Yes I too knew who started the thread without looking.
In so many such threads we have never heard one word about alternatives.
The world today is in trouble.
Very big trouble.
But without the borrowing it would be so many times worse than the not so great depression we would never recover.
China would have.
Much could be said about why we are in trouble but in truth you will not find the reasons in posts from one under god or arjay.

Arjay, you still don't get it and I don't think you ever will :)

The economic gurus will these days largely confirm that it was
Bernanke acting as he did, which prevented a global depression.

Now if you think that would have been a better option, then I think
you are rather foolish, for the global pain would not have been
a pretty picture.

So Reserve Banks globally agreed to increase liquidity to overcome
the depression threat, then decrease it again, which they can easily
do, as economies pick up and inflation sets in.

It makes perfect sense.

I remind you that most of the money lent to US banks has been repaid,
with a profit to the Fed. The big losses have been from AIG, an
insurance company and from Fanny and Freddie, basically Govt institutions.
Stimulus packages have taken up a big chunk.

Your problem is that you still see money as a store of value, rather
then as a means of exchange and a commodity, to be traded easily for
any others.

You are free to store your assets as gold bars, oil, or in OUGs case
silver bars and perhaps tulip bulbs under his bed :)

So the present problem is not the system, but your mindset. Get
over it and accept the new reality, or go to your grave complaining.

Yabby,You cannot keep on inflating currencies with no increase in productivity.We are headed for hyper-inflation/stag-flation with rising unemployment and falling demand/productivity.Banks will be forced to put up interest rates and this will further add to unemployment.You cannot keep on paying for debts and spending by trashing a currency.Have we not learned from the past?

If our $ goes down with the US $ then the loans we have from China will be affected.If it is in Yuan and it holds it's value, then we pay more back to China in principal and interest.If it is in US $ and it's value is halved ,so is it's purchasing power.We buy much from OS when these stimulus packages are initiated.Most of this money goes back to China.We are borrowing from China so we can buy from China to consume and work.It does not add up to me since there is very little productivity involved.

Arjay, productivity keeps increasing, in efficient sectors of
the economy. Farming, mining etc, never stop investing in better,
more efficient equipment, as do most industries.

Loans from overseas would be hedged for currency shift, the cost
of hedging is included in the cost of interest.

If interest rates go up, then so be it. People might think twice,
before bidding up the price of houses.

If the Australian $ goes down in international terms, so be it.

The Australian Govt provides no incentives for people to save,
rather the opposite, they earn income from taxing people on
the inflationary component of interest payments. So Australians don't
save, but live for today and spend up bigtime!

No wonder we have to borrow from overseas, Govt policy encourages it,
so that is what people do.

Eventually Australia will pay a price, through a devalued currency
and higher interest rates.

So be it, people have voted for it and it is never questioned

Cobblers, Arjay.

>>You cannot keep on paying for debts and spending by trashing a currency.Have we not learned from the past?<<

Surely, what we have learned from the past is exactly that. We can.

You yourself have been going on like a two-bob watch forever and a day about how the US dollar has "lost 98% of its value" since 1900. Surely, that is a long enough period to prove that such a "devaluation", as you call it, is, on its own, entirely harmless?

All the time this "devaluation" of yours has been taking place, the US dollar has achieved, then maintained, a position as the world's default currency.

That may not, of course, last much longer. Nothing is forever, after all.

But it won't be caused by a systemic issue. Just the normal shifts in the balance of world trade.

Incidentally, the first three sentences in your paragraph on its impact on our economy each started with the word "if".

That's an old sixth-form debating trick. String together three speculative "ifs", then draw conclusions as if they had each been factual.

Typical.

Pericles the "ifs" are more than plausable and you have not found a flaw in my arguments.Just follow the end result of your argument.Are you saying that it is OK to trash your currency in order not to pay your debts? I cannot believe this nonsense you are writing!

When,not if the US $ seriously depreciates,this means the great masses of poor and not so wealthy in the US will suffer serious losses in living standards.They will buy less form China and thus China will buy less from us.Hopefully the internal Chinese market will continue to expand,off setting this.

We have to get away from this notion of trade and financial deficits since the strong just put the weak into debt slavery.
Every country on this planet should be allowed to balance their expenditues with income and have no sanctions placed on them in their international standing.We need to foster national sovernignity and not this totalitarian corportate rubbish that seeks monopoly power.