I'm not american so I don't care to be honest.
In the end it doesn't matter because wherever you look it is going down.
We are close to a point of no return where somebody will have to push the reset button.
Scary! But if you're smart this will give you the possibilty to profit from it.
Topic: How to make America great again - page 3. (Read 1563 times)
You can start by stop saying "we're number 1" and the "usa is #1", besides defence expenditure I don't see many other positive indicators. The only reason, as someone living in Europe, that I prefer the USA to be the leading military power is because Russia or China would be far worse. When you stop believing that people in other countries might have worked out a better technology, system or implementation then you stop pushing the boundaries in science and understanding.
1. Economic growth
2. Fiscal adjustment-austerity
3. Explicit (de jure) default or restructuring
4. Inflation surprise
5. A steady dose of financial repression accompanied by a steady dose of inflation
But this does not work at all, why not just get it written off?
Who does the debt belong to?
Cannot pay, will not pay, who are you going to stick in Jail?
Hypothetical question, City planners build a railway at the expense of taxpayers money.
City people build this new railroad (pay tax on earnings), the same people pay to ride on this railway.
The same people pay extra for prices rises on the same railway, something is very wrong here.
We pay for it many times over, and they still have us in debt, how to fix it?
I do not know.
Edit to add: I am not American
2. Fiscal adjustment-austerity
3. Explicit (de jure) default or restructuring
4. Inflation surprise
5. A steady dose of financial repression accompanied by a steady dose of inflation
But this does not work at all, why not just get it written off?
Who does the debt belong to?
Cannot pay, will not pay, who are you going to stick in Jail?
Hypothetical question, City planners build a railway at the expense of taxpayers money.
City people build this new railroad (pay tax on earnings), the same people pay to ride on this railway.
The same people pay extra for prices rises on the same railway, something is very wrong here.
We pay for it many times over, and they still have us in debt, how to fix it?
I do not know.
Edit to add: I am not American
Oh, yes, America will become great again. Everyone please vote for Donald Duck, let's elect him President.
I'm not writing in support of Trump. Read the post and tell me where I'm wrong.
Oh, yes, America will become great again. Everyone please vote for Donald Duck, let's elect him President.
This might seem like a boring topic, but it is the most important thing to understand if you care about an economic recovery in the United States. FYI: I am an American.
Big business loans are interest-only, meaning no principal reduction is required. The loans are based on LIBOR (which is referred to as a "benchmark rate"). The 1-month LIBOR rate is currently .44%. A big business typically pays a low spread over the LIBOR benchmark rate. For the purposes of this example we will use a spread of 1%. So, big business' interest rate is 1.44% and its loan payments are interest-only. When a big business borrows money to make a $1 million investment it only costs them $14,400 per year.
Small business loans - which are guaranteed by the US government - are based on the Prime (benchmark) rate and are fully-amortizing, typically over 5 years. The Prime rate is currently 3.5%. Small business pays a higher spread over the benchmark rate than big business (despite the loans being guaranteed by the US government). For the purposes of this example we will use a spread of 2%. So when a small business borrows money to make an investment it pays 5.5%, fully-amortizing over 5 years. The same $1 million investment costs that small business $229,212 per year, 16 times higher than that of big business.
The debt constant (annual payment/loan amount) for a small business loan is 23%. So, in order for a small business to be able to borrow money it needs to find an opportunity that produces cash flow in excess of 23%, or else it will lose money for 5 years (and likely go bankrupt). There are very few opportunities like that in today's economy.
A big business only needs to find opportunities that produce cash flow in excess of 1.44%. Obviously, most existing investment and business opportunities qualify.
Moreover, US government-backed small business loans forbid small businesses from engaging in "financial" or "rent extracting" activities, which are the most stable and profitable businesses. There are also restrictions on small businesses engaging in international trade. Big business loans do not have any of these restrictions.
Big business is not smarter or more efficient than small business. They just have a lower cost of capital and a wider scope of available business activities. This is a result of big businesses' lobbyists influencing Congress to keep small business loans uncompetitive.
Given this dynamic, small business investment is near-impossible, and big business consolidation is inevitable. There are fewer and fewer companies cornering more and more markets. The result is the corporate oligarchy that exists in America today. There was an interesting statistic released recently. The US has fewer corporations than it had 40 years ago, despite there being three times as many citizens.
If corporations are people, do we just need more people?
The only way this is going to change is if the "people" lobby Congress to alter the terms of small business loans (which are governed by the Small Business Administration) to make them competitive with big business loans.
This inequality in the cost of capital is the cornerstone of the current corporate oligarchy. Small businesses are the backbone of America. Small businesses have created far more wealth and high-paying jobs for Americans than big business and the government combined. Today, small business is dying.
The only way to save the economic heart of the American economy is to change the lending inequality between small and big businesses. Otherwise, America will never become great again.
Big business loans are interest-only, meaning no principal reduction is required. The loans are based on LIBOR (which is referred to as a "benchmark rate"). The 1-month LIBOR rate is currently .44%. A big business typically pays a low spread over the LIBOR benchmark rate. For the purposes of this example we will use a spread of 1%. So, big business' interest rate is 1.44% and its loan payments are interest-only. When a big business borrows money to make a $1 million investment it only costs them $14,400 per year.
Small business loans - which are guaranteed by the US government - are based on the Prime (benchmark) rate and are fully-amortizing, typically over 5 years. The Prime rate is currently 3.5%. Small business pays a higher spread over the benchmark rate than big business (despite the loans being guaranteed by the US government). For the purposes of this example we will use a spread of 2%. So when a small business borrows money to make an investment it pays 5.5%, fully-amortizing over 5 years. The same $1 million investment costs that small business $229,212 per year, 16 times higher than that of big business.
The debt constant (annual payment/loan amount) for a small business loan is 23%. So, in order for a small business to be able to borrow money it needs to find an opportunity that produces cash flow in excess of 23%, or else it will lose money for 5 years (and likely go bankrupt). There are very few opportunities like that in today's economy.
A big business only needs to find opportunities that produce cash flow in excess of 1.44%. Obviously, most existing investment and business opportunities qualify.
Moreover, US government-backed small business loans forbid small businesses from engaging in "financial" or "rent extracting" activities, which are the most stable and profitable businesses. There are also restrictions on small businesses engaging in international trade. Big business loans do not have any of these restrictions.
Big business is not smarter or more efficient than small business. They just have a lower cost of capital and a wider scope of available business activities. This is a result of big businesses' lobbyists influencing Congress to keep small business loans uncompetitive.
Given this dynamic, small business investment is near-impossible, and big business consolidation is inevitable. There are fewer and fewer companies cornering more and more markets. The result is the corporate oligarchy that exists in America today. There was an interesting statistic released recently. The US has fewer corporations than it had 40 years ago, despite there being three times as many citizens.
If corporations are people, do we just need more people?
The only way this is going to change is if the "people" lobby Congress to alter the terms of small business loans (which are governed by the Small Business Administration) to make them competitive with big business loans.
This inequality in the cost of capital is the cornerstone of the current corporate oligarchy. Small businesses are the backbone of America. Small businesses have created far more wealth and high-paying jobs for Americans than big business and the government combined. Today, small business is dying.
The only way to save the economic heart of the American economy is to change the lending inequality between small and big businesses. Otherwise, America will never become great again.
Jump to: