Global Debt Time Bomb explodes soon

[Blacksmith]

The USPS has an un-sustainable business model.

That's what happens when the USPS's boss (Congress) won't let it be run like a business and won't let it be run like a charity/infrastructure.

The Post Office isn't a business, or even a charity. It is a requirement.

Article I, Section 8, Clause 7 of the United States Constitution, known as the Postal Clause or the Postal Power, empowers Congress "To establish Post Offices and post Roads" - yup - it's in there.

This is something that I have really given some thought to - as did the Founders. A Postal system is a requirement for any kind of growth or commerce in a Nation. A working Postal system is a plot point in two of my books.

The cost of a working postal system is a driving factor. For years, the FedGov subsidized the postal service. I can remember twice a day delivery, and once on Saturday.

Now, well, it's different. The FedGov doesn't want to subsidize the service. I won't go into what I think are the core problems faced today, but with at least 100K workers looking at layoff/termination, I can only guess it is going to get a lot more expensive without some major changes.

Now, if CONgress would stop the freebies (free mail service for Federal prisoners, franking for .gov and so on) it would help, a little.

I have a dog in this fight. If I order an item from an on-line vendor, it can be mailed for under a few bucks, the same (small) item coming FedEx of UPS will cost at least 35 USD. Even from Seattle.

Example - a $14.95 kerosene lantern. Cost to ship UPS, 39+ dollars. UPS has a goofy UPS to mail service that is only slightly less expensive and horribly slow I've used out of necessity of no other choice Seems once Big Brown gets its hooks into a vendor, they are not allowed to ship via USPS..
I'll skip the frustration of "We don't ship to AK" outlets, owing mostly to thier being married to FedEx or UPS.

Do you believe that if the U.S.P.S. did not have a statutory monopoly, that FedEx and UPS would not find it profitable to retool their system for more economic delivery? Who in the free market would bother to compete with an institution that is allowed to flush the "customer's" money down the toilet and still continue in existence? Speaking of toilets, it allegedly costs the government $100 to procure a toilet seat. Somehow, the free market is magically able to ship one to my door via UPS for 25 bucks, shipping included. I assure you, that would not be the case if the government had a monopoly on providing toilet seats because the Constitution said it could have a monopoly.

But even so, the Constitution does not, in fact, enumerate (as all powers of the Federal Government must be, or else they are not powers) the power of the Postal Service to have a monopoly. Amendments IX and X actually say that private companies have the right to carry mail.

Furthermore, do you actually believe that a "company" that is $1,300,000,000,000 (that's 1.3 trillion dollars) in the red is actually covering the item's delivery by charging a mere "$4.95?"

Because it's not.

I assure you that if the U.S.P.S. could actually turn a profit, you'd be paying them $40 to ship your lantern.

Please don't force me to subsidize your life choices.

I have some really, really bad news for you or.... good news depending upon your point of view.

You paid nearly twice as much for your toilet seat then the government did, listed here at $13.99:

https://www.gsaglobalsupply.gsa.gov/adv ... 9&sk=D360F



What is surprising is that you did not even click the links I posted that show the profit loss of the post office. Maybe not too surprising...

[TacAir]

The USPS has an un-sustainable business model.

That's what happens when the USPS's boss (Congress) won't let it be run like a business and won't let it be run like a charity/infrastructure.

The Post Office isn't a business, or even a charity. It is a requirement.

Article I, Section 8, Clause 7 of the United States Constitution, known as the Postal Clause or the Postal Power, empowers Congress "To establish Post Offices and post Roads" - yup - it's in there.

This is something that I have really given some thought to - as did the Founders. A Postal system is a requirement for any kind of growth or commerce in a Nation. A working Postal system is a plot point in two of my books.

The cost of a working postal system is a driving factor. For years, the FedGov subsidized the postal service. I can remember twice a day delivery, and once on Saturday.

Now, well, it's different. The FedGov doesn't want to subsidize the service. I won't go into what I think are the core problems faced today, but with at least 100K workers looking at layoff/termination, I can only guess it is going to get a lot more expensive without some major changes.

Now, if CONgress would stop the freebies (free mail service for Federal prisoners, franking for .gov and so on) it would help, a little.

I have a dog in this fight. If I order an item from an on-line vendor, it can be mailed for under a few bucks, the same (small) item coming FedEx of UPS will cost at least 35 USD. Even from Seattle.

Example - a $14.95 kerosene lantern. Cost to ship UPS, 39+ dollars. UPS has a goofy UPS to mail service that is only slightly less expensive and horribly slow I've used out of necessity of no other choice Seems once Big Brown gets its hooks into a vendor, they are not allowed to ship via USPS..
I'll skip the frustration of "We don't ship to AK" outlets, owing mostly to thier being married to FedEx or UPS.

Do you believe that if the U.S.P.S. did not have a statutory monopoly, that FedEx and UPS would not find it profitable to retool their system for more economic delivery? Who in the free market would bother to compete with an institution that is allowed to flush the "customer's" money down the toilet and still continue in existence? Speaking of toilets, it allegedly costs the government $100 to procure a toilet seat. Somehow, the free market is magically able to ship one to my door via UPS for 25 bucks, shipping included. I assure you, that would not be the case if the government had a monopoly on providing toilet seats because the Constitution said it could have a monopoly.

But even so, the Constitution does not, in fact, enumerate (as all powers of the Federal Government must be, or else they are not powers) the power of the Postal Service to have a monopoly. Amendments IX and X actually say that private companies have the right to carry mail.

Furthermore, do you actually believe that a "company" that is $1,300,000,000,000 (that's 1.3 trillion dollars) in the red is actually covering the item's delivery by charging a mere "$4.95?"

Because it's not.

I assure you that if the U.S.P.S. could actually turn a profit, you'd be paying them $40 to ship your lantern.

Please don't force me to subsidize your life choices.

I could get the lantern cheaply - could - because the bulk mail /parcel post gets here via a barge or RORO and not via an expensive aircraft - which is the only way FedEx or UPS sends things to Alaska. Waiting an extra 3 days to a week is no problem.
So, I'm stuck -- because the vendor is locked into the Big Boys, and not some subsidy to ship to where I live in Alaska. IOW, the FedEx and UPS guys seek demand a monopoly from the vendors they serve.

FWIW
It's only been recently that you could call everywhere at a flat rate via the telephone - in 1980, it cost $3.50 / Min to call the L48 from Anchorage. You couldn't call at all from the Bush. Today, it comes with your cell phone plan. Thank technology and a mostly non-Union workforce for that change.

You are not really subsidizing my lifestyle choice - I live in Anchorage. However, folks that live in Tititlik get a little help, the folks in Barrow get quite a bit of help - and the folks in Brving Mission get even more. Mostly because there is no Federally subsidized Interstate hiway system in Alaska, like is enjoyed in the CONUS. Very few roads at all - but that is another matter altogether.

Congress, elected by the general population, decided long ago that everyone should have access to the postal system, and at the same cost. So, on the letter you mail across town, the USPS makes some money. The letter going to NY, less and should you ever send - say, a letter of condolence to the family of Kyle Komok in Breving Mission - well, the USPS would lose money on that letter - one of the very few delivered to the village.

As others have mentioned, it's not a level playing field, but the alternative is to shut out rural residents all over the US, something that Congress wants to avoid - at least for now.
The same was true for telephone service and to a lesser extent, electrical service. FWIW, you pay an additional tax on your Internet service, so the FEDGOV can subsidize Internet service to rural areas as well. As you do for telephone and still do for electrical service.

[Blacksmith]

FWIW, you pay an additional tax on your Internet service, so the FEDGOV can subsidize Internet service to rural areas as well. As you do for telephone and still do for electrical service.

Except you don't. There is no high speed internet where I live nor can you get it. It simply is not available.

[TacAir]

FWIW, you pay an additional tax on your Internet service, so the FEDGOV can subsidize Internet service to rural areas as well. As you do for telephone and still do for electrical service.

Except you don't. There is no high speed internet where I live nor can you get it. It simply is not available.

LOL

Thousands of remote Alaskans will soon be able to enjoy high-speed Internet thanks to an $88 million project -- funded partly with a federal stimulus grant -- that laid hundreds of miles of fiber-optic cable across frozen tundra and an ice-locked river before using Chinook helicopters and mountaintop towers to finish the job.

The new broadband network -- set to come online in coming days -- will link one of the nation's most remote regions with big cities in Alaska and the rest of the world, an Alaska telecommunications company announced on Thursday.

Southwest Alaska has long relied on satellites for telecommunications, a system that created delays as signals ricocheted tens of thousands of miles between space and earth. The long distances caused noticeable pauses in everything from Internet connections to videoconferences. Even phone calls were frustrating, with talkers waiting for echoes or stretches of silence to pass before continuing to speak.

and

"In 2010, Alaska telecommunications companies received $219 million of the $4.6 billion “high-cost” federal universal service fund (USF) to provide voice service in the state.1
It is not a surprise that a significant portion of Alaska is unserved by broadband service. Indeed, even the provision of telephone service in the state is checkered. Only four traditional telephone companies serve more than 10,000 lines, and six such firms serve less than 300 lines each. In fact, Alaska includes an area with the second largest per-line high-cost subsidy in the U.S., where Adak Tel Utility received $2.78 million in 2010 to support 165 lines in an area it describes as “the farthest west city in the United States…[O]ver 1200 miles west of Anchorage” (per line support is $16,876 annually). Current proposals to shift those high-cost subsidies to support broadband could possibly have a huge impact upon many Alaska companies and providers." (Source)

and
An internet super highway is under construction in Southwest Alaska this year, but will the average household be able to afford access?

The chairman of the Federal Communications Commission toured Alaska last week to explore this issue. The last time an FCC Chairman was in Alaska was 2003. And a lot has changed since then.

Sometime this year, 65 communities in Southwest Alaska will get high speed internet access through “Project Terra,” an 88 million dollar effort funded by a combination of grants and loans to GCI, an Alaska telecommunications company. The money comes from the federal stimulus program. " (Source)

As a side note, this is related to some ongoing chat earlier in this thread --
"Karl Kowalski, who is the chief information officer for the University of Alaska, told the group that broadband access is key to running successful distance education programs – and with mail service in jeopardy in some remote areas, it has become even more important.

Kowalski says, when the U.S. Postal Service announced last month that it was studying the closure of 36 post offices in Alaska, the University scrambled to come up with a plan.

“There were 270 students that were in those communities, that we thought at the time were going lose mail service, and thus their access to course materials and their ability to send assignments back to the University,” said Kowalski. The Post Office has since taken 25 communities off the list for closure.

Kowalski says students recognize the importance of internet access as vital to competing in a global economy.

“I know homes that have no running water or sewer, but they see the importance of internet, and they’re paying that fee for the small amount of bandwidth that they get,” said Kowalski.

During his visit to New Stuyahok, Genachowski was taken to the store to check out the price of milk, to understand the trade-offs Rural Alaskans face. Milk, a few days away from expiration, was $12.25 a gallon."

There is rural, and remote, then there is "end of the known universe" remote. Welcome to rural Alaska.

[Valarius]

There is rural, and remote, then there is "end of the known universe" remote. Welcome to rural Alaska.

Hah! Try rural Nevada sometime. You can be in downtown Reno with whatever internet service and provider you like, then drive a mere 30 miles over in any direction and either get 28.8K service for 20 dollars a month, or nothing. Large mountains play havok with signals and require towers to broadcast effectively. I believe that's referred to as "building infrastructure".


Anyway, Europe is mulling over punishment for Switzerland's long-standing policy of invisible bank accounts.

http://www.reuters.com/article/2012/08/ ... 6020120812

[Blacksmith]

There is rural, and remote, then there is "end of the known universe" remote. Welcome to rural Alaska.

Hah! Try rural Nevada sometime. You can be in downtown Reno with whatever internet service and provider you like, then drive a mere 30 miles over in any direction and either get 28.8K service for 20 dollars a month, or nothing. Large mountains play havok with signals and require towers to broadcast effectively. I believe that's referred to as "building infrastructure".


Anyway, Europe is mulling over punishment for Switzerland's long-standing policy of invisible bank accounts.

http://www.reuters.com/article/2012/08/ ... 6020120812

Yes but rural Alaska has some things that rural NV (or AL) does not have. So what are you really paying for?

[TacAir]

There is rural, and remote, then there is "end of the known universe" remote. Welcome to rural Alaska.

Hah! Try rural Nevada sometime. You can be in downtown Reno with whatever internet service and provider you like, then drive a mere 30 miles over in any direction and either get 28.8K service for 20 dollars a month, or nothing. Large mountains play havok with signals and require towers to broadcast effectively. I believe that's referred to as "building infrastructure".


Anyway, Europe is mulling over punishment for Switzerland's long-standing policy of invisible bank accounts.

http://www.reuters.com/article/2012/08/ ... 6020120812

(Smiles)
I lived for several years in rural Nevada - Lincoln county the longest. I also did a fair amount of Geo-technical field work in fun place like Frenchman Flats & the wilds north of Ely for my summer college breaks and spent 11 years of my USAF career working on the "Nellis Range Complex". All places you could drive, in your car/truck with gas you can afford.
In Alaska, you need a GAA to get anywhere.

Internet access is one thing, affordable access, period, is another. There is a reason milk is 12+ USD dollar/gal in Bush Alaska. That's one reason I enjoy living in Los Anchorage - electricity that works, all the time! - water that works and is safe to drink and a quality sanitary sewage system. Most of which isn't available or doesn't work in the Bush.

http://www.youtube.com/watch?v=3jiY1pdmKAA
"Sanitation"
Use bucket as toilet
dump bucket in Dumpster

Take Dumpster to "Brown Water Slue" or, dump it out on the tundra.



Faced with this on a daily bases, coupled with 40% to 80% unemployment rate, Internet access has a slightly different meaning.

(Ninja edit)
Sorry for the semi-thread derail, folks here on the board have often wondered aloud what life would be like in the PAW, you don't have to look very far.
Not a lot of fun.

[ModernCombat!!]

Should we go to war with china to absolve our debts?

[raptor]

MC please check your PMs.

[Tater Raider]

Fun (non political) Fact: US Citizens are the largest shareholder of US debt via Treasury Bonds and Social Security.

[raptor]

Fun (non political) Fact: US Citizens are the largest shareholder of US debt via Treasury Bonds and Social Security.

I am not sure that is fun but its absolutely correct. When you add the federal reserve, state governments, insurance companies and other private US debt holders own around 60% of the total US debt.

The Federal Reserve actually owns more debt than China.

[mad scientist]

The Federal Reserve actually owns more debt than China.

But isn't that just a novice level accounting gimmick? The Fed, which is functionally part of the government, "buying" government debt with money it created for that purpose is really exactly the same as if the government just paid for its budget deficit by printing the money itself, Weimar Republic style.

(Yes, I understand all the economic, historic, and political reasons its done. It just seems dishonest to put Fed Reserve debt in the same category as debt held by people who care if they're repaid)

[raptor]

The Federal Reserve actually owns more debt than China.

But isn't that just a novice level accounting gimmick? The Fed, which is functionally part of the government, "buying" government debt with money it created for that purpose is really exactly the same as if the government just paid for its budget deficit by printing the money itself, Weimar Republic style.

(Yes, I understand all the economic, historic, and political reasons its done. It just seems dishonest to put Fed Reserve debt in the same category as debt held by people who care if they're repaid)

Accountants can't print money legally.

Indeed the debt held by the Fed was bought with money it printed. That said the debt is valid US debt.

[Doctorr Fabulous]

The Federal Reserve actually owns more debt than China.

But isn't that just a novice level accounting gimmick? The Fed, which is functionally part of the government, "buying" government debt with money it created for that purpose is really exactly the same as if the government just paid for its budget deficit by printing the money itself, Weimar Republic style.

(Yes, I understand all the economic, historic, and political reasons its done. It just seems dishonest to put Fed Reserve debt in the same category as debt held by people who care if they're repaid)

Accountants can't print money legally.

Indeed the debt held by the Fed was bought with money it printed. That said the debt is valid US debt.

Oh snap, I need to fire my accountant. I wanted to thank you guys for keeping this updated. Numbers make my brain hurt sometimes, and you guys tend to make this stuff easy to follow. Thanks.

[crypto]

Weimar Republic style.

Inflation due to both rounds of quantitative easing has been pretty minimal, all things considered.

Nothing like the Weimar Republic.

[Blacksmith]

Weimar Republic style.

Inflation due to both rounds of quantitative easing has been pretty minimal, all things considered.

Nothing like the Weimar Republic.

Not even close.

The way the US Government handles the inflation numbers is becoming a more and more of a political hot potato over the years (especially among the elderly). The USG has a huge vested interest in seeing low inflation numbers due to the huge amount of payments they make based upon inflation. It seems a little strange for them to set how much inflation is when they have such an interest in it (and then adjust the numbers based upon "whatever"). A marginal increase results in a huge difference.

In any case the USG simply can not afford for inflation to get out of control. If it does they won't be able to afford to pay the bills. That is why I think that the other shoe has not dropped yet, they have been working hard to keep it from happening. How they are doing it is what I don't quite understand.

[SlobberToofTigger]

Inflation due to both rounds of quantitative easing has been pretty minimal, all things considered.
Nothing like the Weimar Republic.

That is true but only because we are still the worlds reserve currency. After WWI, when Germany started printing money, they were not the worlds reserve currency so their printing of money had a direct effect on its value and an indirect effect caused by a lack of confidence. Whereas when the US prints money we see no direct effect only a partial indirect effect caused by a lack of confidence.

The question then becomes at what point will we see both the direct effect and the full indirect effect our money printing should have on the value of our currency? Simply put no one knows.

[raptor]

Inflation due to both rounds of quantitative easing has been pretty minimal, all things considered.
Nothing like the Weimar Republic.

That is true but only because we are still the worlds reserve currency. After WWI, when Germany started printing money, they were not the worlds reserve currency so their printing of money had a direct effect on its value and an indirect effect caused by a lack of confidence. Whereas when the US prints money we see no direct effect only a partial indirect effect caused by a lack of confidence.

The question then becomes at what point will we see both the direct effect and the full indirect effect our money printing should have on the value of our currency? Simply put no one knows.

This is IMO exactly the case. After QE 1, 2 & 3ish macro economics says we should be seeing a lot more inflation. Instead the USD is strengthening relative to other currencies. Truly a bizzarro outcome.

What it says to me is that the USD continues to be the best looking currency in a beauty contest with some truly UGLY participants. The only make up that can make the USD look this good is the status as the world's reserve currency. My $.02.

[phil_in_cs]

This is IMO exactly the case. After QE 1, 2 & 3ish macro economics says we should be seeing a lot more inflation. Instead the USD is strengthening relative to other currencies. Truly a bizzarro outcome.

What it says to me is that the USD continues to be the best looking currency in a beauty contest with some truly UGLY participants. The only make up that can make the USD look this good is the status as the world's reserve currency. My $.02.

It could also mean that the macro economists don't know as much as they think they know. With a world wide economy in place, it is a very Chaotic system with tens of thousands of variables.

[TacAir]

Best looking of many ugly choices.... worth noting

The Republic of Zimbabwe managed - in fairly short order - to completely trash its own currency, so the Government there went to the dollar - something they cannot print.
(Republic of Zimbabwe - that there was a Weimar Republic meltdown)
I suspect that with such a recent and public meltdown, many here are worried of a repeat in the US. Not going to happen, mostly due to a wide range of factors not present in the Republic of Zimbabwe.

Years ago (mid90s) while working in the former Soviet, I would watch with amusement as our Russian workers - who insisted on being paid every Friday - at noon, in cash. Which cash they would then take and rush to the local bank to convert to US dollars. The ruble (rubol) had been devalued, twice.
Some of those factors are in play here, but I doubt they'll drive the kind of reset seen in the old CCCP.


According to an article from the Fed -
"According to our estimates, about $200 billion to $250 billion of U.S. currency was abroad at the end of 1995, or more than half the roughly $375 billion then in circulation outside of banks.
Moreover, that proportion has been rising. Our calculations indicate that growth in foreign demand for U.S. currency—especially for hundred-dollar bills ($100s)—is far stronger than growth in U.S. demand. On average over the 1990s, the overseas stock has been growing at about three times the rate of growth of the domestic stock."

This may be a partial explanation of why the Fed running the (digital) printing presses hasn't lit the inflation skyrocket.
Yet.

"Inflation figures are derived from a market basket of goods. The contents of that shopping basket used by the DoL seems to be a moving target. This constant changing of these contents has led to claims of "cooking the books" by the DoL as far as inflation figures go. I tend to believe that the books, as used, are indeed being cooked.

What IS a good metric?
How about how long does a person need to work to earn the currency to purchase a kg of white bread? How has the "labor cost" changed over time? You can omit the labor component, looking strictly at cost/kg.

Have some fun, look up the cost in the US vs the EU zone vs everywhere else. Don't forget to factor in taxes, subsidies, shortages, etc as you look at the prices.

For those in the North American market, you might be surprised to see location is one of the biggest drivers on price.

[Blacksmith]

Inflation due to both rounds of quantitative easing has been pretty minimal, all things considered.
Nothing like the Weimar Republic.

That is true but only because we are still the worlds reserve currency. After WWI, when Germany started printing money, they were not the worlds reserve currency so their printing of money had a direct effect on its value and an indirect effect caused by a lack of confidence. Whereas when the US prints money we see no direct effect only a partial indirect effect caused by a lack of confidence.

The question then becomes at what point will we see both the direct effect and the full indirect effect our money printing should have on the value of our currency? Simply put no one knows.

This is IMO exactly the case. After QE 1, 2 & 3ish macro economics says we should be seeing a lot more inflation. Instead the USD is strengthening relative to other currencies. Truly a bizzarro outcome.

What it says to me is that the USD continues to be the best looking currency in a beauty contest with some truly UGLY participants. The only make up that can make the USD look this good is the status as the world's reserve currency. My $.02.

I don't know about "best looking". The Swiss are yielding negative interest rates which is pretty creepy. Chinese currency would look good but how can you trust a currency that is completely controlled by a government that was communist less than 15 years ago and still far from free?

[Doctorr Fabulous]

I don't know about "best looking". The Swiss are yielding negative interest rates which is pretty creepy. Chinese currency would look good but how can you trust a currency that is completely controlled by a government that was communist less than 15 years ago and still far from free?

I don't see how their type of government directly bears into the discussion.

[Blacksmith]

I don't know about "best looking". The Swiss are yielding negative interest rates which is pretty creepy. Chinese currency would look good but how can you trust a currency that is completely controlled by a government that was communist less than 15 years ago and still far from free?

I don't see how their type of government directly bears into the discussion.

That is because you don't understand how the world currency market works. Investors will not buy into a market when the government is manipulating the currency or the government is unstable.

[duodecima]

I don't know about "best looking". The Swiss are yielding negative interest rates which is pretty creepy. Chinese currency would look good but how can you trust a currency that is completely controlled by a government that was communist less than 15 years ago and still far from free?

I don't see how their type of government directly bears into the discussion.

That is because you don't understand how the world currency market works. Investors will not buy into a market when the government is manipulating the currency or the government is unstable.

I think it's less their form of government directly, than the fact that they (like the old soviets) artificially determine the exchange rate, vs letting the market decide. Trusting a freely elected government under that condition wouldn't be easy either, altho the government might be more predictable in the short term. Transparency of government is also critical in that situation - something that didn't exist in the old Soviet, nor in China today.