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gruff
Sweden2276 Posts
On October 06 2013 04:00 Yergidy wrote: Dunno if anyone has seen it, but this is pretty ridiculous: http://www.breitbart.com/Big-Government/2013/10/05/Feds-Try-to-Close-the-OCEAN-Because-of-Shutdown The article or the comments underneath? | ||
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mahrgell
Germany3943 Posts
On October 06 2013 04:17 Kaitlin wrote: Is there a chart with the same graphic, but with Congress instead of Presidencies ? I remember Republicans took over Congress after Clinton's first couple of years, exactly when the trend downward begins. Contract with America, Newt Gingrich, government shutdown. Those aren't highlighted in the graph, but they are predecessors to the downward trend in debt as a % of GDP... look again... this chart has it... | ||
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Kaitlin
United States2958 Posts
Yeah, I see it now. It appears everytime a Democrat President gets credit for a reduction in debt as % of GDP, there is a Republican Congress in charge. In fact, the only time I notice an increase with Republican Congress is with Bush 2, which was the wars. | ||
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Kaitlin
United States2958 Posts
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freetgy
1720 Posts
On October 06 2013 04:23 Kaitlin wrote: Yeah, I see it now. It appears everytime a Democrat President gets credit for a reduction in debt as % of GDP, there is a Republican Congress in charge. In fact, the only time I notice an increase with Republican Congress is with Bush 2, which was the wars. anyone also adding the total debts? % doesn't tell you whether the total dept has decreased as well which is it? a) real debt reduction b) averaged out, by economic growth | ||
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Kaitlin
United States2958 Posts
On October 06 2013 04:57 freetgy wrote: anyone also adding the total debts? % doesn't tell you whether the total dept has decreased as well which is it? a) real debt reduction b) averaged out, by economic growth It's relative to GDP in this graph. No debt reduction as long as running deficit. | ||
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mahrgell
Germany3943 Posts
On October 06 2013 04:47 Kaitlin wrote: On another note, does anyone even consider the inter-generational games these politicians play to make themselves look better ? Take for example the Roth IRA conversions back in the 1990's. People had a one-year window to convert their entire IRA balance into a Roth IRA and spread the tax out over the next four years. For those that don't know, Roth IRAs are completely taxfree upon withdrawal. The effect of this was to bring all the tax dollars that all of these retirement accounts would generate out of future generations to be taxed immediately and never again. This made revenues in the 1990's abnormally high at the expense of the future. This is just one example. Is it really honest to give those in charge in the 1990's credit for simply taking tax revenue away from future generations to make themselves look better ? Well, guess it's a first, but i completely agree here. Those cross comparisons of "who caused how much debt" are pointless. Clinton was involved in no wars and had no economic crisis. Is it fair to compare his "debt results" to Obama, who started his presidency with 2 wars, a bloated military an a worldwide economic crisis? I would say no. You also showed similar episodes. Different times need different approaches, and we are simply not able to have some parallel universes to compare the whatifs. So trying to read whatever the own party supports in those statistics is hardly helping. So what decision about spending is right? Who knows, it is fairly obvious there are different ideas with a lot of supporters. Consequences of both courses can be predicted, but both have advantages and risks. Even in the EU this is a huge argument. Germany(at least the government, ofc the opposition has a different point of view) favors to cut spending in the whole EU and leads the charge to force this idea on our southern European troubled countries. But this is nothing Germany is liked for in the rest of Europe ^^. If you look at the UK, they as well follow the line of spending and spending and even more spending, no matter the doubt (actually they are acquiring debt faster then the US) | ||
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D10
Brazil3409 Posts
Its harder to form a coalition to profit from oposing the looneys | ||
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Jisall
United States2054 Posts
On October 06 2013 03:26 Sub40APM wrote: Most sophisticated governments have been borrowing for hundreds of years. In fact, the English have a form of government borrowing that was forever: http://en.wikipedia.org/wiki/Consol_(bond) Consols existed in the U.S. as well. The deal with consols is you never pay back the initial amount, and the interest is a pure dollar amount, so eventually the interest is a non-factor because of inflation. Consols were used in the U.S. railroad industry. So you don't have "debt", you have a money payment you pay forever. You don't owe any money, you are just obligated to pay money every month like a pension. On October 06 2013 03:21 packrat386 wrote: We can always pay it because all US debt is owed in dollars. The USFG can print dollars. Therefore there will never be a case that the US has a debt that they can't pay. Then you devalue your currency and the world gets on your shit because your frauding them out of money. Also you would cause inflation, possibly hyperinflation. Interest is meant to be rent on money, so if your printing money until your inflation is higher then your interest, then other countries are paying you to give you money. That's not good, that means they are pissed. Thats not how you conduct business. What you are suggesting would mean that no body would loan us money. So it would not matter if we had a debt ceiling, because no one would give us money. You can't just print money with no consequences. | ||
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Kaitlin
United States2958 Posts
On October 06 2013 06:08 Jisall wrote: Consols existed in the U.S. as well. The deal with consols is you never pay back the initial amount, and the interest is a pure dollar amount, so eventually the interest is a non-factor because of inflation. Consols were used in the U.S. railroad industry. So you don't have "debt", you have a money payment you pay forever. You don't owe any money, you are just obligated to pay money every month like a pension. Then you devalue your currency and the world gets on your shit because your frauding them out of money. Also you would cause inflation, possibly hyperinflation. Interest is meant to be rent on money, so if your printing money until your inflation is higher then your interest, then other countries are paying you to give you money. That's not good, that means they are pissed. Thats not how you conduct business. What you are suggesting would mean that no body would loan us money. So it would not matter if we had a debt ceiling, because no one would give us money. You can't just print money with no consequences. When you say the UN is on China's ass about that right now, how is the UN actually accomplishing anything. Are they just crying about it ? Or is there an actual demonstrable consequence ? I'm out for a few hours. | ||
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Jisall
United States2054 Posts
On October 06 2013 06:13 Kaitlin wrote: When you say the UN is on China's ass about that right now, how is the UN actually accomplishing anything. Are they just crying about it ? Or is there an actual demonstrable consequence ? I'm out for a few hours. Just like any U.N. measure they just use "political pressure" In all honesty tho, printing money to pay interest is a bad idea. | ||
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Danglars
United States12133 Posts
On October 06 2013 05:05 D10 wrote: Such are the woes of having a two party system. Its harder to form a coalition to profit from oposing the looneys I can think of a few multiparty countries off the top of my head that forms coalitions for fiscal insanity. | ||
micronesia
United States24762 Posts
On October 06 2013 06:08 Jisall wrote: Then you devalue your currency and the world gets on your shit because your frauding them out of money. Also you would cause inflation, possibly hyperinflation. Interest is meant to be rent on money, so if your printing money until your inflation is higher then your interest, then other countries are paying you to give you money. That's not good, that means they are pissed. Thats not how you conduct business. What you are suggesting would mean that no body would loan us money. So it would not matter if we had a debt ceiling, because no one would give us money. You can't just print money with no consequences. If the debt became too massive, or assets too limited for the country to avoid defaulting on their loan, how does defaulting compare to intentional inflation to reduce the debt burden? It seems like both are very damaging, but I don't know how to compare the two. | ||
Whitewing
United States7483 Posts
On October 06 2013 15:22 micronesia wrote: If the debt became too massive, or assets too limited for the country to avoid defaulting on their loan, how does defaulting compare to intentional inflation to reduce the debt burden? It seems like both are very damaging, but I don't know how to compare the two. Both are disastrous but defaulting is the lesser of the two. Defaulting can cause a sustained recession or depression, depending on the extend and how well the government handles damage control, but the hyper inflation caused by printing money to just pay all debt would be catastrophic for everyone's savings: everyone but the excessively rich would be flat out broke almost instantly and not able to afford basic necessities. The recession/depression is bad but actually harms fewer people. That said, the government would still technically have the option of passing a bill stating that all debts it owes to itself are forgiven, without increasing the M1 money supply. This would have horrendous results as well, but it would likely be lesser than defaulting or the hyperinflation caused by printing, because it would still allow for the government to pay back debt it owes overseas (the overwhelming majority of our government's debt is debt it owes to itself). | ||
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Jisall
United States2054 Posts
On October 06 2013 15:22 micronesia wrote: If the debt became too massive, or assets too limited for the country to avoid defaulting on their loan, how does defaulting compare to intentional inflation to reduce the debt burden? It seems like both are very damaging, but I don't know how to compare the two. Hyperinflation destroys the middle class, and annihilates the poor. As the fed prints out money to pay their interest payments, the flood of money into the economy drives prices up. Everybody takes out all their savings money and tries to spend it as soon as possible, since every second your wealth is diminishing. The extra demand also drives prices high, and it is not uncommon for the price of goods to double every day. Everyone looses wealth, and the debtors who's interest we are paying are seeing their debt's value decrease massively, to the point of being worthless. Everybody loses, citizens and debtors. Historical Examples of Hyperinflation: http://www.businessinsider.com/worst-hyperinflation-episodes-in-history-2013-9#hungary-august-1945-july-1946-1 Defaulting would seem to be the only option here, but that will hurt the credit of the United States and make investors less likely to invest in the U.S. Contrary to popular belief the U.S. has defaulted twice in the past, once because of the American Revolution's aftermath, and once because of the Great Depression. Source: http://usgovinfo.about.com/od/moneymatters/a/Has-US-Ever-Defaulted-On-Its-Debt.htm Interesting Read: http://www.reuters.com/article/2013/09/29/us-usa-debt-asia-analysis-idUSBRE98S0GY20130929 The more I read the less I fear a default, but to be honest the main problem is that we have this massive government debt. I understand that all business's have debt in order to effectively fund their operations which is fine, but you have to at one point pay it back, and the policy of borrowing more money to pay of interest, not even the principle of the loan is frightening. | ||
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Millitron
United States2611 Posts
On October 06 2013 15:42 Whitewing wrote: Both are disastrous but defaulting is the lesser of the two. Defaulting can cause a sustained recession or depression, depending on the extend and how well the government handles damage control, but the hyper inflation caused by printing money to just pay all debt would be catastrophic for everyone's savings: everyone but the excessively rich would be flat out broke almost instantly and not able to afford basic necessities. The recession/depression is bad but actually harms fewer people. That said, the government would still technically have the option of passing a bill stating that all debts it owes to itself are forgiven, without increasing the M1 money supply. This would have horrendous results as well, but it would likely be lesser than defaulting or the hyperinflation caused by printing, because it would still allow for the government to pay back debt it owes overseas (the overwhelming majority of our government's debt is debt it owes to itself). How can the government owe debt to itself? I mean I get that some agencies might do work for other agencies and charge for it, but my point is, the money's coming from the same place it's going to. What's the point? | ||
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Rassy
Netherlands2308 Posts
The fed paid the us government like 80b this year in a sort of dividend, with interest rate at 2% the fed probably holds like 4 trillion of us debt. Can look up the excact figures somewhere but cant be botherd now. D-day this week for the usa, it kinda frightens me that people here start seeing default as a somewhat viable option. Is the american public already beeing prepared by the media for such an event? The only debt they could default on is the debt held by the fed. There is no way they can default on bonds wich are held by china and japan,i dont even want to think about the results of that. Well they will probably find some solution at the verry last minute though i definatly dont rule out the change for a default. If they manage to find a solution i guess i will start looking forward to the next discussion about the debt ceiling 6 months later lol. | ||
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Nyxisto
Germany6287 Posts
On October 06 2013 15:22 micronesia wrote: If the debt became too massive, or assets too limited for the country to avoid defaulting on their loan, how does defaulting compare to intentional inflation to reduce the debt burden? It seems like both are very damaging, but I don't know how to compare the two. Well some inflation to ease pressure isn't necessarily so bad and is practiced by most central banks right now. But if we're talking about hyperinflation, that's really devastating, and basically everyone loses. The rich lose most of their wealth because their money isn't worth anything anymore. Middle- and lower classes who just put enough money away for their pension are basically just fucked. Also prices go up insanely because everyone is trying to spent their money anticipating it will lose all of its value. (One of the most devastating inflations after the Weimar Republic to pay the debts for WWI, and probably one of the reasons why Germans are still so austerity obsessed: http://en.wikipedia.org/wiki/Hyperinflation_in_the_Weimar_Republic) I'd say defaulting isn't as bad as uncontrolled inflation, but that's really just guessing. People may not lose all their wealth, but a country defaulting on its debt is probably going to be cut off from the financial markets for a very long time, which would have devastating effects on the economy. | ||
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Sbrubbles
Brazil5776 Posts
According to this, a good part of the american debt is held by the americans themselves (more than half if you consider government entities, including SS funds). Defaulting wouldn't just make international investors weary, it would piss off domestic investors (not only Wall Street itself but everyone who has money in a fund). Of course, this is in relation to a minor default. It's hard to fathom what a real default would do for the american economy, but it would centainly start by sinking the whole financial sector. Also, about inflation, "surprise hyperinflation" doesn't exist, especially when you're stuck at almost 0% inflation. If there was even a hint of it, the US would no longer be able to sell long term treasuries at fixed interest rates (which are currently at less than 4% per year!). It's quite telling that those who are putting their money where their mouth is expect at most 3% inflation per year over the next 20 years. | ||
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Jisall
United States2054 Posts
On October 07 2013 03:33 Sbrubbles wrote: http://www.gao.gov/special.pubs/longterm/debt/ownership.html According to this, a good part of the american debt is held by the americans themselves (more than half if you consider government entities, including SS funds). Defaulting wouldn't just make international investors weary, it would piss off domestic investors (not only Wall Street itself but everyone who has money in a fund). Of course, this is in relation to a minor default. It's hard to fathom what a real default would do for the american economy, but it would centainly start by sinking the whole financial sector. Also, about inflation, "surprise hyperinflation" doesn't exist, especially when you're stuck at almost 0% inflation. If there was even a hint of it, the US would no longer be able to sell long term treasuries at fixed interest rates (which are currently at less than 4% per year!). It's quite telling that those who are putting their money where their mouth is expect at most 3% inflation per year over the next 20 years. The hyper inflation talk started when someone mentioned that we would never default on our debt because we would just print money to pay for it. The treasury would never let hyperinflation happen. | ||
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