Archive for January, 2012

Fibonacci Patterns, the Golden Number, and Fractals

Friday, January 27th, 2012

That’s what our DNA, our fingerprints, our brain neurons, our bodies, our faces, our stock market, our nature, our planet, our galaxy, and our universe all have in common.

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Who Increased US Debt?

Monday, January 23rd, 2012

whoincreasedthedebt.jpgI’d like to see it as a function of GDP, but while that may lower the gap between what is perceived in that chart as 115% and 16%, there will still be striking disparity.

There is no question that deficit spending as a function of GDP during the Reagan administration in particular, is the highest relative increase since WWII. It went from about 25% in the early 80s to 40% by the time Reagan left office.

There is also no question that after the US economy settled down following the end of WWII, republican administrations from the latter half of the 20th century until now have committed to a greater degree of deficit spending as a function of GDP versus democratic administrations.

I would go further to say that recessions tend to be a causal factor in periods where deficit spending occurs above average rates; however, there is no reason to say that one party has been more prone to recessions than the other, granted patterns in US elections indicate that voters switch ruling parties following bad economic climates (which means both parties generally get an equal amount of exposure to recessionary periods because voters “punish” those who are in office when a recession starts).

Based on that, I would conclude that the reasons behind the greater percentages during republican reign are:

– Republicans’ tendency to cut income taxes moreso than their liberal counterparts (thus lowering tax revenue despite maintaining a disproportionately expensive number of government services like medicare and social security).

– Republicans’ tendency to adopt more aggressive foreign policy insofar as going to war is concerned–which again, is a huge drain on government expenditures.

More recently, I would point to two wars initiated by George Bush (costing in the trillions) and a tax rate adopted by his administration which is at a historical low. I would also point to George Bush’s deregulation of a multi-trillion dollar derivatives market juxtaposed with the promotion of speculation on commodities such as oil, which in turn results in price increases being dealt to the consumer, who in turn has less money to spend in favor of economic growth and tax revenue.

The irony–and I’m digressing a bit now–of all this is that China is dependent on our uncontrollable deficit rates to the extent that our debt market is the only one in the world that’s adequately large enough and liquid enough for China to invest its surplus into. Chinese purchases of US Dollars and bonds (artificially) lowers the value of the Yuan currency and enables us to buy cheap goods/services from China. Referring to the ironic part, we’re pressuring the Chinese to quit devaluing their currency so that the US wouldn’t have a trade imbalance/deficit, but if China were to actually alleviate this issue by allowing its currency to appreciate, it would have to stop purchasing our debt, which would essentially bankrupt our economy in that we’d be unable to pay off on the interest on our current debt–not to mention that a strengthening Yuan would further inflate the dollar (we’d need to print more of it to pay out interest on public debt) and cease our ability to purchase goods/services for cheap from the Chinese.

It’s quite simply, really.