PeakTrader.com

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PeakTrader said...

Too many Americans remain in denial (Obama's job approval rating is over 50%):

The Democrats' White Flight
Jan 7 2011

"First among those was Obama's performance. Exactly 75 percent of minority voters said they approved; only 22 percent said they disapproved. Among white voters, just 35 percent approved of the president's performance, while 65 percent disapproved.

The racial gulf was similar when voters were asked whether they believed that Obama's policies would help the nation in the long run. By 70 percent to 22 percent, minorities said yes; by 61 percent to 34 percent, whites said no.

Minorities were almost exactly twice as likely as whites to say that life would be better for the next generation than for their own; whites were considerably more likely to say that it would be more difficult.

And on a question measuring bedrock beliefs about the role of government, the two racial groups again registered almost mirror-image preferences. Sixty percent of minorities said that government should be doing more to solve problems; 63 percent of whites said that government is doing too many things that would be better left to businesses and individuals."

Perhaps, Obama should try to bridge the gap between whites and minorities by appointing Richard Simmons to a new position called "The White Folks Representitive."

Minorities, or young Americans in general, are the future slaves of America.

They will support the 80 million retired Baby-Boomers, who will consume instead of produce, and work for foreigners, through exports.

So, the younger generation will need to produce much more than consume, unlike prior generations, to provide government benefits (e.g. Social Security and Medicare) and goods & services (produced in the future time period) to the older generation and foreigners.

Also, Obama wants to create an illusion of prosperity through exports:

"Milton Friedman has argued that many of the fears of trade deficits are unfair criticisms in an attempt to push macroeconomic policies favorable to export industries. He states that these deficits are not harmful to the country as the currency always comes back to the country of origin in some form or another.

He continues by informing readers that the "worst case scenario" of the currency never returning to the country of origin is actually the best possible outcome; as the country just purchased goods by exchanging pieces of cheaply made paper. The same result would happen if the exporting country burned the dollars it earned, never returning it to market circulation."

My comment: Foreign debt should be allowed to erode through currency exchange rates, interest rates, and inflation, which is the price export-led economies pay for a higher level of employment.

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VangelV said...

Having inflation rob workers and savers of purchasing power just so that the government can have a partial default by other means is not a good idea. What the world needs is honest money that cannot be created by counterfeiting governments and central banks and laws that permit individuals to decide what to use as a monetary media.

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Jason said...

Peak if left with no other option, devaluing debt by devaluing currency is possible, The problem is and always will be when would you stop? If a short term action is taken in the greater context of growth and spending cuts WITH DISCIPLINE, maybe. If it is just more of the same pushing-the-turd-around-the-floor Washington politics, then good luck with that.

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PeakTrader said...

Jason, it will continue as long as foreign countries export too much or import too little, or until the U.S. adopts an inferior trade policy.

The U.S. has no control over foreign economic policies. If foreign countries, trading with the U.S., want to export deflation, earn relatively low interest rates, and exchange more dollars for their currencies, that's their choice.

Some foreign countries prefer a stronger segment of the economy or a stronger government in exchange for a weaker overall economy.

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PeakTrader said...

The prevention of a V-shaped recovery, over the past two years, and reaching full employment in another five years or so, will have long-term consequences.

The soft recovery means the U.S. economy will be weaker when the last of the 80 million Baby-Boomers (born between 1946-64) reach 65 in 2029. There may be a long-wave bust in the 2030s worse than in the 1930s or 1970s.