Aug. 16, 2014

What if they Held a Recovery and No One Came?

7:00 – 17:15 Discussion of the lack of an economic recovery, despite the media’s insistence that there is one.

 

Housing and Inflation

Discussion of the media’s denial of the existence of price inflation and its impact on people’s ability to buy homes, hindering the housing “recovery”. The media choses to blame the slowdown in the housing “recovery” on an housing inventory shortage, rather than on rising home prices or millennial job prospects and crushing student loan debt that shut these potential first time home buyers from the housing market.

The low levels of housing inventory are not holding back sales, rather they are boosting prices. As more inventory has come on the market in the past year, fewer homes have been sold. The problems facing the housing market are caused by a lack of demand, not a lack of inventory.

Discussion of the state of home prices and the end of their ascent.

The Impact of American Sanctions on Russia and Russian Sanctions on America

17:15 – 21:45 the U.S. is miscalculating the impact that sanctions on Russia and their retaliatory sanctions will have on the United States. They have the potential to cause price inflation in the U.S.

Obama Scoffs at Russia

Obama scoffs at Russia, claims they don’t have much of an economy citing that no one is moving to Moscow to get a job. The U.S. view of Russia is that it is a gas station masquerading as a country. This view severely underestimates Russia. Just withholding oil and natural gas can cause a major economic slowdown in Europe.

De-Dollarization

The more non dollar deals Russia does with others and convinces others not to deal in the dollar impacts the demand for and value of the U.S. dollar, reducing its value. If the demand for and the value of the dollar is reduced just 5-15% import prices in the U.S. will surge, causing price inflation in the U.S. apart from whatever price inflation would occur from the Fed’s money printing.

What would the Fed do if there if price inflation not caused by their money printing but rather cause be a drop in demand for the dollar? Another round of quantitative easing?

The Russian Concept of Suffering

Discussion of the Russian character and its ability to survive hard times through suffering compared with the U.S. citizens’ entitlement mentality giving historic and literary examples.

Russians can live without and suffer.

A key theme of the novels of Russian novelist Dostoevsky is ALL is suffering, redemption comes through suffering.

In the west all is SPENDING!

The West can’t take suffering. If sanctions make U.S. citizens feel poorer, they will demand that their government subsidize their lifestyles to ease the pain. They won’t accept a political solution that says – we can’t afford it any more as the entitlement mentality is too strong.

Another misguided point the west is making regarding Russia is saying it is “isolating itself”

From WHOM? Russia has always been detached from Europe and certainly always from the US. Russia is actually becoming less isolated as it reaches out to China, Iran, and South America.

The western view is Russia won’t last in “isolation” forgetting they have lasted in that state for a thousand years and are becoming less isolated.

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How Russia Can Bankrupt the U.S.

21:45 -23:40 Price inflation in the U.S. will cause more government spending which will make the problem worse and push the U.S. to a state that might resemble bankruptcy that can only be avoided by printing money to pay for the government spending and thus creating more inflation.

As prices rise in the US the government will have to recognize the rise in the CPI and increase the payouts on social programs. This would have the impact of further putting the US into debt. Where would the money come from to pay for the increased social spending? print more, which will cause even more price inflation.

It seems like the same tactic the U.S. used on Russia in the 80′s -outspend Russia on the arms race until they collapse. Today is seems that Russia is trying to create an environment where the US over spends on social programs until it collapses.

Americans are ignorant of what is going on as they have been trained to believe in the “exceptionalism” of the US.

They scoff that anything of value could be happening out side the US and think that the Dollar is “almighty” and that other currencies are just paper issued by lesser nations.

The U.S. is no longer the dominant manufacturing/industrial power and has lost its edge in many areas. Many U.S. citizens think that dominance is unassailable. The military is still there but even there its not omnipotent having spend the last 15 years policing the globe.

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The Importance of Gold To A Nation

23:40 -28:20 Discussion of the massive amounts of gold bought by China and Russia. In the U.S. people are not interested in the gold reserves that the U.S. might have. The rest of the world is more interested in gold. U.S. citizens are only concerned about the dollar.

Discussion of the value of the dollar and the impact of deficit spending will have eventually on the dollar.

The dollar doesn’t need to be displaced as the world’s reserve currency for there to be an adverse impact on the U.S. standard of living. A reduction in demand for the dollar by say, 5-15% will create price inflation in the U.S. by raising the cost of imports.

Discussion of the conflict between the constitutional restrictions and giving people and politicians what they want.

Inflation

28:20-30:35

Discussion of the misguided belief that some economists have that inflation is good for the economy.

Look! The Car is Going Fast Because Smoke Is Billowing From Its Tail Pipe

They see smoke coming from a car that is going fast and think that the smoke makes the car faster so they try to get more smoke- by adding impurities to the economy in the form of cheap money an artificially low interest rates.

Price inflation inhibits sales. Lower prices encourages production and spending on that production.

The U.S. Educational System

30:35 Discussion of the economic mis education of Americans through the school system.

Discussion how politicians can exploit hard time. Discussion of Putin’s high approval ratings even though their economy is not doing well. In the U.S. politicians’ approval ratings are normally tied to the health of the economy. Discussion of food stamp commercials and dependence on government and starving college students.

Government involvement in education causes tuition prices to rise, causing the government to get more involved.

Is College Worth it?