Posted on 01/25/2006 8:43:47 AM PST by Capitalism2003
Haven't seen it mentioned in the news yet...
Just think. If it wasn't for all of the fiscally conservative Republicans in Congress and a Republican President working so hard to keep a lid on spending and promoting limited government, we might have hit this debt ceiling as early as last week. < /sarcasm >
Mike Pence in 2008
waaahooo!! go republicans!!!
well, at least Bush didn't run as a fiscally conservative President.
I'll give him that much.
Intriguing possibility.
Maybe he'll actually be a REAL fiscal conservative.
That much, and your wallet. Some AIDS art group in SoHo will appreciate your cash "given" to them by "the government".
Republocrats are in charge.
With a last name meaning "Pennies", I think he will!
"(For you to insult me, I must first value your opinion.)"
Good tagline!
He is. Getting him to run, get the nomination, and win is our job.
"well, at least Bush didn't run as a fiscally conservative President. "
No - he ran on a "We're not gonna be world police and nation-builders" platform. /no sarcasm
As long as the Seniors get to spend their SS checks at the casino...everything is fine!!!
No no, that was the 2000 election. In 2004 it was the "Democracy 2004-2008 Tour" platform.
And Supreme Court judges.
Look on the bright side.
Now you can buy a helicopter with helicopter money and cut out the middle man.
Man! The minimum payment on that must be a PITA!
No big deal...they will just raise the ceiling again. heh
These seems like a completely BOGUS issue on the scale with global warming or Big Foot.
All money that comes into creation in a fractional reserve central bank system must be created as debt. If all of these debt-based 8.2 trillion dollars were paid back, an incredible amount of liquidity would pulled taken out ofd the system. The resulting economic collapse would make the Great Depression look like the greatest boom time ever in history.
The BOGUS part of your statement is that once there is enough of the "liquidity" floating around and you can't sucker any more buyers to fund your interest payments then you do end up in a great depression.
By my public school calculations, that's $27,334 for each and every one of us. I'm not sure I got my money's worth.
Well, I can remember back in the Reagan days when the debt was "skyrocketing" and it was unsustainable. Last I looked, the past 25 years or so have been pretty good on the economic side. What's the magic number for world economic collapse? If I should be losing sleep over this now, when will the torture end?
Don't worry. Once we get a Republican majority in the house and senate and take the presidency in 2000, the Republicans will cut spending and make government smaller and less intrusive.
Tell us all what would happen if the debt was paid off. I want you to display your lack of understanding in public.
You are correct. According to the recent WSJ editorial, Still Morning in America, over the past 277 months the US economy has been in expansion for 262 months and in recession for only 15 months. During that time, the US economy has created 43 million new jobs and increased our wealth by $30 trillion. In fact, we've created more wealth in the past 25 years than in the previous 200 years.
This kind of news should help all but the most ardent doomer's to sleep better at night.
The real question is not one of paying off the debt but it is one of what happens when the consumption (in the US) slows or nearly stops by comparison to its current pace.
Then there will be hell to pay and a wheel barrow full of your liquidity will get you a loaf of bread.
Are you saying you'd want to do this all at once? Why? Our external debt has increased by $2 trillion since 2001. During that same time, our household net worth has increased by more than $10 trillion. If your assets were increasing five times faster than your liabilities (and maybe they are), would you do something radical to stop it?
I don't think the issue is paying off the debt, it is servicing the debt.
We do that today by selling a billion dollars worth of treasuries every day in order to cover the interest on the debt we have created.
Imagine that you were at the peak of your earning power and you were comfortably carrying a fairly heavy debt load. But your earning power declined as you got older and you began to have a problem servicing the debt you created. Eventually your creditors stopped lending you money altogether or you had to pay extremely high interest rates to get a loan.
That is the situation we are facing as our population ages and there is no replacement (younger, earning) population of similar size. The magnitude of the last wave of the baby boomers dwarfs the follow on generations.
When creditors stop buying our treasuries, or insist on very high rates of return, our debt will come around to greet us.
This "Smaller and more Conservative Government" under the Republicans isn't working out too well for taxpayers. It is time for the Constitution Party to come on board.
"Imagine that you were at the peak of your earning power and you were comfortably carrying a fairly heavy debt load."
There is no such thing as "comfortably carrying a fairly heavy debt load." The peak of your earning power can come to a halt with just one tiny stroke or heart attack and it is all for naught.
Well, when a single president borrows $3 trillion, he should be able to throw one hell of a party...but a hangover (depression) is inevitable.
And mase, your ridiculous figures of "assets" that have grown so much are based on PAPER figures. Certainly home values have skyrocketed over the past decade, but this IS NOT REAL MONEY...It is NOT GDP growth...It has not CREATED ANYTHING REAL. If even 5% current homeowners decided to "cash out" tomorrow and sell their property, values nationwide would collapse overnight, and this so-called "wealth" will be erased.
The DEBT for individuals and our government will remain.
We're borrowing at about 4% and we've had no problem attracting all the cash we need at these rates. The path to our present debt situation has been a prosperous one, with inflation, interest rates, and unemployment all falling from double-digit rates to levels not often seen anywhere else. The growth in our debt has also led us through a bull market that has seen the Dow rise from 743 in 1982 to almost 11,000 today.
Although I would very much like to see us shrink the debt by controlling spending, our debt service is small in relationship to the size of our economy. If there is a great deal of public hand wringing over the debt, the politicians will use it as an excuse to raise taxes. I'd much rather have the government selling T-bills for 4% instead of taking my money that I can earn 10% with.
Eventually your creditors stopped lending you money altogether or you had to pay extremely high interest rates to get a loan.
The fact that we're able to attract so much capital into this country, at very low rates, is an unambiguous market signal that the United States is presently the best place to park one’s money. It also means that we have a very solid economy.
When creditors stop buying our treasuries...
There would have to be a better place for them to put all those dollars they've earned from our consumption of imports. If not US T-bills, then what?
or insist on very high rates of return
Have you ever tried to demand a higher interest rate from your bank?
And the debt is just PAPER debt. We don't owe GOLD, OIL, LAND, etc. This works both ways.
Big deal – its only money.
Oops – my beloved Camaro died and is in the category of uneconomically feasible to repair. I have to junk it and buy another car. Why couldn’t this have held off a few months?
I'm against the government wasting my hard earned money too. The growth in entitlements needs to be controlled and Bush has a plan to reduce income security (farm supports) and for reforming social security. That's a huge chunk of the budget.
If you do the math however, you realize that what's really important is increasing our wealth. I say, for now, the government borrowing at 4% is better than them taking more of my money when I can earn 10% on it. Our household net worth is $51 trillion which is almost double what it was just a decade ago. If our wealth is growing five times faster than the national debt, are things really out of control?
Yup, soup lines are just around the corner. Be sure to change out that bottled water and canned tuna in your bunker every couple of years.
Certainly home values have skyrocketed over the past decade, but this IS NOT REAL MONEY
Yes, even so, homeowner equity only accounts for about 21% of our total net worth. Even with all the mortgage debt and home equity loans the average American household has 57% equity in their home. Your aversion to facts is what leads to your knee jerk reactions.
...It is NOT GDP growth...It has not CREATED ANYTHING REAL.
Our GDP growth is the envy of the world.
If even 5% current homeowners decided to "cash out" tomorrow and sell their property, values nationwide would collapse overnight, and this so-called "wealth" will be erased.
Sounds horrible. Do you have any proof that this would happen or is this just more of that fact-free emotion you've become known for? Do you even know what % of American households buy and sell homes each year? If they sell their homes to cash out as you suggest, where will they live? Will they turn from homeowners to renters? Will they do this because of the tax advantages? LOL When was the last time this country showed a year over year decline in the aggregate value of real estate?
The DEBT for individuals and our government will remain.
Is American households have $60 trillion in assets, how much do you think the fedgov has in assets? A discussion about debt is meaningless without knowing how much in assets we own. Do I need to link you to the Federal Reserve report again or will you just ignore it again?
We need more people to spread this debt around - darned planned parenthood!
Interesting. I've always thought it was our ability to attract investment capital along with technological innovation, to increase productivity, that drove our economic growth and increased our standard of living. I think that's what separates our economy from all the others. That, and entrepreneurial ability.
The boomer generation has kept us in a wave of people who are experienced, seasoned and educated beginning in about 82!
If this is true, how does the next generation in this country always manage to enjoy a higher standard of living? Are you saying that technological advances are going to stop and that those behind the boomer's won't increase their productivity and, therefore, their standard of living?
Our population continues to grow as does our productivity and real income. It's not going to stop just because the boomer's go into retirement. Americans, throughout history, have moved up the income ladder from the lower quintiles to the upper and I don't see anything that's going to stop that progression of upward mobility. But then again, I am an optimist.
So, when do we pay the piper??? When the consumption stops.
So, the boomer generation is the generation of consumption but once they hit retirement all that consumption is going to stop or slow dramatically? I just don't see it. Even if it does, our population continues to expand. There is nothing out there that indicates innovation and productivity are going to slow down in the future. This being so, the US will continue to attract the investment capital it needs to grow the economy and support a rising standard of living.
Most would agree that when a countries debt exceeds its GDP, the country is in trouble.
Not sure who you mean by "most". If we continue to grow our household net worth five times faster than the national debt. where will the problem be?
In the meantime enjoy the last few years of the most prosperous period that the US has ever known!
You sure have a gloomy outlook on the future. It's hard for me to share your doom when I look at the trend in per capita disposable income and the decline in federal debt as a percent of household wealth. I can also look at public debt as a percent of GDP and employment as a percent of the population and be fairly certain that my positive outlook is based on facts.
Believe what you like but there is little doubt in my mind that my children will enjoy a better quality of life than I have and that the world will be a safer place thanks to the growth of capitalism worldwide and the courage of our military, and the resolve of a majority of our leaders, in conducting the WOT.
Mase we will agree to disagree.
But I appreciate your civil tone all the same. Too many posters want to get "in your face" and start throwing insults. Its nice to spar with someone who can carry on a civil discussion.
I don't have a doom and gloom view of the future, just one that is based on my observation of the indicators that I have found to be reliable predictors over and over.
1. Profits are up, but the wages and the incomes of average Americans are down. quote:
-------------------------------------------------------------------------------- * Inflation-adjusted hourly and weekly wages are still below where they were at the start of the recovery in November 2001. Yet, productivity—the growth of the economic pie—is up by 13.5%. * Wage growth has been shortchanged because 35% of the growth of total income in the corporate sector has been distributed as corporate profits, far more than the 22% in previous periods. * Consequently, median household income (inflation-adjusted) has fallen five years in a row and was 4% lower in 2004 than in 1999, falling from $46,129 to $44,389. --------------------------------------------------------------------------------
2. More and more people are deeper and deeper in debt. quote:
-------------------------------------------------------------------------------- * The indebtedness of U.S. households, after adjusting for inflation, has risen 35.7% over the last four years. * The level of debt as a percent of after-tax income is the highest ever measured in our history. Mortgage and consumer debt is now 115% of after-tax income, twice the level of 30 years ago. * The debt-service ratio (the percent of after-tax income that goes to pay off debts) is at an all-time high of 13.6%. * The personal savings rate is negative for the first time since WWII. --------------------------------------------------------------------------------
3. Job creation has not kept up with population growth, and the employment rate has fallen sharply. quote:
-------------------------------------------------------------------------------- * The United States has only 1.3% more jobs today (excluding the effects of Hurricane Katrina) than in March 2001 (the start of the recession). Private sector jobs are up only 0.8%. At this stage of previous business cycles, jobs had grown by an average of 8.8% and never less than 6.0%. * The unemployment rate is relatively low at 5%, but still higher than the 4% in 2000. Plus, the percent of the population that has a job has never recovered since the recession and is still 1.3% lower than in March 2001. If the employment rate had returned to pre-recession levels, 3 million more people would be employed. * More than 3 million manufacturing jobs have been lost since January 2000. --------------------------------------------------------------------------------
4. Poverty is on the rise. quote:
-------------------------------------------------------------------------------- * The poverty rate rose from 11.3% in 2000 to 12.7% in 2004. * The number of people living in poverty has increased by 5.4 million since 2000. * More children are living in poverty: the child poverty rate increased from 16.2% in 2000 to 17.8% in 2004. --------------------------------------------------------------------------------
5. Rising health care costs are eroding families' already declining income. quote:
-------------------------------------------------------------------------------- * Households are spending more on health care. Family health costs rose 43-45% for married couples with children, single mothers, and young singles from 2000 to 2003. * Employers are cutting back on health insurance. Last year, the percent of people with employer-provided health insurance fell for the fourth year in a row. Nearly 3.7 million fewer people had employer-provided insurance in 2004 than in 2000. Taking population growth into account, 11 million more people would have had employer-provided health insurance in 2004 if the coverage rate had remained at the 2000 level. -------------------------------------------------------------------------------- --------------------------------------------------------------------------------
Even Newsmax is aware of the dangers facing us ahead in that they summarize from an Economist article:
Danger time for America http://www.economist.com/finance/displayStory.cfm?story_id=5381959 quote: -------------------------------------------------------------------------------- The economy that Alan Greenspan is about to hand over is in a much less healthy state than is popularly assumed
DESPITE his rather appealing personal humility, the tributes lavished upon Alan Greenspan, the chairman of the Federal Reserve, become more exuberant by the day. Ahead of his retirement on January 31st, he has been widely and extravagantly acclaimed by economic commentators, politicians and investors. After all, during much of his 18½ years in office America enjoyed rapid growth with low inflation, and he successfully steered the economy around a series of financial hazards. In his final days of glory, it may therefore seem churlish to question his record. However, Mr Greenspan's departure could well mark a high point for America's economy, with a period of sluggish growth ahead. This is not so much because he is leaving, but because of what he is leaving behind: the biggest economic imbalances in American history.
One should not exaggerate Mr Greenspan's influence—both good and bad—over the economy. Like all central bankers he is constrained by huge uncertainties about how the economy works, and by the limits of what monetary policy can do (it can affect inflation, but it cannot increase the long-term rate of growth). He controls only short-term interest rates, not bond yields, taxes or regulation. Yet for all these constraints, Mr Greenspan has long been the world's most important economic policy maker—and during an exceptional period when globalisation and information technology have been transforming the world economy. His reign has coincided with the opening up to trade and global capital flows of China, India, the former Soviet Union and many other previously closed economies. And Mr Greenspan's policies have helped to support globalisation: the robust American demand and huge appetite for imports that he facilitated made it easier for these economies to emerge and embrace open markets. The benefits to poorer nations have been huge.
So far as the American economy is concerned, however, the Fed's policies of the past decade look like having painful long-term costs. It is true that the economy has shown amazing resilience in the face of the bursting in 2000-01 of the biggest stockmarket bubble in history, of terrorist attacks and of a tripling of oil prices. Mr Greenspan's admirers attribute this to the Fed's enhanced credibility under his charge. Others point to flexible wages and prices, rapid immigration, a sounder banking system and globalisation as factors that have made the economy more resilient to shocks.
The economy's greater flexibility may indeed provide a shock-absorber. A spurt in productivity has also boosted growth. But the main reason why America's growth has remained strong in recent years has been a massive monetary stimulus. The Fed held real interest rates negative for several years, and even today real rates remain low. Thanks to globalisation, new technology and that vaunted flexibility, which have all helped to reduce the prices of many goods, cheap money has not spilled into traditional inflation, but into rising asset prices instead—first equities and now housing. The Economist has long criticised Mr Greenspan for not trying to restrain the stockmarket bubble in the late 1990s, and then, after it burst, for inflating a housing bubble by holding interest rates low for so long (see article). The problem is not the rising asset prices themselves but rather their effect on the economy. By borrowing against capital gains on their homes, households have been able to consume more than they earn. Robust consumer spending has boosted GDP growth, but at the cost of a negative personal saving rate, a growing burden of household debt and a huge current-account deficit.
Take away the massive deficit spending (odd, eh? Esp. in a time of "recovery"?), add in the negative savings rate (consumers overloaded with debt), add in fragile paper worth of Americans' home equity, add in average wages lagging inflation for two years now, and add in the fear cost of the price of energy due to a potential war with Iran, and that's one scary-ass equation!
THINK mase...Don't just tout the party line cuz you like Bush.
Chairman of the Board
Gerald W. McEntee
President, American Federation of State, County and Municipal Employees
Secretary-Treasurer
Morton Bahr
President, Communication Workers of America
Lawrence Mishel
President, Economic Policy Institute
Jeff Faux
Distinguished Fellow, Economic Policy Institute
Barry Bluestone
Professor of Political Economy, Director for Urban & Regional Policy, Northeastern University
R. Thomas Buffenbarger
President, International Association of Machinists
Ernesto J. Cortes, Jr.
Director, Industrial Areas Foundation
Leo W. Gerard
President, United Steelworkers of America
Ron Gettelfinger
President, International United Auto Workers
Robert Kuttner
Editor, The American Prospect; author, columnist, Business Week, New Republic
Julianne Malveaux
Economist, writer, syndicated columnist; owner, Last Word Productions
Ray Marshall
LBJ School of Public Affairs, University of Texas; former Secretary of Labor
Edward J. McElroy
President, American Federation of Teachers
Jules O. Pagano
Vice President, American Income Life Insurance Company
Bernard Rapoport
Chairman of the Board, American Income Life Insurance Company
Bruce Raynor
President, UNITE (Union of Needletrades, Industrial and Textile Employees)
Robert B. Reich
Heller Graduate School, Brandeis University; former Secretary of Labor
Andrew L. Stern
President, Service Employees International Union
Richard L. Trumka
Secretary-Treasurer, AFL-CIO
Roger Wilkins
Professor of History and American Culture, George Mason University
Are you so unable to support your absurd assertions that you have been reduced to quoting from a group run by unions and socialist activists? C'mon, Robert Reich, Julianne Malveaux - she's the one demanding reparations for slavery -The United Steel Workers, The AFL-CIO, The National Federation of Teachers?!! Are these the kinds of people you need to help you make your case?
What, couldn't you find any stats to back up your propaganda from the CPUSA or Public Citizen? How Conservative of you! ROFL
You have no explanation for why our household net worth (that's assets less liabilities which includes all that mortgage and consumer debt your left wing website is so concerned about) continues to increase five times faster than our national debt nor do you understand how the national savings rate is calculated. You ignore (or can't understand) the math that easily proves incomes have risen for Americans over time which is why they can increase per capita consumption year after year, while their net worth (that's assets less liabilities, which includes all mortgage and consumer debt) continues to grow. You can't even show us where the money supply has been over stimulated because inflation is nonexistent - other than in you hyperactive imagination. Finally, you whine constantly about debt accumulation without any regard for assets. How can you understand any of what you post if you can't even understand the most basic accounting like how net worth is calculated?
Because of your lack of knowledge, you are forced to post some socialist rant from a left wing think tank run by unions. Who exactly are you shilling for?
Is this really about the national debt and the money supply or is this more about personal circumstances that have caused you to take a bleak view of what are, in reality, really great times?
Alright!! Tell us what we won, Bob!!
Pathetic. Waiting for people coming to tell us it is still better than the alternative in 5,4,3,2,1...
It has been very refreshing to read your exchanges, they remind me of FR in my lurking days. Both have very interesting points, backed with knowledge and opinions. No one was called a troll, given ZOT pictures or insulted, even though both opinions and conclusions differ and remain to differ... thank you both very much.
Although, I am in the camp that when the baby boomers all start getting SSI checks and prescription drugs, there will be heck to pay that we cannot imagine. The seniors have voted themselves some very nice packages that will have to be paid for by us and our children.
This is called an ad-hominem attack. When in desperation, throw logic out the window and begin attacking individuals, rather than addressing their arguments and FACTS presented.
Debate over. You lose.
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