Obama 7 - now what?

[amherstblackbear]

Re: Obama 7 - now what?

But who's going to buy the new debt?

The only way to make a dent in the debt is to run a surplus and pay it down.

Well, if we can get the deficit under control, growth will eventually take care of the debt, right?

Imagine a mortgage taken out in 1970 for $35,000. Even if the principal is kept constant, in real terms the size of the debt will shrink over time.

 

[Tundra]

Re: Obama 7 - now what?

Funny. The debt was under control when Clinton left office. Must be Obama's fault.

According to some old articles in 1999 we're supposed cut the national debt to 1Trillion or less by now. And if it was a good idea to have no debt.

I guess that's the danger of linear projections, unforseen problems... although for some reason healthcare and education seems to be on that steep curve for awhile now.

http://news.bbc.co.uk/2/hi/business/380923.stm

t is not so long ago, that economists and politicians on both sides of the Atlantic fretted about the US government's escalating budget deficit and the ballooning size of public debt.

The days of gloom are over.

A booming economy has generated massive tax revenues, and President Bill Clinton now predicts that it would take the government just 16 years to reduce the public debt to zero.

Although they did get it right with What IF questions... Bush did lower taxes, we had the stockmarket crash, 911 and the war on terror (Iraq, Afghanistan)

But what if ...
# today's fantastic growth rates collapse?
# the stockmarket falters?
# inflation rebounds and interest rates rise?
# unforeseen events force government to spend more?
# Congress or a new president opt for tax cuts instead of debt repayments?

 

[Tundra]

Re: Obama 7 - now what?

So the theory goes that you can pump money into the economy in order to get it moving and then snatch the punch bowl by reducing the money supply (raise interest rates) once velocity starts to increase.

Under Carter we increased the money supply by 13% and in order to get inflation under control the Fed had to increase the prime rate to 20%.

We now have increased the money supply 120%. What is it going to take to bring things back in line?

Doesn't need to get in line is the current thinking (since the 80s reagan), I think Soros mentioned that in the book: Alchemy of Finance wrote in the 90s called it the imperial circle US budget deficit - US trade deficit - Japan buys our debt from the trade surplus. Now China has replaced Japan as our creditor and it's gotten much bigger since the 80's.
Buffet kinda mentioned that on some interviews.. that we are debtor nation now since like 2004-05... but that we have so much assets that other countries are willing to let us borrow against it basically.

And on inflation I think the Fed has changed their mind from the 70's ... as long as they can keep the expectation of inflation at bay (using fake numbers )... we are all A OK.
Remember the problem we're currently having is the contraction of credit from de-leverging of the banks. but who the hell knows... we're reducing leverage on one end while pumping massive stimulus on the other end.

 

[joecct]

Re: Obama 7 - now what?

The deficit maybe, but not the debt. That was Reagan's fault.

Article I, Section 9, Clause 7 of the US Constitution: "No money shall be drawn from the treasury, but in consequence of apporpriations made by law."

The fault lies not with the Executive, but with the Legislative. We continually blame the President, but give an almost free pass to the thieves that authorize and appropriate the money.

Though I would love to see some spine in the Executive office with vetoes. Unfortunately, they are rare.

 

[Plante26]

Re: Obama 7 - now what?

So the theory goes that you can pump money into the economy in order to get it moving and then snatch the punch bowl by reducing the money supply (raise interest rates) once velocity starts to increase.

Under Carter we increased the money supply by 13% and in order to get inflation under control the Fed had to increase the prime rate to 20%.

We now have increased the money supply 120%. What is it going to take to bring things back in line?

A massive increase in government revenue, or a massive decrease in government spending.

So it's either higher taxes or fewer government programs/employees. Which one do you forsee occurring under this administration?

 

[Kepler]

Re: Obama 7 - now what?

Well, if we can get the deficit under control, growth will eventually take care of the debt, right?

Imagine a mortgage taken out in 1970 for $35,000. Even if the principal is kept constant, in real terms the size of the debt will shrink over time.

Correct. If we balanced the budget (for real, not by plundering future funds, keeping wars off-budget, projecting that slashing the top marginal rate will usher in rainbows and lollipops, etc), there will in fact come a time when $12,000,000,000,000 won't be scary.

Balancing the budget is the whole trick, though. Deep, dollar-for-dollar cuts in HHS and the DOD and restoring the progressive tax structure of the Marxist Eisenhower 50's would be a good place to start. **** everybody off equally and you're doing something right.

But frankly if we can balance the budget we can also overshoot and pare down the debt. The investor confidence in actually being party to a solvent American economy alone would likely offset the dislocation caused by spending cuts and higher taxes. Plus, shunting the burden of defending the Empire to our allies will doubly-improve our competitiveness. That will mean no longer funding multinational profits with the tax dollars of the American middle class, but we can throw a telethon for Exxon.

 

[Plante26]

Re: Obama 7 - now what?

Correct. If we balanced the budget (for real, not by plundering future funds, keeping wars off-budget, projecting that slashing the top marginal rate will usher in rainbows and lollipops, etc), there will in fact come a time when $12,000,000,000,000 won't be scary.

Balancing the budget is the whole trick, though. Deep, dollar-for-dollar cuts in HHS and the DOD and restoring the progressive tax structure of the Marxist Eisenhower 50's would be a good place to start. **** everybody off equally and you're doing something right.

But frankly if we can balance the budget we can also overshoot and pare down the debt. The investor confidence in actually being party of a solvent economy alone would likely offset the dislocation caused by spending cuts and higher taxes.

I agree with you, except for your tax strategy. The 1950s tax rates worked because we were a national economy, not part of a global one. We already have one of the highest corporate tax rates in the world--foreign investment in the U.S. would slow to a trickle because there are now dozens of countries as alternatives for those investments that would produce a much, MUCH higher ROI.

I'm not advocating for a substantial reduction in taxes for the wealthy, but if you severely punish them their money will go elsewhere.

And no one ever got a job from a poor person.

 

[Tundra]

Re: Obama 7 - now what?

Well, if we can get the deficit under control, growth will eventually take care of the debt, right?

Imagine a mortgage taken out in 1970 for $35,000. Even if the principal is kept constant, in real terms the size of the debt will shrink over time.

Sure. If we can get the deficit under control. If our GDP keeps growing. depending on the value of the dollar and consequent interest rate we pay to refinance our $12Trillion loan. The problem is the principal is due every 2/5/10/30 years that we need to refinance.

Greenspan and others keep talking about how our debt to GDP is manageable but if our GDP shrinks like it did recently then we're in a world of hurt. IE deflation would make that debt monumental... conversely high inflation would make it manageable as long as we can pay low interest rates when refinancing.

 

[Plante26]

Re: Obama 7 - now what?

Sure. If we can get the deficit under control. If our GDP keeps growing. depending on the value of the dollar and consequent interest rate we pay to refinance our $12Trillion loan. The problem is the principal is due every 2/5/10/30 years that we need to refinance.

Greenspan and others keep talking about how our debt to GDP is manageable but if our GDP shrinks like it did recently then we're in a world of hurt. IE deflation would make that debt monumental... conversely high inflation would make it manageable as long as we can pay low interest rates when refinancing.

The printing of money at a breakneck pace will devalue the dollar (as it has for the past few months) and the higher taxes on the horizon will dampen any growth in the GDP. If inflation kicks in soon (which it typically does with a drastic increase in the cash supply), we're on a collision course with disaster. Especially when considering interest rates climb when the rate of inflation moves higher. Given the amount of new money flooding the economy coupled with unprecedented spending on new government programs/stimuli, well, Obama has said he brought us back from the brink, but now we're running backwards over another much larger cliff.

 

[unofan]

Re: Obama 7 - now what?

If inflation kicks in soon (which it typically does with a drastic increase in the cash supply), we're on a collision course with disaster.

Yeah, but when the infusion of cash is to insulate against deflation, then it's not so much heading for a collision as staving one off.

The trick, of course, is to reign in the money supply once the economy gets going again.

 

[unofan]

Re: Obama 7 - now what?

And no one ever got a job from a poor person.

You can't collect taxes from poor people to pay off the debt, either.

 

[ScoobyDoo]

Re: Obama 7 - now what?

You can't collect taxes from poor people to pay off the debt, either.

And there's the box. The other funny thing is without taxes big business don't/won't have the infrastructure or employees available to run their business.

But, they don't like to talk about that.

After all we could move Silicon Valley or the Financial Sector of New York to the backwoods of Mississippi with the snap of a finger.

 

[ScottM]

Re: Obama 7 - now what?

You can't collect taxes from poor people to pay off the debt, either.

Sure you can. Just open up federally chartered casinos and lotteries. The suckers will have that debt paid down in a few days.

 

[Plante26]

Re: Obama 7 - now what?

Sure you can. Just open up federally chartered casinos and lotteries. The suckers will have that debt paid down in a few days.

The City of Duluth could use that:

http://www.duluthnewstribune.com/event/article/id/150191/

tDECC might end up being tFDLECC.

 

[Plante26]

Re: Obama 7 - now what?

You can't collect taxes from poor people to pay off the debt, either.

You could if they weren't poor, but by the government giving them everything they need, there's really no incentive for them to better their lives, is there?

Discomfort creates motivation to make the discomfort away. Bring back government cheese, bread lines, soup kitchens and the CCC grunt work camps, and I can virtually guarantee people will start trying to better themselves to avoid doing shiite work.

The only thing I worry about is that there are so many handouts available these days that people would actually prefer to be homeless than work for a living. Not saying that all government spending is on social programs, but the way things are going, it is going to be a growing percentage of the national budget.

 

[ScoobyDoo]

Re: Obama 7 - now what?

You could if they weren't poor, but by the government giving them everything they need, there's really no incentive for them to better their lives, is there?

Discomfort creates motivation to make the discomfort away. Bring back government cheese, bread lines, soup kitchens and the CCC grunt work camps, and I can virtually guarantee people will start trying to better themselves to avoid doing shiite work.

The only thing I worry about is that there are so many handouts available these days that people would actually prefer to be homeless than work for a living. Not saying that all government spending is on social programs, but the way things are going, it is going to be a growing percentage of the national budget.

Sure, discomfort. But that doesn't solve the problem of single parent homes, and two incomes being required just to make ends meet. Especially when the jobs that single parents often have are the lesser jobs. It also doesn't account for all the disabled, mentally or otherwise. And then the management of those lists are very poor cause we always have a percentage trying to cheat the system.

There are no easy answers.

 

[Kepler]

Re: Obama 7 - now what?

Sure you can. Just open up federally chartered casinos and lotteries. The suckers will have that debt paid down in a few days.

The more traditional method is to start a religion.

Barring a sudden evolutionary change in human intelligence, the voters aren't going to get any smarter, so any candidate who suggests either cutting spending or raising taxes will be immolated. The only way to balance the budget is by appealing to the pure, pristine hatreds of the American public. The Dems can push their class warfare of soaking the decadent rich, while the GOP can push theirs of punishing the divinely-judged poor. Both sides will make sacrifices out of the sheer joy of spite.

Or we could find another continent to despoil*. I can't see the Africans putting up much of a fight.

(* I know, I know, we're already on it. I watch the news...)

 

[Plante26]

Re: Obama 7 - now what?

Sure, discomfort. But that doesn't solve the problem of single parent homes, and two incomes being required just to make ends meet. Especially when the jobs that single parents often have are the lesser jobs. It also doesn't account for all the disabled, mentally or otherwise. And then the management of those lists are very poor cause we always have a percentage trying to cheat the system.

There are no easy answers.

Agreed. My younger sister has cerebral palsy--we need to take care of those that are genuinely disabled/handicapped. However, the term "disabled" is being thrown around much too loosely these days, considering that a good number of "disabled" people in Duluth apparently can't hold a job, but can sure as he-ll be at the bank bright and early on the 3rd of the month to empty their accounts and go to where ever to spend it. Next 3rd of the month: Wash, rinse, repeat.

The means by which these programs are administered needs a severe overhaul. You shouldn't be able to use your Minnesota EBT card to pull cash out at the ATM. Making it more lucrative to be on public assistance than hold down a minimum wage job is ludicrous. If someone needs $1200/month to make ends meet, and can only earn $900/month, than fine.....subsidize the difference instead of handing over the entire $1200. And then make sure that the welfare recipient is trying to better their lot via education, job training, etc.

And, if you were to force people to at least work for the government to get their bennies, you'd lose a lot of applicants that just don't want to work. Of course, the government labor unions would go berzerk about the idea of someone doing the menial work that one of their members would be getting $19/hour to do.

Oh, and cut off the benefits of those who use government money to buy cable TV, alcohol, cigarettes, drugs, etc. That shiite is a luxury, not a right.

And one last thought: The government is going to make it mandatory that EVERYONE have health insurance, but they won't say the same thing about jobs? That ain't right.

 

[Rover]

Re: Obama 7 - now what?

The City of Duluth could use that:

http://www.duluthnewstribune.com/event/article/id/150191/

tDECC might end up being tFDLECC.

I love it! I love how all these idiot municipalities think they're going to turn themselves into Vegas pre-Great Recession by allowing some low rent casino in their city. Its even more amusing when they find out the people they're dealing with aren't altruistic after all, and are in fact looking to line their pockets at the expense of the city they professed to want to "help".

However, you can't argue with success. Detroit's really turned themselves around with a bankrupt casino or two.

 

[Old Pio]

Re: Obama 7 - now what?

http://totalbuzz.freedomblogging.co...challenging-obama-birthplace-dismissed/24173/

Interrupting for just a minute: here's a decision which should put an end to this nonsense, but won't. The idiot lawyer at the center of this business is now a "celebrity," who will doubtless continue her efforts. Heck, it beats working, especially if there's a big supply of credulous people to make donations, buy books and tapes and pay for speeches.

And the fact that she (and Fred Phelps and Rosie) is the price we pay for having a First Amendment doesn't make it any easier for the rest of us who have to wade through the manure.

I've forgotten who coined the phrase "paranoid style of American politics," but this business is surely an example. "Truthers," "grassy knoll cretins," "UFO delusionals" and the rest of the exotic flora and fauna of the fever swamps will presumably be with us forever; mutating, metastasizing and otherwise polluting American "thought."

Thanks, I feel better, but only just.