Stocks, Gold, Silver, and the printing press.

[Hohn]

And this is why planned economics don't work. The whole point of the government borrowing money, putting more debt into the market, is to encourage you to borrow more money. In fact, it has the opposite effect, because people are so scared of losing their jobs, they're willing to lose wealth over the long term by paying down debt faster, and saving more, in an inflationary economy.

Ah well... As long as someone is still blowing the "we can borrow our way to success!" trumpet, people will believe it I suppose.

So I'm mistaken that the point of gov't debt is spending more than it makes?


I'm not sure how you can credibly claim that the point of the Gov't borrowing money is to encourage you- -the citizen-- the also borrow money. If anything, gov't bidding for credit should drive up the cost of that credit (higher demand) and raise rates, making consumer borrowing go down, not up.

Alas, the gov't not only bids, but also prints money. So it can set the price and the quantity both. The point still stands, though.

 

[Lex Concord]

.

 

[ATOMonkey]

So I'm mistaken that the point of gov't debt is spending more than it makes?


I'm not sure how you can credibly claim that the point of the Gov't borrowing money is to encourage you- -the citizen-- the also borrow money. If anything, gov't bidding for credit should drive up the cost of that credit (higher demand) and raise rates, making consumer borrowing go down, not up.

Alas, the gov't not only bids, but also prints money. So it can set the price and the quantity both. The point still stands, though.

The Federal Government, and quite a large bit of data, show that the American economy is primarily fueled by spending. For a "strong economy" and thus good polling, the government wants you, joe consumer, to spend as much money as humanly possible, by borrowing large amounts if necessary. That is why rates have been kept artifically low, exemptions granted for interest deductions, etc.

People, by their nature, won't spend money unless they know more is coming in. In fact, they'll spend MORE than is coming in, if they think there is something coming behind it. Americans on average, hold about $20k in unsecured debt, and a lot more than than in secured debts. So, a "strong economy" where people feel secure in their employment will prompt them to spend more and save less. That is the Federal Philosophy anyway.

However, operation twist, QE1, 2, 3, etc. and massive deficit spending has caused the rabble to question whether our Federal Overlords know what they're doing or not. When 1600 Penn overspends by $100B, people will squak, but they won't feel insecure about it. When the big boy in the oval office bounces a $1T check, people get a bit nervous.

So, while the current markets support additional borrowing, the fear of the next credit bubble is causing more than a few to play their cards much closer to their vest.

Economics is about much more than numbers. You have to understand the psychology of people to properly predict how incentives influence behavior.

If money was only about numbers, no one would ever have financial issues.

 

[zippy23]

thats why people should be taught about money. if you make it about numbers and time, it makes it easy. Pay off debt as fast as possible, especially unsecured, put enough money away to live normally for a year, then have a little fun. save for a rainy day of course and have fun, but live within your means and pay off debt! its so much nicer to have no car payment, before you know it your next car will be nicer than your previous one and so on. the way things are going now it doesnt seem as though our money is going to be worth anything in the near future. buy physical assets

 

[lucky4034]

Fiat currency is not debt. Fiat currency can be as asset because it can be traded for something else of value. Debt also is an asset-- to someone-- because it, too can be traded for something else.

What happens when the value of the unit becomes worthless to everyone else and no one is willing to trade anything of value for it? Then what?

 

[smokingman]

Baffle them with bs.

A report today showed consumer confidence fell this month after reaching a nine-month high in April. The preliminary reading of the Thomson Reuters/University of Michigan index of sentiment dropped to 81.8 from 84.1, economists surveyed by Bloomberg said. (this is the data from the actual report)***

Separate data indicated the pace of U.S. home construction jumped in April to its highest level since November, exceeding all analysts’ forecasts and showing builders returned to sites after freezing temperatures restrained work earlier this year. Thanks to the 40% jump in multi unit housing ie apartments single family building permits where only up .1%

Separate data at 9:55 a.m. New York time may show American consumer confidence rose in May to a 10-month high. The Thomson Reuters/University of Michigan preliminary index of sentiment advanced to 84.5 from 84.1 in April, according to the median economist projection. (This is what economist projected and they where very wrong)***

all of the above is from the same article U.S. Stocks Fluctuate as Confidence Drop Offsets Housing - Bloomberg
Hint,consumer confidence fell,and has not been positive a single time(above 100 means positive)since 2003.UMich Confidence Tumbles, Misses By Most In 8 Years | Zero Hedge

 

[smokingman]

Gas usage in the USA for 2013 is less than 1/2 of what is was in 1980 and rapidly declining.Yes since 1980 fuel efficiency has improved 60%,however the population has gone from 226,545,805 to just over 317,00,00.
There are over 254 million licensed cars currently vs 162 million in 1980.The bottom line is less American people can afford gasoline.We are using less than 50% nationally than we have at any time since the oil crisis(anyone remember that when oil went from $3.00 a barrel to $12.00 those where the days),and the decline has been rapid and sharp since 2007.In 2007 we used an average of 59,000,000 gallons per day,today that figure is at just over 18,000,000.Also of note our number one export is refined petroleum(gas and diesel).

U.S. Total Gasoline Retail Sales by Refiners (Thousand Gallons per Day)

 

[GodFearinGunTotin]

Gas usage in the USA for 2013 is less than 1/2 of what is was in 1980 and rapidly declining.Yes since 1980 fuel efficiency has improved 60%,however the population has gone from 226,545,805 to just over 317,00,00.
There are over 254 million licensed cars currently vs 162 million in 1980.The bottom line is less American people can afford gasoline.We are using less than 50% nationally than we have at any time since the oil crisis(anyone remember that when oil went from $3.00 a barrel to $12.00 those where the days),and the decline has been rapid and sharp since 2007.In 2007 we used an average of 59,000,000 gallons per day,today that figure is at just over 18,000,000.Also of note our number one export is refined petroleum(gas and diesel).

U.S. Total Gasoline Retail Sales by Refiners (Thousand Gallons per Day)

That's impressive.

 

[smokingman]

That's impressive.

Just the month of may.Averages by year(thousands of gallons per day in May).

2006:60,234
2007:57,354
2008:56,390
2009:50,957
2010:46,016
2011:41,172
2012:30,292
2013:24,384
2014:20,453

 

[Justus]

Just the month of may.Averages by year(thousands of gallons per day in May).

2006:60,234
2007:57,354
2008:56,390
2009:50,957
2010:46,016
2011:41,172
2012:30,292
2013:24,384
2014:20,453

That is an amazing stat!
Is that a sign of the recovery I keep hearing about?

 

[poptab]

Gas price is one factor in total gas consumption.

I expect gas consumption to continue to decline and sometime in the future go to 0.

People working less, people working from home, people driving electric cars, people ride sharing... The list goes on.

These are increases in market efficiencies which makes those numbers not as bad as they sound.

Are we where we should be? We would be much better off if government did not meddle in the market so much or at all.

 

[Justus]

Gas price is one factor in total gas consumption.

These are increases in market efficiencies which makes those numbers not as bad as they sound.

Are we where we should be? We would be much better off if government did not meddle in the market so much or at all.

I think if you looked a little further into this gas consumption issue you would find that market efficiencies have very little to do with the decrease in demand.

 

[poptab]

I think if you looked a little further into this gas consumption issue you would find that market efficiencies have very little to do with the decrease in demand.

Care to enlighten me?

 

[poptab]

I did find this: miles driven has remained constant since 2007.

Vehicle Miles Driven

But it doesn't really tell you why the consumption is down.

 

[Justus]

I did find this: miles driven has remained constant since 2007.

Vehicle Miles Driven

But it doesn't really tell you why the consumption is down.

The gasoline consumption rate drop could be due to less non-highway and power equipment be used? i.e. landscaping, construction, mining, farming, boating and recreational.


Here's a blog article you might find interesting. I don't completely buy in to everything she says but overall this blog is pretty good.

http://ourfiniteworld.com/2013/01/31/why-is-us-oil-consumption-lower-better-gasoline-mileage/

"Decreased gasoline usage due to improved gasoline mileage amounts to 7% of the total, decreased gasoline usage because of fewer miles traveled amounts to 25% of the total, and a decrease in distillate use amounts to 17% of the savings. The majority of the decrease, 51%, comes from a decrease in industrialization."

 

[poptab]

Those numbers on consumption are taken from refineries. I doubt that's a good proxy for demand at the retail pump. Something is fishy about those numbers. They represent practically a 75% drop. I think I'd notice that in traffic volume.

 

[Justus]

Those numbers on consumption are taken from refineries. I doubt that's a good proxy for demand at the retail pump. Something is fishy about those numbers. They represent practically a 75% drop. I think I'd notice that in traffic volume.

I wish I had the answer. Maybe she's counting figures since the peak in 2003?
She's spot on with the 7% figure on increased fuel efficiency, that's the figure that seems to be used by every other source I've looked at.
With roughly a 66% drop in gasoline sales shown in smokingman's post, there has to be other forces behind this besides telecommuting and fuel efficiency.

 

[ZombieApocolypse]

I wish I had the answer. Maybe she's counting figures since the peak in 2003?
She's spot on with the 7% figure on increased fuel efficiency, that's the figure that seems to be used by every other source I've looked at.
With roughly a 66% drop in gasoline sales shown in smokingman's post, there has to be other forces behind this besides telecommuting and fuel efficiency.

The internet might help in this .... instead of people driving from store to store shopping more people are buying products etc online.

 

[RockofStrength]

The gasoline consumption rate drop could be due to less non-highway and power equipment be used? i.e. landscaping, construction, mining, farming, boating and recreational.


Here's a blog article you might find interesting. I don't completely buy in to everything she says but overall this blog is pretty good.

Why is US Oil Consumption Lower? Better Gasoline Mileage? | Our Finite World"Decreased gasoline usage due to improved gasoline mileage amounts to 7% of the total, decreased gasoline usage because of fewer miles traveled amounts to 25% of the total, and a decrease in distillate use amounts to 17% of the savings. The majority of the decrease, 51%, comes from a decrease in industrialization."

Unless "gasoline" includes diesel fuel, wouldn't most of those applications outside of landscaping and boating tend to be outside of the purview of the metric?

 

[Justus]

Unless "gasoline" includes diesel fuel, wouldn't most of those applications outside of landscaping and boating tend to be outside of the purview of the metric?

Yes, maybe, who knows?
I am inclined to believe that the blog article is on the right track.... a large percentage of the drop in consumption is due to a decline in industrialization.
I don't have the time to find any recent charts but the stats up to 2011 show a decline in diesel fuel consumption as well.