I'm sure many of you realise America has a huge debt. I was just wondering how do you think they will manage to pay it off? This article suggests it will probably be by printing money (hyperinflation) I think that article is probably right. What's your opinion?
I have some ideas, but they would probably never do them. For example, we could sell advertisements on tanks. Walmart could have a bid ad printed on all our military tanks saying, "We are rolling back prices!" Military uniforms can have ads just like Nascar drivers. We could sell President Bush's stuff on Ebay. I don't know. At this point, we need to think outside the box. We can't just continue to print more money.
Or we could just stop shopping at Wal-Mart and buy things made in America. Every time you buy something from a foreign country you are increasing the debt and by buying American goods, closing in on it.
At this point we have no realistic basis going forward on how to pay down the debt. As of 2000 we seemed to be making progress. It would appear that we need to return to pre Bush days to get a grasp on the debt.
http://www.cedarcomm.com/~stevelm1/usdebt.png looking at that graph it seems like the republicans are pretty big spenders. I guess that whole "democrats are big spendsers, republicans are fiscal conservatives" is nothing more than a myth @ Rebecca or maybe you can auction a tatoo on Bush's forehead advertising something. These kind of auctions usually bring significant amount of money
Wow: Astounding graph. The debt load took off during Reagon, kept growing during Bush 1, kept growing then flattened out during Clinton and really took off during Bush 2. Part of it is spending and part of it is tax receipts. Cutting taxes is a great idea subject to two things: volume of expenses and total load of debt. It would seem we need to seriously curtail debt. That means some level of curtailing expenses and some level of increasing govt income. Definitely during Bush 2 administration govt expenditures went through the roof even as he cut taxes. He blew the debt picture out of the water. yeah...with the current administration there is absolutely no truth to the fiscal responsability of Republicans. It has become the absolute opposite and all commentary to that old truism are currently false.
Partianship is the second biggest blight after the debt. I think we can all agree that the Constitution and the Bill of Rights are the fundamental, foundation documents defining this Republic. You don't have to be a Republican or a Democrat to be a constitutionalist, and honor your oath of office. The debt goes beyond Bush, you can trace it back to the earliest days of the Republic, with the Federalists led by Alexander Hamilton. It was rapidly accellerated in 1913 with the income tax, and federal reserve, which created a "lender of last resort" for the government, allowing the monetization of debt through inflation. I've said it on this forum many, many times. If you don't know how we got to this point, you can't hope to solve the problems we face. The destruction of a currency, hyperinflation, bank failures, deficit spending, and the welfare/warfare state are not new situations. There is a lot of historical precedent for how these conditions arise, and how they end. The bad news is, they do not (to my recollection) end nicely. In order to pay off the debt, we need to supercharge the economy, and that means getting a lot more competitive, and working a lot harder than we have in recent history. We have to remove anti-business regulation, and cut taxes on savings/investment earnings, to keep our money working domestically. We need to raise interest rates, to slow the growth of easy and irresponsible credit, and protect the dollar on international markets. Most of all, we need to cut taxes, and then cut spending by double the tax cuts. We need legislation which protects the various entitlement trust funds, so they cannot be bled into general revenue, as well as reform the monetary system which enables the government (D + R) to spend beyond our means for political gain. It's a daunting task. We either embark on the trail of reform and recovery, or we will be faced with a situation that will demand more extreme and dire measures. D, R, C(onstitution), L(ibertarian) or I(ndependent), you should be running for office, local, state or federal, and pushing for the changes to protect the future of the Republic and the prosperity of your children and grandchildren.
cutting taxes results in lower income for the state unless it results in a significant increase of the economy (thus increasing the amount of tax money coming in)
The government brings in 13 Trillion per year. The government owes 9 Trillion. A lot of that is money making debt (loans, etc) that result in a huge net less of income were it to be paid off. I make around 50K per year I have over 200K in debt (house + student loans mostly). Why is my credit score Excellent (728 or so) but people are worried about the US government when it owes significantly less than it makes per year? We would only have a problem if the government couldn't balance the budget. The fact of the matter is, they just don't care to. There's no need. Liberals want to tax people directly to pay for their spending. Republicans would rather borrow money at a certain interest rate and sell it at a higher interest rate to make up for lower taxes and more spending. Liberals are thinking short term. Republicans are thinking long term. Of course your children will be paying off the debt. But by the end of it everyone will come out ahead. Let's say I want to invest 1 million dollars. I don't have 1 million dollars. I could try to earn that money but that would take a very long time and by the time I earn the money there's no time to do anything with it. A better idea is to borrow 1 million dollars now at say 5% interest. I then invest that money at a 10% return. In about 10 years I'll have 2 million dollars. As long as it costs me less than $100,000 per year, it's better to just keep paying the minimum amount, maybe even borrow another million, and keep the million in the bank earning interest and dividends. So really, there's no motivation for me to pay the money back since that debt makes money.
Well the government only brings in $3 trillion a year, $13 is if they seized every productive asset and penny of profit in the country for a year. $9 trillion is the debt outstanding in bonds, t-bills, etc... it doesn't account for government promises of entitlement spending (social security, medicare, etc). The $9 trillion isn't a problem really, but when you add all the money the government has promised to upcoming retirees you're suddenly looking at another $50-$70 trillion over the next 20-30 years. Inflation is the best way to pay it back so that the returns on social security are reduced from what the workers were promised. I think it will be tough for anyone who was relying on SS and Medicare for their retirement...
Kalvin: This upcoming year the govt is expecting to bring in about $2.5 trillian and spend close to $3 trillion. Hence the anticipated $400 million deficit. $13 trillian is the estimated size of the entire economy. That is why the deficit is so daunting. Cutting into $9 trillian total debt is a daunting task when govt side of the equation is dramatically smaller than what you cited. In the past, the concept of paying everything off via low cost borrowing versus anticipated higher revenues had some validity. The look of the graph provided in the OP suggests that the idea isn't working. I worked in the debt industry for a long time (commercial real estate). Assuming everything works out okay its a reasonable idea. Two problems with it. 1. Debt never sleeps. That means the revenue side always (and I mean always) has to be pumping away to cover debt. 2. Nobody can predict the future. Economic periods are cyclical. At various times economic production is great. Assuming costs are being controlled during flush times the govt could produce surplusses and pay down debt. But none of that goes forever. Theory is great....but it doesn't go forever and its not reality. It seems to me that the concept of borrowing is not working over this decade as seen by the graph. It is a time when we do need to coordinate expenditures and income to try and flatten out debt. Guerilla: I generally find it fascinating and simply naive at your strong pronouncements at how to solve all problems. NOBODY or NO GROUP or GROUPS can supercharge the economy. Its so incredibly different in reality than some overconfident pronouncement on how to solve all problems based on theory. In reading the book about Paul O'Neill's time at the Treasury Department it referenced how he and Greenspan would review leading indicators of about the twenty largest segments of the economy to try and get a grasp on economic conditions in the country. It was something the two men had done in the past during earlier periods of govt service. Assuming 20 leading industries that implies that each contribute something less than 5% to the economy. (there are other smaller segments.) They are so dramatically different they don't all just grow as if by some magic wand. In fact some industries are classicly countercyclical. One industry's growth does not imply all others will likewise soar. Even if some industries take off and grow they only continue to do so by meeting demand. Once demand tails off.....there goes the growth. The telecom industry got a lot of publicity at the end of the 1990's because it tanked. Prior to that it was a dramatic growth industry that got lots of publicity. It generated tons of growth publicity prior to the implosion because of phenomenal growth in the latter part of the 1990's. But actually it had a great long moderate but powerful growth spurt probably starting at the end of the 1970's. That essentially started when the govt deregulated telecom and broke up AT&T. Prior to that AT&T dominated both products and services....and had this very slow growth and development curve for new products and services. Competition drove new technology and services and that part of the economy had a stupendous overall growth span for about 2 decades. It was probably spurred by the unleashing of competition. By the end of the 1990's. Demand for product and service growth slowed and the businesses were over expanded still anticipating endless growth. Hence the bust. Our economy is profoundly pro business with controls being far fewer than the claims of theorists. Aggressive businesses have tremendous access to funding that can get industry off the ground. Then it takes successful management to make a business soar. The market is the ultimate decider if businesses work well or not. Taxes, for those of you have been entrepreneurial are not the decider if businesses will go for growth or not. During the 90's with a basic 50% versus current 45% highest tax rate at maximum income levels nothing stopped me or friends with aggressive ideas about growth and business development. On the other hand, I'm not going to say that is an absolute. If we were facing tax rates that were dramatically higher than competing developed nations I'm sure that there would be an enormous outmigration of entrepreneurially spirited people as there is in certain European nations.
if the debt makes money how come it keeps going up? And debt only creates income if it's invested. What has America invested that debt in? What will America invest the 400 billions debt you will accumulate this year? Does spending 600 billions/year on a army really produce any return?
I figure you would find it fascinating to see someone take a stand, make a pronouncement and try to tackle issues head on, instead of proposing rounds of questions, hypotheticals, and citing experts who were just as confused and muddied as the middle of the road ramblings I read here. Ah yes, the "in reality" defense. The Constitution is law, but in reality.... The President has narrow responsibilities but in reality... We should follow the law, but in reality... It must be easy standing for everything real and good, but nothing at all. You can supercharge the economy by getting out of the way of commerce. You can stop taxing productivity and financing a welfare/warfare state. You can encourage entreprenurship by removing barriers and not punishing saving, which is the foundation of capital, which is the bedrock of capitalism. Let free markets work, instead of placing them in chains and then bemoaning the loss of productivity and prosperity. The Chinese economy is booming because they have economic freedom. The fact that they don't have democracy, is not stopping them from becoming an industrial powerhouse. The Soviets allowed elections, but it made no difference if you voted for despot A or despot B, because they ran a warfare/welfare state that bankrupted them. Until people are willing to face up to this, that socialism is not only immoral, but it doesn't work, and get back behind the rugged self-reliance and power of law, we're going to descend into the same morass of bankruptcy the USSR experienced. Bin Laden said that he intended to bankrupt the US the same way the Afghani Mujahideen bankrupted the USSR. It's happening, but the champions of (supposed) progressive liberalism, along with militant conservatism are poor scholars when it comes to history because they are so fixated on their imperial hubris. If you want to engage me in debate, don't demean my position at the outset of the discussion. Take a counter position, and defend it. If you can't find a position, then maybe it's time to look at your preferences and attitudes, questioning how valid they are, when there is nothing behind them. When you undertake the journey of understanding what money is, what capital is, how the business cycle occurs, and the concepts of inflation and deflation (which I consider the basics), then we can have an intelligent discussion without the ankle biting you seem to bring out when someone challenges an issue in a forceful manner, and leaves you without a refuge of logic or precedent to draw from. Thanks for reading.
The problem is the government. The $3 trillion dollars is basically $3 trillion dollars of capital wasted on non productive activities and jobs. Anyone working for the government whether directly or as a sub contractor is a leach. $3 trillion of wasted capital. Supercharging an economy is as simple as removing red tape, removing subsidies, removing taxes, then limiting government to border defense, and insuring the rule of law. Despite its problems there is still a lot of capital in the US, there is also a lot of smart business people, and there is a lot of people who are willing to work hard. Its just all of these positives a chained down by the policies of fools.
I don't think China's success is not due to economic freedom. Money, trade, and commerce have been in China for thousands of years, making money is part of there natural psyche. They save there money (create captital), they produce things, and they sell them. They keep more than they make so they can do it all again. In a lot of situations they have virtual slave labour. Many great societies were built on the back of slaves. The foundations of the American economy were built on the back of slaves. China is not so free. China plan to move 300 million people to Africa. http://www.timesonline.co.uk/tol/news/world/africa/article3319909.ece
No, I believe it is due to economic freedom. It doesn't matter if you're ruled by a closed political system, as long as there is economic freedom. You can't be free, if you can't keep the fruits of your labor or pursue commerce without excessive interference. That is what the Chinese have. Progressive liberals define freedom as dependency and wealth distribution.
How can you call it economic freedom when people are regularly stripped of their land and you have slaves? Land http://www.washingtonpost.com/wp-dyn/content/article/2008/01/13/AR2008011302383.html http://www.usatoday.com/news/world/2007-03-26-china-river_N.htm http://www.nytimes.com/2006/01/17/international/asia/17china.html Formalized private property rights for land are one the fundamental foundations of real capitalism. Slaves http://www.iht.com/articles/2007/06/15/news/china.php
The land issues are prevalent everywhere. Allodial title is a scarce ideal. I read the article on slavery, and it doesn't seem to be a state mandate. China has a massive corruption problem. But it also doesn't imply that all Chinese are slaves.
NAFTA poses a large program and there's the looming threat of the WTO. We need to place restrictions on our trade. For example, this "lead in toys from China" thing could be prevented in the future and their sweatshop-style factories could be stopped if we say, "Hey China, play by the rules or don't play at all." Of course, we'd need some better rules, especially considering the sweatshops. I just think that if we trade with a country, they should at least meet some minimum wage standards. Plus, by curtailing trade with China, we could increase our own production.
yeah, but then the corporations would make just hundreds of millions instead of billions. Can you imagine those poor CEOs having to wait two extra weeks to be able to pay for a new private jet? What kind of cruel person are you anyway?