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Debt
Nov 21, 2014 14:48:07 GMT -5
Post by millring on Nov 21, 2014 14:48:07 GMT -5
Why are the debt and the money bubble not a looming crisis? Probably because the world can't get enough of U.S. treasury bills. It's still considered the safest debt in the world. Why is that? Is it due to our status as consumers?
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Post by fauxmaha on Nov 21, 2014 15:07:09 GMT -5
"Least syphilitic hooker in the whorehouse."
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Post by dickt on Nov 21, 2014 17:08:49 GMT -5
The deficit is way below even Paul Ryan's wet dreams and the great Republican plan. So yeah something is being done about debt. But it's still up. And the perception that it is down is only due in large part to the extreme to which it went as we tried (or succeeded, depending on your pov) to spend our way out of the crash of 2008. I guess I don't read graphs the same way you do. The deficit was 10 percent of GDP in 2009 and has fallen sharply every year for six years and is under 3 percent of GDP. This is way better than the Ryan plan projections. Discretionary spending is down a great deal for both civilian and military.
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Debt
Nov 21, 2014 17:21:01 GMT -5
Post by fauxmaha on Nov 21, 2014 17:21:01 GMT -5
The short term trajectory of annual deficits really doesn't make much difference. The last few years of Bush look particularly ugly because of a sharp drop in receipts, which have now more or less recovered back to "normal" levels.
But none of that changes the fact that the accumulated debt is now over 100% of GDP (a generally recognized level associated with long term reductions in economic growth) and is only going to rise. There is no projection by anyone that shows the accumulated debt ever leveling off and subsequently declining. None.
And all this takes place in an environment of effectively free money (zero interest rates), which is itself unsustainable.
And the imbalance in entitlement programs (SS and Medicare) is on the front end of getting dramatically worse.
As a nation, we have already decided: Never mind that we have no money in the bank and our job prospects are looking shaky, we want that shiny new motorcycle and by golly, we're going to have it.
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Debt
Nov 21, 2014 17:48:20 GMT -5
Post by RickW on Nov 21, 2014 17:48:20 GMT -5
We have always tried to live reasonably. We do buy new cars, but then run them until the doors fall off. The girls school is full of families stretched to the max. They complain about the fees, but live in million dollar homes, go on skiing and tropical vacations every year, and drive BMWs. Weird priorities.
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Debt
Nov 21, 2014 17:54:59 GMT -5
Post by RickW on Nov 21, 2014 17:54:59 GMT -5
I have said this before. Our liberal government made it their job to tame the deficit. They did so over a number of years of cuts and tax increases. Not huge increases, but it's a tool that can be used, and was not a disaster. Once the deficit was tamed, the debt started to drop. Excess tax income was used to pay it down. It was working nicely, and when the financial crisis hit, our economy stood up very well. Then our idiot conservative government came in, and decided they would be popular and give everyone a tax break. We have had a deficit again for most of the years they have been in.
So, it can be done. There is some compromise involved, which I don't think your political structure is very good at providing.
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Debt
Nov 21, 2014 18:11:51 GMT -5
Post by fauxmaha on Nov 21, 2014 18:11:51 GMT -5
We are very good at compromising. Republicans want tax cuts. Democrats want spending increases. So we compromise and do both.
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Debt
Nov 21, 2014 18:15:06 GMT -5
Post by millring on Nov 21, 2014 18:15:06 GMT -5
But it's still up. And the perception that it is down is only due in large part to the extreme to which it went as we tried (or succeeded, depending on your pov) to spend our way out of the crash of 2008. I guess I don't read graphs the same way you do. The deficit was 10 percent of GDP in 2009 and has fallen sharply every year for six years and is under 3 percent of GDP. This is way better than the Ryan plan projections. Discretionary spending is down a great deal for both civilian and military. I'm not sure I understand. You're questioning the graph? Do you have a more accurate one? I chose this one because it was the CBO numbers and projections. I guess I don't see where you're saying that the deficit, much less the debt, is coming down. As I said before, I understand the deficit looks better than it did during the TARP and other extreme spending measures. But though it has reduced from then, it actually is leveling off again at a pretty severe rate of deficit.
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Debt
Nov 21, 2014 18:18:10 GMT -5
Post by millring on Nov 21, 2014 18:18:10 GMT -5
Funny exchange, Rick and Jeff.
I know I've always been misunderstood because my views regarding compromise are pretty "nuanced". But I'm not sure that lack of compromise is the issue. Or, more to the point, compromise doesn't really work when the offering from one to the other is the very thing that undoes the offering of the other to the one.
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Debt
Nov 21, 2014 18:47:12 GMT -5
Post by brucemacneill on Nov 21, 2014 18:47:12 GMT -5
I have said this before. Our liberal government made it their job to tame the deficit. They did so over a number of years of cuts and tax increases. Not huge increases, but it's a tool that can be used, and was not a disaster. Once the deficit was tamed, the debt started to drop. Excess tax income was used to pay it down. It was working nicely, and when the financial crisis hit, our economy stood up very well. Then our idiot conservative government came in, and decided they would be popular and give everyone a tax break. We have had a deficit again for most of the years they have been in. So, it can be done. There is some compromise involved, which I don't think your political structure is very good at providing. Canada is exploiting it's supply of natural resources and mostly selling to the U.S. Someday we'll get back to exploiting ours but right now it's out of favor politically. Mining and drilling will come back when we get desperate although we may have to import the shovel laborers. We could have a lot more money than we allow ourselves but it would be dirty money like Canadian oil dollars are considered here now.
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Debt
Nov 21, 2014 19:37:57 GMT -5
Post by Doug on Nov 21, 2014 19:37:57 GMT -5
Deficit down means nothing as long as there is any deficit. It's debt that's is important. If revenue isn't greater than spending then debt is increasing. No reason for the government to ever have debt unless we are in a war. Nothing else is serious enough for debt.
Cut spending till the government is showing a surplus every year. Anything else is an attack on our kids and grandkids no different than robbing them with a gun.
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Post by RickW on Nov 21, 2014 22:11:45 GMT -5
If you actually taxed at the rate most of the western world taxed, I doubt you'd have so much of a problem. But that seems anathema, so I doubt it will happen.
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Debt
Nov 21, 2014 23:05:16 GMT -5
Post by fauxmaha on Nov 21, 2014 23:05:16 GMT -5
I don't think that's it.
Overall taxation in the US sits around 27% of GDP. Canada is slightly higher at 32%. Australia is slightly lower at 26%.
In personal finances, I've heard it said that "there is no such thing as an income that you can't outspend", and the same goes for governments. Deficits are less a matter of balancing books and more a matter of willingness to incur them. There is no natural limit on what government wants to spend. No matter how much money they have, they can always find a way to spend more.
The biggest inducement to out of control debt on the part of the US government is that there is no constraint on them. They believe they have the capacity to borrow without limit. Absent some external imposition of restraint, there is none.
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Debt
Nov 22, 2014 0:11:30 GMT -5
Post by epaul on Nov 22, 2014 0:11:30 GMT -5
Canada is exploiting it's supply of natural resources and mostly selling to the U.S. Someday we'll get back to exploiting ours but right now it's out of favor politically. Mining and drilling will come back when we get desperate although we may have to import the shovel laborers. We could have a lot more money than we allow ourselves but it would be dirty money like Canadian oil dollars are considered here now. Mining and drilling is back, maybe not in the East, or West, but the rest of the country is doing what needs to be done. And it is our energy boom that has saved our economy from the doldrums plaguing Europe. The truth is, it is our drilling and fracking that has kept this country from the toilet. There is one fundamental that separates our growth from Europe's decay, and that is energy production, a production that has given us not only cheap energy but has revitalized an industrial base that was thought to be dead and gone. This country was saved not by the actions of a "clever" Fed, it was saved fracking.
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Debt
Nov 22, 2014 0:54:05 GMT -5
Post by RickW on Nov 22, 2014 0:54:05 GMT -5
I don't think that's it. Overall taxation in the US sits around 27% of GDP. Canada is slightly higher at 32%. Australia is slightly lower at 26%. In personal finances, I've heard it said that "there is no such thing as an income that you can't outspend", and the same goes for governments. Deficits are less a matter of balancing books and more a matter of willingness to incur them. There is no natural limit on what government wants to spend. No matter how much money they have, they can always find a way to spend more. The biggest inducement to out of control debt on the part of the US government is that there is no constraint on them. They believe they have the capacity to borrow without limit. Absent some external imposition of restraint, there is none. That is one hell of a lot of money, Jeff. Right now, you're driving off a cliff. Might be time for something drastic.
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Debt
Nov 22, 2014 7:10:52 GMT -5
Post by jdd2 on Nov 22, 2014 7:10:52 GMT -5
But it's still up. And the perception that it is down is only due in large part to the extreme to which it went as we tried (or succeeded, depending on your pov) to spend our way out of the crash of 2008. I guess I don't read graphs the same way you do. The deficit was 10 percent of GDP in 2009 and has fallen sharply every year for six years and is under 3 percent of GDP. This is way better than the Ryan plan projections. Discretionary spending is down a great deal for both civilian and military. I read the graph the way dickt does, but I haven't got the photoshop skills (or time) to draw a line on it that would emphasize that reduction. And I wonder what proportion of the present US debt, and those (scary) unfunded liabilities mentioned a page or so back, are the result the the Iraq war? Unfunded liabilities... Is that like the chinese shadow banking system?
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Debt
Nov 22, 2014 7:51:21 GMT -5
Post by brucemacneill on Nov 22, 2014 7:51:21 GMT -5
I guess I don't read graphs the same way you do. The deficit was 10 percent of GDP in 2009 and has fallen sharply every year for six years and is under 3 percent of GDP. This is way better than the Ryan plan projections. Discretionary spending is down a great deal for both civilian and military. I read the graph the way dickt does, but I haven't got the photoshop skills (or time) to draw a line on it that would emphasize that reduction. And I wonder what proportion of the present US debt, and those (scary) unfunded liabilities mentioned a page or so back, are the result the the Iraq war? Unfunded liabilities... Is that like the chinese shadow banking system? The "Unfunded liabilities" are social programs, public pensions and promised healthcare coverage that don't have enough revenue coming in to cover the promised outlays. To ePaul's contention that we are exploiting our resources, yes to some degree but not to the level that they could be exploited.
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Debt
Nov 22, 2014 8:04:28 GMT -5
Post by millring on Nov 22, 2014 8:04:28 GMT -5
I'm still really interested in better understanding this "...world can't get enough of U.S. treasury bills. It's still considered the safest debt in the world."
If that's really the reason our debt doesn't matter, I'd like to understand what it means and why it is. If I remember correctly, if you substituted "U.S. real estate" for "U.S. treasury bills", you'd be describing the world in 2007, wouldn't you?
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Debt
Nov 22, 2014 8:25:54 GMT -5
Post by theevan on Nov 22, 2014 8:25:54 GMT -5
Again, deficit still adds to debt. In my world it is red ink. A reduction on deficit, while laudable, still increases debt.
If bankruptcy were imminent for me, I doubt that showing I was bleeding red less than before would forestall the inevitable. I would need to get back into the black.
Pain looms, sooner or later. We're on a similar trajectory, in some ways, to Japan.
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Debt
Nov 22, 2014 8:26:53 GMT -5
Post by millring on Nov 22, 2014 8:26:53 GMT -5
This is weird. I'm not the best googler in the world, but I just looked through almost the entire page of graphs offered up under a combination of search words to find the deficit in real numbers (instead of a % of GDP). Every single one that I found included projections from 2009 (meaning it's not up to date), or they were thinly disguised propaganda from one side or the other claiming "your guy was worse/did it too". I'll keep looking. Here's one from the left wing (Washington Post) with an encouraging headline "Congratulations, America! Your deficit fell 37 percent in 2013." But it shows that that 37% is just as I a described it -- only encouraging if you took the extreme of 2009 as a baseline. If the graph continued off to the left, I think you'd find that we've merely returned to the level of deficit we had before 2007.
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