Posted on 04/05/2010 7:36:56 AM PDT by SmithL
And spending, as you know, is mutually exclusive from revenue. That fact remains, the tax cuts increased revenue and were done at the right time.
Is that assuming that you have current wages and that those wages will keep up with the inflation rate? Doesn't that also assume that all employee pension plans, individual IRA's and 401K plans (denominated in dollars, not precious metals) become worthless leaving all holders destitute? I keep hearing this arguement that hyperinflation isn't all bad because of the debt wipe out, but I find no solace in the fact that ones current wages may not keep up with a hyperinflationary rate and all individual pensions, savings, and retirement savings become worthless (if denominated in dollars).
Not during a war. Never in the history of the world before Lyndon Johnson has a government ever cut taxes while increasing their budgetary burden. That’s what Bush did.
Now, if he had cut domestic spending so that we were running a surplus during his term you mighht have a point. But he didn’t so you don’t.
The most important principle in running a government is keeping a balanced budget just as the most important principle in running a company is to ensure that your revenue can cover expenses.
At some point you do reach a point where cutting your price causes your revenue to go down. It is basic economics. Supply side economics as far as tax rates only work when the tax rates are above the equilibrium point. And even then, you should only spend as much as you take in and not a dime more.
Well we’ll just print more money and raise taxes.
The people who worry are just racist who don’t like a black man being in charge.
seriously though - all this debt with nothing to show for it? Makes me want to vomit....
And let's keep things in perspective. Compared to Obama’s $1.4 trillion dollar budget deficits, the Bush Admin averaged about a yearly $200 billion dollar budget deficit. And the last Republican Congress budget FY2007 only had a $160 billion dollar deficit.
Our national debt increased about 90% under Bush’s administration. A lot of people blame that on the war. The fact is, the war was costly, but it wasn’t the problem. The problem was run-away spending across the board.
Today Obama says he’s trying to get the budget under control by cutting NASA and military projects. The fact is, while those do consume billions, those are pittances compared to domestic give-aways.
We spend a trillion here and a trillion there, and none of it is going to the military. We need to get off this kick of siding with those who wish to see our military even smaller, or defenses even weaker.
That IS NOT the road to success. It’s the road to failure, to mediocrity, to an also ran status.
If you look at the percentage of the national budget the military expense makes up, you’ll note that it is smaller today as a percentage then it has been in decades. So while Russia, China, Iran, and other nations procure more weapons and are thereby a bigger threat, we see our people suggesting we need to spend less.
Not on the military we don’t...
History does repeat itself.
If you count the $4.5 trillion "borrowed" from the Social Security Trust Fund, we're already at 90%.
$12,702,551,000,000.00 and growing as I type...
Well, let me put it this way. There is no easy road ahead of us from here. There have been major structural problems in our economy for years. Politicians in both parties chose to ignore it until it became to late to prevent.
The time to start staving this off and changing how we do business was 2005, 1995 and even 1985. 2010 is now too late. All we have awaiting us are unattractive options. You have just described an unattractive option. But in that unattractive option people would still be able to own their property. They could grow food on their property. They could subsist.
Believe me, in hyperinflation I stand to lose millions that I earned through a quarter century of working far more than the average 40 hours a week. But I have already begun to increase my own personal investments in land and am looking at ways to safeguard my total value.
That’s what you have to understand. Short of us finding some new economic process that will allow us to continue our dominance of the world’s economy for this century we are in our decline. There are ways to survive as a nation doing that. If 25% of our nations homeowners get the boot because of deflation these are people who will never again say the pledge, wave the flag or even give the slighest damn about what happens to this country.
Give me a break. We are a nation of 310 million people. 80% of the population lives in urban areas. The idea that any substantial number people can survive on subsistence farming is nonsense. Nor will anyone be insulated from the impact of inflation unless they are hermits living alone in the woods. And besides, what kind of state would the nation be in if the people were trying to survive on growing their own food?
2. It would wipe out all debts and allow us to restart with a new currency and new rules to prevent it from ever coming to that again.
How we would get from here to there would be problematic, especially since the dollar is the global curency. Essentially, we would have to declare bankruptcy as a nation, which would send the global economy into something far greater than the Great Depression.
Germany is the only fiscally prudent nation in Western Europe for one reason and one reason alone. They endured Weimar.
They also endured WWII, which essentially destroyed the country economically. The Gemrans are not as in good shape economically as you make them out to be. They still have some of the highest tax rates among the developed countries and they have cut back on the entitlement programs.
And let me tell you what the alternative to hyperinflation could be. It could be a situation where as many as 30% of homeowners are forced out of their homes. Where many small business owners are forced out of their businesses (if they own the premises) for inability to pay the mortgages. That would be far more damaging to national stability than hyperinflation.
I went thru the Carter years and high inflation. I thought I got a bargain when I got a home mortgage rate of 10.5%. Inflation will drive up interest rates making it more difficult for people to buy homes or builders to construct new ones. And anyone on an ARM will have a major problem.
High inflation IS the country collapsing. Devaluing currency is cheating, an unfair way of paying off debts: reducing the amount owed by reducing the value of the payments. If long-term agreements cannot rely on stable currency value, the agreements collapse and take the related economic infrastructure with them.
Are you willing to pay the taxes needed to sustain it? At some point something will have to give and no way forward is attractive. There are some however that we can survive and some which I don’t know if we can.
Keep in mind that national debt = budget deficit + intergovernmental debt.
Bush added about $1.9 trillion in 8 years to the budget deficit. Intergovernmental debt is entitlement programs, bonds, & treasuries (interest). Intergovernmental debt is on auto pilot.
I would really love to know how everyone on this site puts quotes in italics.
“Give me a break. We are a nation of 310 million people. 80% of the population lives in urban areas. The idea that any substantial number people can survive on subsistence farming is nonsense. Nor will anyone be insulated from the impact of inflation unless they are hermits living alone in the woods. And besides, what kind of state would the nation be in if the people were trying to survive on growing their own food? “
Plenty of people in urban areas had victory gardens during World War II. I live in a city of 200,000 in a metro area of 600,000. I would say that almost everyone who has a yard in the city I live in has the capability to grow enough food to keep their families alive. It might only be enough to sustain 1,000 calories a day but it is enough to keep them alive.
“How we would get from here to there would be problematic, especially since the dollar is the global curency. Essentially, we would have to declare bankruptcy as a nation, which would send the global economy into something far greater than the Great Depression. “
We’re pretty much already there. The media just hasn’t told you that yet.
“I went thru the Carter years and high inflation. I thought I got a bargain when I got a home mortgage rate of 10.5%. Inflation will drive up interest rates making it more difficult for people to buy homes or builders to construct new ones. And anyone on an ARM will have a major problem.”
If we ever seriously got into a situation of hyperinflation, those ARMs wouldn’t matter because very quickly the principal would be settled and the government would definitely step in and modify the mortgages so that people couldn’t get screwed on interest. Not the most economically efficient or market oriented solution but if we get to that point then the primary concern will be national survival and not fidelity to any high blown philosophy.
You phase in the changes just like they did in 1983 when they raised the retirment age from 65 to 67. I favor personal accounts with a smalled defined benefit program to cover survivor and disability benefits. You eliminate the government liability for the program. Over 30 countries have done exactly that including Chile and the UK. SS is the easiest entitlement program to solve.
There might be an inventive solution. I actually think there is some equilibrium point in which you could increase federal employment to the point that it would put enough money back into the economy through consumption to bring back the private economy and you could do that while reducing the number of people who are on entitlements.
Government is already too big. Obama is growing it even faster than Bush. When you increase government spending, you take money out of the private sector. The USG is already borrowing almost half of the money it spends.
Economies rebound remarkably fast if governments get out of the way, but that’s a big “if”.
He said we should never fool ourselves into thinking we'd get out of debt or paying our property taxes so easily in a hyperinflationary situation, because the government and the lending institutions would not allow us to pay our debts and taxes at current rates without going to the courts (or passing new laws) to have the debt language changed in the supposedly legal-biding debt document.
Likewise with the payment of property taxes, which would be quickly remedied to be increased to compensate for highly devalued dollars. My professor said one thing we had all better understand well is that when hyperinflation comes, the government and the banking industry will not be the one taking the hit.
Employing someone in a federal job is not exactly the same as handing someone an entitlement check.
Whether it is a state job or a federal job every job that there is increases consumption and demand for that consumption and in the case of the federal government, the higher job security increases the likelihood of more consumption from the person holding it, thereby increasing demand and pepping up the private market.
As I’ve said, in a normal scenario I’d never advocate such a thing. I however, realize that we are close to being forever in the hole and that it might take unconventional thinking to pull us out.
Should say state (as in government) or private (I’m 48, I mix up words sometimes) job. But the point still stands. Every job that actually provides enough to keep a person a loyal and engaged citizen and to get them to consume has value in a consumption based
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