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alstry (< 20)

The Stat Everyone Is Afraid Of.......



April 19, 2011 – Comments (7)

Everyone always says our deficit is under control by asserting that our deficit is only 10-12% of GDP.


These are two very different stats in a system where production is driven by people's willingness to exchange their production for currency.  If you have currency, you drive production giving that person currency to get even more production.  There is a multiplier effect on the GDP to spending currency.

Where the convulsive part kicks in is where such currency is CREATED out of thin air through PREDATORY lending(loans that you know or should know can NEVER be paid back).  When predatory lending drives currency creation, we have a whole bunch of currency floating around driving production from those willing to accept it until the lending stops...........and then production stops while the accumulating interest is impossible to pay back.

New home constuction is illustrative of such a cycle with contruction DOWN over 80% once the lending slowed......and it is down 80% despite a massive deficit by government and currency most of America is still willing to accept for their production.

Could you imagine what will happen if government stops borrowing currency it can never pay back? 

PS:  If America fails...we are all in trouble as we all get our FOOD, WATER and SECURITY from America.  We will soon be asked what are we willing to give up to save/change America....and my guess is it will be a it should be, since everything we have is because of America....for those of you that are Americans living here.....but my guess if you are not American, your nation and system is not much different.

7 Comments – Post Your Own

#1) On April 19, 2011 at 2:04 PM, mtf00l (43.07) wrote:

I keep hearing about house prices falling however, in my state that has not been the case.

I was hoping by this point to get my McMansion at the WalMart price.

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#2) On April 19, 2011 at 2:07 PM, alstry (< 20) wrote:

You will....

The fact that your state hasn't been affected doesn't mean the system is not collapsing.  My guess is many in first class were still partying as those in steerage were freezing in water.....but once the Titanic sank......most felt the cold.

Again, it is very hard to think systemicly in a specialized world.

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#3) On April 19, 2011 at 2:11 PM, chk999 (99.96) wrote:

Unemployment falls in 2/3rds of the states.;_ylt=AsjD.xwS4tbsqK0fmuoeWD27YWsA;_ylu=X3oDMTE1bDVxNnEzBHBvcwM0BHNlYwN0b3BTdG9yaWVzBHNsawN1bmVtcGxveW1lbnQ-?x=0&sec=topStories&pos=1&asset=&ccode=

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#4) On April 19, 2011 at 2:16 PM, alstry (< 20) wrote:

Not unemployment....the unemployment RATE based on what could be called deceptive methodolgy.  Watch INSIDE JOB.

Employment has actually fallen by over 10 million people in the last few years.....and if you include those working part time who need to be and are willing to work full time.....the number is much higher.

And we have a horrible employment picture DESPITE borrowing OVER $1.6 trillion per year....equal to hiring 20% of the workforce and paying them $50K per year.

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#5) On April 19, 2011 at 3:14 PM, FreeMarkets (40.96) wrote:


I think we can get close to an answer.  If the nations GDP is $15 trillion, and we are running a $2 trillion deficit, and we assume the velocity of money is adding 10% (please put in the correct value if you know it), then $2.2 trillion of our $15 trillion is based SOLELY on the deficit.  That's 14.5% of our ENTIRE economy is based on the deficit.

To think we freaked out about a 3% annual decline from 2008-2009.

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#6) On April 19, 2011 at 4:07 PM, alstry (< 20) wrote:

McDonald's experts concluded that for every $1 of added salary they pay their employees, it results in $3 of additional GDP.  Ronald Reagan's experts put the number closer to $5 with his trickle down policies.

I have seen numbers as high as $7 and most sensitivities coming in around $4-6. 

Remember, if you pay someone $100K from deficit dollars, the person pays about $40K in taxes(including state and FICA) which gets spent again by the government going to salaries which gets taxed and spent again.

I myself think the number is closer to $4-5 of GDP for every dollar created factoring current tax rates.

Why do you think any cut in spending/deficit is impossible right now without destroying the economy or offsetting lending.

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#7) On April 24, 2011 at 3:43 PM, OneLegged (< 20) wrote:

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