What's going on with the US/Global economies?

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  • #51
They are being printed...but I don't see what that has to do with my post.
They are being printed _how_?

What is the exact process how a new $1m of dollars (as a number in a bank account, not a pile of paper rectangles) springs into existence?

The answer is: it is usually born as US govt debt to FRS. FRS gives US govt a new, never before existing $1m. US govt gives FRS a Treasury IOU.

Since world economy is growing, US govt _has to_ go into more and more debt, in order to create more and more dollars for world economy.
 
  • #52
russ_watters
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The answer is: it is usually born as US govt debt to FRS. FRS gives US govt a new, never before existing $1m. US govt gives FRS a Treasury IOU.
The debt you are referring to has changed very little from last year (+$1.6 billion), so is a very small part of the government debt increase from last year. The vast majority is apparently in Social Security/Medicare outlays, though I'm still not entirely clear on the cause of that.
 
  • #53
mheslep
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Since world economy is growing, US govt _has to_ go into more and more debt, in order to create more and more dollars for world economy.
No, the US govt has to increase the money supply to support/promote growth. The Fed's purchase of US government debt, instead of the usual sales to other parties (e.g. individuals, other governments) puts more money into the system, but does not per se increase the debt. The Fed does have unprecedented amounts of US debt on its books, though as Russ indicates the Fed mostly stopped the practice some time ago.

https://fred.stlouisfed.org/series/TREAST

The problem for the Fed now is, in some future inflationary period when it desires to tighten the money supply, how does it unload some $3 trillion in debt without crashing the financial world.
http://www.cfr.org/monetary-policy/exiting-monetary-stimulus-better-plan-fed/p30174
 
  • #54
mheslep
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...The vast majority is apparently in Social Security/Medicare outlays, though I'm still not entirely clear on the cause of that.
Unlike a financially sound private pension system which pays out what participants put in over time (plus interest), the US entitlements are ponzi schemes that pay out much more than was ever paid in. With i) an aging population, and ii) anemic economic growth choking govt revenue, the problem accelerates.
 
  • #55
russ_watters
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Unlike a financially sound private pension system which pays out what participants put in over time (plus interest), the US entitlements are ponzi schemes that pay out much more than was ever paid in. With i) an aging population, and ii) anemic economic growth choking govt revenue, the problem accelerates.
I do get all that, but a sudden [edit: not sudden, see below], substantial acceleration isn't something that makes any sense to me. In order to suddenly and substantially accelerate, something had to rapidly change this year. What I'm not seeing is the specifics on what change, how much and why --- and perhaps more importantly, is it going to keep getting worse faster next year and the year after. I guess what I'm looking for is the details on this:
Outlays for Medicare (net of premiums), Medicaid, the children’s health insurance program and ObamaCare subsidies will increase no less than 11%, or $104 billion, this year. [from my earlier link]
How much did each of those things account for the $104 billion, why, and is it going to keep getting worse that fast next year too?

[edit]
From the link, the year-over-year delta in outlays has been:
2011: +$146B
2012: -$66B
2013: -$82B
2014: +$49B
2015: +$184B
2016: +$231B

From your graph, employment has been increasing linearly since 2010 and as expected for a recovery, outlays dropped two years in a row. But stating in 2014 that trend reversed and outlays began to rise again. This is despite the fact that the country is adding jobs faster than it is adding people (so the total number of people without jobs, whether they are looking or not, is decreasing), and it should only need to add jobs about 70% as fast as it is adding people in order to keep pace.

So this reality, that we are paying more for entitlements - a lot more - than the trajectory we were on, is still very confusing to me. Federal outlays today are some $600 Billion higher than I would have expected, given the trajectory of the recovery in 2010-2012.
 
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  • #56
jim hardy
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So this reality, that we are paying more for entitlements - a lot more - than the trajectory we were on, is still very confusing to me.
I don't understand much about high finance.

My old mentor who'd grown up during the depression told me that shortly after SS was intitiated they changed it from savings based to a "pay as you go" ponzi so gov't could spend the surplus (which he described as "a Bonanza" ).
I researched that some years later when internet showed up and found it in the prewar Federal Register . It was tedious to find and i won't try that again.
But now it's mentioned discreetly on the SS site:
https://www.ssa.gov/policy/docs/ssb/v66n1/v66n1p1.html
In fact, the Advisory Council on Social Security of 1938, whose work led to the 1939 amendments, was created in 1937 at the suggestion of Senator Arthur Vandenberg (R-MI). Vandenberg had a number of concerns regarding the large reserve funds that were being built up as a result of the original Social Security Act, one of which was that the government would not truly "save" the reserves but rather use them to finance spending on other federal initiatives.

Surely "Ant or Grasshopper" is just part of the story of how we got here.
 
  • #57
mheslep
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...This is despite the fact that the country is adding jobs faster than it is adding people (so the total number of people without jobs, whether they are looking or not, is decreasing), ...
From the data I see job creation is barely keeping pace with population, and that only for the post recession years. Looking back past the recession, job creation over the past 8 years has been far short of population growth. This is just one the facts that makes me irate when the Obama administration frequently touts X million jobs created over several years, when the recovery job creation needed to be much higher, and could have been to my mind.

Monthly-change-in-payrolls-hardly-keeping-up-with-increase-in-population-2014-11-26111.jpg


More later on Medicare spending spikes, time permitting, which I gather is your current main interest.
 
  • #58
Dotini
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China has built ghost 100 cities with housing for 100 million people. All waste and ruin, but the colossal debt is yet unpaid, and rising faster than the economy. A hard landing is envisioned. In some ways China is the world's #1 economy, and when the crash comes, it may ripple down the chain.
.
 
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  • #59
Dotini
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http://www.bloomberg.com/news/artic...to-world-order-confronts-elite-at-imf-meeting

Policy-making elites converge on Washington this week for meetings that epitomize a faith in globalization that’s at odds with the growing backlash against the inequities it creates.

From Britain’s vote to leave the European Union to Donald Trump’s championing of “America First,” pressures are mounting to roll back the economic integration that has been a hallmark of gatherings of the IMF and World Bank for more than 70 years.

Fed by stagnant wages and diminishing job security, the populist uprising threatens to depress a world economy that International Monetary Fund Managing Director Christine Lagarde says is already “weak and fragile.”



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