Comments on: Sprott: Is it all a Ponzi? Option ARMageddon Tue, 14 Oct 2014 13:06:34 +0000 hourly 1 By: George Sun, 31 Jan 2010 15:57:06 +0000 Discussion of the Federal Reserve as a Ponzi scheme over poker and beer:

Sprott gets a mention.

By: Jon Tue, 29 Dec 2009 15:12:19 +0000 @Dan H – while immigration and assimilation of immigrants in the US is one of it’s strengths and charms, I suspect unskilled Latino immigrants form the bulk of the immigrant flow. With our public education system, particularly in cities, leaving this population severely unprepared for the 21st century workplace, I fear that on balance the immigrant influence will not leave the US more, but less skilled, less creative, less inventive.

By: Dan H Tue, 29 Dec 2009 04:52:38 +0000 From the economist, “America is a Ponzi scheme that works”

‘Immigration keeps America young, strong and growing. “The populations of Europe, Russia and Japan are declining, and those of China and India are levelling off. The United States alone among great powers will be increasing its share of world population over time,” predicts Michael Lind of the New America Foundation, a think-tank. By 2050, there could be 500m Americans; by 2100, a billion. That means America could remain the pre-eminent nation for longer than many people expect. “Relying on the import of money, workers, and brains,” writes Mr Lind, America is “a Ponzi scheme that works.”‘ tes/displayStory.cfm?story_id=15108634&s ource=hptextfeature

Demographically speaking, our underlying trend is growth, if only due to demographics, and this can cover a great many sins. Contrast this with Japan, where the overbuilding up to 1990 can’t be absorbed, EVER, because the population is shrinking. Here in the DC area, house inventory overhang is 40% less than it was at the peak, and prices are climbing again.

We’ve had inflation over the years, and lots of it too. We’ve gotten through… Government budgets will get crunched and fiscal sanity will return. Guess what: There are 1.9 million people employed by the federal government (ex post office and military), same as 1963.

Compared with all history the standard of living of Americans is far higher than ever before. And the vast majority of goods and services in the economy are by Americans, for
Americans. Trade is only a minority of the economy. Speaking of trade, our deficit for the first 3 quarters was just $300B, less than half of what it was a year ago. That is also less than 3% of GDP.

By: fresno dan Mon, 28 Dec 2009 18:04:11 +0000 Yes… yes it is all a Ponzi.

Just like the homeowner (purposefull misnomer – mortgage owner) who tries to maintain a standard of living by equity withdrawal, and not an increase in income, the gubermint wants consequence free spending – don’t raise taxes or cut spending, because…someone might not get re-elected. Just as the home value can’t go endlessly up, borrowing is not income, and debt is not wealth.

By: But What do I Know? Mon, 28 Dec 2009 15:36:20 +0000 It seems hard for me to believe that the Federal government is paying an interest rate of 4.75% for 30 years, while I can borrow on a mortgage at 5% for 30 years–and I have a prepayment option!!! Little old me (and the missus, of course) is now as good a credit risk as a government which can tax me to get its money (even though it doesn’t need to–it can simply issue more PIK bonds).

Something’s not right here. . .

By: Lilguy Mon, 28 Dec 2009 15:28:52 +0000 I’ve read Sprott’s article and his analysis of who’s buying Treasuries is a good one. Kind of hard to quibble with it. OTOH, I also have to think one needs to at least keep in mind Sprott’s perspective as a bullion investor.

That said, it would be helpful if you could write more on this beginning from your end point. What will the beginning of the unraveling look like? What will be the early signs of a policy response–fiscal & monetary? How might it play out (other than like Japan)?