:50 AM, mtf00l (45.26) wrote:

Actually, I like your statement "if you pay me enough per hour, I could make equally strong arguments pro or con" now I know you are truly a lawyer!  Are you a Harvard Law graduate?

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#5) On October 06, 2010 at 11:23 AM, alstry (35.38) wrote:

I will tell you a funny story.....I once sued a publicly traded company personally as the plaintiff....my expert was a well trained with a good pedigree business valuation expert once heading up the valuation department for a strong regional brokerage firm.  Their expert was a similarly pedigreed "economist" with a long history of testifying as an "expert" in the Delaware corporate legal system....which is sort of the Big Leagues for coroporate Law and Litigation.

Both guys got paid very well....but my oponents expert got paid twice what I was paying my guy....and the best part about it was he lied twice as bad as my guy.....in the end, I won and returned a seven figure verdict in my and my friends favor...

The moral:  if you are willing to pay someone enough....you can have them come to practically any conclusion you want.....

Why do you think Wall Street Economists and the Fed are so consistently wrong?......and now you can throw in most politicians as well......

Wall Street is shutting down America and growing overseas markets based on current Zombulation policies....it is simply the mathematical consequence of cutting off the American private sector from credit and giving as much credit as Wall Street and Washington desire....and increasing credit overseas.

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#6) On October 06, 2010 at 11:45 AM, mtf00l (45.26) wrote:

Thanks for the story.

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#7) On October 06, 2010 at 1:23 PM, alstry (35.38) wrote:

Now we beging the SHUTTING DOWN of our cities, counties and states....as Washington and Wall Street borrow as much as they want......

Local tax revenue fell this year by the steepest amount in 25 years, with falling home prices just beginning to drag down property tax receipts.

Property tax revenue in U.S. cities fell 1.8 percent in fiscal year 2010, the National League of Cities said Wednesday. It was the first drop in the 25 years that the survey has been conducted.

Overall, tax revenue fell 3.2 percent in 2010, and cities cut spending by 2.3 percent. It's the fourth straight year that city tax revenues have declined.

Revenues are likely to fall further in coming years as the housing slump takes its toll on real estate values. That will increase the pressure on city governments to cut services and raise taxes and fees.

Home prices peaked several years ago, but the impact of falling prices takes time to affect property taxes. Most local government real estate assessments lag changes in market values. Property tax revenues were still rising in fiscal 2009, the report said.

"The full weight of the decline in housing values has yet to hit the budgets of many cities and property tax revenues will likely decline further in 2011 and 2012," the report said.

http://finance.yahoo.com/news/Housing-slump-hurts-local-apf-1011018302.html?x=0&sec=topStories&pos=3&asset=&ccode=

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