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It's not all that bad. Shorting, credit default swaps and all these other ugly tricks are a comparatively small part of the overall system. The vast majority of

by jsz0 17y ago

It's not all that bad. Shorting, credit default swaps and all these other ugly tricks are a comparatively small part of the overall system. The vast majority of the trading that happens everyday is completely legitimate old school business. The US economy is also freakishly resilient. We had an almost total collapse of our credit system last year and while we don't know the full long term ramifications yet it does appear we're going to make it through it without too much gloom & doom. It's somewhat of a miracle that we've only seen a doubling of the unemployment rate and very little (if any?) inflation or deflation due to all these external forces at work on the market. The end result for most of us is maybe we couldn't buy that new car we wanted or had to cancel a vacation.

euroclydon 17y ago
That's naive my friend, were it not for the fact that central banks all over the world held more dollars than any other foreign currency (a fact that is rapidly changing) the two trillion we have printed out of thin air would have immediately caused drastic inflation. I don't think a nation's economy, resilient of not, gets to print two trillion twice, and since we haven't yet fixed the fundamental issues that got us here: trade deficit and federal deficit, we'll need another bailout soon, but it will cost more, something like four trillion. The world knows it, and that's whey they're moving away from the dollar as fast as they can. There is not much in the US economy for the rest of the world any more. If we do the right thing and pay our debts off, that means drastic consumption cuts, and if we don't then we just continue to consume with credit. So you see, it's a lose-lose for the rest of the world.
nazgulnarsil 17y ago
the dollar lost a huge amount of purchasing power between 2005-present. prices just havn't caught up yet. expect CPI inflation to continue to suck for the next few years.
- jongraehl 17y ago
  I'd think so too, but inflation expectations are actually low (e.g. look at TIPS yields).

by jsz0 17y ago

euroclydon 17y ago

That's naive my friend, were it not for the fact that central banks all over the world held more dollars than any other foreign currency (a fact that is rapidly changing) the two trillion we have printed out of thin air would have immediately caused drastic inflation. I don't think a nation's economy, resilient of not, gets to print two trillion twice, and since we haven't yet fixed the fundamental issues that got us here: trade deficit and federal deficit, we'll need another bailout soon, but it will cost more, something like four trillion. The world knows it, and that's whey they're moving away from the dollar as fast as they can. There is not much in the US economy for the rest of the world any more. If we do the right thing and pay our debts off, that means drastic consumption cuts, and if we don't then we just continue to consume with credit. So you see, it's a lose-lose for the rest of the world.

nazgulnarsil 17y ago

the dollar lost a huge amount of purchasing power between 2005-present. prices just havn't caught up yet. expect CPI inflation to continue to suck for the next few years.

jongraehl 17y ago
I'd think so too, but inflation expectations are actually low (e.g. look at TIPS yields).