US economy - The media says we shouldn't be afraid

[Kakmakr]

Consumer price index is recording double digit numbers and beating inflation means, the purchasing power of USD is on a decline

Disclaimer: I don't live in the US

So I can't really judge or figure out what's actually happening there to draw any definitive or reliable conclusion. With that said, though, I have to note the following. Consumer price index is one of a few metrics used to measure inflation, so it is a marker of inflation in its own right. Another question is whether official inflation rates follow this index as there may be some lags (apart from deliberate distortion or manipulation of statistics, of course)

And while rising inflation rates do imply that the dollar is losing its purchasing power, there are two things to keep in mind and watch for regarding inflation. First, you should keep track of the other major currencies, so it may well be that the dollar is losing its value slower than other currencies on the block (which is the case). And while we are at it, this is what USDX index shows, namely, that the dollar is still quite strong, alive and kicking

Further, even if the dollar depreciates (which is kind of a given for any fiat currency out there), it doesn't necessarily follow that the US economy goes downhill or American citizens become poorer. More specifically, you should also look at the wages rates and their change over time. The point is, if they grow faster or on par with inflation, people may in fact be better off on average even with a cheap dollar (given decreasing unemployment rates)

Yes, that is a brilliant analysis of the economy of the US, but it is a one dimensional view of the problem. US debt is at a new all-time high because of increases in government borrowings, which now amount to 101% of GDP. 

The world is borrowing more than it is producing and third world countries are out of control, so when we have a repeat of the financial crisis in these third world countries, the first world countries will eventually fall too. The stock markets are also due for a 10 year correction and this will happen soon. 

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[deisik]

When there is inflation but people are positive and there is no panic, it reduces side effects of whole bad process.

I think there not being much panic amongst the average joes is purely result of their ignorance in the economics field. Historically, average joes have always been a victim of recessions and toxic monetary policies. I do not expect them to actually acknowledge how bad the situation is until it actually turns bad and they feel it in their pocket

But can it be any other way?

For example, we could consider a hypothetical situation when the tables get turned around somehow. More specifically, could the recessions and toxic monetary policies you mention be ever possible if the average joes were not so ignorant in economic matters? I think it would be an interesting development certainly worth watching. First, what should these joes do or know so as not to be considered economically illiterate? And then, what would the monetary policy makers do when confronted with more aware and knowledgeable folks en masse?

[zhekinsp]

There was a lot of talk about recession in the last days and the media responded with analytics that shows that the US economy is still growing. For example in their output, employment rate and so on..
the stock market is stable for now but what do you think? Is it worth it to invest in big tech firms now or should we wait a year for a possible slump if recession really hit?

So we need to trust their words? Media is the God!

Just ignore them because they will say what they want you to do but they will never say the reality of this world and this can be seen on many evidences.

For now US economy might looks stable but lot of analysis says in few years US will lose their super power due to the collapse in their economy which might be true due to the recent happenings there.

[buwaytress]

Well the DOW soaring now and all that should have been expected. Trump got what he wanted (well, half the rate cut anyway by Fed Reserve) and the expected impact is taking place.

I know Bitcoin maximalists aren't afraid at all. If anything they want the economy to overheat and then implode in a cocktail of inflation and debt repayments the US can't afford for long more. I'm not necessarily wanting any drastic scenario to take place -- because the victims are always the regular people, people who typically won't have much, if any, Bitcoin to fall back on in times of need.

I think we should worry. Not to death. But prudent worrying's good for us. Good for Bitcoin too.

[davinchi]

Media creating a scare tactic where they talk about how bad the economy is does actually make the economy bad. You think the economy doesn't involve any psychology or public manipulation?

When you talk about how the economy is doing bad and how stocks are falling or will fall and how you should totally get safer with your investments, then people do listen to you, maybe not all but most will listen to people on TV if they repeat it long enough, hell even the highest educated intellectuals would have to eventually convinced because if you hear about it for weeks after weeks in every channel you will start to think it is normal.

However, when media does that people do sell and that selling does make it go down, it didn't go down because of any financial reason, it went down because people sold and became desperate, which made media 50% right about it.

[deisik]

US debt is at a new all-time high because of increases in government borrowings, which now amount to 101% of GDP

That largely depends on your perspective

As always, we should look deeper into the matter. In this case, we should first divide the US national debt (as it is correctly called) into two parts. The first part is the debt held by the foreigners, i.e. mostly by foreign governments. And the best part of this debt is held by a few countries which are either outright US puppets (like Japan and Saudi Arabia) or heavily depend on America (like China). The point is, this debt is not debt. It is a tax levied on these countries by Uncle Sam. But to keep things smooth, while waters still and dust settled, it is conveniently called debt in order to avoid public resentment and indignation

The second part of the US national debt is held by the US residents and local institutions. But since the debt is denominated in US dollars, it can be kept rising indefinitely long as it is an accepted truth that any government can print its money as much as necessary. There is no reason to think it is somehow different with the US dollar despite what we are being Fed with (no pun intended). The show that we see every year in Congress with rising the debt ceiling is just that, i.e. only a show as well as a smoke screen for the general public (and probably a weapon in the power struggles within the American establishment)

The world is borrowing more than it is producing and third world countries are out of control, so when we have a repeat of the financial crisis in these third world countries, the first world countries will eventually fall too. The stock markets are also due for a 10 year correction and this will happen soon

The rumors of an imminent collapse of the world economy have been circulating since at least late 90's (since after the 1997 Asian financial crisis, to be exact)

[RealMalatesta]

Media creating a scare tactic where they talk about how bad the economy is does actually make the economy bad. You think the economy doesn't involve any psychology or public manipulation?

When you talk about how the economy is doing bad and how stocks are falling or will fall and how you should totally get safer with your investments, then people do listen to you, maybe not all but most will listen to people on TV if they repeat it long enough, hell even the highest educated intellectuals would have to eventually convinced because if you hear about it for weeks after weeks in every channel you will start to think it is normal.

However, when media does that people do sell and that selling does make it go down, it didn't go down because of any financial reason, it went down because people sold and became desperate, which made media 50% right about it.

There is no way the USA economy is sustainable, it is definitely getting help from cheap labor overseas and than selling for a higher price in USA, if you sell something for 10 dollars in USA there is really not that many people who can't afford it, most people who are even in minimum wage makes 15 dollars an hour so when you sell something for 10 dollars you are literally asking less than their one hour even if they are minimum wage workers.

Moreover, those companies make it for cents on the dollar in some Chinese company and if they can't than they pick another cheap country to build their factory in. This can't continue forever because the more jobs that goes overseas means the less jobs available in USA and there would be less buyers and that would make companies go bankrupt eventually. Just look at how many people were fired this year in USA and you will see why the country is going bad.

[el kaka22]

There are things american should be afraid of and there are things they should not be, you gotta figure out how the financial system works to understand that. Right now in USA the rich people and companies combined make %1 of the country whereas earn 90% of the income, we have all known that for a long time now, even in wall street resistance that was obvious and known.

Bernie Sanders has been saying that for decades now. Politicians get bribes from companies and even get gifted shares from companies to make stuff legal for them so they can make more profits, be able to dump toxic waste, be able to kill trees, basically do anything that would normally be illegal turn to legal for them for more profits. If Americans can't stop this system of rich getting beyond law to get richer and poor paying the price for it, then country will keep getting worse and worse.

[beerlover]

What would you expect the wealthy owners media to say to you about the politician they are backing?

Think about it this way, you are super rich, you have a president that you can talk anytime you want, he allows you to pay less taxes, he makes your legal problems go away, you give him air time that makes him look good and in return he helps you get more viewership via special interviews, then economy goes bad and there is a risk of him not getting elected again and someone you do not like or they don't like you will be elected instead.

What would you do? Show how bad trump is running the country? Of course not, you would show him as the greatest person who ever lived in order to keep him in office to squeeze more money out of him, that is whats going on.

[Janation]

Personal tip: Data will become the biggest commodity in next 5-10 years of time. Invest in such companies who controlls data of the masses. That may be beneficial for the future!

I agree here.

I asked someone about how he's doing and he told me he's doing great and also asked him what is a good investment these days since we usually follow him when it comes to it. He did not say anything but he did pointed the same tip as you posted. Maybe it will be a big thing in the future and I think it will really be a good investment.

[iMark]

There was a lot of talk about recession in the last days and the media responded with analytics that shows that the US economy is still growing. For example in their output, employment rate and so on..
the stock market is stable for now but what do you think? Is it worth it to invest in big tech firms now or should we wait a year for a possible slump if recession really hit?

I think the world is getting more sophisticated, all kinds of systems in the world are starting to be based online. By that thing its become our opportunity and signal for us to begin shift our eyes to firms tech to invest, because in the future companies like facebook, microsoft, twitter, apple, etc. will dominate the world stock market.

[TheCoinGrabber]

Ah, this is just like in 2008. Band playing before the ship sinks. When people tell you not to be afraid, that's when you should. 

But don't worry too much about it, just make sure to protect yourself. People make the most money AFTER crashes - everything becomes cheap and if you got the cash you can buy them all.

[ceyhun4270]

The american economy is growing, but what happens when your president is a guy that wants to buy land that's miles away from his country?
You should not look forward on what the media says about the US economy. Just look at the numbers and be objective.

I suggest you to look for the GDP, inflation and unemployment rate. Those are the things you can trust in 

[fiulpro]

Well this year the growth of dollar wasn't this good, apparently but you can't always expect it to go up... Every now and then it is gonna take ups and downs but that's what an economy is all about , you cannot always expect good days ..
I think it is more or so Trump ... He is actually trying to make America strong by making other countries weak ,..this won't stay up for long time ...it is bound to happen sooner of later...the sooner they change the president..the sooner it will be better for everyone.

[lixer]

Maybe at this time the US economy is growing but the US economy is still likely to decline and experience a recession in the next year. For me, I will invest in gold because gold is less likely to be affected by the impact of this global recession. Just look at the US-China trade war yesterday, gold prices skyrocketed.

Another thing that makes me believe that a recession will occur is my suspicion of Trump's words to make peace with China. I am sure that the US has failed in the trade war this time, they have created their own boomerang. Well the global recession is still very high for me and I will try to invest in a safer market.

https://www.nytimes.com/2019/08/15/world/asia/donald-trump-hong-kong.html

If they are making moves to make sure that the recession does not occur, I don’t see why it should still happen, like I once said to someone, yes they know that the economy is getting bad and they will never come openly to declare it to the world being that they are respected and being that they are giants of the world, we could see signs of it from everything that trump was trying to implement by making sure that they spend less, and also making sure that they generate more money, and we could also see how he has been so strictly about some of the illegal foreigner in their country, so I believe trump is doing everything possible to ensure that the recession does not happen, and if he has to make peace with china, then nothing wrong.

[Chrystora123]

the stock market is stable for now but what do you think? Is it worth it to invest in big tech firms now or should we wait a year for a possible slump if recession really hit?

investing in big tech firms today is an opportunity that will continue to be profitable. Technology companies such as green energy, electric vehicles, and IoT are less noticed today but will be very profitable in the future.

Ah, this is just like in 2008. Band playing before the ship sinks. When people tell you not to be afraid, that's when you should.  

it's important to do your own research because not everything what the media or other people say is the reality, maybe they hide something, stay alert...

[deisik]

But don't worry too much about it, just make sure to protect yourself. People make the most money AFTER crashes - everything becomes cheap and if you got the cash you can buy them all

I wouldn't be overly optimistic about that

And yes, I know about the famous saying credited to Baron Rothschild, the founder (if I'm not mistaken) of the Rothschild banking family, that tells you "to buy when there's blood in the streets, even if the blood is your own" (no plagiarism intended). Everything becomes cheap after a crash, but it doesn't in the least make it worth "buy them all"

You should still be choosy what to buy. So while a crisis certainly makes everything cheap and you can in fact buy worthy assets for pennies, it won't make you rich if you buy trash which is not going to survive. In short, regular and time-tested rules of due diligence still apply even in the streets filled with blood, and still more so if it is your blood

[TheCoinGrabber]

But don't worry too much about it, just make sure to protect yourself. People make the most money AFTER crashes - everything becomes cheap and if you got the cash you can buy them all

I wouldn't be overly optimistic about that

And yes, I know about the famous saying credited to Baron Rothschild, the founder (if I'm not mistaken) of the Rothschild banking family, that tells you "to buy when there's blood in the streets, even if the blood is your own" (no plagiarism intended). Everything becomes cheap after a crash, but it doesn't in the least make it worth "buy them all"

You should still be choosy what to buy. So while a crisis certainly makes everything cheap and you can in fact buy worthy assets for pennies, it won't make you rich if you buy trash which is not going to survive. In short, regular and time-tested rules of due diligence still apply even in the streets filled with blood, and still more so if it is your blood

True. What assets would you suggest people save for for such crashes? I'm thinking that real estate would be great since normally they'd be quite expensive and if the recovery is taking too long to flip them over, they can be rented out in the meantime. People would always need homes.

[deisik]

But don't worry too much about it, just make sure to protect yourself. People make the most money AFTER crashes - everything becomes cheap and if you got the cash you can buy them all

I wouldn't be overly optimistic about that

And yes, I know about the famous saying credited to Baron Rothschild, the founder (if I'm not mistaken) of the Rothschild banking family, that tells you "to buy when there's blood in the streets, even if the blood is your own" (no plagiarism intended). Everything becomes cheap after a crash, but it doesn't in the least make it worth "buy them all"

You should still be choosy what to buy. So while a crisis certainly makes everything cheap and you can in fact buy worthy assets for pennies, it won't make you rich if you buy trash which is not going to survive. In short, regular and time-tested rules of due diligence still apply even in the streets filled with blood, and still more so if it is your blood

True. What assets would you suggest people save for for such crashes? I'm thinking that real estate would be great since normally they'd be quite expensive and if the recovery is taking too long to flip them over, they can be rented out in the meantime. People would always need homes

Help yourself to guns and ammo

Physical gold is the best option in such a scenario. But keep in mind that gold is a passive investment and if this scenario doesn't come to fruition, gold is unlikely to give you any profits. Real estate also seems to be more of a passive option. A more active one would be buying the stock of companies which have good chances to survive but unless you are very familiar with the field, it is hard to tell in advance (read, do your own due diligence at all times)

[sana54210]

That type of logic still stands to this day, Rothschild may have started it but lets remember Warren Buffet gave a loan to a huge bank from himself, not even from his company! Himself! At the amount of couple billion dollars, that is a lot of money to give a bank by a person but he is one of the richest people in the world and considering he holds most of his wealth on stocks and basically papers he must be capable of selling some and funding these sort of things.

After he loaned to a bank because of the 2008 crisis, he started to make so much that it returned to him as 7 billion dollars, bank even tried to buy back the loan as a whole so they wouldn't pay the interest but warren declined because there was no option in the contract like that so he took advantage of it.