NEW YORK, April 7 (Reuters) - With time running out for a budget deal in Congress, Fitch expects Democratic and Republican leaders will set differences aside and recognize the "dire consequences of failing to raise the debt ceiling in a timely manner."
The ceiling is currently set at $14.294 trillion. As of March 31, the debt subject to that limit totaled $14.218 trillion -- or $76 billion shy of the cap.
"Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again."
-Ben Bernanke, current chairman of the federal reserve, speaking in 2002 (source)
The U.S. Federal Debt - A look at the numbers
According to the United States Department of the Treasury, Bureau of the Public Debt, as of March 25, 2011, the Total Public Debt Outstanding of the United States of America was $14.26 trillion and was 97.3% of calender year 2010's annual gross domestic product (GDP) of $14.66 trillion. (source)(source) Given such a number, it does not appear that the problem of debt is insurmountable. Such a percentage of GDP certainly represents a clear problem, but it has not reached a level that will inspire a lack of confidence in U.S. debt and therefore affect our credit rating in the near future.
What will not be reported in the official debt numbers, however, is that the United States federal government uses cash-basis, rather accrual-basis accounting, which is in violation of standard Generally Accepted Accounting Principles (GAAP), and utilizes a series of accounting labeling tricks which underscore the actual debt owed. In particular, "liabilities" are labeled transfer payments and are not considered a form of the public debt, though they do represent obligations which must be paid at some time in the future. How disingenuous it is to call these "transfer payments" can be seen in the fact that the Social Security payments have historically been used as a general slush fund for spending in the legislature and in fact is NOT transferred to future generations.
The two greatest unfunded liabilities alone, Social Security and Medicare, easily surpass $100 trillion in liability. Add to that prescription drug benefits and a host of other liabilities, and add it to the "official" debt numbers, and the estimates can reach as high as $200 trillion in total federal debt. In other words, several multiples of GDP. The total liability per taxpayer would therefore exceed $1,000,000.
How can this be possible? To quote Laurence Kotlikoff of Bloomberg news:
"Simple. We have 78 million baby boomers who, when fully retired, will collect benefits from Social Security, Medicare, and Medicaid that, on average, exceed per-capita GDP. The annual costs of these entitlements will total about $4 trillion in today’s dollars. Yes, our economy will be bigger in 20 years, but not big enough to handle this size load year after year.
"This is what happens when you run a massive Ponzi scheme for six decades straight, taking ever larger resources from the young and giving them to the old while promising the young their eventual turn at passing the generational buck."
IMF Analysis
The Selected Issues Paper released by the International Monetary Fund in July of 2010 can be found here, and includes a thorough and technical analysis of the United States Federal deficit and possible solutions for averting the coming financial crisis. To quote:
"Directors welcomed the authorities' commitment to fiscal stabilization, but noted that a larger than budgeted adjustment would be required to stabilize debt-to-GDP.
"The U.S. fiscal gap associated with today's federal fiscal policy is huge for plausible discount rates[...] closing the fiscal gap requires a permanent annual fiscal adjustment equal to about 14 percent of U.S. GDP."
To put this number in perspective, current federal revenue totals approximately 15 percent of GDP. So what the IMF in effect is calling for is an immediate and permanent doubling of our personal income, corporate and federal taxes as well as the payroll levy set down in the Federal Insurance Contribution Act. Such a tax hike would leave the U.S. running a surplus equal to 5 percent of GDP rather than a 9 percent deficit.
The simple fact of the matter is, enacting such policies would be almost guaranteed to result is severe economic instability. The number of companies alone in the U.S. whose profit margin is less than such a projected increase in the tax rate reveals the unfeasability of this suggestion. The average American is already struggling under personal debt, how can they be expected to foot the bill either? It would result at the minimum in a decades long recession, at the worst a complete depression.
And how do we honestly expect to elect the politicians who will run on such a platform? Any politician suggesting the changes that NEED to be made, promising drastic tax increases coupled with drastic spending decreases and a weaker national economy would wait for hell to freeze over before being elected.
To put it bluntly, the U.S. is nearly bankrupt. There is no foreseeable solution to dig us out of the hole we are in. Our economy as it is has been artificially grown through lax interest rate policy set by the Federal Reserve perpetuating decades long mal and overinvestment throughout a long history of "bubbles," and is on weak footing already.
We have continually resorted to the dire measures of inflation, which is nothing more than an indirect form of taxation on all federal reserve note holders, countless "stimulus" bills, and absurd degrees of credit expansion. Not to mention the endless string of bailouts which have been offered to save not only American companies but even entire nations such as Greece! What can be done when the failing organization is "too big to bailout?" What else can be said on the matter?
Non-Federal Debt
The federal debt numbers are of course only a part of the problem. According to the federal reserve, the total personal debt in the United States including mortgages is $16.15 trillion. That's an average debt per citizen of $51,912. (source) You can add that on to the million dollar federal debt share you owe. But wait, let's not forget about the state level. In my home state of California, you can expect an additional $14,800 per citizen. (source)
There is no doubt many states are in a crisis. Their financial woes are complicated by the fact that they cannot print their own money as the previous organization we covered. States have been striving desperately to make the cuts necessary to reduce their budget deficits, but the stranglehold the American unions have on the public sector is seemingly insurmountable. Many states have already entertained the idea of default, relying on the federal government to bail them out as well. This would of course be a disaster due to the loss of confidence in public investments. But more and more it is appearing to be the only answer.
My home state of California is a case in point. We have 8 counties in the state with unemployment rates of over 20 percent. We have a budget deficit over $20 billion and expected to grow. California already has the lowest credit rating of all 50 states, and there are rumors it will go lower. Leaders from both major political parties in California have been increasingly using the word "bankrupt."
"California is deeply in debt. You could say that it's bankrupt." -Jerry Brown, Governor
"We are on the verge of system failure." -Jean Ross, executive director of the California Budget Project
What does TL think about this mounting problem? It is like the elephant in the room no one wants to talk about. What are the consequences of our fiscal policies going to be? Do you think people are in denial as to the severity of the problem, or do you think the problem is exaggerated? In either case, I would hope you offer some actual reasons or arguments as to why, instead of stating matter-of-fact conclusions which I hear so often on these forums.
Why does this topic take a backseat to so many other issues when the consequences are so much more powerful than any of the current discussions on Libya, Planned Parenthood, or any other of the topics of the day?
The way I see it, America is in a world of shit. My advice is to find a relative who stays in the countryside and get to grow their own food, suck up to them real quick and plan for arrangements to move in with them when shit hits the fan.
Also, buy silver. Lots of it. Gold is much too matured and silver is only starting to pick up.
Why? Since the Marshall Plan, the US Dollar replaced the Pound Sterling as the world's reserve currency. (Historical note: Pound Sterling was the world reserve currency for ~200 years). America manages to stay afloat because unlike other countries who have to exchange real money with real GDP value into US$ in order to pay for oil, all America needs to do is to print more US$ to pay for the oil. That's how America manages to have one of the cheapest gasoline prices in the world.
The US$ declined by about 10% over the course of 2010 and it doesn't look like it will rise for a very long time. People around the world are starting to see that happen and last year, China, France, the Gulf Arab states and Russia had a secret meeting to talk about paying for oil using a basket of their respective currencies.
All of these trends point to the likely future that the US$ will lose its position as the world's reserve currency. Gasoline prices will go through the roof. And seeing how the USA's infrastructure almost exclusively depends on the internal combustion engine, you guys are in a world of shit.
Or, comedy troll suggestion: Get America to force the UN to ratify the 2nd Amendment universally. When everyone gets to buy and bear their own arms, America is the world's largest boutique, producer and supplier for civilian gun ownership and for the military. That's one way to produce and sell your way out of all that impossible debt.
To be honest, I never saw the national debt as a problem. Sure it ends up cutting social services, but America will never cut it to the point of hacking it to pieces.
And sure it decreases America's dollar value, but that raises our manufacturing industry that's been struggling.
Problems associated with the national debt are more fear based than anything. We fear that we have hundreds of trillions of dollars in debts, and that becomes the scare, that we're in debt.
Is there a threat of bankruptcy? No. China will never let that happen, nor will the international community. Is there a threat of government shutdown? Yes, but not to the extent that it's going to drastically affect the majority of Americans as critical services remain open and unnecessary jobs get temporarily removed and then there's backpay once the government starts running again.
I believe that it's not an acceptable mentality to have, but the reasons to be super scared about the national debt is minimal at best.
On April 09 2011 12:10 Zergneedsfood wrote: And sure it decreases America's dollar value, but that raises our manufacturing industry that's been struggling.
This isn't about the decrease of the dollar value now. It's universally accepted that a lowered currency value will render exports more competitive, but I think the US$'s place as world reserve currency is at stake. Energy costs in USA will skyrocket because of it and will cancel out any gains in export competitiveness.
Problems associated with the national debt are more fear based than anything. We fear that we have hundreds of trillions of dollars in debts, and that becomes the scare, that we're in debt.
Is there a threat of bankruptcy? No. China will never let that happen, nor will the international community.
Take a good look and you will see that since 4Q 2010 towards Jan 2011, many of the major holders of T-bills are starting to offload their T-bills as soon as it is reasonably possible. The corpse has been rotting for a while in open air but the stink is starting to get to them and they're trying to cut their losses while they can.
Is there a threat of government shutdown? Yes, but not to the extent that it's going to drastically affect the majority of Americans as critical services remain open and unnecessary jobs get temporarily removed and then there's backpay once the government starts running again.
I think you forget the critically important part where such a government shutdown can shake investor confidence. Are foreign investors willing to make their bets on America despite the heavy debts now that it looks like the government is going to shut down every 10 ~ 15 years because of Congressional squabbling? The world sees the American Congress as the legislative stumbling block of the world, and with good reason. Double-tiered legislative bodies might've sounded great, and might've worked great in the more sedate pace in the world of the 18th, 19th and 20th century, but the 21st century world isn't going to sit around and wait for America's politicians to get done with their Pass-The-Hot-Potato game to and fro the different branches of government.
On April 09 2011 12:02 NEWater wrote: The way I see it, America is in a world of shit. My advice is to find a relative who stays in the countryside and get to grow their own food, suck up to them real quick and plan for arrangements to move in with them when shit hits the fan.
Also, buy silver. Lots of it. Gold is much too matured and silver is only starting to pick up.
Why? Since the Marshall Plan, the US Dollar replaced the Pound Sterling as the world's reserve currency. (Historical note: Pound Sterling was the world reserve currency for ~200 years). America manages to stay afloat because unlike other countries who have to exchange real money with real GDP value into US$ in order to pay for oil, all America needs to do is to print more US$ to pay for the oil. That's how America manages to have one of the cheapest gasoline prices in the world.
The US$ declined by about 10% over the course of 2010 and it doesn't look like it will rise for a very long time. People around the world are starting to see that happen and last year, China, France, the Gulf Arab states and Russia had a secret meeting to talk about paying for oil using a basket of their respective currencies.
All of these trends point to the likely future that the US$ will lose its position as the world's reserve currency. Gasoline prices will go through the roof. And seeing how the USA's infrastructure almost exclusively depends on the internal combustion engine, you guys are in a world of shit.
Or, comedy troll suggestion: Get America to force the UN to ratify the 2nd Amendment universally. When everyone gets to buy and bear their own arms, America is the world's largest boutique, producer and supplier for civilian gun ownership and for the military. That's one way to produce and sell your way out of all that impossible debt.
I am extremely pleased with the quality of the first post after the OP. Before I begin, have you always lived in Singapore? Your view on the current US situation is sadly accurate, and with how many people directly living in the US are oblivious too this, it sparks my interest.
It's very important to have a "backup plan" currently. The fall of the United States social structure seems almost imminent at this point and it's much deeper then anything currently happening in the news. I was lucky enough at my past job to have some "after work at the bar talks" with people very high up in my government job, and this was at a technical work where passiveness is almost expected (NASA), and I was very surprised to hear their take on this. One person explained why their house was on a "hill" in San Francisco, and it wasn't by accident but rather strategically placed because of his preparation for the "fall" or "revolution" or as I would say "shitstorm" we are about to face. He also explained how he invested a large amount of money into guns, motion detectors, and other home defense means (self sustaining food area etc). Needless to say I was taken aback by his view on the future, and this was perhaps one of the smartest people in my field. More surprising perhaps was the other people at the table pretty much agreeing with him (I was the only rookie researcher in that group, the only one with less than 10 years experience for sure).
I've been fortunate enough to move from California back to North Carolina where the Appalachian mountains seem like the proper place to flee too. I have a lot of family in the area and most understand that they need to be armed and ready to get the hell out of the area at a moments notice. The sad part I feel is that, people aren't taking this seriously. The US is not immune to a structural collapse, but the average citizen certainly feels this way. My current peer group isn't as educated as when I was in Silicon Valley, but nearly all of them just laugh about a collapse in the United States.
On April 09 2011 12:10 Zergneedsfood wrote: To be honest, I never saw the national debt as a problem. Sure it ends up cutting social services, but America will never cut it to the point of hacking it to pieces.
And sure it decreases America's dollar value, but that raises our manufacturing industry that's been struggling.
Problems associated with the national debt are more fear based than anything. We fear that we have hundreds of trillions of dollars in debts, and that becomes the scare, that we're in debt.
Is there a threat of bankruptcy? No. China will never let that happen, nor will the international community. Is there a threat of government shutdown? Yes, but not to the extent that it's going to drastically affect the majority of Americans as critical services remain open and unnecessary jobs get temporarily removed and then there's backpay once the government starts running again.
I believe that it's not an acceptable mentality to have, but the reasons to be super scared about the national debt is minimal at best.
Did you pay attention much to the previous recession we just went through? Financial giants were collapsing left and right, we were on the verge of a complete financial collapse. We were able to avert the crisis simply by diluting the dollar to a significant degree, bailing out the failing institutions, and reverting to artificially low interest rates which is of course what precipitated the housing bubble in the first place.
The danger is real... it is the threat that the desperate measures we have employed in the present and in the past will no longer be effective enough due to the ever increasing debt, ever inflated dollar, and questionable US debt credit rating abroad. There is only so far the Keynesian economic policies can delay the inevitable market correction from artificial highs.
On April 09 2011 12:02 NEWater wrote: The way I see it, America is in a world of shit. My advice is to find a relative who stays in the countryside and get to grow their own food, suck up to them real quick and plan for arrangements to move in with them when shit hits the fan.
Also, buy silver. Lots of it. Gold is much too matured and silver is only starting to pick up.
Why? Since the Marshall Plan, the US Dollar replaced the Pound Sterling as the world's reserve currency. (Historical note: Pound Sterling was the world reserve currency for ~200 years). America manages to stay afloat because unlike other countries who have to exchange real money with real GDP value into US$ in order to pay for oil, all America needs to do is to print more US$ to pay for the oil. That's how America manages to have one of the cheapest gasoline prices in the world.
The US$ declined by about 10% over the course of 2010 and it doesn't look like it will rise for a very long time. People around the world are starting to see that happen and last year, China, France, the Gulf Arab states and Russia had a secret meeting to talk about paying for oil using a basket of their respective currencies.
All of these trends point to the likely future that the US$ will lose its position as the world's reserve currency. Gasoline prices will go through the roof. And seeing how the USA's infrastructure almost exclusively depends on the internal combustion engine, you guys are in a world of shit.
Or, comedy troll suggestion: Get America to force the UN to ratify the 2nd Amendment universally. When everyone gets to buy and bear their own arms, America is the world's largest boutique, producer and supplier for civilian gun ownership and for the military. That's one way to produce and sell your way out of all that impossible debt.
I am extremely pleased with the quality of the first post after the OP. Before I begin, have you always lived in Singapore? Your view on the current US situation is sadly accurate, and with how many people directly living in the US are oblivious too this, it sparks my interest.
Thank you, and yeah, I've always lived in Singapore. Never even visited US before. I have been studying US politics, economy and foreign policy for the past 12 years as a personal hobby. It's always been obvious to me that whatever happens on the US affects all of us, so in a sense even if I'm a complete foreigner I still have a stake in what happens there. That also meant that I managed to develop a good nose for predicting what may happen and used that to make a fair amount of extra pocket money in Forex. :D
It really makes me worry, though. I applied to various stateside schools as a transfer undergrad for Fall this year and I don't know if shit will hit the fan before I graduate.
On April 09 2011 12:10 Zergneedsfood wrote: And sure it decreases America's dollar value, but that raises our manufacturing industry that's been struggling.
This isn't about the decrease of the dollar value now. It's universally accepted that a lowered currency value will render exports more competitive, but I think the US$'s place as world reserve currency is at stake. Energy costs in USA will skyrocket because of it and will cancel out any gains in export competitiveness.
Problems associated with the national debt are more fear based than anything. We fear that we have hundreds of trillions of dollars in debts, and that becomes the scare, that we're in debt.
Is there a threat of bankruptcy? No. China will never let that happen, nor will the international community.
Take a good look and you will see that since 4Q 2010 towards Jan 2011, many of the major holders of T-bills are starting to offload their T-bills as soon as it is reasonably possible. The corpse has been rotting for a while in open air but the stink is starting to get to them and they're trying to cut their losses while they can.
Is there a threat of government shutdown? Yes, but not to the extent that it's going to drastically affect the majority of Americans as critical services remain open and unnecessary jobs get temporarily removed and then there's backpay once the government starts running again.
I think you forget the critically important part where such a government shutdown can shake investor confidence. Are foreign investors willing to make their bets on America despite the heavy debts now that it looks like the government is going to shut down every 10 ~ 15 years because of Congressional squabbling? The world sees the American Congress as the legislative stumbling block of the world, and with good reason. Double-tiered legislative bodies might've sounded great, and might've worked great in the more sedate pace in the world of the 18th, 19th and 20th century, but the 21st century world isn't going to sit around and wait for America's politicians to get done with their Pass-The-Hot-Potato game to and fro the different branches of government.
Damn I'm bad at quoting.
I don't see us losing our reserve status any time soon. A large national debt might convince other countries that they need to switch currencies, but we always need to look relatively. China's yuan is nowhere the stability it needs to be because everyone criticizes China for depreciating it.
And look at the Euro, where the sovereign debt crisis has shaken investor confidence in the strength of the currency.
Granted there are people who want to get their Treasury bills/bonds paid back ASAP, but once again that to me feels more fear oriented than anything. Two years ago I read an article saying the exact same thing about investors wanting their money back. Did our government collapse? Not really.
I think you make a fair point about investor confidence, but this is pretty much empirically disproven. We've had a 13 trillion dollar debt for a while, and the minute something goes wrong in Libya, every investor on the face of the planet flocked to the American dollar as a safe haven.
That shows that the greenback, even with a decreased value, is seen as the dominant currency on the market with very little exception.
I understand people's concerns about investors and debt, but when you compare America's financial problems now relative to the financial instability of the world....you get a little different picture imo.
On April 09 2011 12:10 Zergneedsfood wrote: To be honest, I never saw the national debt as a problem. Sure it ends up cutting social services, but America will never cut it to the point of hacking it to pieces.
And sure it decreases America's dollar value, but that raises our manufacturing industry that's been struggling.
Problems associated with the national debt are more fear based than anything. We fear that we have hundreds of trillions of dollars in debts, and that becomes the scare, that we're in debt.
Is there a threat of bankruptcy? No. China will never let that happen, nor will the international community. Is there a threat of government shutdown? Yes, but not to the extent that it's going to drastically affect the majority of Americans as critical services remain open and unnecessary jobs get temporarily removed and then there's backpay once the government starts running again.
I believe that it's not an acceptable mentality to have, but the reasons to be super scared about the national debt is minimal at best.
Did you pay attention much to the previous recession we just went through? Financial giants were collapsing left and right, we were on the verge of a complete financial collapse. We were able to avert the crisis simply by diluting the dollar to a significant degree, bailing out the failing institutions, and reverting to artificially low interest rates which is of course what precipitated the housing bubble in the first place.
The danger is real... it is the threat that the desperate measures we have employed in the present and in the past will no longer be effective enough due to the ever increasing debt, ever inflated dollar, and questionable US debt credit rating abroad. There is only so far the Keynesian economic policies can delay the inevitable market correction from artificial highs.
I paid a lot of attention, thank you very much.
But all of what you said has nothing to do really with national debt.
We didn't suffer a recession because we were getting owned by debt. We suffered because deregulatory policies, low interest rates set by Alan Greenspan, and abuse of financial instruments like CDOs and derivatives screwed us over.
As a result, yeah we have a national debt on our hands. But is there any immediate danger to the average citizen? Not really.
Employment has risen. GDP is rising. Manufacturing is increasing. America is still relatively insulated from world financial crises...
I don't understand why recession suddenly links to "national debt causes problems".
Edit: To answer your last paragraph. You stated that we won't be able to maintain our same desperate measures.
Um.....I don't think we have the same "desperate" measures that you're talking about. I mean granted we bailed out banks and institutions, but the parameters that we set up this time were definitely different from other times. This time, we asked that banks pay back.
We then passed a bill that would enhance regulatory systems and provide a consumer protection agency. New bills being passed don't necessarily slash spending, but they do reform inefficacies and inefficiencies in our social entitlement programs.
We're not taking the same desperate measures. America is definitely changing, and the bills that we pass, albeit partisan and heavily debatable are at least a legitimate effort by our Congress to do something.
On April 09 2011 12:10 Zergneedsfood wrote: To be honest, I never saw the national debt as a problem. Sure it ends up cutting social services, but America will never cut it to the point of hacking it to pieces.
And sure it decreases America's dollar value, but that raises our manufacturing industry that's been struggling.
Problems associated with the national debt are more fear based than anything. We fear that we have hundreds of trillions of dollars in debts, and that becomes the scare, that we're in debt.
Is there a threat of bankruptcy? No. China will never let that happen, nor will the international community. Is there a threat of government shutdown? Yes, but not to the extent that it's going to drastically affect the majority of Americans as critical services remain open and unnecessary jobs get temporarily removed and then there's backpay once the government starts running again.
I believe that it's not an acceptable mentality to have, but the reasons to be super scared about the national debt is minimal at best.
Did you pay attention much to the previous recession we just went through? Financial giants were collapsing left and right, we were on the verge of a complete financial collapse. We were able to avert the crisis simply by diluting the dollar to a significant degree, bailing out the failing institutions, and reverting to artificially low interest rates which is of course what precipitated the housing bubble in the first place.
The danger is real... it is the threat that the desperate measures we have employed in the present and in the past will no longer be effective enough due to the ever increasing debt, ever inflated dollar, and questionable US debt credit rating abroad. There is only so far the Keynesian economic policies can delay the inevitable market correction from artificial highs.
Yes, because TARP wound up costing probably $10 billion, all in, on the financial side. The vilification of TARP as the inflationary death of America is vastly overstated. The interest rates are an issue, but I'm not sure how long they'll stay at this point. I'd be surprised if they weren't up a couple points two years from now. QE is an inflationary concern, but the Fed has the ability to pull that cash out of the market / pump interest rates. FWIW, a large portion of the debt crisis was driven by liquidity issues as much as solvency issues, and that was where the US govt actually helped.
As for the attacks on the dollar as the reserve currency: I think those are fair, but ignore the political side of the financial issues. The only credible threat to the dollar currently is the Yuan. The Euro was a credible threat, but the ECB is pumping so much debt to fund PIIGS + the natural current instability of Germany vs. everyone else on ECB economic policy really hinders capital flows to the Euro. There are a lot of structural problems politically in the European Union that negatively affect their financial policy. The Yuan is a credible threat, and that's a strong economy, but I'm not sure most of the main cash sources of the world (Japan, Europe, etc.) are willing to tie their political futures to China, for obvious reasons (communism, the threat of China as a economic equal, the perceived unfair advantage / trade policy / business investment policy of the Chinese, and for some of the other ASEAN countries, their deep distrust of each other).
Are people really crazy enough to think there is going to be some large scale political / economic revolt in the United States that leads to its collapse? Buying houses in the hills of SF, buying solely silver, etc? This is the same country that survived Bush v. Gore with little to no political upheaval. In 95% of the world, this would have been a civil war. The underrated driver of the dollar as the reserve currency is the unique political stability of the United States. There are very legit critiques to the short and long term US economic strategy and debt load, but we are remarkably resilient at surviving crises without long term political upheaval. This drives foreign investment into the US.
The biggest threat to the US government is its massively underfunded long term transfer obligations (SS, Medicare, etc.) We're going to have to attack the plans in the next 5-10 years or else the budget will get out of hand.
On April 09 2011 12:33 Zergneedsfood wrote: We then passed a bill that would enhance regulatory systems and provide a consumer protection agency. New bills being passed don't necessarily slash spending, but they do reform inefficacies and inefficiencies in our social entitlement programs.
I agree with the vast majority of your post, except for this point. The banks are designed to work around pretty much any regulatory structure placed into effect. There's too much money on the line not to. The rest of your post is very good. People really understate the political aspects that drive the US as the reserve currency.
I agree on the point of underfunded obligations wrecking our budget in the long run, as I believe I've read a couple articles and understand that it's a big issue. But like Broodwich I agree that economically speaking, there really isn't something yet that we need to be completely panicking about.
We're taking steps to remove funding and a lot of good ideas are in circulation to cut down on Medicare and SS costs. It'll take time because these programs are decades in the making, but there's no hurry to overexaggerate the problems.
The one problem I had Broodwich with your point was on the rise of the Yuan.
To me, I feel that China has too many strict investment limits which inherently turns investors away from the Yuan. Furthermore, their artificial depreciation of their currency (which America looks down upon even though it's done also), makes it unstable and unlikely to take the world stage soon.
China doesn't want its currency to be a dominant currency because that would eliminate China's state controlled capitalistic tendencies and open up its currency for investment and free market policies that might hurt its control. Granted, that would be good for the west, but China really doesn't want it much (at least its government doesn't want it).
So the fears for the Yuan taking over are also overstated IMO. But prove me wrong if there's something I missed.
On April 09 2011 12:33 Zergneedsfood wrote: We then passed a bill that would enhance regulatory systems and provide a consumer protection agency. New bills being passed don't necessarily slash spending, but they do reform inefficacies and inefficiencies in our social entitlement programs.
I agree with the vast majority of your post, except for this point. The banks are designed to work around pretty much any regulatory structure placed into effect. There's too much money on the line not to. The rest of your post is very good. People really understate the political aspects that drive the US as the reserve currency.
lol it appears we agree on things. ^^; It appears I'm not crazy!
But I do see why people think this way. For a while myself I was a bit reluctant to accept the Dodd-Frank bill because it didn't do anything to stop moral hazard and the threat of another "too-big-to-fail" incident.
Though I try to be optimistic. ^^; I remember there being a court case in Massachusetts over Wells Fargo which ended up keeping banks from calling foreclosures on certain homes just because banks had CDOs on it....or something.
The one problem I had Broodwich with your point was on the rise of the Yuan.
To me, I feel that China has too many strict investment limits which inherently turns investors away from the Yuan. Furthermore, their artificial depreciation of their currency (which America looks down upon even though it's done also), makes it unstable and unlikely to take the world stage soon.
China doesn't want its currency to be a dominant currency because that would eliminate China's state controlled capitalistic tendencies and open up its currency for investment and free market policies that might hurt its control. Granted, that would be good for the west, but China really doesn't want it much (at least its government doesn't want it).
So the fears for the Yuan taking over are also overstated IMO. But prove me wrong if there's something I missed.
At first glance, you would think the ownership restrictions for foreign investors and the unique habit of the Chinese companies to copy and resell technology brought into the country by third parties (with tacit consent of the government) would keep people out, but companies just can't stop themselves from drooling at the one billion possible consumers there.
I agree that China has to strike a balance between its Yuan control policies and its desire for power / recognition on the global stage. To their credit, they know unpegging the Yuan now would be a disaster for them. They're doing it in the way that works in their best interests.
I still wonder about the stability of that economic and political structure, long term. They haven't had an economic shock since they moved to their "making money is awesome" philosophy. I'll be interested to see what happens when they do have issues, because they haven't had to respond to a real economic downturn during their growth. They've been able to count on booming exports for so long but it's getting to the point of saturation.
One other thing we've ignored: look at Rio Tinto. The Chinese need access to certain raw materials that the rest of the world seems opposed to letting them have. I see that playing out with the Yuan.
The federal reserve was created in 1913 by Woodrow Wilson. A very very short synopsis of how money has worked since goes like this....
The government needs 10 millions dollars to be put into the money supply. They call up the Fed and ask for 10 million. The Fed prints it (or makes it electronic for modern purposes), and gives it to the government and asks for 10 million in some sort of bond. However, the newly created money has interest assessed to it. The government, and the US people, now owe more money to the Fed then is actually in circulation. Multiply this by billlllions of dollars and other tricks the banks use (90% of the money a bank takes in can be used to create to currency) and we end up in a deep deep hole. The economy is meant to collapse.
I started buying gold about 5 years ago, after I finished college and could afford to, knowing that the price was going to continue to sky rocket. The rich of the rich are way ahead of this 'new' knowledge. They have been sitting back making money off this disgusting tapeworm while hard working Americans keep finding themselves trapped in this cycle.
It didn't start here in the US but it may just end...
Is there a threat of government shutdown? Yes, but not to the extent that it's going to drastically affect the majority of Americans as critical services remain open and unnecessary jobs get temporarily removed and then there's backpay once the government starts running again.
I think you forget the critically important part where such a government shutdown can shake investor confidence. Are foreign investors willing to make their bets on America despite the heavy debts now that it looks like the government is going to shut down every 10 ~ 15 years because of Congressional squabbling? The world sees the American Congress as the legislative stumbling block of the world, and with good reason. Double-tiered legislative bodies might've sounded great, and might've worked great in the more sedate pace in the world of the 18th, 19th and 20th century, but the 21st century world isn't going to sit around and wait for America's politicians to get done with their Pass-The-Hot-Potato game to and fro the different branches of government
This is hyperbole, and just flat out wrong. It's pretty clear you're not from the US if you think this is case. Our federal government shutdown will have little to no effect on the US economy, just like the last one in 1996. There's no real threat of a lack of agreement or major structural changes to the US government from this, the US government is very minimally tied to the day to day economy of the country (we're much more privatized than everyone else), and in both cases (96 and the present) it's come about more as a political tool than as an actual attack on the economy / politics of the country.
I am a commercial real estate broker by day and I can say that it seems to me, as others have pointed out, that it isn't that there aren't solutions to these problems available. The problem is that the general public doesn't understand and therefore any government official running for election wouldn't get any support whatsoever. This leaves us in a bad spot.
From a real estate point of view in this country I can say with almost absolute certainty we will have another drop in the market this year. The foreclosure moratorium fucked the market so hard it is unbelievable. Everything is backed up as a result because banks had to refile on many foreclosures. Therefore they have the choice to release a huge stream of foreclosures that butchers the market outright or to slowly release them and have a slower market drop over the next 5 years continuously.
Regarding the financial sector itself and government debt it really looks insurmountable at this point. Not because there are not possible solutions that may work but simply because no one can put those solutions to work in our political environment. I'm very worried about the future of this country and my professional future although I am lucky to be working mostly with REO properties right now so financially it is no problem unless we hit an absolute depression.
What are peoples thoughts on this actually becoming a bad depression over the next few years?
The federal reserve was created in 1913 by Woodrow Wilson. A very very short synopsis of how money has worked since goes like this....
The government needs 10 millions dollars to be put into the money supply. They call up the Fed and ask for 10 million. The Fed prints it (or makes it electronic for modern purposes), and gives it to the government and asks for 10 million in some sort of bond. However, the newly created money has interest assessed to it. The government, and the US people, now owe more money to the Fed then is actually in circulation. Multiply this by billlllions of dollars and other tricks the banks use (90% of the money a bank takes in can be used to create to currency) and we end up in a deep deep hole. The economy is meant to collapse.
I started buying gold about 5 years ago, after I finished college and could afford to, knowing that the price was going to continue to sky rocket. The rich of the rich are way ahead of this 'new' knowledge. They have been sitting back making money off this disgusting tapeworm while hard working Americans keep finding themselves trapped in this cycle.
It didn't start here in the US but it may just end...
I'll ignore the anti-FIAT money commentary which ignores modern history (early 1900s gold standard collapse, Bretton Woods as an abject failure). I voted for Ron Paul in 08, but the worst part of his platform is the Gold standard trolling.
Gold is the worst hard metal investment, and most of its skyrocketing value is being driven by crazy people who think the world is going to end. If you know who Alex Jones is, the guy who owns his radio network is a gold dealer, and because of the AJ show that guy is one of the 5 largest gold dealers in the US. Crazy people are driving the price of gold through the roof.
If you're going to be crazy and invest that way, at least pick a different hard metal. Gold's value is a massive bubble currently, although I think it'll go a little higher in the short term (until the economic worries / housing stuff / unemployment stabilizes a bit more there's going to be a fear factor driving stupid people to gold). There is almost no industrial use for gold. Pretty much every major hard metal besides gold has industrial value that will limit the downside, and is also being invested in by crazy people so it's seeing the same value appreciation. Not to mention that most of the other industrial metals have China desperately driving up their value (except for the rare earth metals, which they pretty much have a monopoly on) and China is only going to keep raising demand for the non-gold industrial metals. The other doomsday guy in the thread suggested silver, which while I'm not investing in metals currently, would be the one I'd go to if I wanted a metals play.
On April 09 2011 12:10 Zergneedsfood wrote: To be honest, I never saw the national debt as a problem. Sure it ends up cutting social services, but America will never cut it to the point of hacking it to pieces.
And sure it decreases America's dollar value, but that raises our manufacturing industry that's been struggling.
Problems associated with the national debt are more fear based than anything. We fear that we have hundreds of trillions of dollars in debts, and that becomes the scare, that we're in debt.
Is there a threat of bankruptcy? No. China will never let that happen, nor will the international community. Is there a threat of government shutdown? Yes, but not to the extent that it's going to drastically affect the majority of Americans as critical services remain open and unnecessary jobs get temporarily removed and then there's backpay once the government starts running again.
I believe that it's not an acceptable mentality to have, but the reasons to be super scared about the national debt is minimal at best.
Did you pay attention much to the previous recession we just went through? Financial giants were collapsing left and right, we were on the verge of a complete financial collapse. We were able to avert the crisis simply by diluting the dollar to a significant degree, bailing out the failing institutions, and reverting to artificially low interest rates which is of course what precipitated the housing bubble in the first place.
The danger is real... it is the threat that the desperate measures we have employed in the present and in the past will no longer be effective enough due to the ever increasing debt, ever inflated dollar, and questionable US debt credit rating abroad. There is only so far the Keynesian economic policies can delay the inevitable market correction from artificial highs.
Your analysis oh how we averted total collapse in the last financial crisis is mostly correct. You're explanation for the cause of the crisis to begin with, especially the housing bubble, is fundamentally wrong.
While low interest rates encouraged banks to issue loans and take some risks they may have otherwise avoided, it wasn't the main cause of the financial crisis. The issue was with the issuance of poor quality mortgages, which homeowners would be unable to pay off. Those mortgages were repackaged and sold as financial instruments. Because the regulating system is broken, they received high quality investment-grade ratings (predicted to give a modest rate of return, with virtually no risk). Investment bankers then placed bets on the same financial instruments they were selling, so when the crash finally came, it involved significantly more assets than the mortgage-backed securities themselves.
Low interest rates may have lubed the tires a bit, but the crash was engineered by private financial institutions with virtually no regulation from the government. The cause and effect relationship you're trying to make doesn't hold water.
On April 09 2011 13:24 LostDevil wrote: I am a commercial real estate broker by day and I can say that it seems to me, as others have pointed out, that it isn't that there aren't solutions to these problems available. The problem is that the general public doesn't understand and therefore any government official running for election wouldn't get any support whatsoever. This leaves us in a bad spot.
From a real estate point of view in this country I can say with almost absolute certainty we will have another drop in the market this year. The foreclosure moratorium fucked the market so hard it is unbelievable. Everything is backed up as a result because banks had to refile on many foreclosures. Therefore they have the choice to release a huge stream of foreclosures that butchers the market outright or to slowly release them and have a slower market drop over the next 5 years continuously.
Regarding the financial sector itself and government debt it really looks insurmountable at this point. Not because there are not possible solutions that may work but simply because no one can put those solutions to work in our political environment. I'm very worried about the future of this country and my professional future although I am lucky to be working mostly with REO properties right now so financially it is no problem unless we hit an absolute depression.
What are peoples thoughts on this actually becoming a bad depression over the next few years?
It's going to take YEARS for the housing stock to stabilize. This was not something that will be fixed during the Obama administration, or even the next one. We have a massive oversupply of housing stock, and also a mismatched inventory (too many people living in houses that should have been out of their price range). Internally, the Paulson Treasury Department joked that one of the best uses of TARP funds would have been to burn down a ton of homes.
That said, this is a weirdly regional crisis. Certain areas are still getting killed (especially inner cities, parts of California, Florida, etc.), but large parts of the country are hitting foreclosure bottoms and actually seeing housing prices start to rise from the bottom.
The federal reserve was created in 1913 by Woodrow Wilson. A very very short synopsis of how money has worked since goes like this....
The government needs 10 millions dollars to be put into the money supply. They call up the Fed and ask for 10 million. The Fed prints it (or makes it electronic for modern purposes), and gives it to the government and asks for 10 million in some sort of bond. However, the newly created money has interest assessed to it. The government, and the US people, now owe more money to the Fed then is actually in circulation. Multiply this by billlllions of dollars and other tricks the banks use (90% of the money a bank takes in can be used to create to currency) and we end up in a deep deep hole. The economy is meant to collapse.
I started buying gold about 5 years ago, after I finished college and could afford to, knowing that the price was going to continue to sky rocket. The rich of the rich are way ahead of this 'new' knowledge. They have been sitting back making money off this disgusting tapeworm while hard working Americans keep finding themselves trapped in this cycle.
It didn't start here in the US but it may just end...
I am seriously not sure why you think gold is good. When the world turns into shit, no one cares how much gold you have. It's just a piece of crap.
On April 09 2011 13:24 LostDevil wrote: I am a commercial real estate broker by day and I can say that it seems to me, as others have pointed out, that it isn't that there aren't solutions to these problems available. The problem is that the general public doesn't understand and therefore any government official running for election wouldn't get any support whatsoever. This leaves us in a bad spot.
From a real estate point of view in this country I can say with almost absolute certainty we will have another drop in the market this year. The foreclosure moratorium fucked the market so hard it is unbelievable. Everything is backed up as a result because banks had to refile on many foreclosures. Therefore they have the choice to release a huge stream of foreclosures that butchers the market outright or to slowly release them and have a slower market drop over the next 5 years continuously.
Regarding the financial sector itself and government debt it really looks insurmountable at this point. Not because there are not possible solutions that may work but simply because no one can put those solutions to work in our political environment. I'm very worried about the future of this country and my professional future although I am lucky to be working mostly with REO properties right now so financially it is no problem unless we hit an absolute depression.
What are peoples thoughts on this actually becoming a bad depression over the next few years?
It's going to take YEARS for the housing stock to stabilize. This was not something that will be fixed during the Obama administration, or even the next one. We have a massive oversupply of housing stock, and also a mismatched inventory (too many people living in houses that should have been out of their price range). Internally, the Paulson Treasury Department joked that one of the best uses of TARP funds would have been to burn down a ton of homes.
That said, this is a weirdly regional crisis. Certain areas are still getting killed (especially inner cities, parts of California, Florida, etc.), but large parts of the country are hitting foreclosure bottoms and actually seeing housing prices start to rise from the bottom.
Yes this is true. The real estate market acts on a much smaller level than most markets. For example my neighboring town is doing quite well with home prices and many are still selling in the 500-700k range which is reasonable for there. The city I live in is completely shat on by the foreclosure crisis and it seems half of the people are being foreclosed on.
You are correct that it will take years to fix. The majority of homeowners need to downsize or head to apartment alternatives. I can go on forever about this but there are way too many Americans that tried to "own their own home" and just outright failed and were not prepared for it financially and also lacking the responsibility for it. I'm banking on apartments doing comparatively alright throughout this downturn for the next few years but that's about it overall.
I predict ~ a decade before we start to see promise in the housing market unless things start to turn. However, I am more concerned with the financial situation of this country overall. We know that we got here, as explained by a poster above me, through the mortgage crisis and lax mortgage regulations but I am afraid it is other areas that will lead to the further demise of the economy. I am interested to see how others perceive this threat and if a modern day great depression may be in the works.
Glad to see people talking down the doomsayers. What I really don't get is why the OP brushes aside tax increases as part of the solution jusr because it's unrealistic the immediately double them. Rhetoric has pushed taxation off the table completely. It's absurd. Even Reagan backed off on the issue when his deep cuts killed revenue; the goalposts keep shifting.
People severely underestimate just how huge and out-of-control the debt is now. It's easy to just have a positive outlook, recall that the debt has been around forever and it's hasn't crashed our economy yet, and assume that things will probably be fine.
But there is a breaking point, there has to be. Suppose you make $50,000 a year and have $500 in debt... no problem, of course. You develop a bit of a spending problem and work up to $3,000 in debt... an small problem, but you can handle it. A couple years later it's at $15,000 and starting to look serious, but you can make your credit card payments and still get by, you're still getting along fine. Years after that, your debt is $40,000 and you're strugging to make your payments, but you're also eyeing a new car you plan to buy. Everything will be fine, you haven't gone bankrupt yet, right? Sadly... that's not how it works.
The fact that there's a debate about the dollar remaining as the world's reserve currency says a lot. Right now we're at "that probably won't change anytime too soon, I think". 15 years ago we were at "are you kidding? the dollar will never go away", and 25 years ago no one even thought it was a possibility. I think you can see what direction this is going... what do you think the discussion will be 10 years from now?
On April 09 2011 12:49 Broodwich wrote: Are people really crazy enough to think there is going to be some large scale political / economic revolt in the United States that leads to its collapse? Buying houses in the hills of SF, buying solely silver, etc? This is the same country that survived Bush v. Gore with little to no political upheaval. In 95% of the world, this would have been a civil war. The underrated driver of the dollar as the reserve currency is the unique political stability of the United States. There are very legit critiques to the short and long term US economic strategy and debt load, but we are remarkably resilient at surviving crises without long term political upheaval. This drives foreign investment into the US.
The biggest threat to the US government is its massively underfunded long term transfer obligations (SS, Medicare, etc.) We're going to have to attack the plans in the next 5-10 years or else the budget will get out of hand.
Bush v Gore was a petty family squabble over whether Daddy or Mommy would choose where we're going on vacation this year. The debt is "kids, I know you like having a pet dog and having your own rooms and a back yard to play in, but we're going to have to move into a small apartment on the other end of town. I hope you don't miss your friends too much, you're going to make new ones..."
There won't be any revolt that will lead to everyone living without electricity, trading silver coins and weapons in order to survive. It won't be a crazy scenario where the entire country falls into chaos. But there will be an economic event close to the size of the Great Depression, though probably without the starvation, malnourishment, and disease this time.
I expect something similar to the housing market crash. There will be a slow but steady decline as other nations finally refuse to keep funding the US debt, and instead of home values falling by 50%, it will be the value of everything in the US and all of the US dollars. Imported goods will be more expensive, we'll have less income from exports, and this country will finally be forced to learn to live on less.
I wish this could be avoided, but it's political suicide to say "I will raise taxes and cut benefits". I do think avoiding it is possible, we don't even have to pay off the debt as long as we just stop making it larger. But the public isn't smart enough to vote in the people who would do this, so it's a broken system destined for failure. Even the people who sort of had the right idea at first, the Tea Party, got flooded with morons to the point where they were literally sending out advertisements for people to watch a charismatic Alaska mom's new reality show.
One thing I'm curious about, if there are any experts around. What happens if someone buys a $300,000 house, has a large mortgage to pay off, but then a year later there's a financial crisis that involves some serious inflation problems? Will he be able to pay off his debt with these inflated dollars, essentially only having to pay half price for his home? (not that I have any idea if inflation will be a major part of the upcoming problems or not)
The federal reserve was created in 1913 by Woodrow Wilson. A very very short synopsis of how money has worked since goes like this....
The government needs 10 millions dollars to be put into the money supply. They call up the Fed and ask for 10 million. The Fed prints it (or makes it electronic for modern purposes), and gives it to the government and asks for 10 million in some sort of bond. However, the newly created money has interest assessed to it. The government, and the US people, now owe more money to the Fed then is actually in circulation. Multiply this by billlllions of dollars and other tricks the banks use (90% of the money a bank takes in can be used to create to currency) and we end up in a deep deep hole. The economy is meant to collapse.
I started buying gold about 5 years ago, after I finished college and could afford to, knowing that the price was going to continue to sky rocket. The rich of the rich are way ahead of this 'new' knowledge. They have been sitting back making money off this disgusting tapeworm while hard working Americans keep finding themselves trapped in this cycle.
It didn't start here in the US but it may just end...
I am seriously not sure why you think gold is good. When the world turns into shit, no one cares how much gold you have. It's just a piece of crap.
If all the doomsayers are right and the US collapses and things go nuts, if this country turns into anarchy you can have all the gold in the world and it's not going to matter. If solely the US dollar collapses, well, buy Euros or something else, because gold is still useless. At first I was stunned that gold was a booming investment, but then I remembered that there are a lot of really stupid people, and it's been 50 years since the collapse and complete failure of Bretton Woods so people don't realize why we went completely away from a gold backed currency (the gold standard repeatedly collapsed and lead to economic crises until we did away with it).
It is arguably the least useful metal possible. The gold boom is proof that stupid people have money to invest.
On April 09 2011 13:57 Chocobo wrote: People severely underestimate just how huge and out-of-control the debt is now. It's easy to just have a positive outlook, recall that the debt has been around forever and it's hasn't crashed our economy yet, and assume that things will probably be fine.
But there is a breaking point, there has to be. Suppose you make $50,000 a year and have $500 in debt... no problem, of course. You develop a bit of a spending problem and work up to $3,000 in debt... an small problem, but you can handle it. A couple years later it's at $15,000 and starting to look serious, but you can make your credit card payments and still get by, you're still getting along fine. Years after that, your debt is $40,000 and you're strugging to make your payments, but you're also eyeing a new car you plan to buy. Everything will be fine, you haven't gone bankrupt yet, right? Sadly... that's not how it works.
The fact that there's a debate about the dollar remaining as the world's reserve currency says a lot. Right now we're at "that probably won't change anytime too soon, I think". 15 years ago we were at "are you kidding? the dollar will never go away", and 25 years ago no one even thought it was a possibility. I think you can see what direction this is going... what do you think the discussion will be 10 years from now?
On April 09 2011 12:49 Broodwich wrote: Are people really crazy enough to think there is going to be some large scale political / economic revolt in the United States that leads to its collapse? Buying houses in the hills of SF, buying solely silver, etc? This is the same country that survived Bush v. Gore with little to no political upheaval. In 95% of the world, this would have been a civil war. The underrated driver of the dollar as the reserve currency is the unique political stability of the United States. There are very legit critiques to the short and long term US economic strategy and debt load, but we are remarkably resilient at surviving crises without long term political upheaval. This drives foreign investment into the US.
The biggest threat to the US government is its massively underfunded long term transfer obligations (SS, Medicare, etc.) We're going to have to attack the plans in the next 5-10 years or else the budget will get out of hand.
Bush v Gore was a petty family squabble over whether Daddy or Mommy would choose where we're going on vacation this year. The debt is "kids, I know you like having a pet dog and having your own rooms and a back yard to play in, but we're going to have to move into a small apartment on the other end of town. I hope you don't miss your friends too much, you're going to make new ones..."
There won't be any revolt that will lead to everyone living without electricity, trading silver coins and weapons in order to survive. It won't be a crazy scenario where the entire country falls into chaos. But there will be an economic event close to the size of the Great Depression, though probably without the starvation, malnourishment, and disease this time.
I expect something similar to the housing market crash. There will be a slow but steady decline as other nations finally refuse to keep funding the US debt, and instead of home values falling by 50%, it will be the value of everything in the US and all of the US dollars. Imported goods will be more expensive, we'll have less income from exports, and this country will finally be forced to learn to live on less.
I wish this could be avoided, but it's political suicide to say "I will raise taxes and cut benefits". I do think avoiding it is possible, we don't even have to pay off the debt as long as we just stop making it larger. But the public isn't smart enough to vote in the people who would do this, so it's a broken system destined for failure. Even the people who sort of had the right idea at first, the Tea Party, got flooded with morons to the point where they were literally sending out advertisements for people to watch a charismatic Alaska mom's new reality show.
One thing I'm curious about, if there are any experts around. What happens if someone buys a $300,000 house, has a large mortgage to pay off, but then a year later there's a financial crisis that involves some serious inflation problems? Will he be able to pay off his debt with these inflated dollars, essentially only having to pay half price for his home? (not that I have any idea if inflation will be a major part of the upcoming problems or not)
To answer your question on the mortgage: your payment obligation and debt is fixed to what you borrowed. However, they'd only benefit if the interest on the mortgage was fixed. If the interest was adjustable, the interest adjustments would move with inflation.
Your point about the debt will be right probably 20 years from now if nothing is done, but I think people are finally waking up to the necessity of cleaning up SS and Medicare, and that it's going to be ugly. The Ryan bill has a lot of major issues, but at least it was a start on attacking the future expenditures of Social Security and Medicare. The current yearly deficit is high but not outrageous, but the long term projections are completely unsustainable without adjustment, even when you factor in the decline in defense spending when we stop stupidly going to war in 3 places.
You vastly understate Bush v. Gore. A two party polemic system with a contested election where one party uses questionable means to assure its victory? And people did nothing? Ask the people of Kenya, or Ivory Coast, or Zimbabwe, or a host of other countries where we've seen this recently how it went for them.
The federal reserve was created in 1913 by Woodrow Wilson. A very very short synopsis of how money has worked since goes like this....
The government needs 10 millions dollars to be put into the money supply. They call up the Fed and ask for 10 million. The Fed prints it (or makes it electronic for modern purposes), and gives it to the government and asks for 10 million in some sort of bond. However, the newly created money has interest assessed to it. The government, and the US people, now owe more money to the Fed then is actually in circulation. Multiply this by billlllions of dollars and other tricks the banks use (90% of the money a bank takes in can be used to create to currency) and we end up in a deep deep hole. The economy is meant to collapse.
I started buying gold about 5 years ago, after I finished college and could afford to, knowing that the price was going to continue to sky rocket. The rich of the rich are way ahead of this 'new' knowledge. They have been sitting back making money off this disgusting tapeworm while hard working Americans keep finding themselves trapped in this cycle.
It didn't start here in the US but it may just end...
I am seriously not sure why you think gold is good. When the world turns into shit, no one cares how much gold you have. It's just a piece of crap.
If all the doomsayers are right and the US collapses and things go nuts, if this country turns into anarchy you can have all the gold in the world and it's not going to matter. If solely the US dollar collapses, well, buy Euros or something else, because gold is still useless. At first I was stunned that gold was a booming investment, but then I remembered that there are a lot of really stupid people, and it's been 50 years since the collapse and complete failure of Bretton Woods so people don't realize why we went completely away from a gold backed currency (the gold standard repeatedly collapsed and lead to economic crises until we did away with it).
It is arguably the least useful metal possible. The gold boom is proof that stupid people have money to invest.
They also forget that the silver market was almost cornered in the 80s showing exactly why investing in a single fairly illiquid commodity is stupid.
But don't worry, everyone who's already invested in it. I'm sure when the crisis does happen, the new standard global currency will be BMW S70/2 engine bays and you'll all make a fortune.
The federal reserve was created in 1913 by Woodrow Wilson. A very very short synopsis of how money has worked since goes like this....
The government needs 10 millions dollars to be put into the money supply. They call up the Fed and ask for 10 million. The Fed prints it (or makes it electronic for modern purposes), and gives it to the government and asks for 10 million in some sort of bond. However, the newly created money has interest assessed to it. The government, and the US people, now owe more money to the Fed then is actually in circulation. Multiply this by billlllions of dollars and other tricks the banks use (90% of the money a bank takes in can be used to create to currency) and we end up in a deep deep hole. The economy is meant to collapse.
I started buying gold about 5 years ago, after I finished college and could afford to, knowing that the price was going to continue to sky rocket. The rich of the rich are way ahead of this 'new' knowledge. They have been sitting back making money off this disgusting tapeworm while hard working Americans keep finding themselves trapped in this cycle.
It didn't start here in the US but it may just end...
I am seriously not sure why you think gold is good. When the world turns into shit, no one cares how much gold you have. It's just a piece of crap.
People like gold because it has an intrinsic real value. Even if the world 'turns to shit' and we barter for stuff, gold would still retain its value from its usefulness alone (jewelry, status, industry use, w/e) (as long as humans are vain, gold will have substantial real value). It's still very important to understand that gold is not a real investment, but only a transfer of one's wealth from nominal terms to real terms (e.g. speculation), and serves as a hedge against inflation.
A real investment can actually return a real profit, instead of just increasing based on expectations and the devaluation of the currency of measurement.
Edit: Eh, it's industrial value is limited, but it's use in industry at all attests to its usefulness/worth, wouldn't they use an available alternative if they could, since it's extremely overpriced currently? (aside from the fact that they get to claim that their product contains gold)
Sure, gold's value mainly comes from society, but it's not like humans will suddenly deem it valueless since it's still very useful as a status symbol.
The federal reserve was created in 1913 by Woodrow Wilson. A very very short synopsis of how money has worked since goes like this....
The government needs 10 millions dollars to be put into the money supply. They call up the Fed and ask for 10 million. The Fed prints it (or makes it electronic for modern purposes), and gives it to the government and asks for 10 million in some sort of bond. However, the newly created money has interest assessed to it. The government, and the US people, now owe more money to the Fed then is actually in circulation. Multiply this by billlllions of dollars and other tricks the banks use (90% of the money a bank takes in can be used to create to currency) and we end up in a deep deep hole. The economy is meant to collapse.
I started buying gold about 5 years ago, after I finished college and could afford to, knowing that the price was going to continue to sky rocket. The rich of the rich are way ahead of this 'new' knowledge. They have been sitting back making money off this disgusting tapeworm while hard working Americans keep finding themselves trapped in this cycle.
It didn't start here in the US but it may just end...
I am seriously not sure why you think gold is good. When the world turns into shit, no one cares how much gold you have. It's just a piece of crap.
People like gold because it has an intrinsic real value. Even if the world 'turns to shit' and we barter for stuff, gold would still retain its value from its usefulness alone (jewelry, status, industry use, w/e) (as long as humans are vain, gold will have substantial real value). It's still very important to understand that gold is not a real investment, but only a transfer of one's wealth from nominal terms to real terms (e.g. speculation), and serves as a hedge against inflation.
A real investment can actually return a real profit, instead of just increasing based on expectations and the devaluation of the currency of measurement.
This is just flat out wrong. Gold is the LEAST useful industrial metal. It has almost no intrinsic value. Pretty much every other major metal has a steady demand and need in industrial goods and technology. Gold does not. Silver, manganese, aluminum, tin, lead, the rare earths, silicon, etc. all are used to make goods people actually need. Gold is used to make...spoons for tasting? Jewelry with little intrinsic value?
On April 09 2011 13:36 Sufficiency wrote: I am seriously not sure why you think gold is good. When the world turns into shit, no one cares how much gold you have. It's just a piece of crap.
That's true, if the world actually "turns into shit" and we're living in anarchy with no government, no police, and everyone's out looting and pillaging and stealing food and supplies just to survive. But that's simply not going to happen.
Gold has held its value for thousands of years, even through periods of weak governments and rampant crime. Even when people had very low standards of living, they valued gold. This is unlikely to ever change.
Now, I am not claiming gold is the best investment ever and everyone should go buy gold coins with all of their money right now. Gold is in an investment bubble along with other things right now, and the current value may not hold up so well.
But the point is that most of the time in a large scale economic crisis, you are better off holding gold (or other commodities) than paper money which is unpredictably changing in value during the crisis. In 2006, ten million Zimbabwean dollars could buy a home. In 2009, ten million Zimbabwean dollars could buy absolutely nothing. You would have been better off holding gold (or anything really) instead of cash. Will anything like this happen in the US? Probably not, but the fact that it's even a remote possibility worries some people.
On April 09 2011 14:12 Chocobo wrote: But the point is that most of the time in a large scale economic crisis, you are better off holding gold (or other commodities) than paper money which is unpredictably changing in value during the crisis. In 2006, ten million Zimbabwean dollars could buy a home. In 2009, ten million Zimbabwean dollars could buy absolutely nothing. You would have been better off holding gold (or anything really) instead of cash. Will anything like this happen in the US? Probably not, but the fact that it's even a remote possibility worries some people.
The people worried about that level of inflation as a serious possibility in the US are the same people investing in ecoloblue water filtration systems, fresh direct food seed delivery to grow their own food, and solar panels to live off the grid. Oh, and buying the book at HIDEYOURGUNS.com to keep their guns hidden from those pesky feds. These are the guys I want to copy investment strategies from.
On April 09 2011 13:36 Sufficiency wrote: I am seriously not sure why you think gold is good. When the world turns into shit, no one cares how much gold you have. It's just a piece of crap.
That's true, if the world actually "turns into shit" and we're living in anarchy with no government, no police, and everyone's out looting and pillaging and stealing food and supplies just to survive. But that's simply not going to happen.
Gold has held its value for thousands of years, even through periods of weak governments and rampant crime. Even when people had very low standards of living, they valued gold. This is unlikely to ever change.
Now, I am not claiming gold is the best investment ever and everyone should go buy gold coins with all of their money right now. Gold is in an investment bubble along with other things right now, and the current value may not hold up so well.
But the point is that most of the time in a large scale economic crisis, you are better off holding gold (or other commodities) than paper money which is unpredictably changing in value during the crisis. In 2006, ten million Zimbabwean dollars could buy a home. In 2009, ten million Zimbabwean dollars could buy absolutely nothing. You would have been better off holding gold (or anything really) instead of cash. Will anything like this happen in the US? Probably not, but the fact that it's even a remote possibility worries some people.
No matter what gold has always been valued. People of ancient times collected it. Perhaps not to barter, but collected it regardless of how useless it was. Lands have been trampled for it again before anyone knew it could be worth it.
So far I do believe the best reasonable investments are... Chinese Dollar (perhaps) Euro Gold Precious stones. Property in Europe
I say perhaps, because there was a report about their economy being a bit too hush hush now and perhaps are struggling because the US is struggling. I doubt it is on equal levels, but it can happen. The rest will hold value because the WHOLE world will not go to shit at once.
I have to agree with the people criticizing gold investments. Of course, gold can be a great investment when economic stability is assured along with inflation. But in the end, the metal itself has very little utility and it not worth much intrinsic value.
However, this does not justify a criticism of gold as a standard for a currency. The reason gold is so valued over fiat currency is not due to its intrinsic value, but rather due to its relative inability to be manipulated and inflated by a central government. However, those who believe in the effectiveness of Keynesian economics will see this as a negative instead of a benefit of the gold standard.
On April 09 2011 14:18 jdseemoreglass wrote: I have to agree with the people criticizing gold investments. Of course, gold can be a great investment when economic stability is assured along with inflation. But in the end, the metal itself has very little utility and it not worth much intrinsic value.
However, this does not justify a criticism of gold as a standard for a currency. The reason gold is so valued over fiat currency is not due to its intrinsic value, but rather due to its relative inability to be manipulated and inflated by a central government. However, those who believe in the effectiveness of Keynesian economics will see this as a negative instead of a benefit of the gold standard.
In a multi-currency system with exports and imports, the gold standard will fail due to capital movements between countries. No amount of pegging currencies or gold exchanges or tariffs or import / export quotas will change this. It has failed multiple times for that reason since we have become industrialized and interconnected. We're only more interconnected now than the early 70s when Bretton Woods finally went away. You don't see credible economists out arguing for the gold standard. There's a reason the main proponent of the gold standard in the United States is a medical doctor, not an economist or a financier (and I say that as someone who voted for Ron Paul). It is a terrible idea in the modern world that would lead to continued economic instability.
On April 09 2011 14:02 Broodwich wrote: To answer your question on the mortgage: your payment obligation and debt is fixed to what you borrowed. However, they'd only benefit if the interest on the mortgage was fixed. If the interest was adjustable, the interest adjustments would move with inflation.
Interesting. It's hard to understand how banks are willing to offer 30 year fixed rate mortgages at under 5% interest, that seems at best minimally profitable and at worst a complete disaster.
You vastly understate Bush v. Gore. A two party polemic system with a contested election where one party uses questionable means to assure its victory? And people did nothing? Ask the people of Kenya, or Ivory Coast, or Zimbabwe, or a host of other countries where we've seen this recently how it went for them.
You're completely right about that, I didn't mean it in that way. What I was trying to say is that the US's ability to deal with crisis situations effectively and minimize the negative impact just won't be able to make a huge difference in an economic problem. Being polite to each other, trusting the government to handle the situation, and accepting the outcome is not going to do much for us if the prices of food and gas double.
Of course it does mean that the resulting violence and theft will be much lower than it could be, and many people will work together effectively to make the best of a bad situation and start us on the track to recovery. But it absolutely will affect people's lives in a much bigger way than that presidential election ever did.
On April 09 2011 14:17 NoobSkills wrote: I say perhaps, because there was a report about their economy being a bit too hush hush now and perhaps are struggling because the US is struggling. I doubt it is on equal levels, but it can happen. The rest will hold value because the WHOLE world will not go to shit at once.
Actually, I disagree with your last statement, and the banking crisis argues in my favor. If you noticed from our last economic crisis, everyone else is so interconnected to the US that it's not like they kept on going. They all have copied our finance structures and economic ideas. Germany's banking sector is still a mess. An Irish friend said it best: "When you Yankees cough, the whole world gets a cold."
In Zimbabwe, the people actually don't measure things in dollars anymore, they measure things by how long you have to stand in line at the bank to be able to afford them.
The answer is to cut military and social spending, and to crack down on Chinese imports to get our own exports going again. Raising taxes just encourages people to save and drives business overseas. Also, cutting unemployment benefits would help too (there is always a tremendous spike in people re-entering the labor market when their unemployment runs out)
On April 09 2011 14:02 Broodwich wrote: To answer your question on the mortgage: your payment obligation and debt is fixed to what you borrowed. However, they'd only benefit if the interest on the mortgage was fixed. If the interest was adjustable, the interest adjustments would move with inflation.
Interesting. It's hard to understand how banks are willing to offer 30 year fixed rate mortgages at under 5% interest, that seems at best minimally profitable and at worst a complete disaster.
It's a bet on the stability of the United States economy. I haven't researched it but I would bet that during stagflation in the late 70s the banks and S&Ls were getting hammered on this interest spread.
On April 09 2011 14:12 Chocobo wrote: But the point is that most of the time in a large scale economic crisis, you are better off holding gold (or other commodities) than paper money which is unpredictably changing in value during the crisis. In 2006, ten million Zimbabwean dollars could buy a home. In 2009, ten million Zimbabwean dollars could buy absolutely nothing. You would have been better off holding gold (or anything really) instead of cash. Will anything like this happen in the US? Probably not, but the fact that it's even a remote possibility worries some people.
The people worried about that level of inflation as a serious possibility in the US are the same people investing in ecoloblue water filtration systems, fresh direct food seed delivery to grow their own food, and solar panels to live off the grid. Oh, and buying the book at HIDEYOURGUNS.com to keep their guns hidden from those pesky feds. These are the guys I want to copy investment strategies from.
1) The value of the dollar is based on the faith people put into it, to trust that it will retain its value. If some people lose that faith and others are wavering, the value of your dollars has already fallen.
2) OK you're right, a portion of those people go way too far, and certainly are not the best financial advisors in the world. You don't have to buy gold, stockpile rice, and install solar panels. But that certainly doesn't make it a bad idea to start considering better investments than an all-cash savings account. It doesn't make you a dirty hippie to react to a real world situation.
On April 09 2011 14:12 Chocobo wrote: But the point is that most of the time in a large scale economic crisis, you are better off holding gold (or other commodities) than paper money which is unpredictably changing in value during the crisis. In 2006, ten million Zimbabwean dollars could buy a home. In 2009, ten million Zimbabwean dollars could buy absolutely nothing. You would have been better off holding gold (or anything really) instead of cash. Will anything like this happen in the US? Probably not, but the fact that it's even a remote possibility worries some people.
The people worried about that level of inflation as a serious possibility in the US are the same people investing in ecoloblue water filtration systems, fresh direct food seed delivery to grow their own food, and solar panels to live off the grid. Oh, and buying the book at HIDEYOURGUNS.com to keep their guns hidden from those pesky feds. These are the guys I want to copy investment strategies from.
1) The value of the dollar is based on the faith people put into it, to trust that it will retain its value. If some people lose that faith and others are wavering, the value of your dollars has already fallen.
2) OK you're right, a portion of those people go way too far, and certainly are not the best financial advisors in the world. You don't have to buy gold, stockpile rice, and install solar panels. But that certainly doesn't make it a bad idea to start considering better investments than an all-cash savings account. It doesn't make you a dirty hippie to react to a real world situation.
1) Gold's value is just as faith based. There is no legit use for gold.
2) People who have a legit amount of money and are stupid enough to be in an all cash savings account deserve just as much scorn as the gold investors.
On April 09 2011 14:12 Chocobo wrote: But the point is that most of the time in a large scale economic crisis, you are better off holding gold (or other commodities) than paper money which is unpredictably changing in value during the crisis. In 2006, ten million Zimbabwean dollars could buy a home. In 2009, ten million Zimbabwean dollars could buy absolutely nothing. You would have been better off holding gold (or anything really) instead of cash. Will anything like this happen in the US? Probably not, but the fact that it's even a remote possibility worries some people.
The people worried about that level of inflation as a serious possibility in the US are the same people investing in ecoloblue water filtration systems, fresh direct food seed delivery to grow their own food, and solar panels to live off the grid. Oh, and buying the book at HIDEYOURGUNS.com to keep their guns hidden from those pesky feds. These are the guys I want to copy investment strategies from.
1) The value of the dollar is based on the faith people put into it, to trust that it will retain its value. If some people lose that faith and others are wavering, the value of your dollars has already fallen.
2) OK you're right, a portion of those people go way too far, and certainly are not the best financial advisors in the world. You don't have to buy gold, stockpile rice, and install solar panels. But that certainly doesn't make it a bad idea to start considering better investments than an all-cash savings account. It doesn't make you a dirty hippie to react to a real world situation.
1) Gold's value is just as faith based. There is no legit use for gold.
2) People who have a legit amount of money and are stupid enough to be in an all cash savings account deserve just as much scorn as the gold investors.
It is just as stupid to believe that diversifying in securities which have the same intrinsic value of paper money somehow protects you from the dangers of an all cash savings account in the modern economy.
Whether one likes it or not the current financial system is rigged in the favor of USA. People can post all they want about collapse but historically this is what America is really good at i.e. coming out of crisis stronger be it World wars or financial crisis of 1971. In 1971 USA's 'adventure' in Vietnam has had an heavy toll on its economy and the dollar was grossly overvalued and not backed by enough reserves. It was predicted that USA's dollar standard is about to collapse and with it, its economic dominance. Then BAM! Nixon unilaterally suspended convertibility of dollar and everyone was forced to appreciate domestic currencies and it made dollar the global tender without any base at all providing US with seigniorage gains. I think USA of today is similarly waiting for the debt to rise to insurmountable levels and then it will most likely end convertibility of securities and/or impose heavy duties on them. To assume that a country like US will let itself die of economic starvation is naive in my humble opinion.
On April 09 2011 14:47 stalking.d00m wrote: To assume that a country like US will let itself die of economic starvation is naive in my humble opinion.
well the thing about the US is that it's run by a bipartisan government so I think you're wrong, they don't seem to have much of a problem letting it die
On April 09 2011 14:47 stalking.d00m wrote: To assume that a country like US will let itself die of economic starvation is naive in my humble opinion.
well the thing about the US is that it's run by a bipartisan government so I think you're wrong, they don't seem to have much of a problem letting it die
It's also much easier to die when you are in denial about your disease.
I love them because I get to read every wannabe economist try and convince everyone the world's gonna end, the US will implode, blah blah blah.
...do you really think that the US, the country with the greatest number of billionaires, the country with the greatest military force in the world, the country with the greatest cultural impact in the world, the country with some of the smartest, brightest minds in the entire fricken world...
... is going to let itself fall apart, and not even realise it? Or do anything about it?
On April 09 2011 14:12 Chocobo wrote: But the point is that most of the time in a large scale economic crisis, you are better off holding gold (or other commodities) than paper money which is unpredictably changing in value during the crisis. In 2006, ten million Zimbabwean dollars could buy a home. In 2009, ten million Zimbabwean dollars could buy absolutely nothing. You would have been better off holding gold (or anything really) instead of cash. Will anything like this happen in the US? Probably not, but the fact that it's even a remote possibility worries some people.
The people worried about that level of inflation as a serious possibility in the US are the same people investing in ecoloblue water filtration systems, fresh direct food seed delivery to grow their own food, and solar panels to live off the grid. Oh, and buying the book at HIDEYOURGUNS.com to keep their guns hidden from those pesky feds. These are the guys I want to copy investment strategies from.
1) The value of the dollar is based on the faith people put into it, to trust that it will retain its value. If some people lose that faith and others are wavering, the value of your dollars has already fallen.
2) OK you're right, a portion of those people go way too far, and certainly are not the best financial advisors in the world. You don't have to buy gold, stockpile rice, and install solar panels. But that certainly doesn't make it a bad idea to start considering better investments than an all-cash savings account. It doesn't make you a dirty hippie to react to a real world situation.
1) Gold's value is just as faith based. There is no legit use for gold.
2) People who have a legit amount of money and are stupid enough to be in an all cash savings account deserve just as much scorn as the gold investors.
It is just as stupid to believe that diversifying in securities which have the same intrinsic value of paper money somehow protects you from the dangers of an all cash savings account in the modern economy.
This isn't necessarily true. Most of the companies you would invest in have a large international presence and keep tons of capital overseas. They're not exclusively tied to the dollar or the US economy.
I always wondered if it was possible to just tell everyone we owe money to to just fuck off. I mean I know geopolitically it would make us look like complete assholes and no one will want to lend us money anymore, but I think that would be a fine solution. It's not like there is any way to force the US to pay money to whoever it owes it to.
I was wondering if anyone could answer why that is completely impossible, since I am sure if it had any merit some insane politician would be campaigning with that idea already.
On April 09 2011 14:12 Chocobo wrote: But the point is that most of the time in a large scale economic crisis, you are better off holding gold (or other commodities) than paper money which is unpredictably changing in value during the crisis. In 2006, ten million Zimbabwean dollars could buy a home. In 2009, ten million Zimbabwean dollars could buy absolutely nothing. You would have been better off holding gold (or anything really) instead of cash. Will anything like this happen in the US? Probably not, but the fact that it's even a remote possibility worries some people.
The people worried about that level of inflation as a serious possibility in the US are the same people investing in ecoloblue water filtration systems, fresh direct food seed delivery to grow their own food, and solar panels to live off the grid. Oh, and buying the book at HIDEYOURGUNS.com to keep their guns hidden from those pesky feds. These are the guys I want to copy investment strategies from.
1) The value of the dollar is based on the faith people put into it, to trust that it will retain its value. If some people lose that faith and others are wavering, the value of your dollars has already fallen.
2) OK you're right, a portion of those people go way too far, and certainly are not the best financial advisors in the world. You don't have to buy gold, stockpile rice, and install solar panels. But that certainly doesn't make it a bad idea to start considering better investments than an all-cash savings account. It doesn't make you a dirty hippie to react to a real world situation.
1) Gold's value is just as faith based. There is no legit use for gold.
2) People who have a legit amount of money and are stupid enough to be in an all cash savings account deserve just as much scorn as the gold investors.
It is just as stupid to believe that diversifying in securities which have the same intrinsic value of paper money somehow protects you from the dangers of an all cash savings account in the modern economy.
If you have savings, it has to be invested into something. It might be US dollars in a savings account, it might be gold coins, it might be mutual funds or real estate or rare baseball cards. The value of EVERYTHING is based on what it is worth to other people.
Normally cash is pretty safe. If it starts to appear less safe, you may want to consider an alternative. That is the extent of what I'm saying and I can't see how that be looked at as stupid.
I don't know much, but I think the U.S will make it through this, as we have multiple times before. In fact, I think that we are now on the upswing after hitting rock bottom. In fact, the GDP increased by 3% in Q4 2010, and the balance of international transitions increased by 12 billion dollars. We certainly have a lot of work to do, as we are still in a hole, but I have confidence in our government, and Obama has us on the right track. Does anyone think that Trump will actually run in 2012? Or if his financial expertise would extend to actually helping the US economy? I'm curious.
I love them because I get to read every wannabe economist try and convince everyone the world's gonna end, the US will implode, blah blah blah.
...do you really think that the US, the country with the greatest number of billionaires, the country with the greatest military force in the world, the country with the greatest cultural impact in the world, the country with some of the smartest, brightest minds in the entire fricken world...
... is going to let itself fall apart, and not even realise it? Or do anything about it?
HA!!
you guise make me laff.
The same exact arguments could be made about the financial giants such a AIG, Bear Stearns, and General Motors.
You also have to understand how the political system in the U.S. actually works. You give way too much credit to our politicians if you think they have the understanding, political will, or social mandate to drastically increase taxation and decrease spending. The priority of of our elected officials is to get reelected and to avoid pissing anybody off.
You also have to consider that the people who are in control of the finances are also the ones who are profiting from the failures of the system. I see this everyday in my home state of california, where every citizen agrees that changes must be made to prevent default, but the unions are perpetually unwilling to compromise on their salaries or pensions.
On April 09 2011 15:05 RebirthOfLeGenD wrote: I always wondered if it was possible to just tell everyone we owe money to to just fuck off. I mean I know geopolitically it would make us look like complete assholes and no one will want to lend us money anymore, but I think that would be a fine solution. It's not like there is any way to force the US to pay money to whoever it owes it to.
I was wondering if anyone could answer why that is completely impossible, since I am sure if it had any merit some insane politician would be campaigning with that idea already.
The problem that most people are explaining here is that debt is the tool we use to actually pay our obligations. We could tell everyone to fuck off, sure. But then when the next quarter comes around and we have bills to pay and not enough revenue to meet the bills, you need to borrow money. Except you won't be able to borrow money, because your reputation is in shambles.
An individual could think the same way. They could decide to go on a credit card spending spree and then just declare bankruptcy. But in the long run, they will almost certainly regret it.
I love them because I get to read every wannabe economist try and convince everyone the world's gonna end, the US will implode, blah blah blah.
...do you really think that the US, the country with the greatest number of billionaires, the country with the greatest military force in the world, the country with the greatest cultural impact in the world, the country with some of the smartest, brightest minds in the entire fricken world...
... is going to let itself fall apart, and not even realise it? Or do anything about it?
HA!!
you guise make me laff.
You do realise that the bipartisan government cannot come to an agreement on the budget for congress right? If neither side is willing to compromise and swallow some pride, the budget will not be passed and congress cannot function. How is that not an indication that the government is falling apart?
On April 09 2011 14:59 andrewwiggin wrote: ...do you really think that the US, the country with the greatest number of billionaires, the country with the greatest military force in the world, the country with the greatest cultural impact in the world, the country with some of the smartest, brightest minds in the entire fricken world...
... is going to let itself fall apart, and not even realise it? Or do anything about it?
HA!!
you guise make me laff.
It's called denial, look into it.
Many rich and powerful people lost a lot of money in the real estate market crash, and the subsequent economic downturn. Both the rich and the rest of the country wanted to prevent it from happening, but it couldn't be done. Certainly the country won't completely fall apart, but this is going to be an unavoidable problem. And due to our political system, no one will do anything about it until the crisis actually happens.
On April 09 2011 15:05 RebirthOfLeGenD wrote: I always wondered if it was possible to just tell everyone we owe money to to just fuck off. I mean I know geopolitically it would make us look like complete assholes and no one will want to lend us money anymore, but I think that would be a fine solution. It's not like there is any way to force the US to pay money to whoever it owes it to.
I was wondering if anyone could answer why that is completely impossible, since I am sure if it had any merit some insane politician would be campaigning with that idea already.
I think this is exactly what will happen, except of course instead of "fuck off" it'll be "we're sorry, we're unable to meet our obligations" etc.
The result is that other countries will stop funding the expansion of our debt (forcing us to cut spending), and will raise prices on goods sold to the US in order to make up for it. Everything we import, including gas, clothing, and many types of food would become much more expensive, and in time we all have to adjust to a somewhat lower standard of living.
On April 09 2011 11:36 jdseemoreglass wrote: What will not be reported in the official debt numbers, however, is that the United States federal government uses cash-basis, rather accrual-basis accounting, which is in violation of standard Generally Accepted Accounting Principles (GAAP), and utilizes a series of accounting labeling tricks which underscore the actual debt owed. In particular, "liabilities" are labeled transfer payments and are not considered a form of the public debt, though they do represent obligations which must be paid at some time in the future. How disingenuous it is to call these "transfer payments" can be seen in the fact that the Social Security payments have historically been used as a general slush fund for spending in the legislature and in fact is NOT transferred to future generations.
While I do agree that the US has mismanaged it's debt, I wanted to clarify two technical things for other readers so as not to be misleading.
The major portion of the US Government uses modified accrual basis accounting, not cash basis. With respects to the discussion, liabilities are still reported in the government wide statement of assets and liabilities (balance sheet), which includes all the government agencies together. That is, the transfer payments between different agencies are effectively offset against each other once all the individual government sections are consolidated. As a result of this, the government wide financial statement liabilities reflects what is owed to investors outside the government, and not necessarily what is owed between departments (typically in the form of US Treasuries).
The other clarification is with how Social Security and Medicare is reported. While the overall Social Security/Medicare liability is not reported directly in the government wide statement of assets and liabilities, they are discussed in the Management Discussion and Analysis (MD&A). And in this section, they discuss their forecasted liabilities, incoming revenue, etc. This is actually comparable to pension fund accounting used by GAAP. In GAAP, pension funds obligations are only disclosed in MD&A; the only part reported directly on the financial statements is if the net assets/obligations of the fund have an abnormally large annual fluctuation.
I point out these two things because I want to make something clear--the government financials aren't necessarily trying to deceive the public, which the OP is implying. There is transparency in liabilities reporting and transparency in SS/Medicare reporting. The problem isn't with the actual reporting, but the consequences of the reporting style.
When governments make budgets for the current fiscal year/half year, the only consideration they have to look at is the Statement of Revenues and Expenditures (Income Statement). That is, they do not have to take into consideration the government wide statement of assets and liabilities. This creates a situation where government congressional bodies and heads of agencies create budgets that only look at their current year. And in this respect, liabilities are essentially cash basis for individual funds/departments. The result of this is that government programs become more of a series of patching up the previous administrations shortsightedness..and the problem perpetuates.
I love them because I get to read every wannabe economist try and convince everyone the world's gonna end, the US will implode, blah blah blah.
...do you really think that the US, the country with the greatest number of billionaires, the country with the greatest military force in the world, the country with the greatest cultural impact in the world, the country with some of the smartest, brightest minds in the entire fricken world...
... is going to let itself fall apart, and not even realise it? Or do anything about it?
HA!!
you guise make me laff.
Because it has never happened before. Rome never existed. Victorian Britain never existed. Imperialist France never existed. USSR never existed. The fact of the matter is that all Empires collapse, and they do so for monetary reasons. The US is stuck in an awkward position. Either we choose crippling inflation or we choose to bankrupt the same institutions that we 'bailed out'. In other words, the correction will need to take place and it will eventually. As short-term debt rolls over (that 15 trillion), and the Federal Reserve chooses not to continue QE (printing money), interest rates will sharply rise. Since the banks hold mortgages mostly around ~4% - 5%, they will be unable to afford to pay the now higher rates of interest. Similarly, even a modest increase of 4% interest on the national debt will send it into compounding hell (we currently spend about 20% of our revenue on our debt obligations). If the Fed continues printing to keep interest rates low to avoid the bankruptcy of the financial sector (which would conversely cripple the economy), inflation will skyrocket. Either way what we live through today is just the beginning. Now, we could avert this by fixing the problem -- spending. However, as evidenced by today's circus show, neither party is willing to touch even 0.1% of the budget. I'll let that speak for itself.
There is a potential conflict of interest in governmental reporting in that it is the Government Accountability Office that prepares the financial statements. The comptroller of GAO is appointed by the President for 15 year terms, and the appointment has to be approved by the Senate. In addition, the GAO is the auditing body for governmental programs--that is, there is nobody above them to audit them. That means that it comes down to their internal controls to determine whether or not the GAO can be relied on. In practice though, these are rarely issues simply because the GAO fights tooth and nail for their independence (like the Fed does).
The second unrelated point is that the Social Security Fund is obligated, by law, to invest in US treasuries only. This creates a bit of an odd situation because it is essentially one part of the government funding the other part (and vice versa). In years when SS revenues exceed expenses, the extra money is put into Treasuries. In years where SS expenses exceed revenues, the overall government has to transfer money into the SS fund. This is accomplished normally through issuing US Treasuries and using that cash to transfer into the SS fund. The result of both of these scenarios is that the US ends up owing money--whether it's to the SS fund or to the general public. This means that the US is screwed either way.
But oddly enough, it's actually not that big of a problem. You have to keep in mind that the US is in the unique position of dictating where the market goes. US Treasuries essentially determine the rates of all other issued debt securities. Even if every complains that US issues way too many treasuries, what is anybody really going to do? Nothing. There's always talk about this currency or that currency taking over as the de facto head, but in reality, that's never going to change. The private costs of changing to Euro or Yuan is probably in the trillions (pulling this number out of my ass). So the point is that in this situation, the US is basically just taking advantage of it's position as the market maker for fixed income securities. I don't blame the government for maximizing it's position--isn't that what any other private enterprise would do?
The federal reserve was created in 1913 by Woodrow Wilson. A very very short synopsis of how money has worked since goes like this....
The government needs 10 millions dollars to be put into the money supply. They call up the Fed and ask for 10 million. The Fed prints it (or makes it electronic for modern purposes), and gives it to the government and asks for 10 million in some sort of bond. However, the newly created money has interest assessed to it. The government, and the US people, now owe more money to the Fed then is actually in circulation. Multiply this by billlllions of dollars and other tricks the banks use (90% of the money a bank takes in can be used to create to currency) and we end up in a deep deep hole. The economy is meant to collapse.
I started buying gold about 5 years ago, after I finished college and could afford to, knowing that the price was going to continue to sky rocket. The rich of the rich are way ahead of this 'new' knowledge. They have been sitting back making money off this disgusting tapeworm while hard working Americans keep finding themselves trapped in this cycle.
It didn't start here in the US but it may just end...
Sup my awake brother. I find it interesting that whenever the toPic of the national debt arises, the people who are the self-proclaimed experts never address the issue of why or how we got into so much debt. They talk about the sPending and they talk about budget cuts, but they never address the parasite that is the federal reserve.
I love them because I get to read every wannabe economist try and convince everyone the world's gonna end, the US will implode, blah blah blah.
...do you really think that the US, the country with the greatest number of billionaires, the country with the greatest military force in the world, the country with the greatest cultural impact in the world, the country with some of the smartest, brightest minds in the entire fricken world...
... is going to let itself fall apart, and not even realise it? Or do anything about it?
The sad thing is that none of the people responsible for the debt will ever feel it's effects. instead, the negative effects of national debt is shafted to the dependents. As we approach the event horizon, it will be the poor people on welfare who will stop receiving welfare checks, it will be the old and retiring who will discover there is no retirement pot of gold waiting, it will be the sick not having enough money to afford doctors, and it will be children not able to access quality education. The symptoms are already evident.
And the people driving the sinking ship will blame current policies or the previous president's inept decision making, and while the general population is growing angry at all these figure heads, the getaway jet airplane has already left to the Bahamas. And even if they do find the people responsible, and people decide to protest or riot on the streets, the damage has already been done. No amount of protesting or angry rhetoric is going to get poor people out of the welfare quagmire. The only sensible advice seems to be, invest in something substantial, grab whatever you can and get out while you can.
On April 09 2011 12:02 NEWater wrote: The way I see it, America is in a world of shit.
Its the same in germany as well, where the debt has risen to ridiculous amounts after the unification. From 500 Billion in 1990 to 2000 Billion Euros right now. http://www.staatsverschuldung.de/
The bottom line is that every second Euro we pay in taxes is used to pay for the interest of our debts. If we didnt have as much debt we could have our children eat from golden platters in their daycare ...
On April 09 2011 13:27 Broodwich wrote: Gold is the worst hard metal investment, and most of its skyrocketing value is being driven by crazy people who think the world is going to end. If you know who Alex Jones is, the guy who owns his radio network is a gold dealer, and because of the AJ show that guy is one of the 5 largest gold dealers in the US. Crazy people are driving the price of gold through the roof.
If you're going to be crazy and invest that way, at least pick a different hard metal. Gold's value is a massive bubble currently, although I think it'll go a little higher in the short term (until the economic worries / housing stuff / unemployment stabilizes a bit more there's going to be a fear factor driving stupid people to gold). There is almost no industrial use for gold. Pretty much every major hard metal besides gold has industrial value that will limit the downside, and is also being invested in by crazy people so it's seeing the same value appreciation. Not to mention that most of the other industrial metals have China desperately driving up their value (except for the rare earth metals, which they pretty much have a monopoly on) and China is only going to keep raising demand for the non-gold industrial metals. The other doomsday guy in the thread suggested silver, which while I'm not investing in metals currently, would be the one I'd go to if I wanted a metals play.
I don't have too much to add to this discussion as I'm an engineer by trade and economics is so interconnected, I just cant spend the time to take it apart and analyze it right now.
I'm interested in the last part where you speak of silver. Recently I've been trying to order some electrically conductive epoxy (essentially 40-80% silver by volume) and have been running into supply issues because there is currently a shortage of silver.
Well I for one believe that we are pretty secure from conventional threats and we can stop spending more than the entire world combined on our military programs. We have the largest navy, largest air force, and most technologically advanced ground army in the world. Yet, for some reason, we keep pressing on with this. We spend $120 BILLION dollars a year (Yes, 10 BILLION a month) on the war on Afghanistan -- just Afganistan. It cost even more years ago when the fighting first started. We are trillions of dollars in debt from pointless wars that had nothing to even do with the Terrorist Attacks other than what is now considered bad information and we continue to spend on it, and we continue to spend ridiculous amounts on our military. Yeah, we're the best military in the world. We get it, but we don't need to economically screw ourselves to keep that title.
On April 09 2011 12:02 NEWater wrote: The way I see it, America is in a world of shit.
Its the same in germany as well, where the debt has risen to ridiculous amounts after the unification. From 500 Billion in 1990 to 2000 Billion Euros right now. http://www.staatsverschuldung.de/
The bottom line is that every second Euro we pay in taxes is used to pay for the interest of our debts. If we didnt have as much debt we could have our children eat from golden platters in their daycare ...
But unlike the US the german government actually focusses on reducing debt. Schäuble has always loled about Westerwelles attempt to cut taxes and he will do so in the future, no matter which moron will lead the FDP in the future. If the german government will continue its course for the next couple of years (maybe 25?) it could work. The US hasn't even started and their political debate is full of irrational people.
However, if the US economy fails everybody is in a world of pain anyways.
On April 09 2011 15:05 RebirthOfLeGenD wrote: I always wondered if it was possible to just tell everyone we owe money to to just fuck off. I mean I know geopolitically it would make us look like complete assholes and no one will want to lend us money anymore, but I think that would be a fine solution. It's not like there is any way to force the US to pay money to whoever it owes it to.
I was wondering if anyone could answer why that is completely impossible, since I am sure if it had any merit some insane politician would be campaigning with that idea already.
It hard to know what would happen. But the mildest shit storm is still worse than the worst case scenario of any other option. Including hyperinflation.
Any government assets outside your borders would be frozen/confiscated. Any debt towards your goverment would defaulted on. Dollar would collapse. 25-100 million lost jobs. In most countries american companies' and citizens assets would be frozen/confiscated. You could no longer buy anything with dollar, youd nee tangible assets to trade. Good luck getting the oil, minerals, food, machinery & technology you need. Most banks would fail. Complete disaster for US as well as all other developed countries. .
On April 09 2011 21:20 Fruscainte wrote: Well I for one believe that we are pretty secure from conventional threats and we can stop spending more than the entire world combined on our military programs. We have the largest navy, largest air force, and most technologically advanced ground army in the world. Yet, for some reason, we keep pressing on with this. We spend $120 BILLION dollars a year (Yes, 10 BILLION a month) on the war on Afghanistan -- just Afganistan. It cost even more years ago when the fighting first started. We are trillions of dollars in debt from pointless wars that had nothing to even do with the Terrorist Attacks other than what is now considered bad information and we continue to spend on it, and we continue to spend ridiculous amounts on our military. Yeah, we're the best military in the world. We get it, but we don't need to economically screw ourselves to keep that title.
The Soviet Union fell apart because they couldnt afford the arms race anymore which Ronald Reagan starts ... Star Wars and so on. Maybe it is time the US realizes that they themselves have to stop spending ridiculous amounts on their military and that "a few millions for some super smart bombs" is just too much. Super expensive technology isnt needed to fight terrorists who are hiding among a population in any case ... the military doesnt work like the industry and more technology doesnt produce more / better results.
P.S.: War SHOULD BE bloody so it isnt started lightly ...
On April 09 2011 11:36 jdseemoreglass wrote: To put this number in perspective, current federal revenue totals approximately 15 percent of GDP. So what the IMF in effect is calling for is an immediate and permanent doubling of our personal income, corporate and federal taxes as well as the payroll levy set down in the Federal Insurance Contribution Act. Such a tax hike would leave the U.S. running a surplus equal to 5 percent of GDP rather than a 9 percent deficit.
[...] The number of companies alone in the U.S. whose profit margin is less than such a projected increase in the tax rate reveals the unfeasability of this suggestion. The average American is already struggling under personal debt, how can they be expected to foot the bill either? It would result at the minimum in a decades long recession, at the worst a complete depression.
Then why not raise taxes on the people and companies who can afford it? I'm sure you must know that wealth hasn't disappeared as much as it has been redistributed into the hands of fewer but wealthier people. Surely you also know that many of the most successful corporations pay near zero taxes due to a large amount of loopholes in the legislation and their tax evasion (or avoidance, as they call it) tactics.
The reason why credit isn't becoming dangerously expensive yet is because other countries realize that all the U.S. needs to do in order to pay it back is to raise taxes on the people or corporations that do have the money. The only thing preventing that might be the awesome streams of money flowing into the politician's hands to ensure less responsibility for the richest, and the streams of money spent on PR campaigns to make people believe in that agenda and having them vote against their own interests (hello Ron Paul supporters).
On April 09 2011 13:27 Broodwich wrote: Gold is the worst hard metal investment, and most of its skyrocketing value is being driven by crazy people who think the world is going to end. If you know who Alex Jones is, the guy who owns his radio network is a gold dealer, and because of the AJ show that guy is one of the 5 largest gold dealers in the US. Crazy people are driving the price of gold through the roof.
If you're going to be crazy and invest that way, at least pick a different hard metal. Gold's value is a massive bubble currently, although I think it'll go a little higher in the short term (until the economic worries / housing stuff / unemployment stabilizes a bit more there's going to be a fear factor driving stupid people to gold). There is almost no industrial use for gold. Pretty much every major hard metal besides gold has industrial value that will limit the downside, and is also being invested in by crazy people so it's seeing the same value appreciation. Not to mention that most of the other industrial metals have China desperately driving up their value (except for the rare earth metals, which they pretty much have a monopoly on) and China is only going to keep raising demand for the non-gold industrial metals. The other doomsday guy in the thread suggested silver, which while I'm not investing in metals currently, would be the one I'd go to if I wanted a metals play.
I don't have too much to add to this discussion as I'm an engineer by trade and economics is so interconnected, I just cant spend the time to take it apart and analyze it right now.
I'm interested in the last part where you speak of silver. Recently I've been trying to order some electrically conductive epoxy (essentially 40-80% silver by volume) and have been running into supply issues because there is currently a shortage of silver.
Speculators have been buying up all the silver they can. Its appreciated by 50% this year, I believe.
On April 09 2011 15:05 RebirthOfLeGenD wrote: I always wondered if it was possible to just tell everyone we owe money to to just fuck off. I mean I know geopolitically it would make us look like complete assholes and no one will want to lend us money anymore, but I think that would be a fine solution. It's not like there is any way to force the US to pay money to whoever it owes it to.
I was wondering if anyone could answer why that is completely impossible, since I am sure if it had any merit some insane politician would be campaigning with that idea already.
It hard to know what would happen. But the mildest shit storm is still worse than the worst case scenario of any other option. Including hyperinflation.
Any government assets outside your borders would be frozen/confiscated. Any debt towards your goverment would defaulted on. Dollar would collapse. 25-100 million lost jobs. In most countries american companies' and citizens assets would be frozen/confiscated. You could no longer buy anything with dollar, youd nee tangible assets to trade. Good luck getting the oil, minerals, food, machinery & technology you need. Most banks would fail. Complete disaster for US as well as all other developed countries. .
Joined this conversation very late, but pretty much correct. The US defaulting on its national debt obligations is pretty much a no-no, especially considering how much emerging markets rely on US paper to forecast there budget obligations. I can't even begin to think about what would happen if the US (or any developed nation) defaulted.
On a slightly unrelated note, I think the time will come soon when we need to look at the culture of consumption - the fact is we can't continue to design economic policy around constant growth, because at some point something has to give.
The US deficit is a hot potato that's just being thrown from one government to the next, where politicians are hoping that when (and not if) it blows up, it blows up in the other party's face and they can point their fingers and try to lay all the blame on their opponents' shoulders.
That's right, the politicians are more worried about who they're going to blame when the shit hits the fan than on trying to avert the crisis. As a Chilean, I'm well acquainted with both the Chilean and American political establishments, and the American one is a disgrace by comparison. Blaming the politicians is easy, but this situation is also the fault of every American citizen who considers himself to be too disgusted / disenchanted / apathetic with respect to their federal / state politics, and thus decides to not vote / not participate in politics in any way. The deficit problem the US has on its hands is very real, and rather big.
On April 09 2011 11:36 jdseemoreglass wrote: To put it bluntly, the U.S. is nearly bankrupt. There is no foreseeable solution to dig us out of the hole we are in. Our economy as it is has been artificially grown through lax interest rate policy set by the Federal Reserve perpetuating decades long mal and overinvestment throughout a long history of "bubbles," and is on weak footing already.
I disagree with this. The problem is that US spending is too high, and revenues might be too low. One of the "big four" issues concerning the sustainability of US debt (Medicare, Medicaid, Social Security, Military spending) could be solved easily from an economic point of view; change your Social Security Ponzi scheme for the private capitalization pension scheme we use in Chile and the Social Security part of the deficit vanishes. There are some really obvious and high-impact solutions that would be of tremendous help to deal with the US's current woes, but the worst kind of deafness is that of the man who refuses to listen.
Rofl at everyone having a firm opinion on whethre debt is good or bad... Hilarious newbies (no meanness intended when I say this).
But seriously, it's a complex debate with economists on both sides... If you don't have extensive education in economics or work in the indutsry don't you think your opinion is going to be uninformed?
On April 09 2011 23:07 Zato-1 wrote: There are some really obvious and high-impact solutions that would be of tremendous help to deal with the US's current woes, but the worst kind of deafness is that of the man who refuses to listen.
Excellent post, so very true. The issue is (we are experiencing this in the UK now) that people are not willing to accept a lower standard of living that is more in line with government revenue. As people have noted, you have two options - lower public expenditure or raise taxes, and the second option really isn't possible in a service centric knowledge economy as there is always the possibility of a mass exodus of employers to Countries with lower taxes and laxer regulation.
It honestly boggles my mind that people can think that the levels of public spending we have are even close to sustainable.
On April 09 2011 22:44 Robinsa wrote: The US is fine. Japans got like GDP x2 in debt.
Is the dept mentioned in the OP not more than 12 times the GDP ?
As I mentioned in page 3, the OP makes misleading statements about how the government reports debt. There's also a few other incorrect assumptions made by the OP with respect to Social Security.
On April 09 2011 23:07 Zato-1 wrote: The US deficit is a hot potato that's just being thrown from one government to the next, where politicians are hoping that when (and not if) it blows up, it blows up in the other party's face and they can point their fingers and try to lay all the blame on their opponents' shoulders.
On April 09 2011 21:20 Fruscainte wrote: Well I for one believe that we are pretty secure from conventional threats and we can stop spending more than the entire world combined on our military programs. We have the largest navy, largest air force, and most technologically advanced ground army in the world. Yet, for some reason, we keep pressing on with this. We spend $120 BILLION dollars a year (Yes, 10 BILLION a month) on the war on Afghanistan -- just Afganistan. It cost even more years ago when the fighting first started. We are trillions of dollars in debt from pointless wars that had nothing to even do with the Terrorist Attacks other than what is now considered bad information and we continue to spend on it, and we continue to spend ridiculous amounts on our military. Yeah, we're the best military in the world. We get it, but we don't need to economically screw ourselves to keep that title.
The Soviet Union fell apart because they couldnt afford the arms race anymore which Ronald Reagan starts ... Star Wars and so on. Maybe it is time the US realizes that they themselves have to stop spending ridiculous amounts on their military and that "a few millions for some super smart bombs" is just too much. Super expensive technology isnt needed to fight terrorists who are hiding among a population in any case ... the military doesnt work like the industry and more technology doesnt produce more / better results.
Seriously? There's a reason the military invests in technology, and it's not just to spend money.
On April 09 2011 22:44 Robinsa wrote: The US is fine. Japans got like GDP x2 in debt.
But Japan is recovering from a depression ( right? ) And not steaming in one, head first.
Japan already made the culture/mentality switch to recover.
Or am I completely off here ?
I would say its mainly because of years of spending and a tradition to never raise taxes. Few politicians have been willing to propose tax raises for the last 20 years. The consumer tax for example has since 1989 been raised from 3 to 5%.
Some people belive there will be a tax raise because of the recent earthquake/tsunami. This is just speculations and Im sure theyll find something else to dismantle before they need to raise the taxes. ^^
On April 09 2011 21:20 Fruscainte wrote: Well I for one believe that we are pretty secure from conventional threats and we can stop spending more than the entire world combined on our military programs. We have the largest navy, largest air force, and most technologically advanced ground army in the world. Yet, for some reason, we keep pressing on with this. We spend $120 BILLION dollars a year (Yes, 10 BILLION a month) on the war on Afghanistan -- just Afganistan. It cost even more years ago when the fighting first started. We are trillions of dollars in debt from pointless wars that had nothing to even do with the Terrorist Attacks other than what is now considered bad information and we continue to spend on it, and we continue to spend ridiculous amounts on our military. Yeah, we're the best military in the world. We get it, but we don't need to economically screw ourselves to keep that title.
The Soviet Union fell apart because they couldnt afford the arms race anymore which Ronald Reagan starts ... Star Wars and so on. Maybe it is time the US realizes that they themselves have to stop spending ridiculous amounts on their military and that "a few millions for some super smart bombs" is just too much. Super expensive technology isnt needed to fight terrorists who are hiding among a population in any case ... the military doesnt work like the industry and more technology doesnt produce more / better results.
P.S.: War SHOULD BE bloody so it isnt started lightly ...
If they're hiding amongst population then we need better technology and intelligence to make sure we reduce collateral damage. We don't want to kill civilians. That's why we developed all this "smart" technology.
Though I agree in general. The fact is that so much of what the US government cut was small programs that don't contribute much. The Defense budget is still as massive as ever, and there really is no cut in sight. On the other hand, Defense easily employs the most people, and develops the most technology (both useful for civilians and military), so I can see how they justify Defense costs by the consequences of cutting it.
On April 09 2011 12:10 Zergneedsfood wrote: To be honest, I never saw the national debt as a problem. Sure it ends up cutting social services, but America will never cut it to the point of hacking it to pieces.
And sure it decreases America's dollar value, but that raises our manufacturing industry that's been struggling.
Inflation has the side effect of artificially lowering interest rates, thus making saving unprofitable, which means that there will be no capital accumulation necessary for industries to develop.
On April 09 2011 12:10 Zergneedsfood wrote: To be honest, I never saw the national debt as a problem. Sure it ends up cutting social services, but America will never cut it to the point of hacking it to pieces.
And sure it decreases America's dollar value, but that raises our manufacturing industry that's been struggling.
Inflation has the side effect of artificially lowering interest rates, thus making saving unprofitable, which means that there will be no capital accumulation necessary for industries to develop.
Wait...what? I have never heard of inflation artificially lowering interest rates. I always thought it was interest rate setting that artificially raises or decreases inflation and not the other way around.
Besides, if interest rates lower, just raise them again to decrease inflation. That's what the Fed and monetary policy is for, to balance out inflation with interest rates.
And if saving is unprofitable, that increases consumer spending because people will take their money to the streets to invest in assets and property.
I don't see any correlation with our current inflation rate and stymied industrial development. If anything, the resurgence of the auto industry, the rust belt (same thing? forgot), and even companies like Caterpillar empirically deny the claim.
Like I said, a dollar value that's decreases enhances our ability to export, which is the biggest money maker for manufacturers. Furthermore, a modest inflation rate is good for employment too.
Why are we worrying about current inflation levels when it's nowhere near hyper inflation?
On April 09 2011 12:10 Zergneedsfood wrote: To be honest, I never saw the national debt as a problem. Sure it ends up cutting social services, but America will never cut it to the point of hacking it to pieces.
And sure it decreases America's dollar value, but that raises our manufacturing industry that's been struggling.
Inflation has the side effect of artificially lowering interest rates, thus making saving unprofitable, which means that there will be no capital accumulation necessary for industries to develop.
Wait...what? I have never heard of inflation artificially lowering interest rates. I always thought it was interest rate setting that artificially raises or decreases inflation and not the other way around.
Besides, if interest rates lower, just raise them again to decrease inflation. That's what the Fed and monetary policy is for, to balance out inflation with interest rates.
And if saving is unprofitable, that increases consumer spending because people will take their money to the streets to invest in assets and property.
I don't see any correlation with our current inflation rate and stymied industrial development. If anything, the resurgence of the auto industry, the rust belt (same thing? forgot), and even companies like Caterpillar empirically deny the claim.
Like I said, a dollar value that's decreases enhances our ability to export, which is the biggest money maker for manufacturers. Furthermore, a modest inflation rate is good for employment too.
Why are we worrying about current inflation levels when it's nowhere near hyper inflation?
Thats how interest rates are lowered. by the central bank buying assets by creating money out of thin air.
The investments are made, are based on the signal of interest rates. Low interest rates -> investments to high order capital goods. High interest rates -> investments to low order capital goods.
Artificially low interest rates give the impression of market demand for investment in the high order capital goods, when the ACTUAL time-pereference determined interest rate would demand more investments to low order capital goods. This becomes evident when interest rates are no longer artificially lowered below the pure(time preference) rate of interest, which makes the low return of high order capital good investmens unprofitable and they become evident as malinvestments which leads to market liquidation in those areas, unemployment, recession. Examples: tulip bubble, dotcom bubble, latest real estate bubbles around the world. THIS is why central bank activity is (quite ironically) PRO-cyclical, not counter cyclical as they like to believe due to primitive(that is, none) understanding of capital theory
On April 10 2011 00:29 xarthaz wrote: Thats how interest rates are lowered. by the central bank buying assets by creating money out of thin air
I'm pretty sure that there are more ways to lower interest rates than printing money. >.>
But what I was talking about specifically was fighting inflation to keep it controlled so that it doesn't get out of hand. In that case, the Fed raises the interest rate rather than lowers it.
Yeah, by saving. That is not what the artificial lowering of interest rates encourages though. And fighting inflation(aka raising interest rates) is by selling assets, thus bringing the money from the economy into central bank.
There of course is the simpler solution. Not alter the money supply at all, thus avoiding the problems of inflation and of economic bubbles. Alas, it is rarely practiced.
The federal reserve was created in 1913 by Woodrow Wilson. A very very short synopsis of how money has worked since goes like this....
The government needs 10 millions dollars to be put into the money supply. They call up the Fed and ask for 10 million. The Fed prints it (or makes it electronic for modern purposes), and gives it to the government and asks for 10 million in some sort of bond. However, the newly created money has interest assessed to it. The government, and the US people, now owe more money to the Fed then is actually in circulation. Multiply this by billlllions of dollars and other tricks the banks use (90% of the money a bank takes in can be used to create to currency) and we end up in a deep deep hole. The economy is meant to collapse.
I started buying gold about 5 years ago, after I finished college and could afford to, knowing that the price was going to continue to sky rocket. The rich of the rich are way ahead of this 'new' knowledge. They have been sitting back making money off this disgusting tapeworm while hard working Americans keep finding themselves trapped in this cycle.
It didn't start here in the US but it may just end...
Sup my awake brother. I find it interesting that whenever the toPic of the national debt arises, the people who are the self-proclaimed experts never address the issue of why or how we got into so much debt. They talk about the sPending and they talk about budget cuts, but they never address the parasite that is the federal reserve.
Yes, eliminate the fed... And be ready to say goodbye to fractional reserve banking, and single digit interest rates, while you're at it. That's not going to put the economy, and private debt in the ditch, or anything.
The US government has no interest whatsoever in reducing the national debt. The people who are behind this whole scheme want the government to maintain a debt level that is as high as humanly possible for two reasons: because it weakens the government, and because the same people directly profit from a huge national debt: they are the ones who collect the interest that the government has to pay each year.
This is modern slavery: the vast majority has to work hard everyday and gets taxed to the max so the government can pay interest to a small clique of people whose only job consists in collecting interest. 200 years ago, when the constitution was created, something like this was UNTHINKABLE, in fact, in Europe at least, this kind of usury was outlawed.
Bush ran the country into debt thanks to the two wars he started, Obama sealed the deal by "saving" the banking system from collapsing (in reality, he was simply helping to socialize the losses of privately held entities). And to pay for said debt, they dont cut the military expenses or tax the banks, they cut down social security and government jobs.
The entire political system in the USA today is corrupt to the core. Your constitution has been figured out by the same kind of people it was supposed to hold in check, and now it doesnt hold up to the 21st century anymore.
On April 10 2011 01:00 Sprouter wrote: tax the wealthy or kill medicare, social security, and medicaid.
Simple models like this do not work when trying to adjust messy real-world systems. 1. Tax the wealthy- How? They already are being taxed, theoretically. Tax them more? By how much? Enforce the existing rules? The people responsible for enforcement would be doing that already, if (necessary but insufficient): i)they were competent AND ii)they knew how to enforce the rules AND iii)they knew where the violation was AND iiii)they will act to enforce the rules rather than getting paid off for personal benefit And so on. Clearly there are issues at each step of even this short list; getting the entire system to work is not trivial. (Wealthy people are not stupid either, they probably aren't going to stand around docilely waiting for you to persecute them without constructing comprehensive defense systems around their wealth.)
2. Kill entitlement programs- just be like, "yo, medicare is too expensive, the entire program ends tomorrow"? There will be a shitload of angry people who will be angry at you for breaking the promise. They had already earned the money when they were younger and working to put it into the system, now they are older and want their fucking money back that was promised to them. You want to be the one responsible for ending this promise? (not an enviable job, but someone will be left holding it in the end) Good luck with that.
Obviously there are problems, but something like just 'tax the wealthy' is not a validly formatted answer.
On April 10 2011 01:00 Sprouter wrote: tax the wealthy or kill medicare, social security, and medicaid.
2. Kill entitlement programs- just be like, "yo, medicare is too expensive, the entire program ends tomorrow"? There will be a shitload of angry people who will be angry at you for breaking the promise. They had already earned the money when they were younger and working to put it into the system, now they are older and want their fucking money back that was promised to them. You want to be the one responsible for ending this promise? (not an enviable job, but someone will be left holding it in the end) Good luck with that.
Well, we've pretty much all accepted in America that at some point we will have no choice but to cut benefits significantly. In other words, we will be forced to choose a generation that has to be a scapegoat, who will pay significant amounts of money into the program and yet not draw even close to the amount they put in or the amount their predecessors received. I have a feeling it will be my generation. At least, I certainly won't expect much money to be there when I retire. Of course, anyone who is depending on the government for their retirement is in a world of trouble.
As I quoted in the OP, this is how ponzi schemes work, and let's not kid ourselves that SS is such a scheme. The first ones in will walk away rich but eventually you will have a large group of people holding an empty bag and a generation that is unwilling or unable to fill it.
You're only stuck at the conclusion that you need to cut benefits because you refuse to increase revenue or find more efficient methods of delivering benefits.
On April 10 2011 06:28 L wrote: You're only stuck at the conclusion that you need to cut benefits because you refuse to increase revenue or find more efficient methods of delivering benefits.
Except, we HAVE attempted to increase revenue...
"We tried that a couple of times before with this particular Big Government albatross. Jimmy Carter tripled the FICA tax rates in 1977, and promised it would make Social Security solvent until 2030. Wrong. Dead wrong.
According to new projections from the Congressional Budget Office, Social Security will pay out $45 billion more in benefits than it takes in this year.
Social Security is the eternal proof that if you raise taxes to repair a deficit, liberals will just spend the money. That’s what happened to Jimmy Carter’s massive FICA hike. That money didn’t go into some kind of safety-deposit box. The government spent it to finance other programs, and here we are, with Social Security running at a deficit for the first time, in 2010 instead of 2030."
The United States currently accounts for about 54 percent of the military budget of the entire planet. It seems like a scale back in military spending is the logical step when trying to answer to the debt problem. Also returning corporate taxation to pre-Bush levels might not be such a bad thing either.
On April 10 2011 02:21 MrBadMan wrote: The US government has no interest whatsoever in reducing the national debt. The people who are behind this whole scheme want the government to maintain a debt level that is as high as humanly possible for two reasons: because it weakens the government, and because the same people directly profit from a huge national debt: they are the ones who collect the interest that the government has to pay each year.
This is modern slavery: the vast majority has to work hard everyday and gets taxed to the max so the government can pay interest to a small clique of people whose only job consists in collecting interest. 200 years ago, when the constitution was created, something like this was UNTHINKABLE, in fact, in Europe at least, this kind of usury was outlawed.
Bush ran the country into debt thanks to the two wars he started, Obama sealed the deal by "saving" the banking system from collapsing (in reality, he was simply helping to socialize the losses of privately held entities). And to pay for said debt, they dont cut the military expenses or tax the banks, they cut down social security and government jobs.
The entire political system in the USA today is corrupt to the core. Your constitution has been figured out by the same kind of people it was supposed to hold in check, and now it doesnt hold up to the 21st century anymore.
This. And simple solution to the problems the fed has caused is to put the power of printing money back into the hands of the government and not the bankers. Easier said than done however because the bankers have been doing this for quite a long time and already own the government and the military of America and other countries. It is too late to stop them. Thy already own everything because money is debt. SO just go with the flow like all the other sheePle bEcause resistance really is futile.
On April 10 2011 06:57 Aurocaido wrote: The United States currently accounts for about 54 percent of the military budget of the entire planet. It seems like a scale back in military spending is the logical step when trying to answer to the debt problem. Also returning corporate taxation to pre-Bush levels might not be such a bad thing either.
America all ready has one of the highest corporate tax rates in the world. Ex-Communist States in Eastern Europe have around ~13-14% Corporate Tax rate compared to the US' 35%. Similarly, there are also State taxes and municipal taxes that are levied. If you raise Federal Taxes to 50 or 60% you are looking at a cumulative tax rate that becomes a disincentive to work. In fact, I'd argue that a tax rate over 50% results in less money for the Government. There will always be two divergent sides on the issue. Those who favor a negligble or limited-Night Watchman State will want to cut spending. Those who benefit from Government will want to raise taxes. A large Government is a conflict magnet. It turns society in on itself. If we let people keep the fruits of their labor we wouldn't be in the situation we are in today.
As for the military budget -- if we cut the entire department we would still be running 500$ Billion yearly deficits. The problem is the MIC & the dependency model of entitlements. People do not realize how poor we are as a nation. I wonder how many people factor in their debt of 45,000$ of the share of the national debt. I wonder what the net worth is of the average American. The fact is that American's do not own -- we rent. There was a point in time when American's understood that debt is slavery. It's a sickening system, but you have State-appointed economists who tell you that your own slavery is good for you -- and the vast majority of the public actually buy it!
If I took out a credit card for a million dollars, and bought a new house, new car, went travelling, and did all sorts of other stuff I'd look rich -- until the bill came due. The bill is due and our standard of living is going to be drastically reduced thanks to the poor decisions of the majority in this country who only see politicians as a money bag -- asking what are you giving me? Well, the time De Tocqueville wrote of in the 1840s is today finally due. I'm prepared.
On April 10 2011 02:21 MrBadMan wrote: The US government has no interest whatsoever in reducing the national debt. The people who are behind this whole scheme want the government to maintain a debt level that is as high as humanly possible for two reasons: because it weakens the government, and because the same people directly profit from a huge national debt: they are the ones who collect the interest that the government has to pay each year.
This is modern slavery: the vast majority has to work hard everyday and gets taxed to the max so the government can pay interest to a small clique of people whose only job consists in collecting interest. 200 years ago, when the constitution was created, something like this was UNTHINKABLE, in fact, in Europe at least, this kind of usury was outlawed.
Bush ran the country into debt thanks to the two wars he started, Obama sealed the deal by "saving" the banking system from collapsing (in reality, he was simply helping to socialize the losses of privately held entities). And to pay for said debt, they dont cut the military expenses or tax the banks, they cut down social security and government jobs.
The entire political system in the USA today is corrupt to the core. Your constitution has been figured out by the same kind of people it was supposed to hold in check, and now it doesnt hold up to the 21st century anymore.
This. And simple solution to the problems the fed has caused is to put the power of printing money back into the hands of the government and not the bankers. Easier said than done however because the bankers have been doing this for quite a long time and already own the government and the military of America and other countries. It is too late to stop them. Thy already own everything because money is debt. SO just go with the flow like all the other sheePle bEcause resistance really is futile.
If we gave Congress the power to print up fiat money our situation would be even worse today. Besides, Congress has no power to print up money. They only have authority to regulate the weight and measurements of gold & silver coinage. Even then, I'm reluctant to give politicians any monetary power whatsoever. Leave the monetary system up to the marketplace. There is a lot of great work on free banking and competing currencies. Lawrence White, George Selgin, and F.A. Hayek are (were in Hayek's case) the best three in that field. For some reason a lot of people who do not like monopolies seem to love Government-monopolies...makes no sense, but yes, you are correct we need to End the Fed. Without the Fed (and any power given to Congress to print money) the fact is that Government would necessarily shrink. As Joseph Schumpeter rightfully pointed out in History of Economic Analysis:
An ‘automatic’ gold currency is part and parcel of a laissez-faire and free-trade economy. It links every nation’s money rates and price levels with the money-rates and price levels of all the other nations that are ‘on gold.’ It is extremely sensitive to government expenditure and even to attitudes or policies that do not involve expenditure directly, for example, to foreign policy, to certain policies of taxation, and, in general, to precisely all those policies that violate the principles of [classical] liberalism. This is the reason why gold is so unpopular now and also why it was so popular in a bourgeois era. It imposes restrictions upon governments or bureaucracies that are much more powerful than is parliamentary criticism. It is both the badge and the guarantee of bourgeois freedom—of freedom not simply of the bourgeois interest, but of freedom in the bourgeois sense. From this standpoint a man may quite rationally fight for it, even if fully convinced of the validity of all that has ever been urged against it on economic grounds. From the standpoint of etatisme and planning, a man may not less rationally condemn it, even if fully convinced of the validity of all that has ever been urged for it on economic grounds.
On April 09 2011 12:02 NEWater wrote: The way I see it, America is in a world of shit. My advice is to find a relative who stays in the countryside and get to grow their own food, suck up to them real quick and plan for arrangements to move in with them when shit hits the fan.
Also, buy silver. Lots of it. Gold is much too matured and silver is only starting to pick up.
heh I posted up an image of my precious metals stash about 3 months ago , 105 ounces silver 1 ounce gold. Needless to say people thought i was a nutjob , i guess everyone that invests in something at $17.00 then more than doubles their money within a year (silver currently $40.90) is nutjob.
I imagine most people will eventually "get it" (how bad the situation is) but only when it is far too late.
I find it very interesting and it gives an idea of where the money is going. There are some terrifying figures in there, especially relating to debt per person and the attached interest bill.
I am a CPA (or the foreign equivalent) and know that debt has its place in business. I temper this knowing that debt for the wrong reasons is bad. The wrong reason is living beyond your means, and that is what the US as a country is doing. When a person has debts that are equal to their yearly salary you think that person is in trouble. Extraploate it to a country and the mindset is "its all fine!". People have a wonderful ability to delude themselves. If you take into account that the OP mentioned the US works on the cash basis and not the accrual basis then debt is actually far far higher since medical and pensions are the biggest albatrosses around private corporations necks, so the same holds true for the government.
As long as America clings to the "Greatest nation on Earth" and "international meddler" mentality then matters will get worse. America as a country can't afford to run around the globe spending hundreds of billions of dollars on "wars on terror" and other stuff.
There is already serious talk and plans to move oil away from being based in Dollars. Oil is valued in Dollars because of what the Dollar always represented. That era is ending.
I'm not sure what the tipping point will be, but the current system has to end. It can end through strong leadership, which seems unlikely since the US can't even pass a normal budget, let alone one with appropriate measures to end the current farce. I know what happens when a company fails finacially, I have no clue what happens when a country fails financiall though. You can't print money to stay afloat forever.
Maybe you should all start learning Mandarin It seems like China owns a sizable portion of the country anyway.
On April 10 2011 01:00 Sprouter wrote: tax the wealthy or kill medicare, social security, and medicaid.
Simple models like this do not work when trying to adjust messy real-world systems. 1. Tax the wealthy- How? They already are being taxed, theoretically. Tax them more? By how much? Enforce the existing rules? The people responsible for enforcement would be doing that already, if (necessary but insufficient): i)they were competent AND ii)they knew how to enforce the rules AND iii)they knew where the violation was AND iiii)they will act to enforce the rules rather than getting paid off for personal benefit And so on. Clearly there are issues at each step of even this short list; getting the entire system to work is not trivial. (Wealthy people are not stupid either, they probably aren't going to stand around docilely waiting for you to persecute them without constructing comprehensive defense systems around their wealth.)
2. Kill entitlement programs- just be like, "yo, medicare is too expensive, the entire program ends tomorrow"? There will be a shitload of angry people who will be angry at you for breaking the promise. They had already earned the money when they were younger and working to put it into the system, now they are older and want their fucking money back that was promised to them. You want to be the one responsible for ending this promise? (not an enviable job, but someone will be left holding it in the end) Good luck with that.
Obviously there are problems, but something like just 'tax the wealthy' is not a validly formatted answer.
The IRS does its job quite well, and is generally pretty good about catching actual tax cheats. Where it is stuck, however, is when people use entire legal methods of reducing their tax rates, that go beyond what is seen as equitable.
So, how to tax the wealthy: 1% wealth tax per annum on the market value of assets possessed anywhere in the world. Capital gains are taxed as if they are salary income. The thing is, the US has 2 laws that make it extremely difficult to simply GTFO if you don't like the taxes.
1) You have to pay tax on overseas income earned to the IRS, at the US rate, with taxes payed to the country you are working to be offset against taxes owed to the IRS, at compliant countries. (if the country is non-complaint, you are double taxed)
2) Renouncing your citizenship to avoid taxes (and by law, if you are worth more than a couple million, any renouncing of US citizenship is automatically deemed to be for tax avoidance purposes), allows the government, to sieze 95% of all your assets.
On April 10 2011 09:20 Deja Thoris wrote: Maybe you should all start learning Mandarin It seems like China owns a sizable portion of the country anyway.
Yes , although actually the biggest holder of US debt is now the private US Federal Reserve. And the US has to pay interest on that debt to the same private banking cartel. The US would be in far far better shape if the FED didn't exist and it produced it's own currency as it did prior to 1913.
yes, the US is in a world of shit right now. The only way I see to get out of it is to stop this crazy militarism its doing all over the world, stop fighting in all 10 countries you are in and reduce the government size by 30%.
For every 1 cop in the US there are 20 "management" persons who no one knows what they do actually.
I once did a paper on the Federal Reserve Act while I was in college. The Federal reserve bank is basically a bank that is run by all of the major regional banks in the US. The more you research how our money is created and who is in control of it, the more you realize that the people of the US have been completely sold out and haven't even begun to realize how deep it goes.
The whole housing bubble, was completely created and popped on purpose. The banks control the value of the currency (how much is printed is what makes a dollar's value, it is not backed by gold!) they banks appraise the houses thus controlling the value of homes, the banks are the ones who gave out these bad loans (basically if your not able to get approved for a 150,000$ loan they just approve you for 2x 75,000$ loans to get around it) also they were giving people adjustable rate loans which go up and down, sometimes drastically, depending on current interest rates. Which, by the way, the Fed also controls interest rates. So basically, the major banks in the US control all of the major variables in the housing and currency sectors of the US exclusively. There is no way the housing bubble could happen with out them MAKING it happen.
Why would they do this? Well after the housing bubble the banks ended up with , all the money paid towards the house including any down payment, they take the house back once you can't pay anymore, then the government gives them trillions in bail outs. A pretty good deal for them.
Furthermore, all the smaller banks that go bankrupt, because of all the defaulted loans, get bought by the bigger banks at bargain prices. It was a consolidation of wealth, plain and simple. The people at the top creating a situation that allowed them to gain control of more assets.
The US is ruled by banks and corporations. Much of the US's media, banks, and corporations are owned by a small group of people. You have been sold out, these people don't care if you suffer, and there is nothing you can do to stop them. They've already won. They own you, your country and your children.
It's like sitting down at a poker table with 100$ of chips, there are 6 other people with 100$ of chips. Then there is one guy with 10,000,000$ worth of chips. Who do you think is going to end up with all the chips when the game is over? By the way, the guy with the 10,000,000$ can change how much a chip is worth at any time. This is how the US's banking and financial system are run.
By now you probably are quite sure I'm some crazy conspiracy idiot. So here's a few quotes from people on the subject who's opinions you might value.
"The few who understand the system, will either be so interested from it's profits or so dependant on it's favors, that there will be no opposition from that class." — Rothschild Brothers of London, 1863
"Give me control of a nation's money and I care not who makes it's laws" — Mayer Amschel Bauer Rothschild
"A great industrial nation is controlled by it's system of credit. Our system of credit is concentrated in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the world--no longer a government of free opinion, no longer a government by conviction and vote of the majority, but a government by the opinion and duress of small groups of dominant men." — President Woodrow Wilson
Senators and Congressmen
"Most Americans have no real understanding of the operation of the international money lenders. The accounts of the Federal Reserve System have never been audited. It operates outside the control of Congress and manipulates the credit of the United States" — Sen. Barry Goldwater (Rep. AR)
"This [Federal Reserve Act] establishes the most gigantic trust on earth. When the President [Wilson} signs this bill, the invisible government of the monetary power will be legalized....the worst legislative crime of the ages is perpetrated by this banking and currency bill." — Charles A. Lindbergh, Sr. , 1913
"From now on, depressions will be scientifically created." — Congressman Charles A. Lindbergh Sr. , 1913
"The financial system has been turned over to the Federal Reserve Board. That Board as ministers the finance system by authority of a purely profiteering group. The system is Private, conducted for the sole purpose of obtaining the greatest possible profits from the use of other people's money" -- Charles A. Lindbergh Sr., 1923
"The Federal Reserve bank buys government bonds without one penny..." — Congressman Wright Patman, Congressional Record, Sept 30, 1941
"We have, in this country, one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board. This evil institution has impoverished the people of the United States and has practically bankrupted our government. It has done this through the corrupt practices of the moneyed vultures who control it". — Congressman Louis T. McFadden in 1932 (Rep. Pa)
"The Federal Reserve banks are one of the most corrupt institutions the world has ever seen. There is not a man within the sound of my voice who does not know that this nation is run by the International bankers — Congressman Louis T. McFadden (Rep. Pa)
"Some people think the Federal Reserve Banks are the United States government's institutions. They are not government institutions. They are private credit monopolies which prey upon the people of the United States for the benefit of themselves and their foreign swindlers" — Congressional Record 12595-12603 — Louis T. McFadden, Chairman of the Committee on Banking and Currency (12 years) June 10, 1932
"I have never seen more Senators express discontent with their jobs....I think the major cause is that, deep down in our hearts, we have been accomplices in doing something terrible and unforgivable to our wonderful country. Deep down in our heart, we know that we have given our children a legacy of bankruptcy. We have defrauded our country to get ourselves elected." — John Danforth (R-Mo)
"These 12 corporations together cover the whole country and monopolize and use for private gain every dollar of the public currency..." — Mr. Crozier of Cincinnati, before Senate Banking and Currency Committee - 1913
"The [Federal Reserve Act] as it stands seems to me to open the way to a vast inflation of the currency... I do not like to think that any law can be passed that will make it possible to submerge the gold standard in a flood of irredeemable paper currency." — Henry Cabot Lodge Sr., 1913
From the Federal Reserves Own Admissions
"When you or I write a check there must be sufficient funds in out account to cover the check, but when the Federal Reserve writes a check there is no bank deposit on which that check is drawn. When the Federal Reserve writes a check, it is creating money." — Putting it simply, Boston Federal Reserve Bank
"Neither paper currency nor deposits have value as commodities, intrinsically, a 'dollar' bill is just a piece of paper. Deposits are merely book entries." — Modern Money Mechanics Workbook, Federal Reserve Bank of Chicago, 1975
"The Federal Reserve system pays the U.S. Treasury 020.60 per thousand notes --a little over 2 cents each-- without regard to the face value of the note. Federal Reserve Notes, incidentally, are the only type of currency now produced for circulation. They are printed exclusively by the Treasury's Bureau of Engraving and Printing, and the $20.60 per thousand price reflects the Bureau's full cost of production. Federal Reserve Notes are printed in 01, 02, 05, 10, 20, 50, and 100 dollar denominations only; notes of 500, 1000, 5000, and 10,000 denominations were last printed in 1945." —Donald J. Winn, Assistant to the Board of Governors of the Federal Reserve system
"We are completely dependant on the commercial banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the banks create ample synthetic money we are prosperous; if not, we starve. We are absolutely without a permanent money system.... It is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defects remedied very soon." — Robert H. Hamphill, Atlanta Federal Reserve Bank
From General Law
"The entire taxing and monetary systems are hereby placed under the U.C.C. (Uniform Commercial Code)" — The Federal Tax Lien Act of 1966
"There is a distinction between a 'debt discharged' and a debt 'paid'. When discharged, the debt still exists though divested of it's charter as a legal obligation during the operation of the discharge, something of the original vitality of the debt continues to exist, which may be transferred, even though the transferee takes it subject to it's disability incident to the discharge." —Stanek vs. White, 172 Minn.390, 215 N.W. 784
"The Federal Reserve Banks are not federal instrumentalities..." — Lewis vs. United States 9th Circuit 1992
"The regional Federal Reserve banks are not government agencies. ...but are independent, privately owned and locally controlled corporations." — Lewis vs. United States, 680 F. 2d 1239 9th Circuit 1982
Past Presidents
"Whoever controls the volume of money in any country is absolute master of all industry and commerce." — James A. Garfield, President of the United States
Founding Father's
"I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a monied aristocracy that has set the government at defiance. The issuing power (of money) should be taken away from the banks and restored to the people to whom it properly belongs." — Thomas Jefferson, U.S. President.
Andrew Jackson "If Congress has the right [it doesn't] to issue paper money [currency], it was given to them to be used by...[the government] and not to be delegated to individuals or corporations" — President Andrew Jackson, Vetoed Bank Bill of 1836
James Madison "History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and it's issuance." — James Madison
Misc. Sources
"Banks lend by creating credit. They create the means of payment out of nothing" — Ralph M. Hawtrey, Secretary of the British Treasury
"To expose a 15 Trillion dollar rip-off of the American people by the stockholders of the 1000 largest corporations over the last 100 years will be a tall order of business." — Buckminster Fuller
"Every Congressman, every Senator knows precisely what causes inflation...but can't, [won't] support the drastic reforms to stop it [repeal of the Federal Reserve Act] because it could cost him his job." — Robert A. Heinlein, Expanded Universe
"It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." — Henry Ford
"[Every circulating FRN] represents a one dollar debt to the Federal Reserve system." — Money Facts, House Banking and Currency Committee
"...the increase in the assets of the Federal Reserve banks from 143 million dollars in 1913 to 45 billion dollars in 1949 went directly to the private stockholders of the [federal reserve] banks." — Eustace Mullins
"As soon as Mr. Roosevelt took office, the Federal Reserve began to buy government securities at the rate of ten million dollars a week for 10 weeks, and created one hundred million dollars in new [checkbook] currency, which alleviated the critical famine of money and credit, and the factories started hiring people again." — Eustace Mullins
"Should government refrain from regulation (taxation), the worthlessness of the money becomes apparent and the fraud can no longer be concealed." — John Maynard Keynes, "Consequences of Peace."
"Banking was conceived in iniquity and was born in sin. The Bankers own the earth. Take it away from them, but leave them the power to create deposits, and with the flick of the pen they will create enough deposits to buy it back again. However, take it away from them, and all the great fortunes like mine will disappear and they ought to disappear, for this would be a happier and better world to live in. But, if you wish to remain the slaves of Bankers and pay the cost of your own slavery, let them continue to create deposits." — SIR JOSIAH STAMP, (President of the Bank of England in the 1920's, the second richest man in Britain):
"The modern Banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was ever invented. Banks can in fact inflate, mint and unmint the modern ledger-entry currency." — MAJOR L .L. B. ANGUS:
"While boasting of our noble deeds were careful to conceal the ugly fact that by an iniquitous money system we have nationalized a system of oppression which, though more refined, is not less cruel than the old system of chattel slavery. — Horace Greeley
"People who will not turn a shovel full of dirt on the project (Muscle Shoals Dam) nor contribute a pound of material, will collect more money from the United States than will the People who supply all the material and do all the work. This is the terrible thing about interest ...But here is the point: If the Nation can issue a dollar bond it can issue a dollar bill. The element that makes the bond good makes the bill good also. The difference between the bond and the bill is that the bond lets the money broker collect twice the amount of the bond and an additional 20%. Whereas the currency, the honest sort provided by the Constitution pays nobody but those who contribute in some useful way. It is absurd to say our Country can issue bonds and cannot issue currency. Both are promises to pay, but one fattens the usurer and the other helps the People. If the currency issued by the People were no good, then the bonds would be no good, either. It is a terrible situation when the Government, to insure the National Wealth, must go in debt and submit to ruinous interest charges at the hands of men who control the fictitious value of gold. Interest is the invention of Satan." — THOMAS A. EDISON
"By this means government may secretly and unobserved, confiscate the wealth of the people, and not one man in a million will detect the theft." — John Maynard Keynes (the father of 'Keynesian Economics' which our nation now endures) in his book "THE ECONOMIC CONSEQUENCES OF THE PEACE" (1920).
"Capital must protect itself in every way...Debts must be collected and loans and mortgages foreclosed as soon as possible. When through a process of law the common people have lost their homes, they will be more tractable and more easily governed by the strong arm of the law applied by the central power of leading financiers. People without homes will not quarrel with their leaders. This is well known among our principal men now engaged in forming an imperialism of capitalism to govern the world. By dividing the people we can get them to expend their energies in fighting over questions of no importance to us except as teachers of the common herd."-- Taken from the Civil Servants' Year Book, "The Organizer" January 1934.
"The Federal Reserve banks, while not part of the government..." — United States budget for
1991 and 1992 part 7, page 10
The Money Power! It is the greatest power on earth; and it is arrayed against Labour. No other power that is or ever was can be named with it... it attacks us through the Press - a monster with a thousand lying tongues, a beast surpassing in foulness any conceived by the mythology that invented dragons, were wolves, harpies, ghouls and vampires. It thunders against us from innumerable platforms and ,Yes, so far as we are concerned, the headquarters of the Money Power is Britain. But the Money Power is not a British institution; it is cosmopolitan. It is of no nationality, but of all nationalities. It dominates the world. The Money Power has corrupted the faculties of the human soul, and tampered with the sanity of the human intellect... Editorial from 1907 edition of The Brisbane Worker (Australia)
funny that many countries can spend a higher percent of their GDP through the government but have significantly less debt issues.
maybe it's because in many countries people pay their fucking taxes.
tax lawyers ought not exist. the IRS ought to have only 2 functions: setting the marginal tax schedule and ensuring complete collection.
people who QQ about taxes amuse me. silly delusions of deserving worldly possessions, most - if not all - gained through the circumstances of birth, drive a mindset whereby the poor and dejected in this country believe they are but moments away from moving up to the upper class. of course, all recent (and by recent I mean longer than I or most of you have been alive) econometric data says that that's not the case; that social mobility is higher in the hated european nations that represent the evils of socialism.
oh and people like to blame economists. if only they would listen to them. as a profession, they arent very good at rubbing it in people's faces that they were right. it is truly tragic that we no longer have John Maynard Keynes; he would have had no hesitation laughing in our face as models designed to please our political overlords with little regard for reality blew up in our laps in spectacular fashion.
On April 10 2011 12:12 red_b wrote: oh and people like to blame economists. if only they would listen to them. as a profession, they arent very good at rubbing it in people's faces that they were right. it is truly tragic that we no longer have John Maynard Keynes; he would have had no hesitation laughing in our face as models designed to please our political overlords with little regard for reality blew up in our laps in spectacular fashion.
Most of the time they aren't right , how many predicted the GFC?
On April 10 2011 09:20 Deja Thoris wrote: When a person has debts that are equal to their yearly salary you think that person is in trouble.
Actually, no. Have you ever heard of a mortgage?
Unless you think that nobody outside of the top 5% of the population should be able to own a home, you should probably re-examine your views, there.
Except there is a huge difference between a debt that is an investment and debt that is a consequence of an inability to pay your obligations. In the first example, the payments are made on the mortgage to decrease it and pay it off. Suppose someone had a mortgage and didn't actually make payments on it, and the interest got tacked on to the principal year after year, and there was no foreseeable raise in the persons income that would suggest an ability to pay it off in the future. In that case, bankruptcy is inevitable.
On April 10 2011 12:12 red_b wrote: it is truly tragic that we no longer have John Maynard Keynes; he would have had no hesitation laughing in our face as models designed to please our political overlords with little regard for reality blew up in our laps in spectacular fashion.
It is truly tragic that we no longer have Keynes, because we aren't able to see the look on his face upon seeing that the Keynesian experiment has been shown to be a complete failure.
On April 10 2011 11:16 AirportSecurity wrote: World War 3 will deal with this debt
haha, WW2 sure solved the great depression but WW3 will not take place mainly in Europe (which was the predominate reason our economy got back on track) but the US will me extremely involved. In addition with nuclear weapons, WW3 will most likely put the US in a worse state.
Honestly, I think it is stupid that we are supporting the elders. I think the money should go to the younger population and education. The US manufacturing capacity is crippled because most major manufacturing company will outsource to foreign nation where labor is under a dollar. With US wages several times higher, the US can't even compete. As a result, there are less jobs for Americans while the wealthy are generating greater profit. More money for the rich, less for the poor. In other words, the trickle-down effect no longer applies. The USD will continue to depreciate because we are importing much more than we are exporting because Americans tend to buy cheaper products. Cheaper products come from cheaper labor. The US cannot support the elders and devote the funds to the next generation. Education is more important than ever because nowadays, most jobs lies in SERVICES instead of manufacturing. The US has lost their ground on the car and steel industries, its manufacturing giants. And now, it is losing its ground on its technology lead. After the cold war, less emphasis has been put on education and now, 40 students are crammed into a single class. European nations established newer, more efficient factories while America continues to rely on outdated factories but since WWII. With 14 trill in dept, I see an continual inflation for the USD and China will become more affluent as they are the major exporters of products. The government is leaving the dept and rising deficits for the next generation to deal with while ill-preparing the future with educational cuts.
I believe that the US needs to transition their energy policy. Less OIL dependence. Establish A LOT more nuclear power plants. Less damaging to the environment and if controlled and disposed of correctly, it will provide an abundant source of energy and more local jobs.
If I was a politician, I would advocate to ban the sale of gasoline cars with the excuse that it is, "irrecoverably damaging our environment and atmosphere" and only permit the sale of hydrogen Fuel Cell cars. Then I would have GM and Ford mass produce these cars to make them cheap and the US would regain some of its manufacturing capacity in the car industry. This would make the US less dependent on oil. <----- just a dream
On April 10 2011 09:20 Deja Thoris wrote: When a person has debts that are equal to their yearly salary you think that person is in trouble.
Actually, no. Have you ever heard of a mortgage?
Unless you think that nobody outside of the top 5% of the population should be able to own a home, you should probably re-examine your views, there.
I should have posted more completely. House and car (to an extent) debt is fine as long you you stick to "living within your means" People pile up debts comparable to their yearly earnings on consumption, not bricks and mortar. When people buy a bar of chocolate and they effectively pay it off over 24 months on a credit card I think its dumb. Thats what the Governement is doing, its meeting current obligations with long term loans. To do this in a pinch is fine, to do it for 20 years, well, look where we are now.
On April 10 2011 12:12 red_b wrote: funny that many countries can spend a higher percent of their GDP through the government but have significantly less debt issues.
maybe it's because in many countries people pay their fucking taxes.
tax lawyers ought not exist. the IRS ought to have only 2 functions: setting the marginal tax schedule and ensuring complete collection.
people who QQ about taxes amuse me. silly delusions of deserving worldly possessions, most - if not all - gained through the circumstances of birth, drive a mindset whereby the poor and dejected in this country believe they are but moments away from moving up to the upper class. of course, all recent (and by recent I mean longer than I or most of you have been alive) econometric data says that that's not the case; that social mobility is higher in the hated european nations that represent the evils of socialism.
oh and people like to blame economists. if only they would listen to them. as a profession, they arent very good at rubbing it in people's faces that they were right. it is truly tragic that we no longer have John Maynard Keynes; he would have had no hesitation laughing in our face as models designed to please our political overlords with little regard for reality blew up in our laps in spectacular fashion.
Because hard work, perseverance, and ingenuity had nothing to do with it. Right?
On April 10 2011 12:12 red_b wrote: funny that many countries can spend a higher percent of their GDP through the government but have significantly less debt issues.
maybe it's because in many countries people pay their fucking taxes.
tax lawyers ought not exist. the IRS ought to have only 2 functions: setting the marginal tax schedule and ensuring complete collection.
people who QQ about taxes amuse me. silly delusions of deserving worldly possessions, most - if not all - gained through the circumstances of birth, drive a mindset whereby the poor and dejected in this country believe they are but moments away from moving up to the upper class. of course, all recent (and by recent I mean longer than I or most of you have been alive) econometric data says that that's not the case; that social mobility is higher in the hated european nations that represent the evils of socialism.
oh and people like to blame economists. if only they would listen to them. as a profession, they arent very good at rubbing it in people's faces that they were right. it is truly tragic that we no longer have John Maynard Keynes; he would have had no hesitation laughing in our face as models designed to please our political overlords with little regard for reality blew up in our laps in spectacular fashion.
Uhm. You realize INCOME TAX taxes your income (which is the most complained about tax), not what you inherit from any family member. Income Tax literally taxes your hard work and paycheck. I have no idea what you're talking about, and have no idea how you justify socialism that way. That is not a good argument for socialism at all.
Economists really don't have a great track record. In the 60s, it was taught in schools that stagnation and inflation could not occur at the same time (because that's what the theory said). Then in the 70s we had stagflation and we had to rewrite all our economic textbooks.
Not to mention that about these specific issues there's tons of disagreement between economists.
On April 10 2011 20:16 RJGooner wrote: Because hard work, perseverance, and ingenuity had nothing to do with it. Right?
not really. socio-economic status and maternal education are by far the best predictors of success. you think you would be where you are now were you born in Etheopia? Or Estonia? Or even to a poor single parent family in Oakland? what a joke.
Americans, in general, are obsessed with anecdotes of rags to riches or bosses going undercover and seeing the light of how shitty they treat their employees and then make it all right. much like in a country of 350 million people, only a few hundred can be professional athletes in the big sports, a preposterously small percent of people are really able to find upward social mobility. and that is, unfortunately, well evidenced.
On April 10 2011 16:42 SpeaKEaSY wrote: It is truly tragic that we no longer have Keynes, because we aren't able to see the look on his face upon seeing that the Keynesian experiment has been shown to be a complete failure.
a promoter of gold as money writing a discourse on how Keynes was wrong? what a shocker.
On April 10 2011 23:27 DoubleReed wrote: Uhm. You realize INCOME TAX taxes your income (which is the most complained about tax), not what you inherit from any family member. Income Tax literally taxes your hard work and paycheck. I have no idea what you're talking about, and have no idea how you justify socialism that way. That is not a good argument for socialism at all.
see above. and Im not justifying socialism through that, just making a point about how silly people are when they attribute their income to things like hard work or that God somehow loves them more than starving people. I, you, all of us... we deserve nothing. Taxes are taken from income that is only owned as long as you have a government making sure no one shoots you and takes it from you. That is not true ownership. it is a difference in perspective caused from observation of reality instead of living in a dream world where money will drop from the sky because I am awesome.
On April 10 2011 23:27 DoubleReed wrote:Economists really don't have a great track record. In the 60s, it was taught in schools that stagnation and inflation could not occur at the same time (because that's what the theory said). Then in the 70s we had stagflation and we had to rewrite all our economic textbooks.
actually theory did allow for stagflation. Keynes's description of the aggregate supply curve is somewhat J shaped without the upturned left tail; prices are sticky to a point, then there is a period of the schedule where prices will rise with increased output and then there is a portion where prices can rise with stable output.
this was not something that was really considered by his pupils (Hicks, primarily, but also Samuelson) when they worked to make a mathematical formalization of the General Theory (which has all of 2 graphs in it). unfortunately, Keynes died shortly after publication so what precisely he had in mind was lost in the rather obtuse, ambiguous General Theory.
For a critique of Keynesianism there still isn't any better work than Henry Hazlitt's - Failure of New Economics. I've read General Theory and to be honest, it is a de-evolution of the economics profession. You would be better off reading Jevons & Walras (Non-Austrians), and Menger & Bohm-Bawerk. I'd even recommend Vilfredo Pareto. Keynes made a mockery of economics. Complete backwardation. Hence, we find ourselves in our present condition.
As for socialism, the socialists have still not answered Ludwig von Mises calculation problem, which was levied in 1922 in Socialism (Still to do this day the best critique of socialism alongside Hoppe's A Theory of Socialism and Capitalism].
On April 10 2011 23:27 DoubleReed wrote: Uhm. You realize INCOME TAX taxes your income (which is the most complained about tax), not what you inherit from any family member. Income Tax literally taxes your hard work and paycheck. I have no idea what you're talking about, and have no idea how you justify socialism that way. That is not a good argument for socialism at all.
Economists really don't have a great track record. In the 60s, it was taught in schools that stagnation and inflation could not occur at the same time (because that's what the theory said). Then in the 70s we had stagflation and we had to rewrite all our economic textbooks.
Not to mention that about these specific issues there's tons of disagreement between economists.
Yea, because the income someone makes has absolutely nothing to do with the socio-economic environment someone grew up in. Or with their gender. Or with skin-colour. Or with the mental/physical capacities they were born with. And for team tea party out there, having an income tax is not the equivalent of socialism. A true socialist system would offset all differences in wealth, which the US income tax is nowhere close to.
A former, republican, supreme court justice (Oliver Wendell Holmes Jr.) said: 'Taxes are the price we pay for a civilised society'. Ofcourse that was back when republicans still had actual, coherent, ideals.
On April 10 2011 20:16 RJGooner wrote: Because hard work, perseverance, and ingenuity had nothing to do with it. Right?
not really. socio-economic status and maternal education are by far the best predictors of success. you think you would be where you are now were you born in Etheopia? Or Estonia? Or even to a poor single parent family in Oakland? what a joke.
Americans, in general, are obsessed with anecdotes of rags to riches or bosses going undercover and seeing the light of how shitty they treat their employees and then make it all right. much like in a country of 350 million people, only a few hundred can be professional athletes in the big sports, a preposterously small percent of people are really able to find upward social mobility. and that is, unfortunately, well evidenced.
On April 10 2011 16:42 SpeaKEaSY wrote: It is truly tragic that we no longer have Keynes, because we aren't able to see the look on his face upon seeing that the Keynesian experiment has been shown to be a complete failure.
a promoter of gold as money writing a discourse on how Keynes was wrong? what a shocker.
On April 10 2011 23:27 DoubleReed wrote: Uhm. You realize INCOME TAX taxes your income (which is the most complained about tax), not what you inherit from any family member. Income Tax literally taxes your hard work and paycheck. I have no idea what you're talking about, and have no idea how you justify socialism that way. That is not a good argument for socialism at all.
see above. and Im not justifying socialism through that, just making a point about how silly people are when they attribute their income to things like hard work or that God somehow loves them more than starving people. I, you, all of us... we deserve nothing. Taxes are taken from income that is only owned as long as you have a government making sure no one shoots you and takes it from you. That is not true ownership. it is a difference in perspective caused from observation of reality instead of living in a dream world where money will drop from the sky because I am awesome.
On April 10 2011 23:27 DoubleReed wrote:Economists really don't have a great track record. In the 60s, it was taught in schools that stagnation and inflation could not occur at the same time (because that's what the theory said). Then in the 70s we had stagflation and we had to rewrite all our economic textbooks.
actually theory did allow for stagflation. Keynes's description of the aggregate supply curve is somewhat J shaped without the upturned left tail; prices are sticky to a point, then there is a period of the schedule where prices will rise with increased output and then there is a portion where prices can rise with stable output.
this was not something that was really considered by his pupils (Hicks, primarily, but also Samuelson) when they worked to make a mathematical formalization of the General Theory (which has all of 2 graphs in it). unfortunately, Keynes died shortly after publication so what precisely he had in mind was lost in the rather obtuse, ambiguous General Theory.
This is all very lofty but how does it translate to the real world, and more importantly the current topic which the the national debt of the US?
Out of honest curiousity (this is not an attack on the integrity of the arguments and discussion here) how many of those posting in this thread are econ majors?
The reason I ask, I have a few economists in my family (my mom is an econ major, and my sister majored in econ for her undergrad, has her masters in econ and is working on her doctorate).
I've taken a couple econ courses as well (I'm a finance major, but international finance isn't until next semester) and my understanding through discussion with my sister and my mom is that national debts are nothing more than a 'how-to finance national spending'.
In reality, global debt is an integral part of how world economies operate. High debt figures can be a problem but it's a much more complex problem than if, for example, a person's debt is higher than their income. Which is, I think, how most people look at it (and was an example used earlier in this thread).
The debt figures are excellent numbers to scare people with but the problem is not as large or at the very least not as simple as it may seem.
On April 10 2011 12:12 red_b wrote: it is truly tragic that we no longer have John Maynard Keynes; he would have had no hesitation laughing in our face as models designed to please our political overlords with little regard for reality blew up in our laps in spectacular fashion.
It is truly tragic that we no longer have Keynes, because we aren't able to see the look on his face upon seeing that the Keynesian experiment has been shown to be a complete failure.
This is actually one of the worst critiques of Kenyesian economics I've ever read. Namely, most of what he criticizes isn't Keynesian.
Keynes rejected monetary policy as ineffective and tended to be critical of central banks. The gold standard and Bretton Woods system were a major part of Keynesian economics as it was applied in practice. The alternative that he proposed in 1940 wasn't freely floating money, but rather an international reserve currency called the "bancor" which would be valued in terms of a certain weight in gold.
The Keynesian period of economics is typically thought of as starting sometime around the end of WWII and lasting until the mid/late 1970s when it proved ineffective in dealing with a recession that was caused by supply-side factors (namely, the energy crisis).
The two dominant schools of thought in economics from the late 70s through recently have been monetarism (and derivatives thereof, such as rational expectations) and neoliberal (sometimes called new classical). The former deals heavily with monetary policy and how it can theoretically be used to stabilize an economy while minimizing inflation. Given the nature of Nathan Lewis' critique, what he is saying would apply much more to these theories, particularly monetarism.
Ideas more in line with Keynesianism have only returned to prominence (and I should clarify - this is more of a parity with the neoliberal school than a hegemony) since the 2007-09 worldwide crashes.
Gold is also not stable in value -- or perhaps more subtly, I should say that this depends on how strictly he means "stable." (I could see an argument that gold backing results in less inflation over long periods of time, but if he means that the value of gold is always the same, then that is definitely incorrect.) Gold is a limited resource and, like other limited resources, its real value is subject to change over time. As the population grows and the supply of gold remains relatively constant, the real price of gold will rise due to basic supply and demand principles. The change in the nominal price of gold in terms of dollars is both a function of inflation on the dollar as well as changes in the real price of gold.
On April 11 2011 02:20 mads wrote: Out of honest curiousity (this is not an attack on the integrity of the arguments and discussion here) how many of those posting in this thread are econ majors?
I was until last May. Now Im a masters program in the same field. Of course graduate econ work is mostly mechanical so in the last few months Ive learned less about this sort of thing than any time in the last 5 years.
Oh, and to the guy who mentioned Hazlitt, come on man. That man, as an "economist", was a joke. At least when Hayek unloaded on Keynes it came from actual understanding. Hazlitt and his folk economics is no better than Sarah Palin's particular brand of horse shit, although I suppose he at least was an intelligent human being.
And blaming Keynes for the current mess? That would be well and good, if it wasnt 3 decades of conservative economists running the show.
On April 11 2011 02:20 mads wrote: Out of honest curiousity (this is not an attack on the integrity of the arguments and discussion here) how many of those posting in this thread are econ majors?
I have a bachelor's degree in economics, and as part of my masters in applied mathematics I took a some graduate courses in economics for interdisciplinary. (I do not have a phd in econ though, and they didn't offer masters in that subject. I'm no expert obviously, merely literate )
Above poster is right - once you get into grad level economics, shit gets real. Microfoundations is closer to a class in abstract algebra or analysis than the arithmetic or simple calculus you'll see in undergrad. It isn't surprising that some of the most influential economists like Keynes (math) or Barro (physics) came from backgrounds where they'd have gained a deep understanding of these subjects.
In the end, of course I hold academic literature with higher regard than things from an ideologically-driven think tank or an internet forum. That is a no-brainer. But it's really no different than watching people outside of atmospheric science disciplines discussing climate change. People who are interested in an earnest back-and-forth discussion can gain some amount of understanding from it if they are willing.
On April 10 2011 20:16 RJGooner wrote: Because hard work, perseverance, and ingenuity had nothing to do with it. Right?
not really. socio-economic status and maternal education are by far the best predictors of success. you think you would be where you are now were you born in Etheopia? Or Estonia? Or even to a poor single parent family in Oakland? what a joke.
Americans, in general, are obsessed with anecdotes of rags to riches or bosses going undercover and seeing the light of how shitty they treat their employees and then make it all right. much like in a country of 350 million people, only a few hundred can be professional athletes in the big sports, a preposterously small percent of people are really able to find upward social mobility. and that is, unfortunately, well evidenced.
On April 10 2011 16:42 SpeaKEaSY wrote: It is truly tragic that we no longer have Keynes, because we aren't able to see the look on his face upon seeing that the Keynesian experiment has been shown to be a complete failure.
a promoter of gold as money writing a discourse on how Keynes was wrong? what a shocker.
On April 10 2011 23:27 DoubleReed wrote: Uhm. You realize INCOME TAX taxes your income (which is the most complained about tax), not what you inherit from any family member. Income Tax literally taxes your hard work and paycheck. I have no idea what you're talking about, and have no idea how you justify socialism that way. That is not a good argument for socialism at all.
see above. and Im not justifying socialism through that, just making a point about how silly people are when they attribute their income to things like hard work or that God somehow loves them more than starving people. I, you, all of us... we deserve nothing. Taxes are taken from income that is only owned as long as you have a government making sure no one shoots you and takes it from you. That is not true ownership. it is a difference in perspective caused from observation of reality instead of living in a dream world where money will drop from the sky because I am awesome.
On April 10 2011 23:27 DoubleReed wrote:Economists really don't have a great track record. In the 60s, it was taught in schools that stagnation and inflation could not occur at the same time (because that's what the theory said). Then in the 70s we had stagflation and we had to rewrite all our economic textbooks.
actually theory did allow for stagflation. Keynes's description of the aggregate supply curve is somewhat J shaped without the upturned left tail; prices are sticky to a point, then there is a period of the schedule where prices will rise with increased output and then there is a portion where prices can rise with stable output.
this was not something that was really considered by his pupils (Hicks, primarily, but also Samuelson) when they worked to make a mathematical formalization of the General Theory (which has all of 2 graphs in it). unfortunately, Keynes died shortly after publication so what precisely he had in mind was lost in the rather obtuse, ambiguous General Theory.
Uhm, it doesn't really make sense to bring up other countries in that context. When we talk about rags to riches and such through hard work, the whole point is we want our country to be that way. That's the American Dream. You can't say "Well if you born in estonia then it wouldn't work." It's the ideal of America.
Honestly this doesn't have to do with "luck of the draw." Obviously this plays a huge factor in people's wealth. But that really doesn't have to do with this at all. That doesn't mean you don't earn your paycheck, and it doesn't mean it isn't your money. That doesn't mean we should all give huge amounts of our money to some amorphous government. That doesn't justify anything.
Look, there are very practical reasons why we should pay taxes. If it's about this "rags to riches" and such, there's private philanthropy. That's a much more efficient way of giving back. This has nothing to do with taxes.
This is actually one of the worst critiques of Kenyesian economics I've ever read. Namely, most of what he criticizes isn't Keynesian.
Keynes rejected monetary policy as ineffective and tended to be critical of central banks. The gold standard and Bretton Woods system were a major part of Keynesian economics as it was applied in practice. The alternative that he proposed in 1940 wasn't freely floating money, but rather an international reserve currency called the "bancor" which would be valued in terms of a certain weight in gold.
The Keynesian period of economics is typically thought of as starting sometime around the end of WWII and lasting until the mid/late 1970s when it proved ineffective in dealing with a recession that was caused by supply-side factors (namely, the energy crisis).
The two dominant schools of thought in economics from the late 70s through recently have been monetarism (and derivatives thereof, such as rational expectations) and neoliberal (sometimes called new classical). The former deals heavily with monetary policy and how it can theoretically be used to stabilize an economy while minimizing inflation. Given the nature of Nathan Lewis' critique, what he is saying would apply much more to these theories, particularly monetarism.
Ideas more in line with Keynesianism have only returned to prominence (and I should clarify - this is more of a parity with the neoliberal school than a hegemony) since the 2007-09 worldwide crashes.
Gold is also not stable in value -- or perhaps more subtly, I should say that this depends on how strictly he means "stable." (I could see an argument that gold backing results in less inflation over long periods of time, but if he means that the value of gold is always the same, then that is definitely incorrect.) Gold is a limited resource and, like other limited resources, its real value is subject to change over time. As the population grows and the supply of gold remains relatively constant, the real price of gold will rise due to basic supply and demand principles. The change in the nominal price of gold in terms of dollars is both a function of inflation on the dollar as well as changes in the real price of gold.
Ha, I must confess, I didn't even read the article. I just googled for some article with the words Keynesian experiment in it to show that it wasn't my idea, and looked for a liberal source so that people wouldn't complain about bias if I posted something from an Austrian source. The guy complained about the source anyway so I guess it was a failure on my part lol.
So as part of the election campaign kickoff it seems that:
Obama wants to cut the defecit by 4 Trillion over the next 12 years by a number of measures including taxing the rich more. (It seems like a low bar being set - reducing quarter of your debt in 12 years)
Republicans want to reduce social programmes to save money and tax the rich less because it will stimulate growth. It seems pretty blatant as to who butters the Republicans bread I'd be interested to see stats on how this supposedly works. I'd also be curious to know how Obama plans to increse the tax burden on the rich without chasing them all to tax havens. Appealing to their better nature probably won't work.
On April 15 2011 07:27 Deja Thoris wrote: So as part of the election campaign kickoff it seems that:
Obama wants to cut the defecit by 4 Trillion over the next 12 years by a number of measures including taxing the rich more. (It seems like a low bar being set - reducing quarter of your debt in 12 years)
Republicans want to reduce social programmes to save money and tax the rich less because it will stimulate growth. It seems pretty blatant as to who butters the Republicans bread I'd be interested to see stats on how this supposedly works. I'd also be curious to know how Obama plans to increse the tax burden on the rich without chasing them all to tax havens. Appealing to their better nature probably won't work.
Rich people won't move to dangerous shitty 3rd world countries just to avoid tax. They will still want to live in America where they enjoy the highest quality of life and luxury. America already has among the lowest income tax for the wealthy in the developed world, so they would actually have to go to a dangerous shithole to pay less tax.
On April 15 2011 07:27 Deja Thoris wrote: So as part of the election campaign kickoff it seems that:
Obama wants to cut the defecit by 4 Trillion over the next 12 years by a number of measures including taxing the rich more. (It seems like a low bar being set - reducing quarter of your debt in 12 years)
Republicans want to reduce social programmes to save money and tax the rich less because it will stimulate growth. It seems pretty blatant as to who butters the Republicans bread I'd be interested to see stats on how this supposedly works. I'd also be curious to know how Obama plans to increse the tax burden on the rich without chasing them all to tax havens. Appealing to their better nature probably won't work.
You do know Obama was the number one receiver of corporate donations right? Guess who was last -- Ron Paul a Republican.
On April 15 2011 07:27 Deja Thoris wrote: So as part of the election campaign kickoff it seems that:
Obama wants to cut the defecit by 4 Trillion over the next 12 years by a number of measures including taxing the rich more. (It seems like a low bar being set - reducing quarter of your debt in 12 years)
Republicans want to reduce social programmes to save money and tax the rich less because it will stimulate growth. It seems pretty blatant as to who butters the Republicans bread I'd be interested to see stats on how this supposedly works. I'd also be curious to know how Obama plans to increse the tax burden on the rich without chasing them all to tax havens. Appealing to their better nature probably won't work.
Rich people won't move to dangerous shitty 3rd world countries just to avoid tax. They will still want to live in America where they enjoy the highest quality of life and luxury. America already has among the lowest income tax for the wealthy in the developed world, so they would actually have to go to a dangerous shithole to pay less tax.
That's not true. There are lots of places that have less tax rates than the US (far less) and aren't dangerous shitholes. Just to list a few: Estonia, Mauritania, Switzerland, Andorra, Liechtenstein, Hong Kong, Singapore, etc.
Of course you are right that a marginal increase won't make them all pack up and move, they'll just shift the taxes onto consumer prices (some businesses will close and some will indeed move). When the cost of doing businesses rises, prices must increase to make the venture profitable. The US has an extremely high tax burden on individuals and businesses, even compared to most of the rest of the world. Most Americans get quadruple taxed daily (Federal, State, County, Local/Munincipal).
I still laugh anytime someone thinks the Democrats are against Corporations and Republicans are for, or that Democrats are for the poor, and Republicans for the rich. Both Democrats and Republicans are for the extremely wealthy -- who do you think bankrolls their elections, and who writes most of the laws? 95% of the Government's policies stay the same no matter if it is a R or a D in charge. (Just to add, I find it sort of ironic that Democrats are supposedly the party of the working man, yet seven of the ten richest federal politicians are Democrats...)
While I agree with your point that there are many tax havens that aren't shitholes (you dont have to "live" in many of them to get residents status) I have to laugh at your quoted choice.
On April 09 2011 14:18 jdseemoreglass wrote: I have to agree with the people criticizing gold investments. Of course, gold can be a great investment when economic stability is assured along with inflation. But in the end, the metal itself has very little utility and it not worth much intrinsic value.
However, this does not justify a criticism of gold as a standard for a currency. The reason gold is so valued over fiat currency is not due to its intrinsic value, but rather due to its relative inability to be manipulated and inflated by a central government. However, those who believe in the effectiveness of Keynesian economics will see this as a negative instead of a benefit of the gold standard.
In a multi-currency system with exports and imports, the gold standard will fail due to capital movements between countries. No amount of pegging currencies or gold exchanges or tariffs or import / export quotas will change this. It has failed multiple times for that reason since we have become industrialized and interconnected. We're only more interconnected now than the early 70s when Bretton Woods finally went away. You don't see credible economists out arguing for the gold standard. There's a reason the main proponent of the gold standard in the United States is a medical doctor, not an economist or a financier (and I say that as someone who voted for Ron Paul). It is a terrible idea in the modern world that would lead to continued economic instability.
While I agree with your point that there are many tax havens that aren't shitholes (you dont have to "live" in many of them to get residents status) I have to laugh at your quoted choice.
20% of the country subsides on less than $1.25 a day
Yes, you are indeed correct. My bad, I meant Mauritius. They are on the same continent (well Mauritius is an island..., but nevertheless), and are similarly named.
i usually like the Democrats but i have to agree with the Republicans on this one. American doesn't have a revenue problem. it has a spending problem.
US tax total revenue has been fairly stable in all these years. in addition, its a lot easier to reduce spending than raising revenue. raising taxes on a ditto economy won't work because ppl don't have the income to pay it. cutting spending, while it hurts the economy too, it can be justified as living within your means.
On June 24 2011 04:57 dybydx wrote: i usually like the Democrats but i have to agree with the Republicans on this one. American doesn't have a revenue problem. it has a spending problem.
US tax total revenue has been fairly stable in all these years. in addition, its a lot easier to reduce spending than raising revenue. raising taxes on a ditto economy won't work because ppl don't have the income to pay it. cutting spending, while it hurts the economy too, it can be justified as living within your means.
wrong, US taxes rate is at an all-time low especially at the top of the bracket. the rich gets richer while the poor get poorer.
wrong,
28% Top Federal Income Tax Rate under Reagan's 1986 TRA 35% Top Federal Income Tax Rate Currently
Keep in mind, Obama wanted it even higher, but went along with Republicans to extend Bush's policy.
On June 24 2011 04:57 dybydx wrote: i usually like the Democrats but i have to agree with the Republicans on this one. American doesn't have a revenue problem. it has a spending problem.
US tax total revenue has been fairly stable in all these years. in addition, its a lot easier to reduce spending than raising revenue. raising taxes on a ditto economy won't work because ppl don't have the income to pay it. cutting spending, while it hurts the economy too, it can be justified as living within your means.
wrong, US taxes rate is at an all-time low especially at the top of the bracket. the rich gets richer while the poor get poorer.
The thing to consider with that last sentence is that the rich get richer on the continued employment of the poor. You don't get a good return on existing money by just throwing it in the bank or sitting on it. Those kinds of rates barely, if at all, keep up with inflation, so you're not gaining anything. The rich actively invest their money back into the economy, which produces more wealth in one of a hundred different ways (bonds, stocks, entrepreneurial efforts and so on and so forth) which they eventually collect on at a later date. Meanwhile, all of these have some level of risk associated with them. Bigger risk, bigger return. All of these investments pumped back into the economy keep us all employed.
I don't necessarily buy that government spending is entirely bad, either. If it's spent domestically, then its little to no different than the rich reinvesting their money back into the economy. If tax revenues increase, I would have to wonder where all of that extra money would be going. I sincerely doubt it would be as beneficial to the economy as it would to leave things as they are now.
The two fundamental things that I think need to be fixed ASA-fucking-P is
A) The blatant cheating of the tax system - that some people and corporations are literally getting away with murder by cheating on their taxes is just fucking us all over
B) Make government more efficient. I don't feel as though I should pay more in taxes to an organization that is doing a horrible job of efficiently using the money its already being given. If the government can't prove they can responsibly spend the money they have now, why should I feel compelled to give them more?
On June 24 2011 04:57 dybydx wrote: i usually like the Democrats but i have to agree with the Republicans on this one. American doesn't have a revenue problem. it has a spending problem.
US tax total revenue has been fairly stable in all these years. in addition, its a lot easier to reduce spending than raising revenue. raising taxes on a ditto economy won't work because ppl don't have the income to pay it. cutting spending, while it hurts the economy too, it can be justified as living within your means.
wrong, US taxes rate is at an all-time low especially at the top of the bracket. the rich gets richer while the poor get poorer.
wrong,
28% Top Federal Income Tax Rate under Reagan's 1986 TRA 35% Top Federal Income Tax Rate Currently
Keep in mind, Obama wanted it even higher, but went along with Republicans to extend Bush's policy.
Previous poster was wrong about the top bracket rates being historically low but overall they are pretty damn low. Lowest bracket is at 10% compared to Reagan's 15%. Corporations are smarter at avoiding taxes though - see GE's ability to pay zero dollars on its US earnings.
I'm not quite sure how half the country is convinced that taxes are at a crushingly high rate. The financial sector has been reporting excellent profits since recovering from 2008.
I read through all of the posts here and I didn't see a mention of politicians too weak to ACTUALLY change anything because of fear of not getting re-elected. I agree with alot of the posters above in the sense that the problem is bad, but not to bad to get out of. The IMF are essentially bluffing, but on the flip side of the coin are warning us as well. The dollar WILL NOT loose its place as the reserve currency. The reasoning is simple. What other currency is anywhere near stable enough to be adopted. NONE the Euro was the hope of many countries. The Euro was designed to be the new reserve and be adopted by many different countries, but as we are seeing now, it is just as unstable as other emerging currencies. I know I am late to the party and others have probably said this but I think it warrants another rant
The real problem is our elected officials. They are weak and are too scared to enact REAL policies that change things. Too many politicians curry favor by adopting policies and stances based solely on their constituents, and they have no idea how out of touch they are with the rest of Americans. The receive HIGH salaries, Fantastic benefits and a term that can last indefinitely. Take for instance our newest President. What was his very first act? He bailed out companies left and right, and spent 800 BILLION dollars. He did this because all of those companies one way or another paid into his election campaign. Alot of those companies STILL failed and are failing now. Waste of money. I will not mention the past presidents who also fucked things up because we can only look forward and not blame the past. It seems that no one has the spine to stand up and say YES we are cutting medicare, medicaid and Social Security. The president is a weak individual and he has shown us this time and time again. I wanted him to be different and change things up but the only thing he has done is make things worse by spending like there is no tomorrow and hyping partisanship until there is a HUGE divide between democrat and republican. Unless we can elect officials who care more about America than their own salaries then we will continue to fester in this mess we have put ourselves in.
On June 24 2011 05:31 MaliciousMirth wrote: I read through all of the posts here and I didn't see a mention of politicians too weak to ACTUALLY change anything because of fear of not getting re-elected. I agree with alot of the posters above in the sense that the problem is bad, but not to bad to get out of. The IMF are essentially bluffing, but on the flip side of the coin are warning us as well. The dollar WILL NOT loose its place as the reserve currency. The reasoning is simple. What other currency is anywhere near stable enough to be adopted. NONE the Euro was the hope of many countries. The Euro was designed to be the new reserve and be adopted by many different countries, but as we are seeing now, it is just as unstable as other emerging currencies. I know I am late to the party and others have probably said this but I think it warrants another rant
The real problem is our elected officials. They are weak and are too scared to enact REAL policies that change things. Too many politicians curry favor by adopting policies and stances based solely on their constituents, and they have no idea how out of touch they are with the rest of Americans. The receive HIGH salaries, Fantastic benefits and a term that can last indefinitely. Take for instance our newest President. What was his very first act? He bailed out companies left and right, and spent 800 BILLION dollars. He did this because all of those companies one way or another paid into his election campaign. Alot of those companies STILL failed and are failing now. Waste of money. I will not mention the past presidents who also fucked things up because we can only look forward and not blame the past. It seems that no one has the spine to stand up and say YES we are cutting medicare, medicaid and Social Security. The president is a weak individual and he has shown us this time and time again. I wanted him to be different and change things up but the only thing he has done is make things worse by spending like there is no tomorrow and hyping partisanship until there is a HUGE divide between democrat and republican. Unless we can elect officials who care more about America than their own salaries then we will continue to fester in this mess we have put ourselves in.
I agree with some of the spirit of your post, a lot of politicians are in a state of permanent campaigning for themselves or their party. But you're wrong on some of the specifics. Their salaries are generally far below what they could be earning in the private sector. Presidents and Governors have term limits. The 800 Billion bailouts were paid back almost completely and were genuinely effective at getting cash flowing in the economy, far from a waste of money.
"Bipartisan" is such an empty buzzword at this point that you can throw at your opponent when they don't agree with you.
I don't consider the American debt to be as crushing a problem as is commonly conceived. While America has a high federal debt to GDP ratio, which is costing them something like 5% of their budget to service. Americans still have some of the lowest taxes in the world. The American government aside from its military is actually quite lean combined with the fact that most Americans are very concerned with the amount of money being wasted, it would be difficult for the government to increase budgets. All Americans need is a reasonable level of taxation for the services their government provides and their debt problems will be solved.
This is contrast to the problems faced by the EU, where their populations tax burden is already too heavy to increase without harming the economy, creating the need for austerity measures.
The solution is to get rid of several of the thousands of useless organizations the government loves to set up, reduce the benefits of government officials who get payed WAY too much.
Also, stop giving other countries aid, we got enough problems, yet every time some other country has some minor problems, the government throws billions upon billions into them, and they still hate us, screw em! Enough of being the world's babysitter, time for the UN to pick things up.
I agree with some of the spirit of your post, a lot of politicians are in a state of permanent campaigning for themselves or their party. But you're wrong on some of the specifics. Their salaries are generally far below what they could be earning in the private sector. Presidents and Governors have term limits. The 800 Billion bailouts were paid back almost completely and were genuinely effective at getting cash flowing in the economy, far from a waste of money.
"Bipartisan" is such an empty buzzword at this point that you can throw at your opponent when they don't agree with you.
Very well reasoned response thank you for not going the flame war style.....I was referring to the auto industries, freddie mac, etc... but mostly the housing bailouts that did nothing!! It just sends me into RAGE everytime one of these stupid politicians or presidents campaign instead of lead....We are in a world of hurt if that doesn't change!
What will not be reported in the official debt numbers, however, is that the United States federal government uses cash-basis, rather accrual-basis accounting, which is in violation of standard Generally Accepted Accounting Principles (GAAP), and utilizes a series of accounting labeling tricks which underscore the actual debt owed. In particular, "liabilities" are labeled transfer payments and are not considered a form of the public debt, though they do represent obligations which must be paid at some time in the future. How disingenuous it is to call these "transfer payments" can be seen in the fact that the Social Security payments have historically been used as a general slush fund for spending in the legislature and in fact is NOT transferred to future generations.
This statement is a little fallacious. You previously use the 97.3% of GDP debt number, which includes the liabilities, then say that social security is not included as a slush fund. The number without the liabilities is 62% of gdp. Source: http://en.wikipedia.org/wiki/United_States_public_debt
On June 24 2011 04:57 dybydx wrote: i usually like the Democrats but i have to agree with the Republicans on this one. American doesn't have a revenue problem. it has a spending problem.
US tax total revenue has been fairly stable in all these years. in addition, its a lot easier to reduce spending than raising revenue. raising taxes on a ditto economy won't work because ppl don't have the income to pay it. cutting spending, while it hurts the economy too, it can be justified as living within your means.
wrong, US taxes rate is at an all-time low especially at the top of the bracket. the rich gets richer while the poor get poorer.
for the last few decades, annual tax revenue is approx 20% of US GDP.
the poor is indeed getting poorer but the tax system shouldn't be blamed for this. the poor class is not paying more tax than they receive back in benefits. the reason they remain so poor is because they lack education to get better jobs.
I'm curious, isn't this issue talked about in the media? A while back, before the "greece crisis", there where a lot of items about this topic in the media. the vibe I get here is that its pretty much beeing ignored in the US media, or am I wrong?
What will not be reported in the official debt numbers, however, is that the United States federal government uses cash-basis, rather accrual-basis accounting, which is in violation of standard Generally Accepted Accounting Principles (GAAP), and utilizes a series of accounting labeling tricks which underscore the actual debt owed. In particular, "liabilities" are labeled transfer payments and are not considered a form of the public debt, though they do represent obligations which must be paid at some time in the future. How disingenuous it is to call these "transfer payments" can be seen in the fact that the Social Security payments have historically been used as a general slush fund for spending in the legislature and in fact is NOT transferred to future generations.
This statement is a little fallacious. You previously use the 97.3% of GDP debt number, which includes the liabilities, then say that social security is not included as a slush fund. The number without the liabilities is 62% of gdp. Source: http://en.wikipedia.org/wiki/United_States_public_debt
It's funny you say my facts are fallacious and then link me to a page which very clearly states what I originally said...
"The government is committed under current law to mandatory payments for Social Security. However, these amounts are excluded from the national debt computation."
Let me clarify the terms for anyone who is confused....
Debt Held by the Public: all federal securities held by institutions or individuals outside the United States Government; Intragovernmental Holdings: U.S. Treasury securities held in accounts which are administered by the United States Government, such as the OASI Trust fund administered by the Social Security Administration; and Total Public Debt Outstanding: the sum of the above components.
The category of "Intragovernmental Holdings" does not include the obligations owed to future recipients of Social Security, which is what is meant by "unfunded liabilities." It refers to the debt that has already been accumulated when failing to meet current and past Social Security obligations. In other words, it is a government IOU to itself, which allows them to pay for Social Security obligations as they arise, but do not account for the total liabilities owed.
On June 24 2011 10:22 Madoga wrote: I'm curious, isn't this issue talked about in the media? A while back, before the "greece crisis", there where a lot of items about this topic in the media. the vibe I get here is that its pretty much beeing ignored in the US media, or am I wrong?
I would say this isn't being ignored by the media. They have reported on this mounting problem fairly often. It is being ignored by the American people. I'm sure many Americans don't really care about it, they are apathetic. Then once the government realizes they actually need to do something before all hell breaks loose, that's when the people start protesting like they are in Greece. People don't do much about government overspending or waste or corruption until they start seeing it hit them in their wallets.
On June 24 2011 10:22 Madoga wrote: I'm curious, isn't this issue talked about in the media? A while back, before the "greece crisis", there where a lot of items about this topic in the media. the vibe I get here is that its pretty much beeing ignored in the US media, or am I wrong?
It isn't completely ignored, but it's downplayed. It's not as prevalent as you would think, given the circumstances.
I'm surprised more people aren't critical of the Federal Reserve. Greenspan's deregulation (e.g. unwillingness to regulate derivatives) greatly contributed to the 08 crisis. Furthermore by Bernanke's own admission the Federal Reserve was responsible (at least in part) for the great depression. I'm not an econ major but it seems to me the Fed is rather incompetent.
On June 24 2011 05:20 Bibdy wrote:I don't necessarily buy that government spending is entirely bad, either. If it's spent domestically, then its little to no different than the rich reinvesting their money back into the economy.
I just wanted to pick on this little part here:
The important thing to consider is that the money spent by the government would otherwise be spent by private citizens/businesses.
One metaphor I've used before to explain this to my relatives: Imagine you need groceries. Now there's two scenarios. First, you can go and spend $50 to get all of the things you need. Second, you can give me that $50 and I'll go get the things that I think you need.
If I buy your groceries, I'll inevitably buy stuff that you don't need, meaning you end up with value less-than-or-equal-to the original $50. In the absolute best case, the second scenario is the same as the first.
Obviously this is just a metaphor, but the point is that when private businesses spend money on investments, they make sure there is a huge amount of value in what they're investing in. When the government spends money, they don't care what they get back. They just want a giant project that sounds nice. In both cases, a whole bunch of money gets spent and goes to the hands of the people on the ground working to make the giant projects happen. In only one of them, however, does the giant project ever actually return profit.
Perfect example is the high speed rail in my home state CA. At best, it's going to be billions of dollars spent and take away the tiniest fraction of traffic from southwest airlines. At worst (and most probably) it's going to end up being a giant money sink just like amtrak/metrolink/bart. If instead these billions of dollars were in the hands of people wanting to start businesses and invest in new enterprise, we would know that every single dollar spent is going to be well thought through.
It really scares me when people think all spending is equal. They claim that government spending is exactly the same thing as business spending because the money just gets circulated through the economy.
Look at it this way... You can pay people to dig a hole and fill it back up, or you can pay people to produce computers. It is not the amount of money that matters, but the amount of efficiently produced goods. Businesses have huge incentives to be as efficient as possible and never squander resources. Governments have no such incentives and have a reputation for waste and inefficiency.
Its obviously not exactly the same, but it does help in times of crisis like in 2008. When the shit hits the fan, private investors have a tendency to turtle up and pull money out of everything. People then turn to government to spend like assholes to keep things afloat. Lo and behold, once things start to fix themselves once more, and private investors return to the party, people complain that the government spent too much.
It's a cycle that repeats itself over and over and it just gets nauseating.
On June 25 2011 02:47 Bibdy wrote: Its obviously not exactly the same, but it does help in times of crisis like in 2008. When the shit hits the fan, private investors have a tendency to turtle up and pull money out of everything. People then turn to government to spend like assholes to keep things afloat. Lo and behold, once things start to fix themselves once more, and private investors return to the party, people complain that the government spent too much.
It's a cycle that repeats itself over and over and it just gets nauseating.
Except you have to realize that recessions don't happen for no reason. They have a very specific cause: overinvestment and malinvestment. And the primary factor driving overinvestment and malinvestment is the policies of easy credit, aggressive fractional reserve banking, and artificially low interest rates set by the federal reserve.
A recession is a CORRECTION. This is something that needs to be understood clearly. If someone stays awake way too late and then feels very tired, I wouldn't recommend that you go over and give them a shot of caffeine and some meth. That's essentially what the governments keynesian economic policies entail. They think they can perpetually create artificial growth financed with debt and there will never be any consequences.
Give that tired man enough caffeine and meth and eventually he's gonna collapse from exhaustion or die. "Spend spend spend!"
I'd just like to point out that the OP is clearly biased. The OP state that the US Federal debt does not follow general accounting rules, which is correct, and proceed to talk about how future liabilities such as SS and MC are not included INCREASING the size of the real debt. Great. However, the US debt also does not include assets of the US government including land, public buildings, etc. These assets would LOWER the amount of real debt. The OP simply doesn't mention this.
This post is not meant to be political and just pointing out bias in the OP.
On June 25 2011 02:47 Bibdy wrote: Its obviously not exactly the same, but it does help in times of crisis like in 2008. When the shit hits the fan, private investors have a tendency to turtle up and pull money out of everything. People then turn to government to spend like assholes to keep things afloat. Lo and behold, once things start to fix themselves once more, and private investors return to the party, people complain that the government spent too much.
It's a cycle that repeats itself over and over and it just gets nauseating.
Except you have to realize that recessions don't happen for no reason. They have a very specific cause: overinvestment and malinvestment. And the primary factor driving overinvestment and malinvestment is the policies of easy credit, aggressive fractional reserve banking, and artificially low interest rates set by the federal reserve.
A recession is a CORRECTION. This is something that needs to be understood clearly. If someone stays awake way too late and then feels very tired, I wouldn't recommend that you go over and give them a shot of caffeine and some meth. That's essentially what the governments keynesian economic policies entail. They think they can perpetually create artificial growth financed with debt and there will never be any consequences.
Give that tired man enough caffeine and meth and eventually he's gonna collapse from exhaustion or die. "Spend spend spend!"
Oh, no doubt. Heavy spending during times of economic growth is enormously tempting, because it accelerates that growth. It's always done under the assumption that if we accelerate growth now, we'll be in a much better position to adopt a contractionary (raise taxes and reduce spending) fiscal policy later and pay back all that debt! But, it always comes back and bites us in the ass 10-20 years down the road.
The thing is, though, when you increase government spending "in order to keep things afloat" (I don't even want to touch on whether that's a good idea or not), that almost NEVER goes away. Those funds that get written into the budget are there for good.
So once things fix themselves and the private economy is healthy once again, government spending remains the same. If anything should ever happen again, it'll increase again like mad.
So while private investment may fluctuate with the times, government spending increases monotonically. With a finite amount of money, that means that eventually, the government will be in charge of more and more of the economy.
On June 24 2011 05:50 VPCursed wrote: so.. why are people stupid for investing in gold?
Basically for over a hundred years, the value of gold has gone up tremendously. If you invest now when the prices of gold is very high, sure maybe the value will still keep on going up but looking at history such as the tulip bubble, internet bubble, housing bubble, etc. there will most likely be a point where investors think "I should probably sell my stocks in gold now because if I don't, other people will and I won't get as much money" and as more and more people panic and sell off their gold, it will crash. Of course you never know and maybe investing in gold now can still be profitable but it most likely isn't worth the risk.
On June 24 2011 10:22 Madoga wrote: I'm curious, isn't this issue talked about in the media? A while back, before the "greece crisis", there where a lot of items about this topic in the media. the vibe I get here is that its pretty much beeing ignored in the US media, or am I wrong?
It isn't completely ignored, but it's downplayed. It's not as prevalent as you would think, given the circumstances.
I'm surprised more people aren't critical of the Federal Reserve. Greenspan's deregulation (e.g. unwillingness to regulate derivatives) greatly contributed to the 08 crisis. Furthermore by Bernanke's own admission the Federal Reserve was responsible (at least in part) for the great depression. I'm not an econ major but it seems to me the Fed is rather incompetent.
Uh, it's not the Federal Reserve's job to regulate capital markets. That would be the SEC. And, yes, the Federal Reserve was responsible for the Great Depression because they were stuck to the gold standard and were unable to drive aggregate demand through inflation. Some would argue the Federal Reserve is also responsible for this current recession for trying to tighten things back in 2007 (with gas prices soaring) rather than loosening monetary policy. And for not loosening it enough in 2008 and 2009; but mostly because of political pressure that it would cause runaway inflation despite the fact that inflation was very, very low.
On June 24 2011 05:20 Bibdy wrote:I don't necessarily buy that government spending is entirely bad, either. If it's spent domestically, then its little to no different than the rich reinvesting their money back into the economy.
I just wanted to pick on this little part here:
The important thing to consider is that the money spent by the government would otherwise be spent by private citizens/businesses.
One metaphor I've used before to explain this to my relatives: Imagine you need groceries. Now there's two scenarios. First, you can go and spend $50 to get all of the things you need. Second, you can give me that $50 and I'll go get the things that I think you need.
If I buy your groceries, I'll inevitably buy stuff that you don't need, meaning you end up with value less-than-or-equal-to the original $50. In the absolute best case, the second scenario is the same as the first.
Obviously this is just a metaphor, but the point is that when private businesses spend money on investments, they make sure there is a huge amount of value in what they're investing in. When the government spends money, they don't care what they get back. They just want a giant project that sounds nice. In both cases, a whole bunch of money gets spent and goes to the hands of the people on the ground working to make the giant projects happen. In only one of them, however, does the giant project ever actually return profit.
Perfect example is the high speed rail in my home state CA. At best, it's going to be billions of dollars spent and take away the tiniest fraction of traffic from southwest airlines. At worst (and most probably) it's going to end up being a giant money sink just like amtrak/metrolink/bart. If instead these billions of dollars were in the hands of people wanting to start businesses and invest in new enterprise, we would know that every single dollar spent is going to be well thought through.
You're basically advocating subsidies. You just take on at good faith that private business can somehow magically spend money better. When the government spends money on highways, they don't have to worry about the transaction costs of dealing with competing highways. When the government spends money on fire fighting services, they don't have to worry about the transaction costs of making sure they're covering the right property and the wrong property. When the government spends money on public sector health care systems, they don't have to allocate money to interacting with other health care systems. Private business to private business communication can be horrendous and be a drain on the economy.
The whole reason that the telephone system was regulated away from a a pure private affair in the 1800s was because the amount of copper lines from each 2^n homes to every other 2^n - 1 homes would become a nightmare to manage if there were multiple and competing telephone infrastructures. The whole reason that rural areas received electricity was because the government stepped in and said electricity to rural citizens is a good idea. Private businesses didn't say that and private businesses weren't willing to create infrastructure for rural electrification.
On June 24 2011 10:22 Madoga wrote: I'm curious, isn't this issue talked about in the media? A while back, before the "greece crisis", there where a lot of items about this topic in the media. the vibe I get here is that its pretty much beeing ignored in the US media, or am I wrong?
It isn't completely ignored, but it's downplayed. It's not as prevalent as you would think, given the circumstances.
I'm surprised more people aren't critical of the Federal Reserve. Greenspan's deregulation (e.g. unwillingness to regulate derivatives) greatly contributed to the 08 crisis. Furthermore by Bernanke's own admission the Federal Reserve was responsible (at least in part) for the great depression. I'm not an econ major but it seems to me the Fed is rather incompetent.
Uh, it's not the Federal Reserve's job to regulate capital markets. That would be the SEC. And, yes, the Federal Reserve was responsible for the Great Depression because they were stuck to the gold standard and were unable to drive aggregate demand through inflation. Some would argue the Federal Reserve is also responsible for this current recession for trying to tighten things back in 2007 (with gas prices soaring) rather than loosening monetary policy. And for not loosening it enough in 2008 and 2009; but mostly because of political pressure that it would cause runaway inflation despite the fact that inflation was very, very low.
The duties of the Federal Reserve (according to their own website) include:
-supervising and regulating banking institutions to ensure the safety and soundness of the nation's banking and financial system and to protect the credit rights of consumers
On June 24 2011 10:22 Madoga wrote: I'm curious, isn't this issue talked about in the media? A while back, before the "greece crisis", there where a lot of items about this topic in the media. the vibe I get here is that its pretty much beeing ignored in the US media, or am I wrong?
It isn't completely ignored, but it's downplayed. It's not as prevalent as you would think, given the circumstances.
I'm surprised more people aren't critical of the Federal Reserve. Greenspan's deregulation (e.g. unwillingness to regulate derivatives) greatly contributed to the 08 crisis. Furthermore by Bernanke's own admission the Federal Reserve was responsible (at least in part) for the great depression. I'm not an econ major but it seems to me the Fed is rather incompetent.
Uh, it's not the Federal Reserve's job to regulate capital markets. That would be the SEC. And, yes, the Federal Reserve was responsible for the Great Depression because they were stuck to the gold standard and were unable to drive aggregate demand through inflation. Some would argue the Federal Reserve is also responsible for this current recession for trying to tighten things back in 2007 (with gas prices soaring) rather than loosening monetary policy. And for not loosening it enough in 2008 and 2009; but mostly because of political pressure that it would cause runaway inflation despite the fact that inflation was very, very low.
Wait, the Fed's monetary policy has been incredibly loose over the last couple decades, the only thing left to them now is QE because of the ridiculously low interest rates that Greenspan supported during solid economic growth. How would further expanding the money supply do any good during a credit bubble?
Edit@ Pasade considering the tools the fed actually has how are they supposed to accomplish that? I just don't think they can fulfill that mission and if they lack the tools it is a failure of congress.
On June 25 2011 02:58 jackinthebox wrote: I'd just like to point out that the OP is clearly biased. The OP state that the US Federal debt does not follow general accounting rules, which is correct, and proceed to talk about how future liabilities such as SS and MC are not included INCREASING the size of the real debt. Great. However, the US debt also does not include assets of the US government including land, public buildings, etc. These assets would LOWER the amount of real debt. The OP simply doesn't mention this.
This post is not meant to be political and just pointing out bias in the OP.
I agree that the OP should point out the assets that the government has, but the land and public buildings that the government does own are A) non-profitable and B) a lot of this land is not owned by the federal government, it is owned by the states gov.
The problem I see with raising taxes is that the use of that money. As a country that is based off of capitalism, I really don't see a disencentive (such as higher taxes) as a way to bring and keep companies in the U.S. Furthermore, the programs created by the government for general welfare and other non-specific programs are inherently going to be easier for corrupt politicians and the companies that they represent to get free money.
100 years ago, the max rate that the federal government was going to tax the citizens was 7% http://en.wikipedia.org/wiki/Revenue_Act_of_1913Link. The Revenue act of 1913 reduced the % of tariffs from 40% to 25% and imposed an income tax starting at 1% and up to 7%. Now the income tax between federal and state can easily exceed 50% of total earnings and I feel that is complete bullshit.
The reason why the U.S nation is in debt for 14.49 trillion is because of frivolous spending in our federal government. The amount of money (including inflation) that is taxed has only increased, but the cost of the "Great deal" and the "Great new deal" plus other spending programs and Bush's medicare part D and other crap that has been passed is officially KILLING the U.S.
I would propose to reduce the tax rate on all citizens, increase tariffs and go through the "books" (ie, every single dollar that is spent by the federal government) and cut out all funding that can be done through private organizations. I would also like to implement a plan where you can reduce your yearly/quarterly tax by 100% of money that you have donated to charities that replace the government equivalents of those programs (medicare would be an example). Also, the Voucher idea for many programs (like k-12 schools) would be great. If a school sucks and a parent doesn't want their kid to go there, they can go to another school (this would mean that schools would have to compete for your money).
I know that social programs work in countries in Europe. I understand that in countries like Sweden (9mil pop, same as Michigan) and Denmark (5mil, same as Colorado). But in a country that is twice the population of Russia (141million), socialism doesn't work nearly as well. China is on the end of that bell curve with 1.3 billion and up until 1990's they were in a horrible state (even now, they still are). Socialism works in smaller countries because the cost of providing something like free healthcare increases exponentially because of additional spending occurences.
On a similar note, California is has the highest population of any state in the us (37 mil) and is practically bankrupt. California is also one of the most profitable lands in the world; California has the eighth largest economy in the world (if it were it's own country). Californias debt alone is 378 billion (2/3's of Greece's debt). This is another look at a country that has an extremely heavy list of social programs and has the highest tax rates on middle class families (10% on 47k or higher).
asset and liabilities are two separate things and often not allowed to get against each other until it has already been done so by actual settlement (ie selling assets to pay a debt).
the total debt + liability is relevant because those amounts needs to be paid with cash. the amount of assets the gov has is often irrelevant because most of it can not be sold for cash. the government runs into problem when it runs out of.... you guessed it: CASH!!
btw, majority of US gov asset are buildings (ie the white house), roads, water/sewage etc. these "assets" can not be sold. imagine how Congress react if China demands ownership of US airports as payment against debts owed to them.
slightly misleading-- social security is portrayed as a 4trillion dollar hole in the budget, but contributions aren't discussed in terms of the larger numbers. Its easy to scare people into privatizing social security when we use words like "ponzi scheme", "bankrupt" and the like.
The fact is, a lot of hedge fund operators and financial firms would stand to profit a significant deal if social security was converted into a personal accounts type system, so is it all that strange we see reports advocating such?
The increasingly pronounced boom-bust crisis cycle that we're seeing is a sign that the powers that be are running out of frontiers to harvest... social security is one of them though.
1. its not misleading. social security IS a ponzi scheme. if any other entity is to provide social security using the structure the gov is doing, it would have been shut down by the SEC due to fraud.
2. and bankrupt correctly describes it. the only way gov can continue social security is to significantly reduce payout. in the corporate world, we call this Chapter 11 Bankruptcy. btw, CBO already ruled out that increasing tax to match payout is improbable.
3. hedge fund operators will have a 1 time windfall at the switchover. but superior profits for the long run is not likely. to maintain superior profits, fund managers will need to form a monopoly or cartel to fix prices, outright steal money from your account or lie about your investments. but those options are illegal.
1) The OP is misleading since it talks about obligations as debt. There is also Social Security contributions, which are recievables, but they are left out of all calculations, and the OP frames the situation as a massive 100 trillion hole, when in fact it is not. It is not a ponzi scheme-- most people pay in, most people will receive benefits after. The income has surpassed the expenses in almost all years since it was implemented. THE WORST estimates for when the surplus will be eliminated is 2043. This will however be completely mitigated by a modest few percentage point increases to payroll taxes. A small price to pay for income security for the elderly. Many of which will be deep in poverty without it, and make no mistake, opening it to market forces WILL cause people to lose their money. Its a mathematical certainty.
2) see #1. Ruling a tax increase is improbably is a funny way to hide a solution-- the problem doesn't even start until 2043, or 2052 if you actually ask the state. Interestingly the majority of the American public is in support of increasing income taxes progressively, so it becomes a question of democracy.
3) No, because if you convert the system, you have a structural change, and under a single accounts system, financial entities including hedge funds have new territory, so to speak. Right now their creep stops at the social security zone, which is a pretty big part of the map. if you alter the system, social security becomes the territory of said entities and they throw down hatcheries all over all of the retirement planning that people do, henceforth profiting out of all financial transactions carried out within the domain of retirement planning.
On June 26 2011 00:19 caradoc wrote: 1) The OP is misleading since it talks about obligations as debt. There is also Social Security contributions, which are recievables, but they are left out of all calculations, and the OP frames the situation as a massive 100 trillion hole, when in fact it is not. It is not a ponzi scheme-- most people pay in, most people will receive benefits after. The income has surpassed the expenses in almost all years since it was implemented. THE WORST estimates for when the surplus will be eliminated is 2043. This will however be completely mitigated by a modest few percentage point increases to payroll taxes. A small price to pay for income security for the elderly. Many of which will be deep in poverty without it, and make no mistake, opening it to market forces WILL cause people to lose their money. Its a mathematical certainty.
2) see #1. Ruling a tax increase is improbably is a funny way to hide a solution-- the problem doesn't even start until 2043, or 2052 if you actually ask the state. Interestingly the majority of the American public is in support of increasing income taxes progressively, so it becomes a question of democracy.
3) No, because if you convert the system, you have a structural change, and under a single accounts system, financial entities including hedge funds have new territory, so to speak. Right now their creep stops at the social security zone, which is a pretty big part of the map. if you alter the system, social security becomes the territory of said entities and they throw down hatcheries all over all of the retirement planning that people do, henceforth profiting out of all financial transactions carried out within the domain of retirement planning.
1a. the receivables are only for amounts incurred but not yet remitted. there is usually about a 30 day lag. the amount isn't much. 1b. the income had never exceeded the expense. only the cash flow did. at the current pace, ppl paying into social security today will get back far less than what they put in, after adjusting for falling value of the dollar. 1c. your point about the percentage adjustment is invalid. in fact, Bernard Madoff paid back his investors, if only you take into consideration of a few percent adjustment annually. 1d. obviously the elderly want income security. they just dont want to pay for it. in fact, the problem faced by social security is because they didn't pay enough for it.
2. majority of Americans support increasing taxes, only if they don't have to pay for it. in fact, majority of Americans receive more benefit than they paid in taxes (even if you include VAT, property tax etc) but they still feel only the rich should pay for tax increases. they believe being bailed out for life is a birth right.
3. there is no doubt fund managers will profit. the question is superior profit, which is not possible without knowingly breaking the law. also, fund managers diligently look for investment opportunities, ensuring capital is efficiently allocated. there is always a few bad managers out there, but taxpayers can CHOOSE their own champions.
On June 26 2011 00:19 caradoc wrote: 1) The OP is misleading since it talks about obligations as debt. There is also Social Security contributions, which are recievables, but they are left out of all calculations, and the OP frames the situation as a massive 100 trillion hole, when in fact it is not. It is not a ponzi scheme-- most people pay in, most people will receive benefits after. The income has surpassed the expenses in almost all years since it was implemented. THE WORST estimates for when the surplus will be eliminated is 2043. This will however be completely mitigated by a modest few percentage point increases to payroll taxes. A small price to pay for income security for the elderly. Many of which will be deep in poverty without it, and make no mistake, opening it to market forces WILL cause people to lose their money. Its a mathematical certainty.
2) see #1. Ruling a tax increase is improbably is a funny way to hide a solution-- the problem doesn't even start until 2043, or 2052 if you actually ask the state. Interestingly the majority of the American public is in support of increasing income taxes progressively, so it becomes a question of democracy.
3) No, because if you convert the system, you have a structural change, and under a single accounts system, financial entities including hedge funds have new territory, so to speak. Right now their creep stops at the social security zone, which is a pretty big part of the map. if you alter the system, social security becomes the territory of said entities and they throw down hatcheries all over all of the retirement planning that people do, henceforth profiting out of all financial transactions carried out within the domain of retirement planning.
1a. the receivables are only for amounts incurred but not yet remitted. there is usually about a 30 day lag. the amount isn't much. 1b. the income had never exceeded the expense. only the cash flow did. at the current pace, ppl paying into social security today will get back far less than what they put in, after adjusting for falling value of the dollar. 1c. your point about the percentage adjustment is invalid. in fact, Bernard Madoff paid back his investors, if only you take into consideration of a few percent adjustment annually. 1d. obviously the elderly want income security. they just dont want to pay for it. in fact, the problem faced by social security is because they didn't pay enough for it.
2. majority of Americans support increasing taxes, only if they don't have to pay for it. in fact, majority of Americans receive more benefit than they paid in taxes (even if you include VAT, property tax etc) but they still feel only the rich should pay for tax increases. they believe being bailed out for life is a birth right.
3. there is no doubt fund managers will profit. the question is superior profit, which is not possible without knowingly breaking the law. also, fund managers diligently look for investment opportunities, ensuring capital is efficiently allocated. there is always a few bad managers out there, but taxpayers can CHOOSE their own champions.
1d) The point is that employers make contributions as well as employees. A well designed system would incorporate this into the structure of the economy, like a minimum wage.
2) This is not a critique. In a democratic society presumably you strive for a system that is supported by a majority.
3) This doesn't really deal with my main point, which is that it is partisan interests which stand to profit through privatizing social security are the ones that advocate and propagate this type of information.
If you want to discuss assets, we can. Small Business + Corporate + Household Assets = $75 trillion. Social Security + Prescription + Medicare Liabilities = $115 trillion
If you want to discuss revenue and the deficit we can. Revenue to GDP ratio = 30.5% Spending to GDP ratio = 46.6%
If you want to discuss receivables, we can. They aren't going to cover the costs, not by a long shot, and that is the whole point.
No matter what measure you want to use the conclusion will always be the same: we are in a massive hole and digging it deeper every day that passes. Splitting hairs regarding the numbers is just a way of avoiding that fact.
caradoc, if you think that trying to reduce the federal retirement burden is some hedge fund conspiracy to get old people's money, instead of a common sense measure to stave off mounting debt, I don't really know what to say. I would recommend you stop being paranoid about the rich boogeymen and instead consider how our children are going to pay these debts. A "modest" raise in the payroll taxes clearly isn't going to cut it. That's why I linked the IMF report which advocates an adjustment of 15% of GDP.
1d) The point is that employers make contributions as well as employees. A well designed system would incorporate this into the structure of the economy, like a minimum wage.
2) This is not a critique. In a democratic society presumably you strive for a system that is supported by a majority.
3) This doesn't really deal with my main point, which is that it is partisan interests which stand to profit through privatizing social security are the ones that advocate and propagate this type of information.
1a,b) those amounts are received, not receivables. they were already taken into calculation of the "gaping hole" the CBO was talking about, which is the actuarial deficit.
1c) the "percentage adjustment" you speak of involves increasing contribution by young workers to cover the older retirees without adding benefits to those paying for it. thus, the young workers will end up getting pennies on the dollar. hence the ponzi scheme.
2. Look at Greece. No one protested when the gov was borrowing to pay their social security. And now the debts come due, they blame the gov. Being a democracy doesn't save your country from bankruptcy or make social security solvent.
3. Nothing wrong with profiting from privatization of social security. This benefits young workers the most. effectively turning social security into defined contribution plan. older ppl will lose out. but that is because they never paid enough into social security in the first place.
and in it already you have the explanation why not only the US has a dept that is exponantially rising.
inadvertently, what the video proposes is what is being done in China. the gov owns all the biggest banks and has complete control over money supply. in fact, the RMB is not even a trade-able currency outside of China and look at the impact this financial crisis has on them.
the video does not purpose to create new dept money.
it proposes that the state creates money whithout any dept burden. otherwise the state (the borrower) is just a tool for banks (the lender) to make big profits on money that they never had.
what do you think the goverment in china is ? ofc its corporated dictatorship, nothing else. but i wouldnt be too happy with it, all the profits will still go to private ownership.
and in china you can see that the monetary system we use in its exponantial growth can have some shot term benefits. Just look up the dates when they created their central bank (1983) and how they economic growth did since then. Sadly its a trap ....
Another point that's not been discussed at all is the effect that the lack of job creation is having on social security. There are less people employed every year which is devastating for the balance books.
Also consider that the top 1% in the US earns more than the bottom 50% in the US. Then consider that there's also a 106,800 cap on earnings for the purpose of social security. Eliminating this cap alone would cover over 85% of the projected shortfall for the next 75 years.
I dont recall anywhere having said anything about a paranoid scheme, could you link or quote that? to my mind I was simply referencing the fact that privatizing social security would be tremendously profitable for certain firms, which would obviously then make it a priority to devote resources towards making that a reality, (whether through public endorsements, partisan interviews, research, what have you) this is standard corporate practice and has been well discussed for most of the past century.
I'm not sure if this is offtopic or not, but these discussions always remind me of Queensryche's "Operation Mindcrime".
And as for on-topic, I really can't understand why the US can't cut from some relatively unimportant things(army) and instead use it to pay off their debt. It reminds me of some young adult who gets his first credit card, buys a lot of stuff with it because it feels like a good idea at first, and paying for it for the rest of his life.
@Shikyo Heh. Beware the military industrial complex. You can't cut funding when they are so influential on policy. There have been some good arguments made on why the government is fairly hamstrung when it comes to trying to do things like this.
Dwight Eisenhower made a speech on this in 1961, it was pretty prescient.
"This conjunction of an immense military establishment and a large arms industry is new in the American experience. The total influence -- economic, political, even spiritual -- is felt in every city, every State house, every office of the Federal government. We recognize the imperative need for this development. Yet we must not fail to comprehend its grave implications. Our toil, resources and livelihood are all involved; so is the very structure of our society.
In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the militaryindustrial complex. The potential for the disastrous rise of misplaced power exists and will persist.
We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together. "
On June 27 2011 01:11 Shikyo wrote: I'm not sure if this is offtopic or not, but these discussions always remind me of Queensryche's "Operation Mindcrime".
And as for on-topic, I really can't understand why the US can't cut from some relatively unimportant things(army) and instead use it to pay off their debt. It reminds me of some young adult who gets his first credit card, buys a lot of stuff with it because it feels like a good idea at first, and paying for it for the rest of his life.
Then again what do I even know? =P
Cutting down on the military is an easy thing to talk about when we are sitting pretty with all of the advanced weapons and infrastructure that the past sixty years of heavy spending on the military have bought us. Remember that the only reason we are not being attacked right now is that no other armed force on the planet can hope to compete with our own. Squandering that advantage to get our finances in order would be a decision made without any foresight or common sense.
On June 27 2011 01:11 Shikyo wrote: I'm not sure if this is offtopic or not, but these discussions always remind me of Queensryche's "Operation Mindcrime".
And as for on-topic, I really can't understand why the US can't cut from some relatively unimportant things(army) and instead use it to pay off their debt. It reminds me of some young adult who gets his first credit card, buys a lot of stuff with it because it feels like a good idea at first, and paying for it for the rest of his life.
Then again what do I even know? =P
Remember that the only reason we are not being attacked right now is that no other armed force on the planet can hope to compete with our own.
.
EDIT: edited out. Its sometimes hard to stay cogent in the midst of so much of what I perceive to be ignorance.
On June 27 2011 01:11 Shikyo wrote: I'm not sure if this is offtopic or not, but these discussions always remind me of Queensryche's "Operation Mindcrime".
And as for on-topic, I really can't understand why the US can't cut from some relatively unimportant things(army) and instead use it to pay off their debt. It reminds me of some young adult who gets his first credit card, buys a lot of stuff with it because it feels like a good idea at first, and paying for it for the rest of his life.
Then again what do I even know? =P
Remember that the only reason we are not being attacked right now is that no other armed force on the planet can hope to compete with our own.
.
EDIT: edited out. Its sometimes hard to stay cogent in the midst of so much of what I perceive to be ignorance.
What is keeping us safe? Diplomacy? Economic heft? If I'm wrong, tell me why.
On June 27 2011 01:11 Shikyo wrote: I'm not sure if this is offtopic or not, but these discussions always remind me of Queensryche's "Operation Mindcrime".
And as for on-topic, I really can't understand why the US can't cut from some relatively unimportant things(army) and instead use it to pay off their debt. It reminds me of some young adult who gets his first credit card, buys a lot of stuff with it because it feels like a good idea at first, and paying for it for the rest of his life.
Then again what do I even know? =P
Remember that the only reason we are not being attacked right now is that no other armed force on the planet can hope to compete with our own.
.
EDIT: edited out. Its sometimes hard to stay cogent in the midst of so much of what I perceive to be ignorance.
What is keeping us safe? Diplomacy? Economic heft? If I'm wrong, tell me why.
I will make an analogy. There are two farmers that live next to each other in a small rural town. Farmer A and Farmer B. Farmer A spends half of his money on a gun and weapon collection. Sometimes he sends his sons to visit nearby townships, brandishing big and fancy weapons, to make sure that nobody grows the same variety of bean as he does-- too much special beans and the price goes down! Sometimes, when neighbouring farmers wouldn't cooperate, they would all of a sudden go on vacation, and a new farmer would take their place that did cooperate. This isn't important for the analogy though, sometimes coincidences happen.
Anyways, farmer A talks to farmer B one day. this is their discussion
Farmer A: Its a good thing I have all these weapons, otherwise you would steal all of my food! Farmer B: ??? Farmer A: What is keeping me safe then? is it my superior communication skills with the neighbouring townships' farmers? Is it my vast bean fields? If I'm wrong, tell me why.
Now instead of farmers, lets pretend that these are countries, and instead of farmer A spending half of his money on a gun and weapon collection, farmer A is spending half of the budget on military spending, and instead of saying 'otherwise you would steal all of my food!', it is someone on TL saying 'the only reason we aren't being attacked right now'.
and that is why I felt that it was hard to stay cogent in the midst of a lot of ignorance.
On June 27 2011 01:11 Shikyo wrote: I'm not sure if this is offtopic or not, but these discussions always remind me of Queensryche's "Operation Mindcrime".
And as for on-topic, I really can't understand why the US can't cut from some relatively unimportant things(army) and instead use it to pay off their debt. It reminds me of some young adult who gets his first credit card, buys a lot of stuff with it because it feels like a good idea at first, and paying for it for the rest of his life.
Then again what do I even know? =P
Remember that the only reason we are not being attacked right now is that no other armed force on the planet can hope to compete with our own.
.
EDIT: edited out. Its sometimes hard to stay cogent in the midst of so much of what I perceive to be ignorance.
What is keeping us safe? Diplomacy? Economic heft? If I'm wrong, tell me why.
On June 27 2011 01:11 Shikyo wrote: I'm not sure if this is offtopic or not, but these discussions always remind me of Queensryche's "Operation Mindcrime".
And as for on-topic, I really can't understand why the US can't cut from some relatively unimportant things(army) and instead use it to pay off their debt. It reminds me of some young adult who gets his first credit card, buys a lot of stuff with it because it feels like a good idea at first, and paying for it for the rest of his life.
Then again what do I even know? =P
Cutting down on the military is an easy thing to talk about when we are sitting pretty with all of the advanced weapons and infrastructure that the past sixty years of heavy spending on the military have bought us. Remember that the only reason we are not being attacked right now is that no other armed force on the planet can hope to compete with our own. Squandering that advantage to get our finances in order would be a decision made without any foresight or common sense.
I disagree... There is a big difference between having the means to defend yourself and having the means to invade and bomb multiple nations at once on the other side of the planet. We can very certainly use a cut in military spending, and this is coming from someone who was in the Army.
When i was younger i thought that we lean money to make projects that enhance our society, nowadays its quite obvious that nearly every nation is in debt that they never be able to pay back. I think its kind of perverted that most "first world countries" have to pay billions just for the interest, not paying a single dime back. While that is the case, our precious politicians argue about millions wheather they should be in education or social care or -insert random resort-.
Its not happening yet, but in theory you can be hold responsible for your nations dept. Time to go to vote! (sorry for sarcasm)
On June 27 2011 01:11 Shikyo wrote: I'm not sure if this is offtopic or not, but these discussions always remind me of Queensryche's "Operation Mindcrime".
And as for on-topic, I really can't understand why the US can't cut from some relatively unimportant things(army) and instead use it to pay off their debt. It reminds me of some young adult who gets his first credit card, buys a lot of stuff with it because it feels like a good idea at first, and paying for it for the rest of his life.
Then again what do I even know? =P
Remember that the only reason we are not being attacked right now is that no other armed force on the planet can hope to compete with our own.
.
EDIT: edited out. Its sometimes hard to stay cogent in the midst of so much of what I perceive to be ignorance.
What is keeping us safe? Diplomacy? Economic heft? If I'm wrong, tell me why.
I will make an analogy. There are two farmers that live next to each other in a small rural town. Farmer A and Farmer B. Farmer A spends half of his money on a gun and weapon collection. Sometimes he sends his sons to visit nearby townships, brandishing big and fancy weapons, to make sure that nobody grows the same variety of bean as he does-- too much special beans and the price goes down! Sometimes, when neighbouring farmers wouldn't cooperate, they would all of a sudden go on vacation, and a new farmer would take their place that did cooperate. This isn't important for the analogy though, sometimes coincidences happen.
Anyways, farmer A talks to farmer B one day. this is their discussion
Farmer A: Its a good thing I have all these weapons, otherwise you would steal all of my food! Farmer B: ??? Farmer A: What is keeping me safe then? is it my superior communication skills with the neighbouring townships' farmers? Is it my vast bean fields? If I'm wrong, tell me why.
Now instead of farmers, lets pretend that these are countries, and instead of farmer A spending half of his money on a gun and weapon collection, farmer A is spending half of the budget on military spending, and instead of saying 'otherwise you would steal all of my food!', it is someone on TL saying 'the only reason we aren't being attacked right now'.
and that is why I felt that it was hard to stay cogent in the midst of a lot of ignorance.
On June 27 2011 01:11 Shikyo wrote: I'm not sure if this is offtopic or not, but these discussions always remind me of Queensryche's "Operation Mindcrime".
And as for on-topic, I really can't understand why the US can't cut from some relatively unimportant things(army) and instead use it to pay off their debt. It reminds me of some young adult who gets his first credit card, buys a lot of stuff with it because it feels like a good idea at first, and paying for it for the rest of his life.
Then again what do I even know? =P
Remember that the only reason we are not being attacked right now is that no other armed force on the planet can hope to compete with our own.
.
EDIT: edited out. Its sometimes hard to stay cogent in the midst of so much of what I perceive to be ignorance.
What is keeping us safe? Diplomacy? Economic heft? If I'm wrong, tell me why.
Nukes.
Meh, I'm not sure I buy the nuclear peace. I'd rather subscribe to the democratic peace.
On June 27 2011 01:11 Shikyo wrote: I'm not sure if this is offtopic or not, but these discussions always remind me of Queensryche's "Operation Mindcrime".
And as for on-topic, I really can't understand why the US can't cut from some relatively unimportant things(army) and instead use it to pay off their debt. It reminds me of some young adult who gets his first credit card, buys a lot of stuff with it because it feels like a good idea at first, and paying for it for the rest of his life.
Then again what do I even know? =P
Remember that the only reason we are not being attacked right now is that no other armed force on the planet can hope to compete with our own.
.
EDIT: edited out. Its sometimes hard to stay cogent in the midst of so much of what I perceive to be ignorance.
What is keeping us safe? Diplomacy? Economic heft? If I'm wrong, tell me why.
I will make an analogy. There are two farmers that live next to each other in a small rural town. Farmer A and Farmer B. Farmer A spends half of his money on a gun and weapon collection. Sometimes he sends his sons to visit nearby townships, brandishing big and fancy weapons, to make sure that nobody grows the same variety of bean as he does-- too much special beans and the price goes down! Sometimes, when neighbouring farmers wouldn't cooperate, they would all of a sudden go on vacation, and a new farmer would take their place that did cooperate. This isn't important for the analogy though, sometimes coincidences happen.
Anyways, farmer A talks to farmer B one day. this is their discussion
Farmer A: Its a good thing I have all these weapons, otherwise you would steal all of my food! Farmer B: ??? Farmer A: What is keeping me safe then? is it my superior communication skills with the neighbouring townships' farmers? Is it my vast bean fields? If I'm wrong, tell me why.
Now instead of farmers, lets pretend that these are countries, and instead of farmer A spending half of his money on a gun and weapon collection, farmer A is spending half of the budget on military spending, and instead of saying 'otherwise you would steal all of my food!', it is someone on TL saying 'the only reason we aren't being attacked right now'.
and that is why I felt that it was hard to stay cogent in the midst of a lot of ignorance.
I don't understand how your analogy works. It doesn't seem to apply very well because you mentioned nothing at all about the bandits who roll through every once in a while and demand a daughter from each farmer to sell into slavery.
On June 27 2011 01:11 Shikyo wrote: I'm not sure if this is offtopic or not, but these discussions always remind me of Queensryche's "Operation Mindcrime".
And as for on-topic, I really can't understand why the US can't cut from some relatively unimportant things(army) and instead use it to pay off their debt. It reminds me of some young adult who gets his first credit card, buys a lot of stuff with it because it feels like a good idea at first, and paying for it for the rest of his life.
Then again what do I even know? =P
Cutting down on the military is an easy thing to talk about when we are sitting pretty with all of the advanced weapons and infrastructure that the past sixty years of heavy spending on the military have bought us. Remember that the only reason we are not being attacked right now is that no other armed force on the planet can hope to compete with our own. Squandering that advantage to get our finances in order would be a decision made without any foresight or common sense.
I disagree... There is a big difference between having the means to defend yourself and having the means to invade and bomb multiple nations at once on the other side of the planet. We can very certainly use a cut in military spending, and this is coming from someone who was in the Army.
You raise a good point. I have always thought that the three (THREE?) wars we are involved in at the moment were ridiculous in that we only have a ghost of a reasonable excuse for participating in one of them. The United States has no business sending its men to die just because yet another group of people in a faraway land decided it was time to get with the killing once more.
On June 27 2011 01:11 Shikyo wrote: I'm not sure if this is offtopic or not, but these discussions always remind me of Queensryche's "Operation Mindcrime".
And as for on-topic, I really can't understand why the US can't cut from some relatively unimportant things(army) and instead use it to pay off their debt. It reminds me of some young adult who gets his first credit card, buys a lot of stuff with it because it feels like a good idea at first, and paying for it for the rest of his life.
Then again what do I even know? =P
Remember that the only reason we are not being attacked right now is that no other armed force on the planet can hope to compete with our own.
.
EDIT: edited out. Its sometimes hard to stay cogent in the midst of so much of what I perceive to be ignorance.
What is keeping us safe? Diplomacy? Economic heft? If I'm wrong, tell me why.
Hey nemo, we're not arguing against having an army. We're suggesting that the US is spending too much money on the military. You'd still have military personnel in the missile silos, and you'd still have an army, just a smaller one.
On June 27 2011 08:42 HellRoxYa wrote: Hey nemo, we're not arguing against having an army. We're suggesting that the US is spending too much money on the military. You'd still have military personnel in the missile silos, and you'd still have an army, just a smaller one.
I know. Honest to God, I don't know why I even posted in the first place. The general forum is not kind to me. I say something, come off as too extreme, get flamed, ask why, and receive condescension. Every time, the same pattern.
On June 27 2011 08:42 HellRoxYa wrote: Hey nemo, we're not arguing against having an army. We're suggesting that the US is spending too much money on the military. You'd still have military personnel in the missile silos, and you'd still have an army, just a smaller one.
I know. Honest to God, I don't know why I even posted in the first place. The general forum is not kind to me. I say something, come off as too extreme, get flamed, ask why, and receive condescension. Every time, the same pattern.
I laughed, but not at you-- you seemed to find the pattern funny, which it kinda is. My analogy wasn't meant to be condescending to you in specific, more in regards to a mentality. Its a little bit like when you make jokes that are ostensibly racist, because racism is so ridiculous/absurd-- you're making fun of racism, not being racism.
you're fine.
re: the bandits. Farmer A is scared of bandits too, but the other farmers think its kinda funny but also alarming and obsessive. The other farmers have never had bandit troubles. Farmer A thinks that its because he has so many weapons, which weirds out the rest of the farmers.
Off of the top of my head the only reason I want a Federal Government is for military purposes such as: defense from other nations/hostile groups(like Moslem jihadists) and border security. Oh and the Feds are good for interstates for traveling across the country. Beyond that I want the Federal Government out of my life. It is completely unfair when certain people have to pay 36%+ of their wages to Uncle Same to pay for someone elses grandmothers prescription drugs. That tax number basically means that out of a 5 day work week you are working 2 of those days for the government, that is bullcrap.
I can't stand entitlement programs. If I wanted to help people out I would give my money to a charity that would put it to good use and not waste it. Basically, the Federal government is requiring you to make "charity" donations to these entitlement programs if you earn over a certain amount a year(I'm talking about taxes).
Speaking of taxes, about 50% of Americans pay no Federal income tax. This isn't how the ballgame should be played, if certain people have to pay because they make X amount of money, those that makes Y and Z should also contribute. Personally, I am for a "scale percentage model"(I guess you could call it that?). Say those that make $0-$100,000 have to pay 5%, $100,001-$250,000 pay 10%, $250,001-$1,000,000 pay 15%, and $1,000,001+ pay 20%. And then if you decide to raise taxes you raise it for all based on the percentages. So if the top earners tax is increased by 25%, of the current tax value, then everyones tax was increased by 25% of the current value. This makes it fair and much simpler to follow, in my opinion.
On June 27 2011 08:42 HellRoxYa wrote: Hey nemo, we're not arguing against having an army. We're suggesting that the US is spending too much money on the military. You'd still have military personnel in the missile silos, and you'd still have an army, just a smaller one.
I know. Honest to God, I don't know why I even posted in the first place. The general forum is not kind to me. I say something, come off as too extreme, get flamed, ask why, and receive condescension. Every time, the same pattern.
I laughed, but not at you-- you seemed to find the pattern funny, which it kinda is. My analogy wasn't meant to be condescending to you in specific, more in regards to a mentality. Its a little bit like when you make jokes that are ostensibly racist, because racism is so ridiculous/absurd-- you're making fun of racism, not being racism.
you're fine.
re: the bandits. Farmer A is scared of bandits too, but the other farmers think its kinda funny but also alarming and obsessive. The other farmers have never had bandit troubles. Farmer A thinks that its because he has so many weapons, which weirds out the rest of the farmers.
Thanks for clearing that up. I was almost as upset as a black guy with a job. Also, I forgot to add the sixth and most hilarious part of the cycle; I get drawn back into the discussion.
The other farmers just don't remember their bandit troubles because they haven't seen anyone more dangerous to them than a few serial killers with clotheslines since 1945.
I agree with the top 2 paragraph. most of everything the gov does can be substituted by the private sector and by donation to charities.
tax rates dont work out as you claim but the system does have alot of free riders. but for most part the problem with US isn't taxation, its spending.
the problem with this is that the prime directive of any corporation is profit, therefore donations, regardless of whether they are socially beneficial or not, will only be given if they increase profit. If not, the board of directors or the CEO gets replaced since shareholders won't tolerate a management that doesn't put profit first. If government is controlling the switch, at least they are selected by the public, and their mandate is to improve society directly. Yes-- government is currently heavily compromised by private interests, but it is still marginally better than handing the reins over entirely to corporations.
but @caradoc, I can hear some of you say, if the public respects socially beneficial endeavours, then the companies will donate to them in order to promote a positive brand image. This is true, but donations aren't given to maximize social benefit, but to maximize brand image. As a citizen, I would rather maximize social benefit. I dont give a crap about company X's brand image, so why structure a society in a way that maximizes brand value? If you think about it, its pretty deceitful-- maximum positive PR for an unrelated amount of social benefit? Nope. Next.
Starbuck's 'green' bottled water line comes to mind. WTF is that? they donate .5% of profits from selling bottled water to water treatment initiatives in africa? all the while undermining water supply in N.A, and engaging in ridiculously unsustainable practices along the way? (but great photo OPs)
Somehow some people think that if you let market forces take care of themselves, everything will be all rosy, but history proves time and time again that this is just not the case.
On June 27 2011 09:33 Stress wrote: Speaking of taxes, about 50% of Americans pay no Federal income tax. This isn't how the ballgame should be played, if certain people have to pay because they make X amount of money, those that makes Y and Z should also contribute. Personally, I am for a "scale percentage model"(I guess you could call it that?). Say those that make $0-$100,000 have to pay 5%, $100,001-$250,000 pay 10%, $250,001-$1,000,000 pay 15%, and $1,000,001+ pay 20%. And then if you decide to raise taxes you raise it for all based on the percentages. So if the top earners tax is increased by 25%, of the current tax value, then everyones tax was increased by 25% of the current value. This makes it fair and much simpler to follow, in my opinion.
It can't work that way. Otherwise if you got a raise from $99000 to $100000 then you would lose money. Instead, income tax is broken down into tax brackets. You are taxed only for the income above that bracket. Let me show an example.
Suppose you have only three tax brackets: $0-50000: 0% 50000-100000: 10% 100001+: 20%
Someone who makes $50k would pay $0. Someone who makes $75k would pay $2.5k. Someone who makes $100k would pay $5k. Someone who makes $200k would pay $25k
Note that 20% of $200k would be $40k -- no one pays the top tax bracket on all of their income. So when you say,
It is completely unfair when certain people have to pay 36%+ of their wages to Uncle Same to pay for someone elses grandmothers prescription drugs.
You should realize that literally no one pays 36% on their wages because the top tax bracket is only 35%. Nor does anyone pay 35% (because of the way the brackets work).
Also be aware that the truly wealthy don't make their money from wages and aren't taxed as such. The top earners in the country pay closer to 5-10% of their earnings as taxes. In the United States, if you make $100,000/year from wages, you will pay more as a percentage of your income than someone who makes $10 million/year from other sources (capital gains, etc).
Moreover, while at face value it is true that 50% of Americans do not pay the federal income tax, it is not true that 50% of Americans do not pay any taxes. You can read more here: http://www.factcheck.org/2008/11/americans-paying-no-taxes/
re: the bandits. Farmer A is scared of bandits too, but the other farmers think its kinda funny but also alarming and obsessive. The other farmers have never had bandit troubles. Farmer A thinks that its because he has so many weapons, which weirds out the rest of the farmers.
No bandit troubles? Maybe Farmer Canada and Farmer Sweden don't have bandit troubles, but - ok, this is silly. The fact of the matter is that there are significant dangers in the world that require both shows and threats of military force to deter. Could we spend less on our military in the USA? Absolutely. Without a doubt. But in the face of a US military that is unable to project its power across the globe, you can see the potentially for conflict between North and South Korea, China and Taiwan (less likely now but still potentially dangerous in the future), and Russia and nearby countries such as Georgia.
Yes, cutting military spending is certainly something the USA should explore and most likely do in the very near future, but to discount the effect of the US military on world security is, in my opinion, a mistake.
EDIT: Now, I'm not saying if we cut one aircraft carrier, the world will be plunged into World War III, haha. That is kind of what the above sounds like. All I am saying is that a great portion of the world benefits greatly from US military dominance and our willingness to use it.
On June 27 2011 01:11 Shikyo wrote: I'm not sure if this is offtopic or not, but these discussions always remind me of Queensryche's "Operation Mindcrime".
And as for on-topic, I really can't understand why the US can't cut from some relatively unimportant things(army) and instead use it to pay off their debt. It reminds me of some young adult who gets his first credit card, buys a lot of stuff with it because it feels like a good idea at first, and paying for it for the rest of his life.
Then again what do I even know? =P
Cutting down on the military is an easy thing to talk about when we are sitting pretty with all of the advanced weapons and infrastructure that the past sixty years of heavy spending on the military have bought us. Remember that the only reason we are not being attacked right now is that no other armed force on the planet can hope to compete with our own. Squandering that advantage to get our finances in order would be a decision made without any foresight or common sense.
Save a couple of nukes. Worked well during the cold war atleast. The army you currently possess and pay for is an invasion army, and hasn't used for defensive purposes for about 70 years.
On June 27 2011 01:11 Shikyo wrote: I'm not sure if this is offtopic or not, but these discussions always remind me of Queensryche's "Operation Mindcrime".
And as for on-topic, I really can't understand why the US can't cut from some relatively unimportant things(army) and instead use it to pay off their debt. It reminds me of some young adult who gets his first credit card, buys a lot of stuff with it because it feels like a good idea at first, and paying for it for the rest of his life.
Then again what do I even know? =P
Cutting down on the military is an easy thing to talk about when we are sitting pretty with all of the advanced weapons and infrastructure that the past sixty years of heavy spending on the military have bought us. Remember that the only reason we are not being attacked right now is that no other armed force on the planet can hope to compete with our own. Squandering that advantage to get our finances in order would be a decision made without any foresight or common sense.
Save a couple of nukes. Worked well during the cold war atleast. The army you currently possess and pay for is an invasion army, and hasn't used for defensive purposes for about 70 years.
Not American defense. It has however subsidized European, Japanese, and Korean defense since the 40s/50s. Personally I think we should withdraw our military from overseas and cut spending massively, but I just felt I should qualify your point for accuracy.
The problem with the USA budget right now, is that, in my opinion, there is no real way to solve it without resorting to tax increases.
Military spending can be cut; healthcare can be reformed; social security can be revamped; there are tons of stuff that we can do to lower spending. However, the problem simply is that the United States budget contains too much stuff that we have to pay for.
For example, military spending: While our army and "defense" budget is very much oversized, it must be realized that simple cutting of the budget will not work. The United States acts as a police power in many, many parts of the world, and withdrawal of that power is simply not feasible in many aspects. Sure, we definitely shouldn't be invading Iraq and other Middle Eastern countries 'cause we want the oil, but that doesn't excuse the fact that our military presence in Israel and East Asia are all rather essential. If we pull out all support for Israel, well, expect terrorism in the Middle East to rise. If we pull out of East Asia (S.Korea and Japan) expect China's sphere of influence (and by association N. Korea) to rise, which can be quite a legitimate security concern.
The problem is, no president and presidential candidate will risk even suggesting the words "tax increase" to the public (at least until their second term) as that will mean the end of their career. Even if they do attempt to raise taxes, Congress is so divided and, to put it bluntly, fucked up at the moment that it's highly unlikely that any reasonable change can be made. Until the public as a whole wises up, there's really only so much our leadership can do.
That's capitalism baby! Unless you as an individual want to take an interpersonal stance, and try to solve the problem of 7b people living on one finite planet (and not in a world of infinite growth), the problems of debt that "free" market capitalism has created will never be solved.
The problem's the system we use and the people using it. To quote Socrates;
"Technology Advances, but Humanity does not". Well said Soc', if people cared about each other, and fixing (upgrading) the system we use, the problems would be fixed. However 80%+ of the planet doesn't even care about the problems to begin with, nevermind actually understanding them enough to be able to help fix them.
The problem is, no president and presidential candidate will risk even suggesting the words "tax increase" to the public (at least until their second term) as that will mean the end of their career. Even if they do attempt to raise taxes, Congress is so divided and, to put it bluntly, fucked up at the moment that it's highly unlikely that any reasonable change can be made. Until the public as a whole wises up, there's really only so much our leadership can do.
This is what I've always been thinking too. The leaders represent the people's opinions. If the people would start demanding tax increases (lol) or cutting costs everywhere to pay the debt and have a healthy economy, then leaders would eventually get it and start doing something about it. But yeah, if one guy offers better military/school/healthcare/infrastructure/whatever and the other guy says he cant afford it beacuse he wants to pay off the debt, who will get elected? People aren't very economically responsible on a state or country level, hell some even have problems being responsible for their own economy. And until the people start to actually want a healthy economy over "give me more now", politicians can't do anything about it no matter they want it or not.
On June 27 2011 01:11 Shikyo wrote: I'm not sure if this is offtopic or not, but these discussions always remind me of Queensryche's "Operation Mindcrime".
And as for on-topic, I really can't understand why the US can't cut from some relatively unimportant things(army) and instead use it to pay off their debt. It reminds me of some young adult who gets his first credit card, buys a lot of stuff with it because it feels like a good idea at first, and paying for it for the rest of his life.
Then again what do I even know? =P
Cutting down on the military is an easy thing to talk about when we are sitting pretty with all of the advanced weapons and infrastructure that the past sixty years of heavy spending on the military have bought us. Remember that the only reason we are not being attacked right now is that no other armed force on the planet can hope to compete with our own. Squandering that advantage to get our finances in order would be a decision made without any foresight or common sense.
Save a couple of nukes. Worked well during the cold war atleast. The army you currently possess and pay for is an invasion army, and hasn't used for defensive purposes for about 70 years.
Not American defense. It has however subsidized European, Japanese, and Korean defense since the 40s/50s. Personally I think we should withdraw our military from overseas and cut spending massively, but I just felt I should qualify your point for accuracy.
Isn't that about protecting American interests? I highly doubt it's to look good in international media or whatever. Right now to me it'd make more sence to pull it all back though.
On June 28 2011 04:56 Euronyme wrote: Isn't that about protecting American interests? I highly doubt it's to look good in international media or whatever. Right now to me it'd make more sence to pull it all back though.
well, look at Iraq and Libya. the US intervened not because of freedom and democracy but for self interest.
likewise, the USA went into Japan and Korea primarily to contain the communist threat and prevent them from having access to pacific ocean. there is nothing democratic about it. in fact, USA helped the Japanese right-wingers to suppress the Japanese Communist Party. even Martin Luther King was harassed because the FBI thought he was a commie. its just politics.
There is so much random pointless shit our government funds right now, it's rediculous. If they cut out all the rediculous funding where they literally have no idea what the money is actually used for, and ended these wars, we would be fine. The problem is, no one wants to stop getting their precious hand-outs from the government. Meanwhile, hard-working people are paying taxes into the system that are just used as handouts. Pretty stupid.
On June 27 2011 01:11 Shikyo wrote: I'm not sure if this is offtopic or not, but these discussions always remind me of Queensryche's "Operation Mindcrime".
And as for on-topic, I really can't understand why the US can't cut from some relatively unimportant things(army) and instead use it to pay off their debt. It reminds me of some young adult who gets his first credit card, buys a lot of stuff with it because it feels like a good idea at first, and paying for it for the rest of his life.
Then again what do I even know? =P
Remember that the only reason we are not being attacked right now is that no other armed force on the planet can hope to compete with our own.
.
EDIT: edited out. Its sometimes hard to stay cogent in the midst of so much of what I perceive to be ignorance.
What is keeping us safe? Diplomacy? Economic heft? If I'm wrong, tell me why.
I will make an analogy. There are two farmers that live next to each other in a small rural town. Farmer A and Farmer B. Farmer A spends half of his money on a gun and weapon collection. Sometimes he sends his sons to visit nearby townships, brandishing big and fancy weapons, to make sure that nobody grows the same variety of bean as he does-- too much special beans and the price goes down! Sometimes, when neighbouring farmers wouldn't cooperate, they would all of a sudden go on vacation, and a new farmer would take their place that did cooperate. This isn't important for the analogy though, sometimes coincidences happen.
Anyways, farmer A talks to farmer B one day. this is their discussion
Farmer A: Its a good thing I have all these weapons, otherwise you would steal all of my food! Farmer B: ??? Farmer A: What is keeping me safe then? is it my superior communication skills with the neighbouring townships' farmers? Is it my vast bean fields? If I'm wrong, tell me why.
Now instead of farmers, lets pretend that these are countries, and instead of farmer A spending half of his money on a gun and weapon collection, farmer A is spending half of the budget on military spending, and instead of saying 'otherwise you would steal all of my food!', it is someone on TL saying 'the only reason we aren't being attacked right now'.
and that is why I felt that it was hard to stay cogent in the midst of a lot of ignorance.
Cute, but there's another story being told over on the other side of the fence called REALITY that's being told as we speak.
You essentially have this misplaced expectation that the US should trust everyone else's politicians and militaries more than the locals do, in the vain hope that humans aren't going to be humans and will see the common good over their own personal gain. Good luck with that.
The problem is, no president and presidential candidate will risk even suggesting the words "tax increase" to the public (at least until their second term) as that will mean the end of their career. Even if they do attempt to raise taxes, Congress is so divided and, to put it bluntly, fucked up at the moment that it's highly unlikely that any reasonable change can be made. Until the public as a whole wises up, there's really only so much our leadership can do.
This is what I've always been thinking too. The leaders represent the people's opinions. If the people would start demanding tax increases (lol) or cutting costs everywhere to pay the debt and have a healthy economy, then leaders would eventually get it and start doing something about it. But yeah, if one guy offers better military/school/healthcare/infrastructure/whatever and the other guy says he cant afford it beacuse he wants to pay off the debt, who will get elected? People aren't very economically responsible on a state or country level, hell some even have problems being responsible for their own economy. And until the people start to actually want a healthy economy over "give me more now", politicians can't do anything about it no matter they want it or not.
a majority DO want a progressive tax increase.
I think something like 73% are in favour of higher corporate taxes and higher income taxes for the top earners.
Unfortunately those are also the people with the most influence.
Remember that the only reason we are not being attacked right now is that no other armed force on the planet can hope to compete with our own.
On June 27 2011 02:21 nemo14 wrote:
On June 27 2011 02:05 caradoc wrote:
On June 27 2011 02:03 nemo14 wrote:
On June 27 2011 01:11 Shikyo wrote: I'm not sure if this is offtopic or not, but these discussions always remind me of Queensryche's "Operation Mindcrime".
And as for on-topic, I really can't understand why the US can't cut from some relatively unimportant things(army) and instead use it to pay off their debt. It reminds me of some young adult who gets his first credit card, buys a lot of stuff with it because it feels like a good idea at first, and paying for it for the rest of his life.
Then again what do I even know? =P
Remember that the only reason we are not being attacked right now is that no other armed force on the planet can hope to compete with our own.
.
EDIT: edited out. Its sometimes hard to stay cogent in the midst of so much of what I perceive to be ignorance.
What is keeping us safe? Diplomacy? Economic heft? If I'm wrong, tell me why.
I will make an analogy. There are two farmers that live next to each other in a small rural town. Farmer A and Farmer B. Farmer A spends half of his money on a gun and weapon collection. Sometimes he sends his sons to visit nearby townships, brandishing big and fancy weapons, to make sure that nobody grows the same variety of bean as he does-- too much special beans and the price goes down! Sometimes, when neighbouring farmers wouldn't cooperate, they would all of a sudden go on vacation, and a new farmer would take their place that did cooperate. This isn't important for the analogy though, sometimes coincidences happen.
Anyways, farmer A talks to farmer B one day. this is their discussion
Farmer A: Its a good thing I have all these weapons, otherwise you would steal all of my food! Farmer B: ??? Farmer A: What is keeping me safe then? is it my superior communication skills with the neighbouring townships' farmers? Is it my vast bean fields? If I'm wrong, tell me why.
Now instead of farmers, lets pretend that these are countries, and instead of farmer A spending half of his money on a gun and weapon collection, farmer A is spending half of the budget on military spending, and instead of saying 'otherwise you would steal all of my food!', it is someone on TL saying 'the only reason we aren't being attacked right now'.
and that is why I felt that it was hard to stay cogent in the midst of a lot of ignorance.
Cute, but there's another story being told over on the other side of the fence called REALITY that's being told as we speak.
You essentially have this misplaced expectation that the US should trust everyone else's politicians and militaries more than the locals do, in the vain hope that humans aren't going to be humans and will see the common good over their own personal gain. Good luck with that.
Cuz... afghanistan was for defense... and...iraq was for defense... and libya...defense... and overthrowing the haitian government...defense... yup...
Course try telling that to Farmer A when he's in one of his moods, locked in the cellar with sentry guns on his roof with his sons telling them about the bogeymen outside.
Just a heads up guys, 14 trillion in debt means that each person in america is roughly 40k in debt...
Also, Social Security has a 2.5 trillion dollar surplus. I also don't understand how some of you propose screwing the middle class by cutting Social Security and Medicare. I mean, a strong middle class means a beastly economy (* macro *). Trickle down is total fail. In Starcraft terms, trickle down is like rushing to BC's every game and thinking you will win in the long term (giving money to the high tier while having an extremely weak tier one and tier two). Only results in bad macro and poor mid game.
On June 28 2011 05:58 Michaelwins wrote: Just a heads up guys, 14 trillion in debt means that each person in america is roughly 40k in debt...
Also, Social Security has a 2.5 trillion dollar surplus. I also don't understand how some of you propose screwing the middle class by cutting Social Security and Medicare. I mean, a strong middle class means a beastly economy (* macro *). Trickle down is total fail. In Starcraft terms, trickle down is like rushing to BC's every game and thinking you will win in the long term (giving money to the high tier while having an extremely weak tier one and tier two). Only results in bad macro and poor mid game.
The Social Security 'crisis' is manufactured. Its a very common pattern for privatizing public things that have a lot of support. Not just in the US, but worldwide. Manufacture a crisis, scare the population, pose privatization as the solution, negate opposition, profit.
heres a good snippet on how Social Security could be funded for the next 75 years.
1. Eliminate the current cap of $106,800 on earnings for the 12.4%. This would raise revenue to cover 86% of the projected shortfall for the next 75 years.
2. Raise the payroll tax rate by 1% more both for employee and employer, to 14.4%, in stages over the next 20 years. According to the Social Security Trustees latest 2011 report, the government would be able to pay the current package of benefits for everyone who reaches retirement age at least through 2085. So items 1 and 2 amount to 186% of needed funded.
3. I then propose to use the excess 86% funding to reduce the retirement age to 64 for everyone, instead of the current 67. Why reduce it 3 years instead of raise the retirement age three years? To open up more jobs for young workers who are suffering the worst unemployment. Today, the fastest growing segment of the work force are those over age 65, as more older workers are forced by economic conditions to continue working past 67 or are forced to re-enter the labor force just to pay their bills. With a decent, higher level of benefits they could retire earlier.
4. As for the Medicare shortfall, that can be solved simply by raising the current 2.9% Medicare payroll tax by a paltry 0.25% for workers and employers each for the next ten years, then another 0.25% each starting year eleven for the second decade. That’s a mere 1% raise over the next 20 years.
5. Better and simpler yet, make everyone pay the 14.4% and 3.4% for the next ten years, not just those earning wages and salaries. Make all forms of capital incomes (capital gains, dividends, interest, rents, etc.) pay the 14.4% and 3.4%. Do that and you not only solve the so-called entitlement funding crisis for the remainder of this century but you have now raised enough additional revenue to pay for single payer health care for all, as well as fix social security retirement and disability for the next 75 years and even increase the level of those benefits and/or reduce the retirement age.
Remember that the only reason we are not being attacked right now is that no other armed force on the planet can hope to compete with our own.
On June 27 2011 02:21 nemo14 wrote:
On June 27 2011 02:05 caradoc wrote:
On June 27 2011 02:03 nemo14 wrote:
On June 27 2011 01:11 Shikyo wrote: I'm not sure if this is offtopic or not, but these discussions always remind me of Queensryche's "Operation Mindcrime".
And as for on-topic, I really can't understand why the US can't cut from some relatively unimportant things(army) and instead use it to pay off their debt. It reminds me of some young adult who gets his first credit card, buys a lot of stuff with it because it feels like a good idea at first, and paying for it for the rest of his life.
Then again what do I even know? =P
Remember that the only reason we are not being attacked right now is that no other armed force on the planet can hope to compete with our own.
.
EDIT: edited out. Its sometimes hard to stay cogent in the midst of so much of what I perceive to be ignorance.
What is keeping us safe? Diplomacy? Economic heft? If I'm wrong, tell me why.
I will make an analogy. There are two farmers that live next to each other in a small rural town. Farmer A and Farmer B. Farmer A spends half of his money on a gun and weapon collection. Sometimes he sends his sons to visit nearby townships, brandishing big and fancy weapons, to make sure that nobody grows the same variety of bean as he does-- too much special beans and the price goes down! Sometimes, when neighbouring farmers wouldn't cooperate, they would all of a sudden go on vacation, and a new farmer would take their place that did cooperate. This isn't important for the analogy though, sometimes coincidences happen.
Anyways, farmer A talks to farmer B one day. this is their discussion
Farmer A: Its a good thing I have all these weapons, otherwise you would steal all of my food! Farmer B: ??? Farmer A: What is keeping me safe then? is it my superior communication skills with the neighbouring townships' farmers? Is it my vast bean fields? If I'm wrong, tell me why.
Now instead of farmers, lets pretend that these are countries, and instead of farmer A spending half of his money on a gun and weapon collection, farmer A is spending half of the budget on military spending, and instead of saying 'otherwise you would steal all of my food!', it is someone on TL saying 'the only reason we aren't being attacked right now'.
and that is why I felt that it was hard to stay cogent in the midst of a lot of ignorance.
Cute, but there's another story being told over on the other side of the fence called REALITY that's being told as we speak.
You essentially have this misplaced expectation that the US should trust everyone else's politicians and militaries more than the locals do, in the vain hope that humans aren't going to be humans and will see the common good over their own personal gain. Good luck with that.
Cuz... afghanistan was for defense... and...iraq was for defense... and libya...defense... and overthrowing the haitian government...defense... yup...
Course try telling that to Farmer A when he's in one of his moods, locked in the cellar with sentry guns on his roof with his sons telling them about the bogeymen outside.
Yes, yes, no, and what? Foreign countries piss and moan when the US does nothing, and they piss and moan when they intervene. It's the age old adage for anyone in power and consequently its easy to ignore a lot of it.
If the US (in collaboration with the UN and many other countries around the world, FYI) didn't intervene in Libya, we'd be sitting here arguing over why the US didn't intervene to stop the genocide of the Libyan people in the streets of Tripoli. Did we learn nothing from the late 1930s?!?!
If we didn't go in and take out Al Qaeda training camps in Afghanistan, we'd be sitting here arguing over why the US didn't do enough to help stop the next major terrorist attack.
If we didn't invade Iraq, we'd be sitting here arguing over how to spend all of this cash the US is sitting on.
If we disarmed our military we'd be sitting here wondering why China came over for a big tea party, why Israel and many other places in the world are now a giant, smoking crater.
Sometimes I wish we'd pull the military out of other countries just so we could all learn from the mistakes of the Roman Empire again.
Remember that the only reason we are not being attacked right now is that no other armed force on the planet can hope to compete with our own.
On June 27 2011 02:21 nemo14 wrote:
On June 27 2011 02:05 caradoc wrote:
On June 27 2011 02:03 nemo14 wrote:
On June 27 2011 01:11 Shikyo wrote: I'm not sure if this is offtopic or not, but these discussions always remind me of Queensryche's "Operation Mindcrime".
And as for on-topic, I really can't understand why the US can't cut from some relatively unimportant things(army) and instead use it to pay off their debt. It reminds me of some young adult who gets his first credit card, buys a lot of stuff with it because it feels like a good idea at first, and paying for it for the rest of his life.
Then again what do I even know? =P
Remember that the only reason we are not being attacked right now is that no other armed force on the planet can hope to compete with our own.
.
EDIT: edited out. Its sometimes hard to stay cogent in the midst of so much of what I perceive to be ignorance.
What is keeping us safe? Diplomacy? Economic heft? If I'm wrong, tell me why.
I will make an analogy. There are two farmers that live next to each other in a small rural town. Farmer A and Farmer B. Farmer A spends half of his money on a gun and weapon collection. Sometimes he sends his sons to visit nearby townships, brandishing big and fancy weapons, to make sure that nobody grows the same variety of bean as he does-- too much special beans and the price goes down! Sometimes, when neighbouring farmers wouldn't cooperate, they would all of a sudden go on vacation, and a new farmer would take their place that did cooperate. This isn't important for the analogy though, sometimes coincidences happen.
Anyways, farmer A talks to farmer B one day. this is their discussion
Farmer A: Its a good thing I have all these weapons, otherwise you would steal all of my food! Farmer B: ??? Farmer A: What is keeping me safe then? is it my superior communication skills with the neighbouring townships' farmers? Is it my vast bean fields? If I'm wrong, tell me why.
Now instead of farmers, lets pretend that these are countries, and instead of farmer A spending half of his money on a gun and weapon collection, farmer A is spending half of the budget on military spending, and instead of saying 'otherwise you would steal all of my food!', it is someone on TL saying 'the only reason we aren't being attacked right now'.
and that is why I felt that it was hard to stay cogent in the midst of a lot of ignorance.
Cute, but there's another story being told over on the other side of the fence called REALITY that's being told as we speak.
You essentially have this misplaced expectation that the US should trust everyone else's politicians and militaries more than the locals do, in the vain hope that humans aren't going to be humans and will see the common good over their own personal gain. Good luck with that.
Cuz... afghanistan was for defense... and...iraq was for defense... and libya...defense... and overthrowing the haitian government...defense... yup...
Course try telling that to Farmer A when he's in one of his moods, locked in the cellar with sentry guns on his roof with his sons telling them about the bogeymen outside.
On June 28 2011 06:35 Bibdy wrote: Yes, yes, no, and what? Foreign countries piss and moan when the US does nothing, and they piss and moan when they intervene. It's the age old adage for anyone in power and consequently its easy to ignore a lot of it.
foreign countries? they piss and moan? which countries? what did they say? Sounds like a generalization without any substance to argue your stance. If not, its vague to the point of being meaningless
On June 28 2011 06:35 Bibdy wrote: If the US (in collaboration with the UN and many other countries around the world, FYI) didn't intervene in Libya, we'd be sitting here arguing over why the US didn't intervene to stop the genocide of the Libyan people in the streets of Tripoli. Did we learn nothing from the late 1930s?!?!
Firstly, what? *about face* You're comparing a civil war to Nazi Germany? Seriously? You're comparing a public uprising with aggressive expansionism? Secondly, ask yourself why the US isn't intervening elsewhere which exhibits similar circumstance. Egypt for example. Why Libya? Thirdly, why didn't the US intervene to stop the genocide in a slough of other countries without abundant oil wealth when it happened previously.
On June 28 2011 06:35 Bibdy wrote: If we didn't go in and take out Al Qaeda training camps in Afghanistan, we'd be sitting here arguing over why the US didn't do enough to help stop the next major terrorist attack.
This is in my opinion fairly wrongheaded. Even CIA officials have said that invading Iraq and Afghanistan has increased, rather than decreased the threat of attacks.
On June 28 2011 06:35 Bibdy wrote: If we didn't invade Iraq, we'd be sitting here arguing over how to spend all of this cash the US is sitting on.
If we disarmed our military we'd be sitting here wondering why China came over for a big tea party.
I fail to see the connection between this statement and the rest of your post, or the rest of the thread for that matter. Perhaps it made sense to you but you didn't do your due diligence to make it accessible to the rest of the viewership, or you tried to edit your post and inadvertently made it nonsensical in the process without proofreading. It has happened to me before. I certainly don't think you intended your post to read like what some more emotional than me might call incoherent paranoid delusional ramblings.
Regarding Haiti, its not surprising you hadn't heard that they organized a coup d'etat to eliminate the democratically elected Aristide government along with France and Canada, escorted him to Africa, and then installed a virtual puppet regime. It wasn't on Fox or CNN, or even MSNBC.
Finally, lets not derail this thread further. Debt, not foreign policy. This will be my last post on this 'aside'.
Remember that the only reason we are not being attacked right now is that no other armed force on the planet can hope to compete with our own.
On June 27 2011 02:21 nemo14 wrote:
On June 27 2011 02:05 caradoc wrote:
On June 27 2011 02:03 nemo14 wrote:
On June 27 2011 01:11 Shikyo wrote: I'm not sure if this is offtopic or not, but these discussions always remind me of Queensryche's "Operation Mindcrime".
And as for on-topic, I really can't understand why the US can't cut from some relatively unimportant things(army) and instead use it to pay off their debt. It reminds me of some young adult who gets his first credit card, buys a lot of stuff with it because it feels like a good idea at first, and paying for it for the rest of his life.
Then again what do I even know? =P
Remember that the only reason we are not being attacked right now is that no other armed force on the planet can hope to compete with our own.
.
EDIT: edited out. Its sometimes hard to stay cogent in the midst of so much of what I perceive to be ignorance.
What is keeping us safe? Diplomacy? Economic heft? If I'm wrong, tell me why.
I will make an analogy. There are two farmers that live next to each other in a small rural town. Farmer A and Farmer B. Farmer A spends half of his money on a gun and weapon collection. Sometimes he sends his sons to visit nearby townships, brandishing big and fancy weapons, to make sure that nobody grows the same variety of bean as he does-- too much special beans and the price goes down! Sometimes, when neighbouring farmers wouldn't cooperate, they would all of a sudden go on vacation, and a new farmer would take their place that did cooperate. This isn't important for the analogy though, sometimes coincidences happen.
Anyways, farmer A talks to farmer B one day. this is their discussion
Farmer A: Its a good thing I have all these weapons, otherwise you would steal all of my food! Farmer B: ??? Farmer A: What is keeping me safe then? is it my superior communication skills with the neighbouring townships' farmers? Is it my vast bean fields? If I'm wrong, tell me why.
Now instead of farmers, lets pretend that these are countries, and instead of farmer A spending half of his money on a gun and weapon collection, farmer A is spending half of the budget on military spending, and instead of saying 'otherwise you would steal all of my food!', it is someone on TL saying 'the only reason we aren't being attacked right now'.
and that is why I felt that it was hard to stay cogent in the midst of a lot of ignorance.
Cute, but there's another story being told over on the other side of the fence called REALITY that's being told as we speak.
You essentially have this misplaced expectation that the US should trust everyone else's politicians and militaries more than the locals do, in the vain hope that humans aren't going to be humans and will see the common good over their own personal gain. Good luck with that.
Cuz... afghanistan was for defense... and...iraq was for defense... and libya...defense... and overthrowing the haitian government...defense... yup...
Course try telling that to Farmer A when he's in one of his moods, locked in the cellar with sentry guns on his roof with his sons telling them about the bogeymen outside.
On June 28 2011 06:35 Bibdy wrote: Yes, yes, no, and what? Foreign countries piss and moan when the US does nothing, and they piss and moan when they intervene. It's the age old adage for anyone in power and consequently its easy to ignore a lot of it.
foreign countries? they piss and moan? which countries? what did they say? Sounds like a generalization without any substance to argue your stance. If not, its vague to the point of being meaningless
On June 28 2011 06:35 Bibdy wrote: If the US (in collaboration with the UN and many other countries around the world, FYI) didn't intervene in Libya, we'd be sitting here arguing over why the US didn't intervene to stop the genocide of the Libyan people in the streets of Tripoli. Did we learn nothing from the late 1930s?!?!
Firstly, what? *about face* You're comparing a civil war to Nazi Germany? Seriously? You're comparing a public uprising with aggressive expansionism? Secondly, ask yourself why the US isn't intervening elsewhere. Why Libya? Thirdly, why didn't the US intervent to stop the genocide in a slough of other countries without abundant oil wealth when it happened.
On June 28 2011 06:35 Bibdy wrote: If we didn't go in and take out Al Qaeda training camps in Afghanistan, we'd be sitting here arguing over why the US didn't do enough to help stop the next major terrorist attack.
This is in my opinion fairly wrongheaded. Even CIA officials have said that invading Iraq and Afghanistan has increased, rather than decreased the threat of attacks.
On June 28 2011 06:35 Bibdy wrote: If we didn't invade Iraq, we'd be sitting here arguing over how to spend all of this cash the US is sitting on.
If we disarmed our military we'd be sitting here wondering why China came over for a big tea party.
I fail to see the connection between this statement and the rest of your post, or the rest of the thread for that matter. Perhaps it made sense to you but you didn't do your due diligence to make it accessible to the rest of the viewership, or you tried to edit your post and inadvertently made it nonsensical in the process without proofreading. It has happened to me before. I certainly don't think you intended your post to read like what some more emotional than me might call incoherent paranoid delusional ramblings.
Regarding Haiti, its not surprising you hadn't heard that they organized a coup d'etat to eliminate the democratically elected Aristide government along with France and Canada. It wasn't on Fox or CNN.
Sorry, I should have said "TL posters who like to claim they speak for their entire country, and on occasion, the rest of the planet outside of the US, piss and moan etc etc.". It's easy to blur the lines between a guy with 'Country X' and his title and a large subset of the country when they claim they represent them on a regular basis. Anecdotal and incidental evidence tends to be a favourite.
Thirdly, why didn't the US intervene to stop the genocide in a slough of other countries without abundant oil wealth when it happened previously.
Case in point. Apparently the US is the only country involved in Libya right now. That's pretty big news to me. How did you obtain this information? Why isn't Canada helping out in Syria, hmm? France? Britain? What makes the US special? Starting to see my point?
That was kind of the point. It was hyperbole and the kind of argument that people would be spewing forth had the US, UN, and oh hey, all of us, not intervened in Libya. But, that's besides the point. We'd still be sitting here arguing over why the US didn't do enough to help stop the slaughters in the streets of Tripoli by taking out key military targets in Libya. Or do you assume this is all just a precedent to an invasion by the US, nevermind all the other western nations involved in the operation, right? I'm sure the US is entirely, 100% to blame for the clusterfuck that was Iraq, too?
I mentioned that snippet about Iraq, because you mentioned it and you would have no doubt given me shit for it had I omitted it, just as you're giving me shit now for having mentioned it, and the, I feel rather obvious revelation that I don't agree with that particular war and never did from the start. It seems as though you just want to start a fight.
Same with China. That silly little story of yours about the Farmers predicates a situation where the US has built up an military for no particularly good reason, all under the guise of defense. It must be fun living outside of reality in the middle of the day.
The whole Haiti thing might have been more obvious to me had I been living in the country the year it happened (2004) and owned a TV, but hey, little things like that tend to slip through the cracks. Certainly don't remember seeing it on the UK news. Guess they couldn't have given less of a shit, or its just wild speculation and falsehoods. Nah, must have been a US expansionist invasion of another smaller country and the US bought out the media in every country. Damn they're good.
On June 28 2011 06:35 Bibdy wrote: Sometimes I wish we'd pull the military out of other countries just so we could all learn from the mistakes of the Roman Empire again.
What?
We would be like the Eastern Roman Empire? So... after we leave our expensive expansive imperialist problems behind us we look forward to hundred of years of regional dominance and economic prosperity and the only threat we need to avoid is long wars of attrition with Muslim empires? Now that would almost solve our debt problem right up. I mean GO USA!! but I think this whole story that our military spending is wholly justified since the end of the cold war is pretty ridiculous and Eisenhower would agree with me. After all, we learned "the arsenal of democracy" was good enough in the early 40s and I don't see why it wouldn't be again; instead of a military industrial complex.
Also the US has a spending problem and a revenue problem. As a percent of GDP revenues are lower than they have been for decades. I feel that this is appropriate given the economic situation but the debt level is rising too rapidly but the debt problem tends to be either ignored or blown out of proportion However, foreign troop commitments are an easy place to start reducing spending particularly in Europe and Japan.
My two cents: Is the debt an issue? Sure, its an elephant in the room thats going to rear its head in the years ahead but compared with the current economic condition, its not the most serious problem America is facing right now because the government is still able to make interest payments on the debt. (unless the debt ceiling isn't raised, then we are in for a world of shit).
On June 28 2011 17:48 BlackPanther wrote: My two cents: Is the debt an issue? Sure, its an elephant in the room thats going to rear its head in the years ahead but compared with the current economic condition, its not the most serious problem America is facing right now because the government is still able to make interest payments on the debt. (unless the debt ceiling isn't raised, then we are in for a world of shit).
Better to fix it earlier than later. It may be something we could put off again and again but the future generation are going to be absolutely fucked if we do. Kind of selfish to put off something now just because it's not going to be easy to deal with.
On June 28 2011 17:48 BlackPanther wrote: My two cents: Is the debt an issue? Sure, its an elephant in the room thats going to rear its head in the years ahead but compared with the current economic condition, its not the most serious problem America is facing right now because the government is still able to make interest payments on the debt. (unless the debt ceiling isn't raised, then we are in for a world of shit).
Better to fix it earlier than later. It may be something we could put off again and again but the future generation are going to be absolutely fucked if we do. Kind of selfish to put off something now just because it's not going to be easy to deal with.
Yeah, I wish people wouldn't forget that all this debt is basically a form of stealing from our children and people who haven't even been born yet. It's a very selfish thing to do.
On June 28 2011 17:48 BlackPanther wrote: My two cents: Is the debt an issue? Sure, its an elephant in the room thats going to rear its head in the years ahead but compared with the current economic condition, its not the most serious problem America is facing right now because the government is still able to make interest payments on the debt. (unless the debt ceiling isn't raised, then we are in for a world of shit).
Better to fix it earlier than later. It may be something we could put off again and again but the future generation are going to be absolutely fucked if we do. Kind of selfish to put off something now just because it's not going to be easy to deal with.
Yeah, I wish people wouldn't forget that all this debt is basically a form of stealing from our children and people who haven't even been born yet. It's a very selfish thing to do.
Youth today have one of the highest unemployment rates, they are having their lives stolen from them by the economic conditions. Existing, possibly structural unemployment exacerbated by large public sector cuts is a terrifying prospect. Rhetoric like "stealing from our children" ignores the reality of youth today, many of the unemployed are recent college grads with their own crushing debt burden to deal with.
Since spending cuts tend to hit education in disproportional amounts, the children tend to be hurt pretty badly by deficit reduction, ironically because it is often done in their name. Deficit reduction is a good thing but radical austerity programs are just not appropriate in these economic conditions.
IMHO slight tax increases on upper income brackets and reductions of foreign troop commitments would be appropriate now and only once the unemployment rate is below 7% percent should actual balanced budgets should be a goal.
the USA doesn't suffer from the length of education, it suffers in quality. it's a cultural thing. education is not highly valued. having cool gadgets, video games and free sex are the most important things to have in school.
the USA doesn't suffer from the length of education, it suffers in quality. it's a cultural thing. education is not highly valued. having cool gadgets, video games and free sex are the most important things to have in school.
When did I say the US suffered from length of education? I said that education takes an unfair share of the burden of deficit reduction.
Also the US only suffers from education quality problems in high school and below, our college system is very high quality, its just very expensive. I think you have really oversimplified the problems of our educational system too, not that I really disagree I just think there's more and deeper issues than you list. However this is not really the thread to discuss US education.
EPT
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