Not sure how anyone could read this article and still feel rosy about the direction we're heading. Thought it was mostly spot on.
http://www.thestreet.com/story/11142443/10-myths-that-politicians-want-…
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Wow great article. Doesn't Jim Cramer own The Street? I'm surprised he's actually promoting the truth for once.
Other myths that politicians/economists want you believe:
1) The US will never default because we have a printing press 2) There is not much inflation, just check out core CPI 3) Spending and consumption drives economic growth 4) All military spending strengthens our national defense 5) Al qaeda/terrorism is America's single biggest threat 6) Republicans are opposites of democrats 7) Iran is a threat to the US 8) Israel has never done any wrong (They also have "0" nukes) 9) If you give up a little bit of liberty, you will be safer 10) Obama, Romney, Santorum, Gingrich, and 98% of Congress have your best interests at heart
For: 1) The US will never default because we have a printing press
You don't have to stop making payments to default... you essentially default if inflation is high and whatever currency the bonds are dominated in have little value.
Also, in the latest TIPS auction the yields were actually negative (below real/inflation rate).
Even if you use the term default to mean only an actual debt restructuring and not default by inflation, a printing press does not gaurantee a country will never default. Default is a political decision and many many countries have chosen to deal with a debt problem by restructuring even if they could have just printed the money. History shows that some countries attempt to inflate their debt away, some restructure their debt, and some do both.
As far as I know, Jim Cramer did own The Street. Not sure if he still does. Anyone know what % of revenue comes from the Fed-Treasury arbitrage scheme for the major banks?
You probably won't find an accurate figure; I could be wrong though. The only reference that I found was from WSJ, stating that it made up approx 15% of the street's bonus pool. This was back late last year sometime.
Myth #1. U.S. GDP Is Growing led me to the following article - http://www.oftwominds.com/blogjune11/GDP-is-not-growing6-11.html where I read this:
lol
Yea, he did co-found TheStreet.com according to wikipedia.
Forgive my ignorance, but if the US was gonna default... wouldn't they just kinda, like, ...change the rules?
Changing the rules on debt you owe most certainly would qualify as an event of default. I am not predicting the US will default Im just pointing out that having a printing press does not always stop a country from defaulting so people who say we can't default for this reason are somewhat ignorant of history.
The U.S. not playing by the rules (that it created)? You surely are ignorant. That would never happen!
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