can someone please tell me that this won't crash violently? what am i missing? someone smarter than me please help out.
Interesting graph, robbie380. Thanks! Notice how it started leveling off during the Clinton years and then took off like a rocket during Bush? Fascinating!
Reagan was considered a good president but people fail to see that he turned things around by leveraging. Economy was pumped up and inflated with borrowed money. Sure it worked well for his terms but now we will pay for it. We had the Great Depression. Now let the Great Deleveraging begin...
I think you're misreading the graph, Deckard. That level-off was from 1991-95. It took off after that. The really interesting thing (though completely predictable) is how it was going down until Nixon got rid of the gold standard. Inflation rewards borrowers and hurts savers. Strengthening the dollar might make some acute pain, but it is the only way to get us out of this.
Total Credit Market Debt _____________________ Treasury Securities Agency and GSE backed securities Municipal Securities Corporate and Foreign Bonds Bank Loans Other Loans and Advances Mortgages Consumer Credit http://www.federalreserve.gov/pubs/supplement/2008/09/table1_59.htm
The economy isn't the only guilty party. http://en.wikipedia.org/wiki/Us_debt Pay close attention to the graph that shows debt as percentage of GDP.
1994. Congress has virtually no control over the Fed, though. The President doesn't have much, but the Fed Chairman does at least show up to Cabinet meetings.
don't worry the dollar won't be strong for too long. it's only strong due to european weakness not because of true strength.
We all want to blame it on a politician but the fact is that we all are in debt. Face it, each and every one of us has a little hand in that graph. Or do we all own our homes?
I agree. I posted part of an article the other day by Steve Forbes about how we should codify a strong dollar policy for the Fed, where the Fed maintains a fixed gold price range, except to respond to credit crises. Basically a more flexible alternative to the gold standard. I don't blame politicians in general. I blame bureaucrats. Cheap money will be lended. Money that's being inflated won't be saved. The only way to increase saving and decrease debt is to strengthen the dollar. It's a matter of sound public policy.
yen has also gained on those 2 because of the carry trade. http://en.wikipedia.org/wiki/Carry_trade#Currency
don't worry my friend...they already are the consequences aren't real until they happen...i love the american mindset.
When the rest of the world actually want something back from the US instead of US government IOUs then we will be in trouble. However, that won't happen for many years (I hope it will come after I am dead).
