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In reaction to my post yesterday, several people pointed out that Obama's budget deficits would lead to certain economic doom. Let's take a look at that assumption.

First, if you are American, and you believe the deficit means certain doom, you should cash in all of your investments and move into some sort of survivalist encampment, or to a country that has less of a budget problem. You don't want to pay your share of the $19 trillion. So if you aren't already packing to leave, maybe you are just saying you think the ballooning national debt is the end of us all, but you really think we'll figure a way out of it. This might be similar to saying you believe in Jesus but for some reason you refuse to give most of your money to the needy. There's a difference between real believing and whatever the heck the other thing is.

Allow me to be the first to say I don't understand all the ins and outs of the national debt. On the surface, it's hard to see how you can pay off a multi-trillion dollar debt even if you mug the rich. It's not even clear how we could stop the debt from increasing every year until cannibalism breaks out.

On the other hand, the Adams Theory of Slow Motion Disasters states the following: Any looming disaster that is generally recognized years in advance is eventually solved. For example, population hasn't increased until we ran out of food (Malthus), the Y2K problem got fixed, and even our air and water quality have improved in recent years in the U.S.

So what are the odds that human ingenuity will find a way to pay off the national debt, or at least pound it into a smaller problem before it rips society to shreds?

Do the economic experts in the Obama administration believe the debt is unsolvable? It's entirely possible that some of them think we're doomed, but they don't speak out because keeping their jobs in the short run is the best strategy they have.

I declare a link war. Show me your links to the best arguments for the debt eventually killing us all, and your links to any argument that says there is a way to grow the economy enough to pay it off. If you don't have a link to share, vote on the ones you think are most persuasive. Let's see if we believe, collectively, that we're doomed.
 
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Sep 7, 2009
A lot of economists believe that the United States will be bankrupt in as few as twenty years. It may take several decades for future generations of Americans to pay off America's debts, if it is even possible. In the best case scenario, the United States would cease funding several key programs, such as Social Security and Medicare, and even increase the retirement age again just to name a few possibilities. Television will be soon be useless, should everything start to really break down, as nearly nothing broadcasted will be even close to the truth of what is actually happening on <a href="http://personalmoneystore.com/Payday-Loans/instant-Payday-Loans/instant-Cash/"><strong>instant cash</strong></a>. They will be using TV to continue to try to dope people into a false sense of security, even when FEMA & UN troops are marching right through their neighborhoods.
 
 
Sep 1, 2009
Hey Phantom II, to paraphrase Dilbert's pirate iPhone app, don't let the door bash your khyber on the way out, people like you would be best off helping some far right regime in Central America.
 
 
-1 Rank Up Rank Down
Aug 30, 2009
It was in a misrepresented context. I'm not even arguing that RM's point was incorrect. Evidence suggests that the Canadians have done a better job of reigning in their debt. I didn't argue against that. You seem to be awfully defensive against somebody just trying to clarify data.
 
 
Aug 30, 2009
Mr. welge, the point is IT WAS IN CONTEXT. He had posted the difference in size. "Almost lying"? what are you studing, to become a politician.
 
 
-1 Rank Up Rank Down
Aug 29, 2009
The US economy is not going to collapse for a number of reasons. I could write a book on it. Since the industrial revolution, life expectancy and quality of life has improved for all people in all countries under all governments and all healthcare systems. Seriously, it's true. I'm young and between me and my friends, we think that things are moving in the right direction. Economics isn't a game that anybody "wins" anyway. I like how people believe that recessions are a "mistake" as if somebody f'ed up or something. People were behaving in an unsustainable manner, now resources are being reallocated to actually productive parts of the economy. The economy here in Texas is almost unscathed. Doesn't seem like a bad thing to me. Once we go a few years without wasting economic resources, the momentum will return to the economy, and everybody will calm the f down. I think that the national debt could become relatively high, especially if the US actually develops a higher savings rate, but Obama's policies are still dumb. He's not spending money in anywhere near the best way possible, and his transparency promises completely fell through. My generation is baffled by the sheer inefficiency and lack of transparency in government today.
 
 
-1 Rank Up Rank Down
Aug 29, 2009
Your post about the difference in sizes was unnecessary, since RM already pointed it out, and it had no context; it didn't add anything. Just like when people inadvertantly double-post and people thumb them down, I assume you got thumbed for lack of contribution.

Canada is (approx) 1/10 the size of the US, with (approx) 1/10 the GDP, but *only* 1/20 the debt, despite one payer healthcare. This was (part of) the point RM was trying to make. (If I may be so bold as to speak on their behalf.)
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I think that my post was perfectly necessary. Saying that Canada has one twentieth the debt of the US is almost lying. Plain and simple. Not putting information in context is bad.
 
 
-1 Rank Up Rank Down
Aug 29, 2009
Reducing and preventing a deficit are the same thing. To reduce the deficit, you can't have on in the first place. I didn't realize that I had to specify Dilgal.

__________________________________________________________________________

What I meant to say, is that you can't reduce with debt while you have a deficit anyway, so reducing the debt and the deficit are essentially the same issue. Both have the same solution. Have more money flow in than out.
 
 
0 Rank Up Rank Down
Aug 29, 2009
wow.
What is posted isn't what I typed...

beware the use of the percent sign. The guy would have a 500 percent debt. And the US debt is running at about 80 percent.

And is there some software that wants to censor profanity? I didn't type all those symbols for when our money goes bad. Apparently, it isn't PC to use the colloquialism for breasts. And after all that registration BS.

Scott I can't believe that after making me swear I'm not 13 so that you can comply with the law you won't let me swear a little bit to all the others who swear they aren't 13.
 
 
0 Rank Up Rank Down
Aug 29, 2009
To R.Saunders
european governments too small..... have you say heard of the eurozone? The european central bank issues bonds.
Personally I think the reason the US is not doomed is simple- the united states has borrowed all of the money it owes to people in dollars- which the US government can print- at worst you'll get massive inflation. Far less destructive than economic collapses that we have seen in south america because their debt was in dollars.
 
 
0 Rank Up Rank Down
Aug 29, 2009
The guy who makes $100,000 per year is probably going to have a $500,000 mortgage. So as a percentage of his gross domestic product his debt is P0. The current level of public debt as a percentage of GDP is nearly €. About the same as Germany. The guy with the mortgage, if he got a decent deal, is going to have to pay about 35% of his income every year to the mortgage... the point is that comparing a country's finances to an individual's is comparing apples to oranges.

GDP is a completely mythical number. It is nearly meaningless. If all of us on the block got together and pooled our paychecks, you might think that would be our Gross Domestic Product on the Block (GDPoB). But not quite. Because Bill loaned Fred $8000 to help him put solar cells on his roof we would have to add $8000 to GDPoB for Bill's capital investment, another $8000 would be counted for Fred's capital expenditure and because Joe owns the solar company another $8000 for manufacturing orders and because Joe spent $6000 to buy the raw materials, another $6000 for raw goods, plus $2000 for corporate profits. That "simple" $8000 transaction gets counted multiple times, inflating what's really happening. Or not. That movement of money passed through many hands during the year and got counted each time. Egads, it's enough to confuse anyone.

When money is moving around like mad, the economy is booming. When money isn't moving - it's busted. But trust is an essential and unmeasurable component of money. The barter system is not dependent on trust. And it is not at all an efficient means of buying and selling. Because in our modern times we are not swapping chicken eggs for tomatoes but instead swapping the one thing we produce (like selling real estate) for a product that requires the separate production of literally thousands of other people (like an ipod). That takes a construct like money which is largely based on trust. Take out the trust, and we are back to eggs and tomatoes, and very quickly no one will be able to bring together all it takes to make manufactured goods without the abstraction of money.

And because that concept of money makes the greedy actualize, we get finance for the sake of finance rather than for the intended purpose of capital investment in means of production. But that's another can of tomatoes altogether.

I will give you 50 dozen eggs for a days work. That is a good deal for most people if they could easily convert the eggs into money. But if money isn't trusted, it is going to take an impossible amount of trading to come up with any manufactured good, especially once we have lost our manufacturing base. Possibly the trust of money will be lost after the singularity. That is, after we invent the self-replicating-fabricate-anything device...we are close... Then how well off you are will be determined by what you choose to have your little self-replicating factories produce for yourself...then there will be laws...you can't fabricate Scott's good-looking underwear because he has a copyright on them and wants 50 dozen eggs for the right to make a pair...

Tell me our system of making things happen isn't wacked. But it's all we have right now and it is being controlled and abused by small groups of powerful people...like always.

Look at what happens when governments go broke. We don't really get taught that in school, we'd much rather learn about liberating the slaves. But the collapse of German money after World War I resulted in the democratically elected government of Adolph Hitler (tells me that there are serious problems with majority rule). The Soviet Union fell because it went broke and it's money couldn't buy it anything on the world market. The result was that it downsized, developed and exported a mafia, found oil and is back on the upswing and busily diverting its new wealth back into a military build-up with a neo-nazi at the helm. And so on.

Not much good happens when your government's money is devalued. But, we're in a pretty good spot. We, the U.S. of A., have everything we need to be really well off right here within our borders. We make all the food we need (for much of the rest of the world too). We depend on imported oil, but if we get rid of some environmentalists, we could make all our own energy and the rest of the world would go broke because most of it gets its money from oil sales to us. They might not realize they are broke, but when Saudi Arabia starts buying military hardware from China, they are toast.

It might be good for us to go broke. We can't buy anything on the world market, so we make it here. Full employment comes back again. American made computers, american made televisions, american made childrens toys. Who wudda thought. We could all be busilly providing health-care for one another too. And while we are at it we could elect (by majority) a facist guy who wants to nationalize everything but we are really happy because the planes run on time.

National debt doesn't mean anything - what means something is when our money goes !$%* up. Probably not this year, or next. But if we don't capture bin Laden soon, we will be weenies and don't deserve the trust our money commands.
 
 
Aug 29, 2009
The way that I see it, There's 2 possible things that can happen:
1. Eventualy, all the contries of the world that we owe money too will get impatient about the debt and start repossessing the US.
2. We will get new loans to pay for the old debt. This scenario will only delay scenario 1.

What's realy going to be interesting is what happens during the repossessing. Cuba will finaly have taken over florida "officialy," Russia might want to take back Alaska "Good bye Palin!," Brittan might want those 13 eastern-seaboard states, France might want the area we got in the Louisiana purchase "but probably not," noone would want Nevada "exept for Las Vegas," Japan could get Washington "the state," China could take California "simply so that they have more land to cram all those people into," Mexico might want some of the sothern-border states, but I have no idea who would want Wyoming and Nebraska. Of coarse, it's possible that the country won't be repossessed along state lines, similar to what happened to Africa with all the European colinization.

I would appreciate it if people would leave comments based upon what country would take what area.
 
 
+2 Rank Up Rank Down
Aug 29, 2009
Comparison graph of the national debt versus GDP of the US, Japan and Germany:

http://en.wikipedia.org/wiki/File:PublicDebtTriade.PNG
 
 
0 Rank Up Rank Down
Aug 29, 2009
I propose that all U.S. citizens do all of their investing in US bonds from now on. That way the the money that you lose while the governments spends it on interest, comes back to you.
And as long as you keep on investing, the government will not have to default on its loans. It is a win-win scenario. All you need is trust.
 
 
Aug 29, 2009
For the person who said the Chinese suggested we issue our debt in Chinese Yuan...are you really that stupid? 1) The Yuan exchange rate is fixed to the US Dollar. Issuing in Chinese Yuan would make no difference. 2) No country can issue debt in currency it does not issue.

And saying any health care bill passed by the Democrats would lead to single payer for all is like saying that any health care bill passed by the Republicans (like Medicate part D) would lead to the privatization of medicare and social security.

Please, stupid person, just leave, as you said you might. America will be much better off without people as stupid as you. Do it now rather than hanging on until the rest of us have saved your butts, and you get the same benefits that the smart ones of us get.

No, I'm not a Democrat, I'm just intelligent. At least just let the rest of us run things so that you can't screw it all up because of your stupidity.

You're also not working. You have every right not to, as long as you can provide for yourself. But you're the proverbial "deadweight employee." We can't fire you, and that would not be the right thing to do. But if you decide to quit...don't let the door hit you on the way out.

If you want your fixed income to go up, you'd want some inflation, wouldn't you? The more the government borrows, the more is has to borrow from you, and the interest rate goes up. Economics 101. I suppose you didn't take that course.

We need less stupid people who don't work. There's the door.
 
 
-1 Rank Up Rank Down
Aug 28, 2009

Let’s start with the effects of this year’s deficit. ... Consider what would have happened if the U.S. government and its counterparts around the world had tried to balance their budgets as they did in the early 1930s. It’s a scary thought. If governments had raised taxes or slashed spending in the face of the slump, if they had refused to rescue distressed financial institutions, we could all too easily have seen a full replay of the Great Depression. Its obvious that some institution may get <a rev="vote for" title="Death Risk Rankings | Are You Dead Yet?" href="http://personalmoneystore.com/personal-loans/quick-loans/fast-cash/ ">fast cash</a>.
 
 
Aug 28, 2009
I do not understand much about all this but I do not see this as the USA's problem at all. It is the holders of the debt who have the problem.

Assuming an extreme scenario, even if the US declares bankruptcy what happens? The world will have no option but to bail it out. Similar to the large banks which were considered too large to fail and which were bailed out by the government. There may be some temporary recession, layoffs etc, but nothing on any large scale.

Even assuming that nobody bails out the US what will actually happen? The dollar will become worthless in theory, but practically will all American land, American business and American people be sold to its creditors. I doubt. If the US basically tells the world that the dollar is now worth zero, therefore your investment is also worth zero and now we are moving to a brand new currency to start afresh, you can take it or leave it, do you think China, Japan, UK or other will start a nuclear war to reclaim their investment.

A dollar is basically a promise/contract by the US goverment to pay a certain sum of money to somebody. If the US defaults on the contract, there is no way anybody in the world can enforce the contract. Some hue and cry will be made, but then the world will move on.

To all americans, I say forget about all this debt business. Keep on printing dollars and spending like crazy. When the whole ponzi scheme collapses, there is nothing anybody in the world can do to you. If people are foolish enough to accumulate contracts which have no hope of being enforced that is their problem, not your's.

 
 
Aug 28, 2009
umm... wow. some deep stuff. I think that people are dumb. Ya. thats what most everything is about. if you didnt study for a test and you failed, thats just being dumb.if you people are trying to sell a house and cant, your dumb because everyone knows the economy is bad so why wait for a million years to sell your house??? just live with it!!! everything is about smart or dumb. if President Obama is smart ( supposedly he went to collage so he should be) he will find a way out of this mess. so sit back and relax. maybe watch the news or what ever. or you can.... i dont know weed the garden... or .. ya . maybe take out the trash?? whatever you do just do something!!.
 
 
Aug 28, 2009
Scott - a much better and more reasoned post than your idiotic one (sorry) of yesterday. You say that if people really believed it was all that bad, they'd run away, and I agree with you. Personally, however, I'm semi-retired, which means most of my income is passive. You're an economist and know what that means, but for those who aren't: I don't earn very much income any more. Most of my money comes from equity investments; I only take what I need to get by, and only get taxed on the gain. So that means I will be impacted less by massive tax increases on income than a lot of folks. It also means I'll have more time to execute my plans when I see the maelstrom coming.

The other reason I don't head for the hills right now is that inflation isn't going to happen overnight; we'll have warning. What the massive spending and borrowing IS making me do is make serious "what if" plans. These involve deciding what country I'll move to if, and I do mean if, not when, the excrement hits the rotating cooling device. I have identified a few countries, including Panama, Costa Rica, and a couple of others I don't want to give away, as places to go if this country's economy goes in the toilet.

The facts are, though, that something has to change in this country or we are not going to be economically viable in the near future ("near" being within our lifetimes). Here's some basic economics for you, Scott. Maybe this will make an impression on some of you.

First, there are only four ways a government can get money:
- tax its citizens (this includes 'nationalizing' industries, a la Hugo Chavez, Fidel Castro, et. al.)
- borrow the money from someone else, such as the Arabs, Japan and China
- borrow the money from ourselves by printing it (the US government does this by issuing bonds which are then bought by the Federal Reserve, which then prints the money and gives it to the government for its IOU, which causes inflation)
- and the fourth, which you probably haven't thought of: spoils of war. Hold on to that last thought for a second:

The Chinese currently own (as of January 2009) $740 billion, or about 24% of our debt instruments. Japan is a close second with $635 billion (21%). Now this was before president Obama decided to increase the debt by another couple of trillion, and now his estimate is that his administration will add $9 trillion to the debt (he originally said $7 trillion, but I guess he made a rounding error) in the next ten years. Not to mention the $54 trillion or so in unfunded liabilities for Medicare and Social Security, which aren't a part of the debt but are still owed.

Recently, Secretary of State Clinton went to China to beg them to keep buying our bonds. When Treasury Secretary Geitner spoke before a group of students in China recently, they laughed loud and long when he told them that the US economy was still in fine shape. The Chinese are starting to balk at buying our bonds, and have recently floated the idea that we should issue them in something other than the US dollar, suggesting the Chinese Yuan be used because the dollar has a severe threat of losing value to inflation.

Now, there's no way to tell why the Chinese (and the Russians) are starting to pour a lot of money into their military forces. There is no way the US is going to become imperialistic and try to capture other countries for their money and resources, but there is also very little way we can say a lot to the people who hold our economy's mortgage in their hands if they start to get frisky and start to rethink their old 'world domination' strategy.

So, Scott, those of us who see what is happening to our country, and the threat that continuing this massive debt and overspending poses to our economy, are not ready to pull the plug - yet. But if you think we're sitting back here and pretending that everything is OK, and that the good ol' USofA will find a way out of this crisis of our own making without massively cutting both spending and debt, well, you're wrong.

What things are we looking for as indicators that all is lost? The passage of Obama Care, for one. Medicare overshot its initial cost estimates by 700%. Obama Care will ultimately destroy 20% of the free market economy while racking up another $7 trillion or so in debt. To start. If any Democrat health-care bill passes both houses of Congress, it will mean single-payer is inevitable. That will make our unfunded liabilities skyrocket.

Then, the passage of Cap-and-Trade. If that happens, the increased cost burden on manufacturers will force them to produce overseas (read, "China") because it's the only way they can stay cost-competitive in the world market. This will cause massive layoffs and have a huge negative impact on our economy.

Next, significant tax increases, whether hidden or not. If the government does something like taxing a certain sector, and that makes you pay higher prices, then guess what, folks: you're now paying higher taxes. That reduces spendable dollars and further depresses the economy.

Next, the 2010 elections. Currently there are no checks and balances in our one-party rule of government. Republicans hold too few votes to stop any legislation the Democrats want to pass, regardless of the cost, impact or reductions in freedom and liberty they will cause. If the Republicans can't at least keep a filibuster-proof Senate from continuing, the Democrats will take that as a mandate to keep spending through the roof.

Finally, the 2012 presidential election. If president Obama is re-elected and the Democrats maintain control of the House and Senate, it's pretty much game over. At that point, I and many like me will become the proverbial goose that laid the golden egg; we'll get out of here before you can kill us.

So there's your scenario, Scott. I hope I have made it clear. We're still here - for now. But in all honesty, we may not be here for a whole lot longer.
 
 
Aug 28, 2009
Continually increasing the debt is the only thing that Republicans and Democrats both agree on. Republicans do it by cutting taxes; Democrats do it by increasing spending.

The only solutions that come to mind are either massive inflation, or the Emo Phipps debt-dissolving plan: When the other countries ask, "So, where's all the money we lent you?", we say, "We used it to buy all these weapons!"
 
 
+5 Rank Up Rank Down
Aug 28, 2009
I saw the phrase 'link war' and instantly pictured Elbonians flinging sausages at each other.
Could you garrotte someone with a link of sausages?
And if you did, would people be bound to comment, 'I never sausage a thing before!'

*groan*
(That was for Scott, the closet pun-lover)
 
 
 
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