Simple question with a not so simple answer i bet. I have been trying to figure this out the past few days with what´s going on in the states but since i am clueless about economics it isn´t the easiest thing in the world. I was hoping someone has a somewhat unbiased answer to this, since wherever i go on the net there is a political agenda behind it(SOCIALIST OBAMA RAISING TAXES DOES NOTHING! CHRISTIAN LUNATIC REPUBLICANS WE NEED HIGHER TAXES!) and i also have a few things that i simply do not understand about the US tax system.
So in short: 1. Why does the US have to borrow so much money all the time? And why does it never decrease(plz don't say OMG DEMOCRATS THROW MONEY OUT THE WINDOW!) like other countries who manage to keep it +-0 or even in a decrease.
2. The countries with the highest taxes are the best countries in the world to live in year after year(Namely scandinavia) - why can't people see the correlation?
3. Norway for instance has a law that you cannot put a budget into effect that goes in a deficit and it cannot be covered by loans to make ends meet either. The US has no such law?
4. Won't the US eventually be unable to pay their interest rates? Then what?
Theres a bunch of variables like taxes, interest rates, spending, unemployment, and debt, deflation/inflation, etc.
Theres a bunch of equations relating them, and together that makes some matrix.
The people who get elected do so by saying things like decrease taxes, decrease unemployment, end this depression, healthcare reform, etc. These people also get money from companies to fund their campaign, such as from oil companes, banks, private prisons, military suppliers, etc.
In the end this matrix is going to add up, that's just the way numbers work. So if some numbers go up, others go up or down.
Since all these other variable are constrained by companies, people, etc, they'll stay high or low, or whatever people want them to be. But since no one gives a fuck about national debt (or at least didn't 6 months ago), that becomes the free variable.
Thus debt goes up. And because differential equations, debt goes up exponentially.
Math Politics FTW.
Q 1 2 3: I think the US government is pretty shitty in a lot of ways. It's probably not the worst, but it sure isn't the best either. Just saying raise taxes doesn't cut it, there's more linear algebra to it. You have to get rid of inefficiencies, and loosen constraints on the other variables.
Q 4: No one really knows. My opinion? Short term: More debt. Mid term: Default on bonds, people lose investments. Long term: Dollar becomes worth less, Unemployment, etc. All those other variables become bad things. My advice: Drop US investments before it gets as bad as it'll get.
Also, pretty much all the people who say "I know how to fix this problem" are just looking at one equation in the matrix, and they use it to convice everyone else that it's really simple to solve, and then it just fucks things up more.
I do recommend that you study economics yourself to gain a more thorough understanding, but I can give you a short summary based on my knowledge.
There are roughly speaking two opposing schools of thought in economics: Keynesian economics, and Austrian economics. Austrian economic states that the market will automatically correct itself whenever bad things happen, as long as it is deregulated. That is, if a product available for sale is too expensive, then either no one will buy it and the price will go down, or a competitor will start up selling a similar product for a cheaper price. If there are too many companies in an industry for the amount of customers, then some companies will go bankrupt until the number of companies suits the amount of customers. If a need of the consumers is not being met, a new company will start up which will produce a product to meet that need.
What does this have to do with governments and their borrowing? Bear with me, there is a reason the important difference is that Austrian theory requires as little market regulation as possible (while still being moral, e.g. don't deregulate slavery, etc.). If there is little regulation, the market will serve the needs of the people (because the market is people, sothey will serve the needs that they see to make money from those needs).
Keynesian economics thinks of the market as being a ship that needs steering. It does not automatically correct itself to meet the needs of the consumers (people). Instead, it needs guidance in the way of regulations and laws to control how the market expands and deflates. If the market is shrinking and people are spending less money, it is not considered the market correcting itself. Rather, asthe market is not growing it needs to be fixed.
One of the ways which Keynesian economics promotes as a way to fix a falling market is to pump money into the market. If people and companies have more money, no companies will go bankrupt, consumers will buy more products, and the market will grow again. This is what the US (and many other) government is doing. An excellent example of this is the car industry in the USA. Some of the companies were going to go bankrupt. Instead of the government accepting this as a common course of events in an oversaturated market when a company is uncompetitive (prices too high, company not run well, prices too low, no skilled staff because wages aren't high enough, the reasons could be manifold), they decide that the market is shrinking. Market shrinkage means jobs lost and less money being spent (and unhappy voters!) so the government starts giving money to the car companies. Billions of dollars. But the money has to come from somewhere, and the banks start to fail, and other companies start to go under! There's not enough tax money for all these bailouts, not to mention social security, a massive military, government welfare, healthcare, millions of government employees (which partly are employed because then the government can say they have reduced unemployment, but again they are regulating a market by doing so) and all the other hundred and one things the government spends money on. Oh, and there's a recession even with their edforts. That means there are lots of unemployed people. Well, to lower unemployment, the Keynesian suggests massive public projects such as bridges, monuments, roads, public buildings, the Panama Canal, and so on. And those cost billions MORE dollars.
And here's where the debt comes in. To support this massive expenditure, which the taxes can't pay for, the government borrows money. Stacks of it. Truckloads of it. So much money that if all pf the USA sent every dollar they eanred for one year, they would barely dent the surface of this debt. And this is just the public debt (there's also student debt, home loan debt, ordinary credit cardebt, and so on which ordinary people with poor money management have built up, which also totals an almost hilarious amount of money if it weren't so sad).
That's why the USA has so much debt. For the most part, both Republicans and Democrats from my knowledge support this big government, large spending style of economics. Ron Paul was one of the few exceptions (I believe both sides have got a few exceptions but very few).
The reason Scandanavian countries (NZ is just as livable a country with lower tax btw :D) don't have as bad a debt problem is A) higher taxes to fund the government spending, instead of massive borrowing, and B) slightly more sane expenditure, with smaller standing armies and fewer government employees. However, it wouldn't take much or those governments to swing as far over as the USA (on a smaller scale of course). Their basic philosophy of economics is still Keynesian.
Printing of money (fiscal easing or whatever catchphrase they currently use to hide what they're dojng) is another way the governments all over the world try to pay for their big spending. However, the inflation incurred by this printing is straight theft from veryone in their country. If there is $100 total in a country, and you have $10, and the government has $90, then you have 10% of the total money in the country. If the government prints $10 more, suddenly you only have ~9% of the money. Of course, you still have $10 in your hands, but by printing money your money has dropped in purchasing power, and you have been stolen from.
The simple answer to the debt is to default on it as it's unpayable, and remove all unnecessary regulations, government departments, fire most of the people in the government, reduce the size of the military, stop giving out welfare and healthcare, and basically shrink spending to a miniscule fraction of what it currently has. Then lower taxes, because you no longer need that much money to fund the government. Boom, more money in the market for people to spend on what they want to spend it on. Companies will be started and go bankrupt, the market will grow and shrink, bu it will be much more stable. But no one has the balls to do that because they want votes, and millions of people would suffer hardship if the government were to suddenly shrink like I suggest. The transition would be gutwrenchinglyhard but it would work very well in the long run.
Sorry for any spelling mistakes, I'm on a phone. Worth noting that I'm pro-Austrian economics because I think it works much better than the unsustainable Keynesian economics. If Keynesian economics worked well I'd change my mind in a heartbeat. But they don't.
1. Why does the US have to borrow so much money all the time? And why does it never decrease(plz don't say OMG DEMOCRATS THROW MONEY OUT THE WINDOW!) like other countries who manage to keep it +-0 or even in a decrease. 4. Won't the US eventually be unable to pay their interest rates? Then what?
2. The countries with the highest taxes are the best countries in the world to live in year after year(Namely scandinavia) - why can't people see the correlation?
If you ask the question this way it looks like you understand world economics better than everyone and that every other country "doesn't see the correlation between high taxes and living standard". Just try to understand how much each country differ in size/population/natural resources/etc.
3. Norway for instance has a law that you cannot put a budget into effect that goes in a deficit and it cannot be covered by loans to make ends meet either. The US has no such law?
In 2012, individual countries within the OECD ranged from a surplus of 15.2% for Norway, 0.9% for Korea and 0.7% for Switzerland, to large deficits in Ireland (8.1% of GDP) and the United States (8.5%.) By 2014, the budgets of most Advanced Economies are expected to be on the mend. The UK’s projected 6% deficit for that year remains a sticking point, however, along with Spain’s -5.9%, Ireland’s -5.3%, the US’ -5.2%, and Greece’s -4.6%.
Outside the OECD, the Russian Federation maintained a small government surplus of 0.5% in 2012 and is expected to continue to balance its budget through 2014 at least. Brazil and China had deficits of around 2% of GDP, which are predicted to remain constant over the next year or so. India had a much larger budget shortfall, at 8.4%, which is only going to shrink to 7.6% by 2014. South Africa also registered a negative 5% in its 2012 budget, which the OECD foresees will decrease to 4.7% this year and to 4% in 2014.
By the way, Norway does very well (now) because it's filled with petrol.
On October 06 2013 18:28 unkkz wrote: 2. The countries with the highest taxes are the best countries in the world to live in year after year(Namely scandinavia) - why can't people see the correlation?
It's worth pointing out however, that while Scandinavian countries have been well off for the past few decades, the system might still end up being unsustainable, with immigration problems and an aging population. When mass health deterioration starts and there are less taxpayers, then lousy politicians will eventually end up financing the system by debts.
In 20 years, the individual currencies will become the international credit, and every individual will have international credit attached to their heads.
Until then, god fuck the united states of america for creating this economy -__-
On October 06 2013 19:55 Birdie wrote: I do recommend that you study economics yourself to gain a more thorough understanding, but I can give you a short summary based on my knowledge.
There are roughly speaking two opposing schools of thought in economics: Keynesian economics, and Austrian economics. ...
On October 06 2013 19:55 Birdie wrote: [...]Worth noting that I'm pro-Austrian economics because I think it works much better than the unsustainable Keynesian economics. If Keynesian economics worked well I'd change my mind in a heartbeat. But they don't.
Sorry but in this last part you are mixing claims of facts with your opinion. Is the Keynesian approach unsustainable? maybe in your opinion but it is not a fact. Same goes for your statement that Keynesian economics do not work. That they don't is your very opinion not a fact. I think this comes from your rather one sided interpretation of the concepts. Keynes is not about funding the entire economy based on debt but for supporting the economy in times of depression and on the otherside withdrawing that support in times of an economic boom.
On October 06 2013 22:50 NeuroticPsychosis wrote: China holds the majority of US debt and that's why everything is made in China
Who told you that? Because they're wrong.
When Japan held the majority of US debt, everything wasn't made in Japan. And in 10-20 years when more manufacturing leaves China because the cost will be too high, China will still own most of the US's debt. There really isn't a connection.
US debt is huge because of the size of the country and what it produces, but our debt-to-GDP ratio isn't that crazy. It's smaller than Germany, Canada, UK, Spain, France, Singapore, and Japan's. Same for external debt-to-GDP, which is actually lower than Norway's.
I do recommend that you study economics yourself to gain a more thorough understanding, but I can give you a short summary based on my knowledge.
There are roughly speaking two opposing schools of thought in economics: Keynesian economics, and Austrian economics. Austrian economic states that the market will automatically correct itself whenever bad things happen, as long as it is deregulated. That is, if a product available for sale is too expensive, then either no one will buy it and the price will go down, or a competitor will start up selling a similar product for a cheaper price. If there are too many companies in an industry for the amount of customers, then some companies will go bankrupt until the number of companies suits the amount of customers. If a need of the consumers is not being met, a new company will start up which will produce a product to meet that need.
What does this have to do with governments and their borrowing? Bear with me, there is a reason the important difference is that Austrian theory requires as little market regulation as possible (while still being moral, e.g. don't deregulate slavery, etc.). If there is little regulation, the market will serve the needs of the people (because the market is people, sothey will serve the needs that they see to make money from those needs).
Keynesian economics thinks of the market as being a ship that needs steering. It does not automatically correct itself to meet the needs of the consumers (people). Instead, it needs guidance in the way of regulations and laws to control how the market expands and deflates. If the market is shrinking and people are spending less money, it is not considered the market correcting itself. Rather, asthe market is not growing it needs to be fixed.
One of the ways which Keynesian economics promotes as a way to fix a falling market is to pump money into the market. If people and companies have more money, no companies will go bankrupt, consumers will buy more products, and the market will grow again. This is what the US (and many other) government is doing. An excellent example of this is the car industry in the USA. Some of the companies were going to go bankrupt. Instead of the government accepting this as a common course of events in an oversaturated market when a company is uncompetitive (prices too high, company not run well, prices too low, no skilled staff because wages aren't high enough, the reasons could be manifold), they decide that the market is shrinking. Market shrinkage means jobs lost and less money being spent (and unhappy voters!) so the government starts giving money to the car companies. Billions of dollars. But the money has to come from somewhere, and the banks start to fail, and other companies start to go under! There's not enough tax money for all these bailouts, not to mention social security, a massive military, government welfare, healthcare, millions of government employees (which partly are employed because then the government can say they have reduced unemployment, but again they are regulating a market by doing so) and all the other hundred and one things the government spends money on. Oh, and there's a recession even with their edforts. That means there are lots of unemployed people. Well, to lower unemployment, the Keynesian suggests massive public projects such as bridges, monuments, roads, public buildings, the Panama Canal, and so on. And those cost billions MORE dollars.
And here's where the debt comes in. To support this massive expenditure, which the taxes can't pay for, the government borrows money. Stacks of it. Truckloads of it. So much money that if all pf the USA sent every dollar they eanred for one year, they would barely dent the surface of this debt. And this is just the public debt (there's also student debt, home loan debt, ordinary credit cardebt, and so on which ordinary people with poor money management have built up, which also totals an almost hilarious amount of money if it weren't so sad).
That's why the USA has so much debt. For the most part, both Republicans and Democrats from my knowledge support this big government, large spending style of economics. Ron Paul was one of the few exceptions (I believe both sides have got a few exceptions but very few).
The reason Scandanavian countries (NZ is just as livable a country with lower tax btw :D) don't have as bad a debt problem is A) higher taxes to fund the government spending, instead of massive borrowing, and B) slightly more sane expenditure, with smaller standing armies and fewer government employees. However, it wouldn't take much or those governments to swing as far over as the USA (on a smaller scale of course). Their basic philosophy of economics is still Keynesian.
Printing of money (fiscal easing or whatever catchphrase they currently use to hide what they're dojng) is another way the governments all over the world try to pay for their big spending. However, the inflation incurred by this printing is straight theft from veryone in their country. If there is $100 total in a country, and you have $10, and the government has $90, then you have 10% of the total money in the country. If the government prints $10 more, suddenly you only have ~9% of the money. Of course, you still have $10 in your hands, but by printing money your money has dropped in purchasing power, and you have been stolen from.
The simple answer to the debt is to default on it as it's unpayable, and remove all unnecessary regulations, government departments, fire most of the people in the government, reduce the size of the military, stop giving out welfare and healthcare, and basically shrink spending to a miniscule fraction of what it currently has. Then lower taxes, because you no longer need that much money to fund the government. Boom, more money in the market for people to spend on what they want to spend it on. Companies will be started and go bankrupt, the market will grow and shrink, bu it will be much more stable. But no one has the balls to do that because they want votes, and millions of people would suffer hardship if the government were to suddenly shrink like I suggest. The transition would be gutwrenchinglyhard but it would work very well in the long run.
Sorry for any spelling mistakes, I'm on a phone. Worth noting that I'm pro-Austrian economics because I think it works much better than the unsustainable Keynesian economics. If Keynesian economics worked well I'd change my mind in a heartbeat. But they don't.
Holy balls you wrote all that from a phone? I can barely be bothered to text people. Very nice summary and it explains a lot, ty.
One question however: I thought the scandi countries went through the crisis as well as they did BECAUSE they regulated things? Such as not having the banks be able to do whatever they want in terms of lending people money which from my very limited understanding is what they did in the US(Lend anyone money for a house, since even if they default the house is a 100% foolproof security) and hence no scandinavian banks suffered any difficulties apart from Swedbank which just blows in general and had some terrible investments in the balcan.
ulan-bat China. October 06 2013 20:05. wrote: If you ask the question this way it looks like you understand world economics better than everyone and that every other country "doesn't see the correlation between high taxes and living standard". Just try to understand how much each country differ in size/population/natural resources/etc.
Ofcourse i don'´t and that was not my intention. I just meant that the scandi's have the highest taxes by far and they got through the crisis among the top - there has to be a form of correlation there right? Ofcourse i am not even an armchair economics professor so it is merely uneducated speculation from an ordinary tax payer.
On October 06 2013 20:05 ulan-bat wrote: By the way, Norway does very well (now) because it's filled with petrol.
Despite not knowing much of economics this is a very short sighted answer i'd say. Norway has a gargantuan surpluss due to oil yes, but i´d guess they would be somewhere close to Sweden in managing the crisis since our politics are extremely similar and hence get out of it in good shape.
On October 06 2013 20:51 EtherealBlade wrote: It's worth pointing out however, that while Scandinavian countries have been well off for the past few decades, the system might still end up being unsustainable, with immigration problems and an aging population. When mass health deterioration starts and there are less taxpayers, then lousy politicians will eventually end up financing the system by debts.
Afaik something similar is happening in Japan right now? Too many old people and too few young people to earn enough money to support them, or something like this.
On October 06 2013 19:55 Birdie wrote: I do recommend that you study economics yourself to gain a more thorough understanding, but I can give you a short summary based on my knowledge.
There are roughly speaking two opposing schools of thought in economics: Keynesian economics, and Austrian economics. Austrian economic states that the market will automatically correct itself whenever bad things happen, as long as it is deregulated. That is, if a product available for sale is too expensive, then either no one will buy it and the price will go down, or a competitor will start up selling a similar product for a cheaper price. If there are too many companies in an industry for the amount of customers, then some companies will go bankrupt until the number of companies suits the amount of customers. If a need of the consumers is not being met, a new company will start up which will produce a product to meet that need.
What does this have to do with governments and their borrowing? Bear with me, there is a reason the important difference is that Austrian theory requires as little market regulation as possible (while still being moral, e.g. don't deregulate slavery, etc.). If there is little regulation, the market will serve the needs of the people (because the market is people, sothey will serve the needs that they see to make money from those needs).
Keynesian economics thinks of the market as being a ship that needs steering. It does not automatically correct itself to meet the needs of the consumers (people). Instead, it needs guidance in the way of regulations and laws to control how the market expands and deflates. If the market is shrinking and people are spending less money, it is not considered the market correcting itself. Rather, asthe market is not growing it needs to be fixed.
One of the ways which Keynesian economics promotes as a way to fix a falling market is to pump money into the market. If people and companies have more money, no companies will go bankrupt, consumers will buy more products, and the market will grow again. This is what the US (and many other) government is doing. An excellent example of this is the car industry in the USA. Some of the companies were going to go bankrupt. Instead of the government accepting this as a common course of events in an oversaturated market when a company is uncompetitive (prices too high, company not run well, prices too low, no skilled staff because wages aren't high enough, the reasons could be manifold), they decide that the market is shrinking. Market shrinkage means jobs lost and less money being spent (and unhappy voters!) so the government starts giving money to the car companies. Billions of dollars. But the money has to come from somewhere, and the banks start to fail, and other companies start to go under! There's not enough tax money for all these bailouts, not to mention social security, a massive military, government welfare, healthcare, millions of government employees (which partly are employed because then the government can say they have reduced unemployment, but again they are regulating a market by doing so) and all the other hundred and one things the government spends money on. Oh, and there's a recession even with their edforts. That means there are lots of unemployed people. Well, to lower unemployment, the Keynesian suggests massive public projects such as bridges, monuments, roads, public buildings, the Panama Canal, and so on. And those cost billions MORE dollars.
And here's where the debt comes in. To support this massive expenditure, which the taxes can't pay for, the government borrows money. Stacks of it. Truckloads of it. So much money that if all pf the USA sent every dollar they eanred for one year, they would barely dent the surface of this debt. And this is just the public debt (there's also student debt, home loan debt, ordinary credit cardebt, and so on which ordinary people with poor money management have built up, which also totals an almost hilarious amount of money if it weren't so sad).
That's why the USA has so much debt. For the most part, both Republicans and Democrats from my knowledge support this big government, large spending style of economics. Ron Paul was one of the few exceptions (I believe both sides have got a few exceptions but very few).
The reason Scandanavian countries (NZ is just as livable a country with lower tax btw :D) don't have as bad a debt problem is A) higher taxes to fund the government spending, instead of massive borrowing, and B) slightly more sane expenditure, with smaller standing armies and fewer government employees. However, it wouldn't take much or those governments to swing as far over as the USA (on a smaller scale of course). Their basic philosophy of economics is still Keynesian.
Printing of money (fiscal easing or whatever catchphrase they currently use to hide what they're dojng) is another way the governments all over the world try to pay for their big spending. However, the inflation incurred by this printing is straight theft from veryone in their country. If there is $100 total in a country, and you have $10, and the government has $90, then you have 10% of the total money in the country. If the government prints $10 more, suddenly you only have ~9% of the money. Of course, you still have $10 in your hands, but by printing money your money has dropped in purchasing power, and you have been stolen from.
The simple answer to the debt is to default on it as it's unpayable, and remove all unnecessary regulations, government departments, fire most of the people in the government, reduce the size of the military, stop giving out welfare and healthcare, and basically shrink spending to a miniscule fraction of what it currently has. Then lower taxes, because you no longer need that much money to fund the government. Boom, more money in the market for people to spend on what they want to spend it on. Companies will be started and go bankrupt, the market will grow and shrink, bu it will be much more stable. But no one has the balls to do that because they want votes, and millions of people would suffer hardship if the government were to suddenly shrink like I suggest. The transition would be gutwrenchinglyhard but it would work very well in the long run.
Sorry for any spelling mistakes, I'm on a phone. Worth noting that I'm pro-Austrian economics because I think it works much better than the unsustainable Keynesian economics. If Keynesian economics worked well I'd change my mind in a heartbeat. But they don't.
On October 06 2013 22:50 NeuroticPsychosis wrote: China holds the majority of US debt and that's why everything is made in China
Who told you that? Because they're wrong.
When Japan held the majority of US debt, everything wasn't made in Japan. And in 10-20 years when more manufacturing leaves China because the cost will be too high, China will still own most of the US's debt. There really isn't a connection.
US debt is huge because of the size of the country and what it produces, but our debt-to-GDP ratio isn't that crazy. It's smaller than Germany, Canada, UK, Spain, France, Singapore, and Japan's. Same for external debt-to-GDP, which is actually lower than Norway's.
the debt to GDP ratio in the US is actually much higher than in Germany when it comes to overall debt. the gross debt of the US would be at 108% of the GDP while Germany's is around 81%. The gross debt includes the debts from all levels of a country (federal, state and local) and gives a much more reliable value since the differences in the structure of a state do not matter as much (think France which basically is an all centralistic state which naturally has a much higher public debt than say Germany, which is a federal state where a lot of the debts are actually with the federal states)
On October 06 2013 19:55 Birdie wrote: The simple answer to the debt is to default on it as it's unpayable, and remove all unnecessary regulations, government departments, fire most of the people in the government, reduce the size of the military, stop giving out welfare and healthcare, and basically shrink spending to a miniscule fraction of what it currently has. Then lower taxes, because you no longer need that much money to fund the government. Boom, more money in the market for people to spend on what they want to spend it on. Companies will be started and go bankrupt, the market will grow and shrink, bu it will be much more stable. But no one has the balls to do that because they want votes, and millions of people would suffer hardship if the government were to suddenly shrink like I suggest. The transition would be gutwrenchinglyhard but it would work very well in the long run.
First of all thanks for writing out that big explanation about economics... I believe that was very helpful for some readers.
Second I'm not sure if I understand your suggestion here... the 'simple answer.' If the US defaults on its loan, is that the equivalent of missing a payment or the equivalent of declaring bankruptcy? Either would be horribly damaging the US economy though (which you seem to acknowledge).
Removing all unnecessary regulation wouldn't be so simple unless we elect one person (such as you) to choose which regulations are necessary and which aren't. We had a great recession recently that many chalk up to differences of opinion about what is or isn't necessary regulation.
You want to greatly shrink the government, including benefits for those who currently cannot feet themselves and make themselves healthy. This would increase the suffering of citizens to a level much higher than it currently is, all because you claim the end result would be worth it (that is going to be hard to believe for all those people whose children are starving, that weren't starving before this approach was enacted).
Can you think of examples of places where this policy has been very successful recently? I'm of course referring to very small government, minimal amounts of regulation, everything pretty much self-regulated by the economy according to your Austrian economic principles.
They have to borrow so much money, because they spend more than they earn (and for government, earnings = money collected form taxes).
Where do they spend the money? Wars. Why wars? Because of oil. USA cant live without oil, thus they have to "bring democracy" here and there. Also, when you have quite a lot of debt, you need to get additional debt to be able to repay the interest; you get into a borrowing spiral.
In Norway, you have quite a lot of money earned due to your natural resources; but also you have very high taxes, that's why your government has a surplus. I think, that due to your oil/gas sales, you have such a big surplus, that you had problems what to do with it in the past.
1. Why does the US have to borrow so much money all the time? And why does it never decrease(plz don't say OMG DEMOCRATS THROW MONEY OUT THE WINDOW!) like other countries who manage to keep it +-0 or even in a decrease.
Very few countries have a budget surplus, I think it's only few countries in fact (Norway and the ones that export natural resources - the Arab oil countries). This simply shows that most governments are terrible, because those debts will have to be paid one day (by future generations), or that the governments like to pay "interest on interest" (borrowing money to pay interest).
2. The countries with the highest taxes are the best countries in the world to live in year after year(Namely scandinavia) - why can't people see the correlation?
Norway earns ton of money due to natural resources; not every country has natural resources. Also, what you wrote is at least very subjective (I would even write not true) - books have been written on the subject. But in North Korea the taxes are gigantic, and somehow the life isnt that great.
Also, since Scandinavian's took tons of people from Muslim countries (5% of population?) who live off social, your dream will end soon.
3. Norway for instance has a law that you cannot put a budget into effect that goes in a deficit and it cannot be covered by loans to make ends meet either. The US has no such law?
They have it, but they increase the limit every now and then.
4. Won't the US eventually be unable to pay their interest rates? Then what?
Either war, or China (who holds most of the debt) will simply buy out USA. There are also many other ways to get rid of the debt - "running forward" and hoping for some sort of an advancement in technology, OR having gigantic inflation. When the inflation is gigantic, the governement has to repay less. It hurts its own citizens, but they do not seem to care. Also, in fact, inflation of dolar hurts the world economy, since it is considered a "backup currency". Many people believe that the current "quantitative easing" by the FED is in fact a form of running forward in order not to have repay the Chinese. Basically FED is producing tons of "empty" money that is rising the inflation and ruining the US economy... but at least the debt that has to be paid is lower. It's against Chinese interest to have a war with USA, because it would not do anything good. USA has found a way to outsmart China - eat a cookie (borrow money) and have a cookie (not having to repay it at full). Personally I believe that China will simply try to convert the debt somehow and "buy out" parts of USA; of course USA will try not to allow it.
Also, there is a running joke among economists (not that funny): "We have 1 billion dollars" said the Germans "We have 10 billion dollars" said the Chinese "We have a printing press" said the USA
The issues that you touched upon are very complex but in general one simply cannot spend more than they earn... unless you are a government. But this interest has to be paid somehow and it WILL be paid somehow; that's why there are dozens of tin foil hat theories about bankers running the world. The more probable explanation is that governments rule in terms (4-6 years, depending on country) while the debts have to be paid in a 20 or 30 year span. So they dont care about the future at all. A household couldnt be run like most governements do.
I could also write quite a lot about the norwegian style of economy, but as I wrote above it is a very complex thing and your country is rich due to being not affected by war / education / natural resources; in general low taxes usually mean high economic activity, while high taxes kill that activity - read about the Laffer's curve - one of the oldest concepts in economy ( http://en.wikipedia.org/wiki/Laffer_curve )
Also, something that is often ignored is that while USA has a GIGANTIC debt, that cannot be repaid easily.. it still could be repaid. I think Clinton managed to repay the debt what led to a gigantic economic boom. USA still has a gigantic economy and if they would stop being the OIL POLICE they could probably repay it in a span of 10-15 years. The problem is that when USA stops being OIL POLICE (aka invading oil countries to "bring democracy") their economy would be ruined.
EPT
the important difference is that Austrian theory requires as little market regulation as possible (while still being moral, e.g. don't deregulate slavery, etc.). If there is little regulation, the market will serve the needs of the people (because the market is people, sothey will serve the needs that they see to make money from those needs).
