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Kill the goose goose by fdjerue7eeu


									Kill the goose goose
Kill the goose goose
At that time, how we think?
To reverse the situation

      Can be described as the most talented of our time critic Peggy - Noonan (Peggy
Noonan) wrote a few weeks ago, many people faint concern to us is slowly
approaching the monster may be (I understand) does not Nazhi golden eggs only from
the goose (the U.S. free-market economy) Unplug the trunk and a few body feathers,
or re-stolen How many pieces of valuable golden eggs, but directly to the geese killed.
Today, we talk about the United States is embarked on the huge government deficit
this fiscal path is indeed likely to kill or seriously hurt Nazhi golden eggs of the geese,
so the Japanese suffered the lost decade of shame.
      Although I do not think we will come to that point (I do not deny this possibility),
because I will be described below, but if we do not take the initiative to solve the
problem (or deny the existence of the problem), it is extremely may cause and we
have just finished of the credit crunch experienced as bad as or even worse changes.
This will not happen overnight, but a seemingly everyone has predicted normal return
may make people feel at ease too, the result is the "kick down the jar along
the way."
At that time, how we think?
      As a culture, the current generation mix (especially in the U.S.) made some
choices. These options allow us later to adult mind can not help but ask:
"how we think at that time?"
      We did a series of wrong choices, so that a credit crisis to face. Now, as a nation,
we are doing a worse choice, this choice makes us no better choice next option - only
a very bad choice or terrible choice. Here, the reference from the Hyman consultants
(in Dallas) for a recent client newsletter in a few paragraphs.
     ?"Western democracy, communism and the Japanese deflation of the
capitalists who are also engaged in may be the largest-ever global financial
experiment. Governments are printing money to support a large fiscal deficit. The
greatest risk of these policies is that quantitative easing will continue until the value of
money equal to the actual cost of printing money (that is slightly higher than zero) so
     ?"The 20th century there have been a total of 28 times the national
economy of hyperinflation, of which 20 occurred after 1980. Peter - Bernholz
(University of Basel, Switzerland, the economic and commercial center
<WWZ> Professor Emeritus of Economics) dedicated his life to
political and economic occupation of interwoven between, and in particular
specializes in the financial sector. In his latest book, "the monetary system
and inflation: historical, economic and political relations", the Bernholtz
analysis 12 largest hyperinflation - are due to creation of public money to huge budget
deficits caused by intermediation. His conclusion: When the government's
deficit exceeded 40% of expenditure will be hyperinflation when the tipping point.
     ?"According to the Office of Management and Budget (OMB) current
projections, the United States two fiscal years 2009 and 2010 total federal
expenditures were estimated at 3.653 trillion U.S. dollars and 3.766 trillion U.S.
dollars, the total deficit estimated at 1.58 trillion U.S. dollars, respectively, and 15 020
billion. In other words, the deficit this fiscal year and the proportion of expenditure
will reach 43.3% and 39.9%. In short, about 40% of government expenditure is to rely
on borrowed.
     ?"One has to ask whether the United States has reached tipping point.
In addition to government deficits and money creation 相 关 quantitative
measurement of addition, such conditions may be more important there is a quality
aspect. Confidence was destroyed, the quality of fiscal and monetary policy got ideas
can not control. Indeed, metals, U.S. dollar and commodity prices of recent behavior
shows that the market is now expected towards the future. "
      I would like to point out the that the 2010 deficit is expected to be established in
the year of Jing Ji Qiang a fairly strong basis of Fu Su's, therefore, the
actual deficit Shuekeneng Hui Gengjiapangtai. If the unemployment rate continues to
rise, Congress decided (correctly) additional unemployment benefits, the situation
will be worse.
      Interest on the national debt in fiscal 2008 totaled 4,510 million. 2009 fiscal year,
although there debt soared, but interest has fallen to "only"
3,830 billion. According to my rough estimate, probably accounts for the year 2009,
more than 20% of total tax revenue. I guess the interest rates down to zero, and a lot
of borrowing short-term debt is to help reduce interest costs.
      The current nominal GDP is about 14.3 trillion U.S. dollars, the fiscal deficit is
expected to account for about 11% of nominal GDP. Congressional Budget Office is
currently forecasting that the deficit within a decade will reach 1 trillion U.S. dollars.
      ?Last spring, I am "creative thinking" (Outside the Box)
published a Woody - Brock's a very important paper, Woody discusses the
government debt can not be far beyond the nominal GDP, or set the whole economic
system will result in severely damaged.
      I just copied from the article over a chart. Please note that this is
Woody's worst assumptions, an annual increase equal to 8% of GDP, the
debt, rather than what we are experiencing 11%. So, the Congressional Budget
Office's forecast was even worse, and they also assume that the growth rate
of the economy over the next five years could reach 3% or higher. Woody's
hypothesis according to the year 2015, the amount of debt will rise to 18 trillion U.S.
dollars or much more than 100% of GDP, depending on how much of your growth
assumptions. Take some time to look carefully at this chart, but I pay attention to is
2015, not those abnormal years.

     1.5 trillion, it means that someone has bought so many bonds. Let's
take a look at this 1.5 trillion U.S. dollars may come from. Assume that all of our
trade deficit is transferred back to invest in U.S. government bonds. We found that the
amount of last month's trade deficit is only slightly more than 30 billion
U.S. dollars, year on year is 3,700 million (only a few years ago, half). Minus this part,
need to find 1.13 trillion U.S. dollars to invest in U.S. government bonds (which also
did not consider business loans, consumer loans and mortgages).
Kill the goose goose
      1.13 trillion U.S. dollars is about 8% of U.S. GDP. This is an alarming figure.
Emphasize again that this is assuming foreigners to bring their new dollar reserves to
invest 100% of dollar assets as a precondition. This is not a safe assumption, because
recent news reports that foreign governments are considering whether to create a way
to replace the dollar as reserve currency. (If I see that the U.S. is running a deficit of
1.5 trillion U.S. dollars, and without any real deficit reduction plan, I am sure would
have thought. Idiot will not do.)
      The funds needed only three sources: a tax increase; two people to increase
savings and use the savings to purchase government bonds; 3, the Fed monetization of
debt. Or combination.
      ?Now, as part of a plan of its quantitative easing, the Fed in fact part of the
monetization of debt. U.S. consumers also increase savings. Tax revenue is way down.
I can tell you that tonight's New Orleans meeting of the Fed's
monetary filled with anxiety. This is the traditional "gold bug"
conference, many participants and speakers only foreseen inflation.
      Long-term readers know that my view is that the Fed plans massive monetization
was able to get away because of the credit crunch and deflation in the global release
of a large number of large-scale solution of the power lever to force action on a global
scale to start. Fed printed money is gone? The form of bank reserves back to the
Fed's balance sheet. Banks do not loan, so the money is not to with some
reserve banking is usually associated way into systems. Prior to this, and wage
income and employment rates are on the rise before the near future inflation will not
      This brings us to a dilemma. You can not run for too long the amount of the
deficit far beyond the nominal GDP, or economic system in danger of collapsing. Ask
hyperinflation occurred in Argentina and other countries. However, we are in a
deflationary environment, therefore, far beyond the scale of the Fed to carry out any
of us expected monetization of debt and does not immediately lead to inflation.
      But the Fed monetizing the debt without the ability of real inflation, there is a
limit. First of all, as long as the Fed is independent, to a certain extent, they will have
to tell Congress that they can no longer be the currency of more debt. Although some
of you sure that the Fed will not do, but I have had exchanges with the U.S. Federal
Reserve officials and economists who are very firm on this point. They will not cross
a certain line. Perhaps now from this line than I had hoped far, but it does exist.
      The Fed can not buy all the debt the government needed. Similarly, the Federal
Open Market Committee will not advocate or allow someone to do so. To do so will
let us down a very dangerous road. Therefore, in addition to the Fed than they have to
a large number of buyers willing to buy bonds. The good news is, we have buyers. It
is also bad news. Let's go back 30 years ago.
      Legend of Paul - Volcker hand to double the inflation rate, the first bull-horn to
pull apart. Face a certain degree of economic recession and high unemployment,
which requires tenacity to do it. Those who have not fared well. But the bond is with
his actions. Bond investors demand higher returns only because they are really
worried about inflation.
      To a certain time, if we can not control the government deficit, the bond market
will again respond. Real interest rates (interest rates adjusted for inflation) increased
almost overnight, and is rising rapidly. And I said, not 1% or 2%. In the current low
interest rate conditions, the U.S. equivalent of 14 trillion U.S. dollars every year to
increase 8% of GDP, government debt is simply not sustainable.
      Let's think about that. If you total U.S. consumer spending up 8% of
the storage and flow of this part of the savings are government bonds, so consumer
spending is reduced, real GDP is also reduced. But some people want to invest in
stocks? There are foreign bonds? Foreign currency? New business? All kinds of loans?
We need to save much money to get the necessary funds? Remained stagnant in the
debt securities of the environment, the savings rate how much would be enough to
meet all the other activities of intermediation?
      Some people would refer to the Japanese government debt to GDP ratio rose to
200% soon be over, far beyond the United States. Why can not we increase to 200%
then? Because the Japanese have long been saving and investment in government
bonds of tradition. Wanted them to support the country. But even the Japanese
eventually want to run into a wall, because they have a large population of retirees,
need to sell bonds to support their retirement, so the savings rate declined. They run
very large budget deficit, almost as much with the United States. Some people really
want to experience the two lost decades, like Japan, Why?
      In the event of changes, we can go far? I do not know. The market can continue
to irrational or complacency estimated at well beyond the time most people imagine.
Estimated a few years. May be not that long. Then suddenly, in July 2008
reproduction, bonds officers who rushed to flee.
      But now, it seems that we can continue to borrow money, no worries. Deflation,
with banks not lending an atmosphere of repression of the normal forces of deflation.
We as a nation are constantly expanding debt. As did the 2005 Carnival. Music in play,
we enjoy dancing. Our Congress is to find ways how to run more deficits.
      To a certain stage, the consequences will be serious. There are two roads, it is not
clear which ones we will be. First, inflation may occur, the actual interest rates. As
bonds are mostly short-term debt is the deficit amount will rise as interest rates rise.
Mortgage interest rates, to housing pressure. Commercial mortgage loans will
increase the pressure. Consumer credit will be harder to obtain, more costly. This
would mean that companies will increase the cost of financing is not conducive to
employment. So, on the back of the last century 70's, high interest rates and
stagnant economic growth coexist.
      Second, deflation strikes, and even if interest rates are still generally remain in
situ, real interest rates (adjusted by deflation, the interest rate) or may be like the 30s
and the rise of Japan was the case.
     Some of the most knowledgeable of my friends to support the inflation camp,
others support the deflation camp. I tend to think that the Fed will have to fight
deflation to inflation so far, but the result is certainly not pleasant. We have no good
way to go.
     How can we avoid such changes? The only way is to do some very difficult
choices. There must be some adults in charge to make a choice, and now these young
people are obviously not in power to make rational choices.
     I have written, we can long-running equivalent to 2% of GDP deficit, which in a
few years to reach 3,000 billion U.S. dollars. I believe that if there is a credible plan
that allows investors to see the bond market and the world we can achieve the deficit
reduced to less than 2% of GDP, we have a hope to avoid the terrible upheaval.
     However, this will mean that we need to make some painful choices. This is not
pain and non-pain problems, but decided to bear the pain of time and degree. The
longer we wait, the more severe the consequences will be.
To reverse the situation
     Some merchants were called to trend expert. But they will have the basic ability
of some sick, through the implementation of proper management of the enterprise to
survive over down. In general, the new management to make the choice for those
involved is painful, but if you're going to continue to operate, these choices
is necessary.
     Therefore, in the next few pages, I will present some of the situation in the
United States is expected to reverse the proposal. Although all non-simple approach, I
know there will be many readers do not like the content they read or do not agree with
certain points, but we have to take similar measures, the golden eggs of the geese had
been killed in danger.
     First, we must recognize the deficit out of control, spending must be cut this fact.
If you really want to increase by Obama to tax increases, to 2011, we will almost
certainly push the country back into the abyss of recession. Think of the 1937 tax
increase is to kill off the nascent recovery. 3 trillion budget accounts for 20% of the
entire U.S. economy, which is too high.
     A simple fact. According to the most credible research shows that government
spending is not a multiplier effect on the economy, but a very slight negative effect.
Not only in the U.S.. However, the tax impact is a multiple of 3! If we raise taxes in
2011, 3,000 billion dollars, this will give the economy a heavy blow. Moreover,
reduced economic activity, tax revenue but will not meet expectations.
     The problem is too much debt to take on more debt can not be resolved. We can
not rely on debt to prosper. Each of the past few decades, a crisis because of excessive
debt and leverage resulting from the use, we seem to want to repeat the mistakes of
the past, hope this will be different. This is impossible.
     Well, let's reverse the situation.
     We should first of all project expenditures overall reduction of 5%. Military
personnel outside the unity of all federal employees, cut wages by 5%. Federal
employees, the average annual salary is 75,419 dollars, the private sector, the average
annual salary of employees is 39,751 dollars. Disguised tax increase to cut the
remaining wages.
      Then the second year and then an overall reduction of 2.5%. And then
completely freeze the size of the total budget, until the deficit down to below 2% GDP,
      Social Security must now rectify. We all know that this must be done, why not
now do? Review the economic situation should be part of the plan.
      Medicare must be the rectification, the actual practice of health care reform. If
the count unfunded liabilities (a majority of health insurance), then the total national
debt reached 56 trillion U.S. dollars. This is about the middle of the next decade will
become a nightmare. Only increase costs without cutting other expenditure is
      ?Every year, we have to allow nearly one million immigrants entered the United
States, most of which are family members of current U.S. residents. I propose in the
next two years suspended this policy. Replaced to be able to buy a house here,
through the basic screening and can prove their ability to pay for health insurance who
emigrated to the United States to obtain temporary green card. If they comply with
relevant requirements, four years later, the temporary green card to become a
permanent green card.
      We can almost immediately stop the decline in the housing market to absorb the
excess housing, within a year, housing construction market, and those who lose jobs
are to be restored. The stimulus package to save the taxpayers a penny.
      Although I do not believe this is what I wrote, but tax rates will certainly rise,
because the Congress is bent to raise the tax rate. Congress wants a one-time
additional 10% will definitely push the economy into recession once again among the.
Therefore, we should slow down to 4 years progressively implemented, then the
deficit down to 2% of GDP to resume after tax cuts.
      We should consider the value added tax and slash corporate taxes or
consolidation. We need to encourage businesses to hire more personnel, tax cuts to
achieve this effect. We should improve rather than reduce the competitiveness of
domestic enterprises. Our tax rate than any of its major competitors are much higher.
Also, please destroy stupid carbon tax. If you want to reduce greenhouse gas
emissions, it would direct a substantial increase in petrol duty enough. Do not
disguise the transfer tax burden on to consumers.
      To invest in new technologies for the new venture capital to provide tax
incentives to promote the positive emergence of new industries. We are the only way
out of mess is to create new industries, as we have in the last century the late
70's and 80's did. (Think of the computer, Internet and
      The unemployment rate is likely to continue to rise, and continued to grow to
unprecedented long time. We need to work to take care of those people who work but
can not find the basic needs. Should be after the expiration of the unemployment
benefits of those people who are still looking for work to extend unemployment
insurance, and the creation of some local voluntary services, as a continuation of the
initial relief grant of relief after the expiration of the price. This not only helps the
community, but also can be helped by better life and greater opportunity to meet
people who can give him a job. However, this scheme should not create pressure to
the country's income, other plans should be reduced accordingly.
      We must rethink our military spending (I can not believe myself to write this!)
We are the world's military spending accounted for almost 50% of the total
military budget. When the world police is subject to budget constraints.
      Should be restored Glass - Steagall Act or similar bills. Accept the taxpayer
rescue of the banks should not be engaged in investment banking and derivatives to
create business. Derivatives (especially credit default swaps) should be placed on
exchanges, large enough to close down the entity must disappear. Bank lending
operations only exposure has been big enough. Should reduce the use of leverage, and
to derivatives or any other form of sale of products equivalent to naked call options to
regulate hedge funds.
      Let me see, what other group of people that I have not offended you? But to a
certain stage, similar to the measures I am proposing is to be taken. We can not at
present go on forever on this road. Bond must be noted that we make real efforts to
bring the deficit down to a reasonable level, otherwise we may face a very difficult
economic environment. The longer we wait, the situation would worsen.
      ?We will not return to normal, although we may see some form of statistical
recovery. But we can not afford to be complacent. The possibility of another crisis is
very real, and definitely be taller than on a more serious. When a crisis occurs when
you do not want to do more than anything, in addition to hedge investments or
liquidity risk than investment. Admittedly, this may last a long time. I just do not
know, "long" is long. Either too long or not long enough.
      The hits sent. I wish you a happy, keep in mind, as long as we work together, will
be able to overcome all difficulties.
      Analysts fear the results of all accidents,

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