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raymondusa (raymondusa)
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A List of Frequently Wrong Assertions about USA

This thread contains a list of frequently wrong assertions regarding the USA.  I will use this thread to list the existing wrong assertions, and add to this list as others post new wrong assertions.  I will also correct these wrong assertions using facts, verifiable stats, and or historical and current data.

Some people make these wrong assertions out of blind arrogance, and others make it out of blissful ignorance.  Part of the problem is some Americans don’t want to face facts, don’t want to see reality, and prefer to live in the past.  Perhaps this was the mindset of the British, when they reluctantly and begrudgingly saw the rise of US, as they began their fall.  Perhaps it was a similar mindset when the Romans felt omnipotent, even when the Greeks were buying up pieces of the Roman Empire.  Transition and changing of the guard, is not pleasant for US, but many of the same signs of historical fallen Empires are there, if only people are honest enough to see it.

An Empire grows by attempting to control more territory, either by outright conquest, or by sponsoring client states.  Either way, the cost to administer and control the growing Empire becomes unsustainable.  The Empire may attempt to finance this cost, by issuing more and more money, but even the mightiest Empire cannot overcome the simple law of Supply and Demand.  While an Empire can issue more debts, and borrow more money, when there is decreasing worldwide demand for its money, it brings on hyperinflation.  There are many historical examples of fallen Empires that didn’t follow the laws of Supply and Demand, and ultimately lead to its ensuing collapse.

2007-6-11 11:24 AM

raymondusa (raymondusa)
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Wrong Assertion #1

Probably the most popular wrong assertion is US can just print more money to pay the debts.  The problem with this assertion is USA is already doing that, and it isn’t helping.

USA has printed more dollars, and the world has NOT looked the other way.  It’s quite the contrary.  Some people assert that the way to fix the US financial problems, with massive debts, unfunded liabilities, budget deficits, trade deficits, etc. is to print more dollars to pay the bills, the debts, etc.

Wrong, wrong, wrong, as there are too many historical examples showing how that is an ineffective strategy, leading to hyperinflation and economic collapse.

Study these historical examples of hyperinflation and the events leading up to it.  You will learn some scary similarities between these examples, and what USA is currently doing.  Example of hyperinflation include France 1789-1795, US Civil War 1861-1865, Germany 1920-1923, Russia 1921-1924, Austria 1921-1922, Poland 1922-1924, Hungary 1922-1924, Greece 1943-1944, Hungary 1945-1946, Argentina (Austral Plan 1985), Brazil (Cruzado Plan 1986), Yugoslavia 1993-1994 (Tito).  Tito felt the answer to his country’s problems was just print money.  We know what happen to Tito and Yugoslavia, right?

This is a basic supply and demand problem.  When you print money, you increase the money supply (notice they stopped printing the M3 to attempt to hide the fact that US is printing more money now).  But when you don’t have an equal demand for that money, you create inflation, and if left unchecked, compounds to hyperinflation and a collapsing implosion of the economy.

Demand for US dollars has dropped for many reasons including but not limited to the following:

1) US dollar is relatively weak, as Central Bankers are buying stronger currencies for their reserve portfolio
2) Japan has been a net seller of US Treasuries, further reducing demand for US dollar denominated assets
3) Kuwait dropped dollar peg recently
4) Iran using their bourse to transact oil in euros, instead of dollars
5) Venezuela transacting oil in euros, instead of dollars
6) US private equity firms offer higher return alternatives to the US dollar, so there is real fear that foreigners will reduce purchases of US dollars, which is actually happening, so it’s a fear now realized

Future demand for US dollars:

1) If Kuwait can drop peg, who’s next among those OPEC nations?
2) If other bourse are successful in capturing greater market shares, that will reduce demand for US dollars even further
3) There is talk that more countries many go to a direct barter system, to bypass dollars completely

With worldwide reduction in demand for US dollars, printing more money, which increases the money supply, will result in very harmful hyperinflation. You should be thankful China and other Central Bankers are still willing to buy dollars since they are the real reason we are not at hyperinflation now, descending to a Banana Republic.  A first year economics student will understand why it is crazy to increase money supply, when demand is going down.  That’s like falling into a hole, and instead of trying to dig yourself out, you are willingly adding rocks on top to bury yourself.  That makes no economic sense whatsoever!!!!

2007-6-11 11:26 AM

raymondusa (raymondusa)
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Wrong Assertion #2

Some people assert that US can just print more dollars to pay its debts and 99% of the world will look the other way.

This is so outlandishly wrong, that it’s too easy for me to factually refute.

Let talk a closer look at the World of buyers and sellers of US dollar denominated assets like US Treasuries.  Below is the year- to -year net changes in foreign holdings of US Treasuries.  These are the latest numbers available from the US Treasury (April numbers are not available yet).  These numbers represent the net change for a year (from March 2006 to March 2007).  Don’t confuse these numbers with the existing foreign holdings of these countries.

- Countries with a negative number mean they are net sellers
- Countries with a positive number mean they are net buyers
- Total amount of net sales are -$116.8 lead by UK, Japan, France, and Korea
- China is the largest net buyer at $101, which almost makes up for all the net sellers
- Very surprised that Luxemburg is such a large net buyer

Foreign Holdings          Net Change (billions)

China                                                             101
Brazil                                                             39.2
Luxemburg                                                             25
Caribbean                                                             21.7
Oil Exports                                                             14.9
India                                                             8.9
Turkey                                                                6.6
Netherlands                                                          5.7
All Others                                                                2.6
Switzerland                                                                2
Israel                                                                1.8
Germany                                                                1
Thailand                                                                0.4
Italy                                                                   0.3
Poland                                                                   0
Sweden                                                                   -2.9
Canada                                                                   -3.3
Singapore                                                                   -3.5
Mexico                                                                   -4.9
Belgium                                                                   -4.9
Ireland                                                                -7.9
Korea                                                                -14.3
France                                                                   -14.3
Japan                                                                -26.7
UK                                                                   -34.1

Data collected from US Treasury, cut and pasted to Excel
Data calculated and sorted by Excel Spreadsheet
Total time to Cut, Paste, Calculate, and Sort:  Under 4 minutes

Some Americans are so blind that they bash China, even when China is the main reason we don’t have even higher interest rates. As net sellers like UK, Japan, France, Korea, etc. rebalance away from US Treasuries, interest rates moved up.  This is not surprising since US needs to attract other buyers to make up the difference.  If not for China, Brazil, and the other net buyers, US will have even higher interest rates than it does now.

Interest rate increases is one reason the real estate sector has cooled off in many parts of USA.  It’s also a reason we have higher foreclosures, bankruptcies, etc.

Here is the irony.  Congress is pandering for votes, and wants China to revalue the RMB up.  China can do this by reducing new purchases of US dollar denominated assets.  If China did this, interest rates go up (since US doesn’t have that many major net buyers left) dollar goes down, and every American will be even poorer (devalued dollars buy less and less things).  That’s chop off the nose to spite the face, as it is not a solution.

If you understood the truth, you would thank China, Brazil and the other net buyers still supporting the US economy, and scorn net sellers like UK, Japan, France and others who are rebalancing away.

2007-6-12 10:40 AM

changabula
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I enjoy reading your posts.

I wish that I was as knowledgeable about it to make a contribution.
But please keep going.

2007-6-12 05:17 PM

convair1948
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Reply #1 raymondusa's post

Just for the record here, exactly what qualifications are behind this commentary. Are you a political analysist, economist, stock analysist, researcher or other. I will enjoy reading this section once I understand the source.

2007-6-12 08:28 PM

tradervic (Uncle Laowai)
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Uh, Ray...

"Yugoslavia 1993-1994 (Tito). Tito felt the answer to his country’s problems was just print money. We know what happen to Tito and Yugoslavia, right?"

We are talking about Josip Broz Tito (Cyrillic: Јосип Броз Тито, May 7, 1892 [May 25th according to official birth certificate] – May 4, 1980)?

TraderVic

2007-6-12 11:28 PM

raymondusa (raymondusa)
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convair1948:

People who have command of the facts are confident enough to let the facts stand on its own merits, and have no need to buttress their message by emphasizing their qualifications.

Since you asked about my qualifications, you are assuming you have the qualifications to determine the merits of my qualifications, otherwise you would not ask.  Since I don’t know your qualifications, what makes you think you are qualified to determine the merits of my qualifications?

Some people try to sidetrack a debate, or a presentation of facts, by attempting to make it an issue about the qualifications of the messenger, instead of just focus on the facts in the message.  This attempt is usually because they don’t have facts to refute it, don’t like the facts, don’t know the facts, don’t know how to find facts, or confuse self-serving opinions with facts.  I hope that is not you.

Whether you enjoy reading this thread or not, is irrelevant to me.  I didn’t write it for your enjoyment.  I wrote it to correct frequently wrong assertions repeated by others here.  By having all these wrong assertions on one thread, I can just link my answers to this thread to save time, instead of correcting these frequently wrong assertions repeatedly.

tradervic:

Yes, I was referring to Josip Broz Tito, President of SFR Yugoslavia.  His policy after WW2 was a reason for Yugoslavia’s eventual collapse, decades later.

2007-6-13 11:52 AM

convair1948
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Reply #7 raymondusa's post

No offense was intended nor implied in my request. To answer your question MBA Economics 40 years, a student of geopolitics and not ignorant of americas direction. Like you I find that the spoon feed media and political posturing of america is definitely leading to eventual downfall of not only world standing but our very existance as a nation.

Unlike many of your readers on this forum, I prefer to know if the answers given are personal opinion, or based on statistical foundations. Much of what you say here is truely a broad brush stroke of "American Opinion" however opinion is sometime far from the actual facts.

Again my request was not intended to offend you, just to know who I might wish to challenge should I disagree with.

Regards

[ Last edited by convair1948 at 2007-6-13 08:42 PM ]

2007-6-13 08:33 PM

tradervic (Uncle Laowai)
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So the 'ethnic cleansing' was just a 'side show'?

QUOTE:

Originally posted by raymondusa at 2007-6-12 21:52
Yes, I was referring to Josip Broz Tito, President of SFR Yugoslavia. His policy after WW2 was a reason for Yugoslavia’s eventual collapse, decades later.

So all that 'ethnic tensions' for hundred of years (and during WWII) were just a 'side issue'?

TraderVic

2007-6-13 11:02 PM

raymondusa (raymondusa)
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convair1948:

Okay, fair enough!  I will answer your question, only because you answered my question, but I don’t want to turn this into a qualification match, and sidetrack the issues.

Business Owner
Real Estate Syndicator / Investor
MBA Finance
Undergrad in Finance and Accounting

I welcome you or anyone else to FACTUALLY challenge anything I write, if you can.  Given your educational background, I think you will agree this is about basic Supply and Demand.  Increasing money supply when demand is decreasing makes no economic sense!  The historical examples I cited reinforce that.

I’ve given historical information, and posted current data from our Treasury.  So far, you have not posted any information, facts, or stats to refute me.  That is revealing since I suspect if you could factually refute me, you would have already done so.

Tell me specifically what you think I wrote that was “American Opinion” and sometime far from the actual facts? Don’t just make a statement and not back it up.

Tradervic:

Notice I said Tito’s policies after WW2 was A REASON for Yugoslavia’s eventual collapse.  Tito was not the only reason.  Ethnic tensions were to some degree, another factor in Yugoslavia’s collapse.

2007-6-14 10:24 AM

#10

convair1948
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Reply #10 raymondusa's post

Thus far I have no problem with your articles and comments. My singular fear (especially on this BBS) that broad stroke facts usually have factors not mentioned, and others take up the opportunity to slip in some obscure attacks. It is sometime ammusing to me to read about the markets, trade deficit and global economics solutions provided in this forum stated as facts, when they are indeed just an authors opinion, or excerpt taken out of context.

One example can be illustrated in the threads about the trade deficit with China. If you read a few comments listed and commented on, it becomes apparent quickly the "American Opinion" is listed by comments issued from specific issue disscussions to media and not provided in full text of the question being responded to. Basic Economics clearly dictate china's windfall now, will deminish quickly as china moves to a consumer driven economy, and thereby bring the trade imbalance to proper economic levels.

Personally I think your thread is indeed refreshing - the formites here think we are all war mongers and gangsters.

[ Last edited by convair1948 at 2007-6-15 12:32 AM ]

2007-6-15 12:15 AM

#11

changabula
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QUOTE:

Originally posted by convair1948 at 2007-6-15 00:15
the formites here think we are all war mongers and gangsters.

Well aren't you?

2007-6-15 12:29 AM

#12

convair1948
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Reply #12 changabula's post

Only on Wednesdays and Thursdays LOL

2007-6-15 12:30 AM

#13

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Reply #13 convair1948's post

Mr ramondusa has facts as the are today on Americas economic front and tries to project the future of Americas economic health in the future and make his assertions fact for tomorrow . He could be right based on today's facts .The Problem is he fails to ecknowledge that America had huge deficets before under president Ronald Reagan , i wasn't on China daily then so i dont know if he was as well , but if he was I'm sure he would be posting the doom of America economically and have his facts to back it up( about the then )deficits of America , but what happened? America turned the deficit into a massive surplus , this is a historical fact . I believe Mr Ramondusa is not anti-American
but is simply trying to inform anyone that will listen, that America cant keep on doing what it is doing becouse it will jeopardise the health of the US economy and he is right . I'm a optimised on the US economy for the future becouse becouse historically America has on record shown proof that its economy is resilient and always bounces back from adversity ( please Mr ramondusa prove me wrong historically ) the readers here want to know , especially the foreign admirers of your posts . Mr ramondusa cant refute my historical facts of Americas economy because truthfully he cant , in the age of the Internet anyone can try and refute me but the evidence is fact on the subject of Americas past economy and its dips and turns to date . President Reagan knew full well that the arms race of the soviet union vs America would cost a lot and cause huge deficets to Americas economy during the cold war , but he also knew America would win eventually and he was right . The cold war is over and the soviet union no longer exists . This spending of huge money is going on today for America to defeat terrorists causing Americas deficit to balloon as it has in the past to defeat a enemy of Americas national security . America will again outspend its enemy ( the terrorists) and crush them regardless of its short term effect to Americas economy . The end result , regardless of its deficits effect on Americas economy , is victory for Americas security that supersedes any short term effect that the necessary increase in Americas deficit to outspend the enemy will bring . Mr ramomdusa will respond that the terrorist spend much less money than America and that its a war of attrition that America cant win , i disagree , yes Mr ramondusa is right that America spends far more than the terrorists in this war but i believe America will win in the end regardless of the discrepancy of cost and that is all that matters to me and any other like minded American.

2007-6-15 09:14 AM

#14

raymondusa (raymondusa)
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convair1948:

It’s great that you have no problems with my articles and comments thus far.  I’m not sure what trade deficit thread you are referring to, since I didn’t write anything about trade deficit on this thread.  But as I wrote before, you are welcome to factually challenge anything I write.

frothow:

Your memory is faulty.  We debated this resilience issue before, but I will refresh your memory.  Reagan ran up large deficits, which added to the existing debts.  You may feel US won the Cold War, but some Economists feel both USSR and USA lost the Cold War.  USSR was the first loser because they couldn’t afford to continue the military spending.  USA was the second loser, since those deficits incurred during all those years of the Cold War, increased our national debts, and was and still is, damaging to our economy.  Do you realize we spend more money paying the interest to service our debts, than we do to fund our Educational System?  Sad, but true!  As far as I’m concerned, there were no winners of the Cold War.

Do not confuse income statement items like Deficits and Surplus, with Balance Sheet items like Assets, Debts, Unfunded Liabilities, etc.  I see some people use Deficit and Debts interchangeably like they think it is the same thing.

Clinton’s surplus was not truly a budget surplus (Taxing revenues greater than operating expenses equals Budget Surplus).  Clinton took money out of our Social Security Trust Fund Account, and supplemented his Budget to create a surplus.  In accounting terms, he took Assets, and converted it to additional cash flow (notice I didn’t call it tax revenue as defined by GAAP) to create a surplus.  We cannot call that a resilience turnaround, since that just decreased the Social Security Trust Fund Asset, creating greater future unfunded liabilities.

Therefore, you have not shown me a factually resilience example yet.  When you say I projected the future, you are doing the same, but with one very important difference.  I’m projecting based on a trend of increasing debts and unfunded liabilities.  You are projecting based on a faulty premise.

2007-6-15 11:55 AM

#15

frothow
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Reply #15 raymondusa's post

Now you are resorting to lies " Reagan ran up large deficets , which added to existing debts " these are your words , lets examine this , Reagan ( according to you )is responsible for today's "existing debts" ....... TODAYS EXISTING DEBTS ! are you out of your mind! Americas debts are in no way becouse of Ronald Reagan , his debts were eliminated and reversed by Bill Clinton and turned into a surplus ! Today's debs are a result of George Bush and his fight against terrorism . As far as the fictional " social security trust fund " that supposedly Clinton raided to make a surplus, i say how can you raid something that doesnt exist? There is no and never was a social security trust fund , are you that stupid? Do you realy believe everything your government tells you ? What a gullible person you are !

2007-6-15 03:15 PM

#16

joey141
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QUOTE:

To Raymond:

2007-6-16 01:54 AM

#17

raymondusa (raymondusa)
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Let me take a moment to educate these two dummies - frothow and joey

I’ve heard these wrong assertions before, as you have offered nothing new. That’s why it is too easy for me to find the US data to prove you wrong. See the post below for the data and links.

Do yourself a favor and learn about our government and how things work. For starters, learn about our Treasury, Social Security Fund, Office of Management and Budget, how the Congress gets these reports and how they appropriate monies. Learn about GAO, Congressional Budgets. Learn about our skyrocketing debts and unfunded liabilities. Americans cannot fix a problem with blind rhetoric. Get real and face these realities.

I don't enjoy making you two look like fools, but you make yourself look foolish when you don't know the facts.

[ Last edited by raymondusa at 2007-6-16 06:33 PM ]

2007-6-16 02:12 AM

#18

raymondusa (raymondusa)
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frothow

You just continue to make wrong assertions that reinforce your ignorance.  You should know by now it is too easy for me to find US data.  I took one minute to look up our Treasury and OMB stats, as reported to Congress.  If you disagree with their stats, then you better tell Congress and the Presidents, since they use the same stats to appropriate spending.

You just confirmed you don’t know the difference between deficits and debts.  The Annual Budget is either a Budget Surplus or Deficit – income statement.  When you keep incurring annual deficits, you just add to the existing debts – balance sheet.

Our national debts existed before Reagan, and continued to grow after Reagan all the way to the current Bush.  You can confirm our debt numbers for any year by going to our US Treasury site.

http://www.treasurydirect.gov/NP/BPDLogin?application=np

We had debts all the way back to the 1800’s but the National debts started to take off about the 1970’s, and continued its skyrocketing path upwards.  Don’t misunderstand me, as I was not just blaming Reagan, since Carter, Clinton, Bush senior and junior, added to our National Debts, with the most alarming being the current Bush, since he has added the most debts.

I looked up the Reagan deficits and how much it added to the National Debts.  When you take his first full budget in 1981, he incurred deficits every year, which added about $2 trillion dollars to the National debts.  79-80’ budget is what Carter left Reagan.

         Deficits (billions)                Existing Debts (billions)
1979       -$40,183    -$828,923
1980       -73,835       -908,503
1981       -78,976       -994,298
1982       -127,989         -1,136,798
1983       -207,818         -1,371,164
1984       -185,388         -1,564,110
1985       -212,334         -1,816,974
1986       -221,245         -2,120,082
1987       -149,769         -2,345,578
1988       -155,187         -2,600,760
1989       -152,481         -2,867,538

from U.S. Office of Management and Budget, Historical Tables, annual.

You sound like an unemployed person, when you don’t know we have a Social Security Trust Fund.  Employed people pay social security tax and self-employed people pay self-employment tax.  I pay part of the Social Security for my employees and my employees have the other part of SSI withheld from their paycheck.  That’s the law.  I also pay self-employment tax for the categories of income that fall under than taxing category.  You can also go to our Social Security site to check out how our Social Security Trust Fund is performing, since there are annual reports to Congress.  BTW, both Clinton and Bush diverted monies from the Trust Fund.  Read the Annual Reports to Congress and you would know that (that is assuming you know how to read annual reports).
http://www.ssa.gov/

2007-6-16 09:49 AM

#19

frothow
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raymondusa:

On paper there is a social security trust fund but in reality it doesnt exist, its nothing but a tax with a title and is spent by every US administration to date .

2007-6-16 10:35 AM

#20

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