America's Debt is Trivial. Naysayers are wrong.

[mryellow123]

Population decline is just a shortfall of labour, restricting growth?

Think he might just be seeing population as a graph and not realising that it declines because the earth will be reaching capacity while easy to access/use resources become ever more scarce.

Can't use growth focused economics to analyse post-peak-population where we'll be working with new systems.

Infinite growth does not marry with the idea of a finite earth.

[edschaeffer]

@mryellow123 - I think you have a great comment. Sort of relating population growth to the Earth as it was a typical population differential equation.While I think that may be true on some level I seem to support Dr. Friedman's analysis, that its due to economic reasons. My evidence would be that of Japan's stagnant recession of the last 20 years. Their GDP shrinked about 6% in 2009, debt is 170% GDP, and now that China and S. Korea competes with them its no surprise the population is plunging.

[mryellow123]

@edschaeffer I'd love to see some form of triple bottom line accounting, a move away from growth in GDP as our sole focus. Japan may have had a lack of growth over recent years, but did any of the citizens really suffer too badly? Would be interesting to... just did a lil searching... apparently Japan's happiness increased sharply over the same period...

[Thayabharan]

Wall Street is a confidence trick, a dazzling edifice built on paper promises, gambling, bets and rampant speculations. Wall Street doesn’t manufacture or produce anything. Wall Street , however attractive it may appear, is built on paper.

The total value of Wall Street speculative financial derivatives reached more than $600 trillion – about 10 times global GDP. . Every consumer is paying more for commodities including food and fuel due to the excessive speculation by Wall Street.

[dodododa]

This guy is either smoking crack or has a serious mental disorder. Third world immigrants are going to save us? If he took a look inside a South Californian high school, he would change his opinion pretty quick.

[WillOrng]

@JamesonSmirnoff Government spending in a floating fiat modern money truly sovereign currency creates money, taxes destroy it, the IRS literally shreds it.

Government then borrows back the money it's spent. If it doesn't the surplus reserves in the bank system at the Fed would drive interest rates down to their natural level of zero.

When foreigners net export and send net money to the US they are effectively saving that surplus at the Fed, by buying bonds they get some interst on that saving

[WillOrng]

Income is produced by capital. Ten Year Treasury Bond interest; 4.3%. The capital needed to produce GNP; 100/4.3. GNP is $14T in round figures, so the capital that would generate that income at 4.3% is $325T rounding down.

On that basis, the figure seems quite reasonable, even if it was only $100T, Federal debt is merely 1% of National Capital.

The debt is held as net financial savings by the top wealthy people and pensions domestically and abroad.

US Politicians and ThEoconomists are wrong

[edschaeffer]

@JamesonSmirnoff - Think of it this way. Keep in mind what the capital markets think. Treasuries are yielding 4.2% for 30 years as of today. This is not the yield investors would demand for a country that would near default. One thing that doesn't lie is the value of money. The Fed can certainly release more money stock but this doesn't debase currency; it makes it less valuable, like share dilution. By comparison Greek bonds are 28%+.

[edschaeffer]

@JamesonSmirnoff - In Clinton's term in office he was talking about paying off the National Debt by 2015 with plans having a trillion or more in surplus. That would've never went down, but the fact that the Fed did print extra money on top of the fact that inflation may indeed outpace the % yield on Treasuries I don't see how the United States is really losing actual value due to the inflation rate and that they can simply keep rolling over their debt. This would invalidate your last sentence.

[evilnomad111]

...Okay, so we borrow money from the fractional reserve bank---who makes up money out of thin air (all money, in fact)---and expects us to pay it back...plus interest? So money is made out of debt, and since the principal will never satisfy interest, where the fuck does the interest come from?? My head hurts....My economics professor blatantly admitted that if we were to pay off ALL debt, there would be no money.....

[chairde]

I would recommend George Friedman's book "The Next 100 Years". It will open your eyes about our situation in the world. His approach is logical and factual.

[davidbarbetta1]

The Federal Reserve calculated household net worth (which includes the value of real estate, stocks, and pensions, among other items) to be $53 trillion ($67T in assets less $14T in liabilities) as of 2010Q3. So the value of everything that is not encompassed in the Fed's "household net worth" would need to be another $287T (net of debt) for total U.S. net worth to be $340T. That seems highly unlikely. When you throw out a seemingly-ridiculous number like that, you've GOT to show your work.

[edschaeffer]

@davidbarbetta1 - David this is a good response. Surely, this is using some sort of Wall Street valuation for America. Very similar to Facebook's 50B valuation. In any event the Fed's numbers certainly represent a tangible "cash value" which are really the important numbers. I commend you on having a sensible response.

[WillOrng]

@davidbarbetta1 You've missed out public assets, the nature reserves, interstate highways, rail system, public education, water and sewage pipes...all these things have capital values, then there's corporate assets too.

[purkasz]

This guy seems delusional. His facts are skewed to a subtler message. He is convinced we are going to handle immigration better because there will be more of us to grow the labor force as opposed to Germany, Japan and Europe in general whcih he say will be smaller in 25 years...including Russia. Where does he get that conclusion from and what madness allows him to postulate that it is better for us to have more people in our labor force WHEN WE CAN'T GET ENOUGH OF THEM JOBS NOW???

[purkasz]

This is madness.

[bongijr]

Interesting perspective from Mr Friedman. I would like to know how he calculated this $340 trillion NET worth of the US? I suspect that he has made the same mistake as Joe Smith next door. He spends $1000 on a set of golf clubs and adds this to his net worth. Meanwhile, he would only be able to sell them 2nd hand for $200.

I won't bet my wealth on what George believes.

[Mithan415]

As soon as the guest said that the U.S. is worth 340 Trillion dollars, the host should have immediately hit the guest in the head with that book.

[edschaeffer]

@Mithan415 - Perhaps you didn't hear him say that our industrial output is bigger than Japan and China combined. Kind of interesting when you consider China is the number 2 economy (just got larger than Japan) and Japan is number 3. Study macroeconomics.

[999silverrush]

THIS MAN IS MENTALLY RETARDED. WE ARE WORTH $340 TRILLION? REALLY? CURRENTLY WE PAY $400Billion a year in interest on our debt of $14Trillion, nearly 1/3 of all taxes collected. WHY ON EARTH WOULD WE HAVE ANY DEBT OR BE PAYING ANY INTEREST WHATSOEVER IF WE HAVE $340T? YOU DONT HAVE SHIT IF NO ONE IS BUYING. WHAT DO WE HAVE WORTH $340, THE WORLD IS FILLED WITH MORONS, DONT" EVEN WATCH THIS SHOW

[edschaeffer]

@999silverrush

Evidently, you don't understand the concept of assets, just liabilities.

Annually the irs collects....

Individual tax collection $1,366,241,000,000

Corporate: 395,536,000,000

From an income statement / balance sheet point of view please tell me how that is not manageable over 30 years.

You precious metal people are always shitting on currency and spewing stupid propaganda. That's why I put up videos like these.

[999silverrush]

@edschaeffer Your train of thought is like listening to enron executives explain some bullshit way of accounting as they rob everything in sight. Your post didn't ven address the problem. They will pay paying 1/3 and soon to be 1/2 of all revenue on INTEREST, WTF on earth are you even talking about? The $340T isn't the gov.'s assets moron, if your stupid enough to even belive that retarded number.

[999silverrush]

@edschaeffer I am sure when the Enron executives had to show up to any accounting meetings or produce any explanation for their accounting activities, I am they just threw up their arms and said YOU GOT ME. Everyone has an explanation even if it doesn't make sense. I dont even know where to begin with your ridicolous reply.

[999silverrush]

@edschaeffer Let's start with some basic math. What part of 1/3 of your taxes is spent on interest don't you get. Congratulations, on finding the revenue numbers, I gues you didn't seem to find the expenditures which is about $4 Trillion. What kind of fucked up thinking defends this retarded economic math. If you were in charge of a family, would you rack up enough bills to have 1/3 of your income spent on interest? Where do you get 30 years from?

[999silverrush]

@edschaeffer Does the world end in 30 years? Does math and accounting? Would you tell your wife then it's no problem the money is spent on interest because it's not 100% of the income. I know maybe you are recieving some sort of personal benefit from taxpayers getting drained of trillions of dollars, which is what we will spend on interest alone the next decade.

[999silverrush]

This video is hilarious. Somehow by patrolling oceans the economy will stay magically healthy. He does not understand the problem is domestic. LOL his "special self-made net worth" figures lol. All the money in the world combined is only $60 trillion, it is impossible or not realistic to sell all american assets let alone how can you sell what there's not even enough money for. It is just plain stupid to even address.

[secretbonus]

Please explain the depression of 1920 or 1907 when nothing was done things got better. Why? Why did the great depression occur?

The fed hiked the rates, Hoover increased terrif dramatically from Coolige administration. Hoover tried to manipulate the prices of agriculture and farming, he hiked the estate tax

Hoover was far more active than coolidge.

FDR had 3 terms and he couldn't even get things up to the 1929 levels.

Stocks were not overvalued in 1929 relative to earnings or bookvalue.

[Gizziiusa]

LOL. Labor shortage with over 6 billion on the planet, globalization continuing unabated, trade barriers gone, and continued concentration of global wealth to the few (gini). This fella is from another planet...

[DarkwingScooter]

The problem is that America is so large that it poses a structural problem.

The Nett worth it has is valued in dollars and it has not been making money for the last thirty odd years or so (income less expenditure). The nett worth is also not the property of the U.S. government, but the debt is, as is a proportion of GDP in taxes.

If the bubble pops the Nett worth will decline with the currency while at the same time the value of debt will be higher in a revalued currency. (in Euros?).

[nickrhill]

I would love to find some solid contrarian argument to the prognostications of Peter Schiff, Gerald Celente and Marc Faber. George Freeman hasn't won me over.

Nett asset values can and do collapse with currency. Zimbabwe. used to be the breadbasket of Africa, not a basket case.

Currency values are based on confidence that you will be able to liquidate the value you invested in the currency in a few years (buy something with it). Once that confidence evaporates...Boom! (Hyper)inflation.

[edschaeffer]

Austrian economists like Peter Schiff provide no proof of their own. They do not even use the scientific method or any type of DSGE models. They are simply using rhetoric and use no proof themselves.

None of Schiff's, Faber's, or any Austrian text is on the required reading list at any major university. In the other words they are crackpots, gold propagandists. I suggest you see this critique of Austrian economics before you continue to buy into propaganda.

watch?v=2P_Yq1AIDjM

[nickrhill]

@edschaeffer Thanks for the link. I would rather read the text than listen to a text to speech robot.

I find that the Austrian School puts words to the concerns and economic ideas I had been formulating and the predictions I made.

Maybe predictions going forward from Austrian Economics will be completely wrong, but as I understand it, standard Keynesian theory got us into this mess, and was not predictive of it - Austrian was.

Old theories have been falsified, we need to fill the gap.

[edschaeffer]

Agree with you on the robot, I can't stand that either.

If you notice though Austrians are like broken clocks, but even broken clocks sometimes tell the right time.

It's my opinion that the opposite of your premise is true; too much laissez-faire is what caused the crisis not Keynesian economics. Take for the prime example credit default swaps. This unregulated "free" market made the recession into a crisis.

watch?v=0Y9A0C45KZI

[nickrhill]

@edschaeffer A very interesting and worthwhile link. Some interesting quotes:

Frank Partnoi 2:42: Obviously they were wrong because you can't model human behaviour with math.

07:27: How big is the market for Credit Default Swaps? Voluntary survey perhaps 50 to 60 TRILLION dollars.

Frank Partnoi 11:06: The truth is that on wall street a lot of people just weren't very good at their job.

I can't see any contradiction to the Austrian school. The idiots should lose their shirts not get bailouts

[edschaeffer]

Think about the CDS market. It was unregulated insurance of mammoth proportions. Allowing firms of that size too fail has dangerous consequences as told by history. Think of a world where they were allowed to fail. It's easy to sit back now and say screw them, but which world would you want to live in right now? This is monetarist theory.

en..wikipedia..org/wiki/Moneta­rist

Also my other vid is a little more related to this: watch?v=3ai6tlcD-SU

[secretbonus]

@edschaeffer So the solution should be to pump more money out in the system? The problem is that the banks speculate because they can make money that way as long as there is the excess credit to fund them. If credit was tight, they would only be able to invest in the most important projects and there would be no derivative bubble, at least not nearly to the same extent There's a reason Friedrich von Hayek won a nobel prize

[999silverrush]

@edschaeffer Yes it is a great idea to repeal 100 year old wallstreet gambling laws by 500 people, create a betting market larger then all the money on the earth combined. So large, the contracts can collapse the economy if they have to be payed out. Then let's tie 300 million people's income, who had nothing to do with it, to it by making them pay for any failures that occur "insuring" it will exist forever, for criminals to suck money from the population. Great idea.

[999silverrush]

@edschaeffer To even call cds contracts insurance means your a layman and probably have no real clue why they are even bad. Insurance means you have to own the underlying asset to insure, you don't with cds, allowing you to take out fire insurance on your neighbor's house. Spend some time thinking about that. Stop pretending you even have a clue, you don't.

[secretbonus]

they're not always bearish, they just think that money growth rate beyond the real growth rate of the fundimentals leads to an unsustainable bubble when you don't have a resourced based economy. If you had no resources in the world but a zillion dollers it does you no good, and can't speed up recovery. on the other hand, the "robber barrons" made things 95% more effecient and the cost of living went WAY down as the price of steal dropped and oil and cars became accessible to all.

[secretbonus]

even if that were true they have a better record then Ben Bernanke

[secretbonus]

Science is flawed. It isolates everything in experiments, ignoring synergy which science itself proves exists. Science also says that "matter cannot be created or destroyed" but the fact is, nutrino reactors seem to create matter. Science can't explain why magnets work through a wooden table, or why the law of themodynamics change above 3000 degrees calvin.

Theories are for people that can't produce results in the real world... Edison and Tesla didn't theorize, they just produced.

[secretbonus]

@edschaeffer

"robber barrons" like Rockefeller shaped the school system. Perhaps the system doesn't teach real financial education because the system is rigged so they stay atop.

[999silverrush]

yes, on the middle of FastMoney on msnbc they are just going to stop the entire program for Peter Schiff to explain for hours on end with models and charts. ya right. It's interesting you don't ask for proof/scientificmethod of your own government, who is in charge unlike P.S., slowly bankrupting the country. Too even post this video means you don't know shit about money or economics, don't pretend you know anything on Austrian economics(aka common sense) either.

[999silverrush]

yes, on the middle of FastMoney on msnbc they are just going to stop the entire program for Peter Schiff to explain for hours on end with models and charts. ya right. It's interesting you don't ask for proof/scientificmethod of your own government, who is in charge unlike P.S., slowly bankrupting the country. Too even post this video means you don't know shit about money or economics, don't pretend you know anything on Austrian economics(aka common sense) either.

[999silverrush]

yes, on the middle of FastMoney on msnbc they are just going to stop the entire program for Peter Schiff to explain for hours on end with models and charts. ya right. It's interesting you don't ask for proof/scientificmethod of your own government, who is in charge unlike P.S., slowly bankrupting the country. Too even post this video means you don't know shit about money or economics, don't pretend you know anything on Austrian economics(aka common sense) either.

[nickrhill]

George Friedman bases his arguments on

1) USA economy greater than next 4 combined

2) Has high value

3) Controls the oceans

4) Who's rising [implying nobody].

And fluff. Eg population density.

1) 70% of USA $14Trn GDP is consumption. Gross production around $4.2Trn. Nett production strongly negative. USA is a nett consumer by far.

2) To what extent are the assets desirable or saleable based on consumption and not production?

3) Somalian pirates? Navy losing grip.

Who's rising? China perhaps

[karlhelvede]

@nickrhill ATTENTION ATTENTION The entire US Navy has been destroyed by 80year old fishing boats captained by khat chewing somalies.

It's official. USN has lost it's grip.

[wuptdo2]

Inflation is always due to increase in the SUPPLY of money. Law of diminishing returns clearly says the more of something there is the less it is valued. The dollar and even gold has no intrinsic value - the value fluctuates with its availability and the productivity of the country. The reason Gold (or any other limited, non-creatable resource) is preferable to fiat money is that you can't "print" gold.Money is just a more efficient means of transferring capital, it has no value in and of itself

[freemarket11]

RandsTeaParty. com

Dec. 16th - moneybomb for Rand Paul US Senate.

Debt is worse than we all think right now, the money supply has also doubled in the past couple years. Inflation is coming, we need to be ready and buy gold/silver.

[edschaeffer]

Gold and Silver will crash within about 4 months. Any economist can spot that gold is at it's classic 10% top because of all the money that's coming "late".

[freemarket11]

The price of gold is connected to the purchasing power of our dollar, but at times the price of gold is very volatile. If the fed began to raise interest rates, our government would be unable to pay the interest any longer on our debt. Interest rates need to rise, the fed is in a corner.

I'm already watching pricese on everything I "need" rise month over month now. Yet everything I "want" has been falling in price.

[edschaeffer]

No, gold is a bubble and it's about to burst. The people that think like you are stupidly putting their mind in gold. When it does burst hopefully the rest of the Ron / Rand Paul / Peter Schiff supporters (gold bug propagandists) will hopefully die off. I have another video that you should be commenting on regarding that.

[freemarket11]

Debate is good. I was telling people housing was merely tracking inflation since 71' or possibly earlier when the Fed came into existence and corrupted our money. Now that the housing bubble bursted you say gold is in a bubble? Even after knowing how much "new" money the fed is pumping into the system? Please state how gold is in a bubble.

[edschaeffer]

businessinsider..com/if-your-g­old-bunker-is-burning-save-thi­s-chart-2009-10

theglobeandmail..com/globe-inv­estor/china-warns-of-possible-­gold-bubble/article1385240/

Gold is the currency of fear. General fundamentals. Dollar is driven by demand not supply. Also look at the Fed's balance sheet. Plus you have the fact that Treasuries are rallying. Treasuries wouldn't rally if there was fears of inflation. Gold's target = $1350 by 03/10 then short it. Trust me.

[freemarket11]

Treasuries are being bought by our own federal reserve, they openly admit this. That is not a true rally, when money is being added out of thin air to buy our own treasuries, because the world doesn't have enough money to buy them or even care to. Come on man!

[999silverrush]

@edschaeffer Treasuries are rallying? Again, I forgot your dumb. The gov. has having to offer a larger return on investment to attract more investors for the ponzi scheme. By the way, just post a minute long video explaining how we will repay our debt. Don't really focus on grown up words like "theory" "monetary" "inflation" and "system", focus more on words like "addition" and "subtraction"

[999silverrush]

@edschaeffer HEY ED, IT"S BEEN 4 MONTHS NOW, HOWS THAT GOLD/SILVER COLLAPSE. GOLD 1140 SILVER 18 PLATINUM 1715 PALLADIUM 510. THE REASON YOU THINK GOLD/SILVER WILL COLLAPSE IS BECAUSE YOU HAVE NO CLUE ABOUT HISTORY AND MONEY. LOL GOOGLE JOHN LAW. LOOK AT THE ARTIST DEPICTION OF THE CHAOTIC SCENE OF THE LOCAL ELITE IN THE TOWN SQUARE FRANTICALLY REALIZING THE PAPER THEY HOLD IS WORTHLESS, THAT IS YOU.

[boptah]

if america is so powerful why is it in so much debt. being in debt is a position of weakness. (obviously . if you have a choice you would'nt be in debt.). this guy is not wise.

[edschaeffer]

I have his Bio listed in the description, I think he's certainly qualified to make these claims.

Besides why do people go into debt? It's not always for necessity, sometimes it's for an investment.

Yes, debt will certainly slow growth, but the lesson here is the well isn't as deep as doomsdayers like to project.

[freemarket11]

ed, you are an optomist, but not a realist. This video isn't anything other than a guy trying to spread happy thoughts, while ignoring reality. Let's be honest here, why would you even post this worthless video?

[edschaeffer]

Whatever dude. If Austria was so financially smart why is there GDP $100 Billion less than the city of Chicago? Your kind of propaganda won out in the 1930's.

Hoover sucked ass and it wasn't until WWII and the New Deal that brought us out of it. I still say you are a freak and you will see that I'm right. AND, you should be arguing on my other video about the declining dollar.

[freemarket11]

Austrian economists (not Austria the country) point of view is what you should research a bit. This country was sold out in 1913 when the banksters took over our money supply via the Federal Reserve. You're missing the point on history, because your view is very clouded by your limited study of it.

[999silverrush]

@edschaeffer Stop pretending your smart in your posts, you don't even know what GDP even means. A billionaire walks into a strip club, puts down a million dollars on the table for girls to shake their tits in his face, he pays another girl a million dollars to look at it the money while he pays another girl another million to polish the money. $3 million was just added to the GDP. Congratulations on your countries' new economic output #'s, moron.

[999silverrush]

@edschaeffer LOL are you equating the debt with an investment? Where's the return on the investment then Ed? Are you profiting handsomly from the iraq invasion or something? Wait, your jsut stupid, mindlessly defending the robing of your own personal income, spending power, and quality of life of yoruself and most people around you.

[999silverrush]

@edschaeffer History teaches us that people never learn from history. Pick up a book, your dumb.

[freemarket11]

This video is of a government shill spreading propoganda to the sheep. Look at his bio - enough said. When the guy said the U.S. is worth 339 Trillion I about fell off my chair. LMAO.

[edschaeffer]

When I'm right and you are wrong.. what are you going to say then?? Gold is going to burst and I made a call when I think it will. Really, when it does what are you losers going to say?? Hopefully, the Ron/Rand Paul, Peter Schiff bubble will pop too. It must feel self-fulfilling that things are going your way, but you'll see... give it time.

watch?v=n6fCKMHP45k

[freemarket11]

You are sounding ever more desperate and in need of someone to agree with you. You sound nervous, did you jump into the stock market and make some buys you are unsure of? Whats going on here?

[999silverrush]

@edschaeffer HOW IS THAT GOLD BUBBLE BURST COMING ALONG? IM SURPRISED YOU EVEN HAVE TIME TO POST VIDEOS WITH ALL THE MONEY YOU MAKE ON THE MARKET. RON PAUL/PETER SCHIFF BUBBLE? LMAO. YOU MEAN FREEDOM/HONESTY/CONSTITUTION BUBBLE?(You are mentally ill btw) GOOD LUCK ON YOUR DELUSIONS.LOL "I made a CALL when I think it will" LOL HOW IRONIC HAHAHHAHA