[wind_magic]

Originally Posted by hellosailor

Rick?

So how is it a bad thing, that they have lots of dollars that no one can use except (ultimately) here? And shouldn't that ultimately make us "rich", since we have lots of stuff that someone will need to buy--or, lots of paper money that someone will have to throw away, unredeemed?

I just don't understand the assumptions of supposed Economists. If they really knew what they were doing, I can't believe The Economy would constantly be in such trouble. The basic premises are not always logical, much less proven valid.

The economy isn't out of control.

Look, I hate to be the one tell you this.

Here is one possible explanation that fits the data.

Situation: You have a country that gets attacked, and you decide you need to go to war, but you know your people aren't going to support it. You've promised not to raise taxes and know that the people are going to be really pissed if you raise taxes for a war they are divided about in the first place, so raising taxes is out, but you have to pay a lot of money to fight a war. On top of this you have domestic problems too, you have an older population all retiring soon with their nest eggs and you know there is no way in hell that the few young people you have in country are going to be able to work while a huge percentage of the population sits around ordering margaritas and watching the sun go over the horizon. If you don't do something to transfer wealth your social network is going to implode. Thirdly you have the sympathy of the leaders of the world who want to help but their populations won't allow them to commit troops.

What do you do ?

Here, I will give you an idea about it. Below is a chart of gold, the universal currency, for the period in question. Note that gold starts moving up mid-2002 and breaks out of it's trading range in mid to late 2002 and really takes off in 2003. What was happening then ? Not September 11th 2001, that barely even affects the chart. And why is gold going up ? And why does everything else start going up at the same time including lumber, cows, foreign currencies, and all the rest ? And why is it all STILL going up ?

Do you remember the President standing up on television saying he wasn't going to raises taxes to fight a war ? Do you remember all the economists and people on television at the time saying that taxes had to be raised to do it ? Do you remember all those world leaders saying they'd like to help but that they couldn't commit troops ?

You can't fight a war without either A) raising taxes, or B) borrowing from willing lenders i.e. inflation

CLICK HERE TO VIEW CHART (it's too wide to post without messing up the thread)