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    andrewc24301's Avatar
    andrewc24301 Posts: 374, Reputation: 29
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    #1

    Feb 17, 2009, 06:47 PM
    Ten Trillion Dollars
    This is not a political debate, this is a question,

    How can people feel comfortable with this number as our national debt? And with no real plan to ever pay it down, only to ever increase.

    This is a question I can not wrap my head around. I can't help but entertain the idea that by the time I'm an old man, America will be dead.

    Forclosed on. A part of another, or many other countries who have all cashed in on what's theirs. What flag will we be saluting in 30 years? I'll be 58 years old then.

    What can be done aside from pointing fingers. I don't know all the history, I don't know all the politics, but I do know that that's an astounding number to comprehend.

    How can it work, if I ran my household budget like this, I'd be bankrupt. If I made $100 day and spent $1,000 per day, how long would this last? Why is it that this practice would lead to disaster and bankruptcy for individuals and private businesses, yet our government seems to be immune to the idea that eventually all loans have to be paid back.

    So what happens to America when that day comes?

    At least it looks as though Obama is at least trying to make jobs, as opposed to just throwing money at people so they can buy more stuff from China.

    I'm not the smartest man in the world, I'm just an ordianry High School graduate who maintained a C average, but for the life of me, I can't figure out how this kind of financial policy can work...

    Maybe I'm just an idiot.

    Then I look at this: http://news.bbc.co.uk/2/hi/business/411973.stm

    Ahh, the good old days... Looking at that chart makes me roll on the floor now... what a joke!
    Skell's Avatar
    Skell Posts: 1,863, Reputation: 514
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    #2

    Feb 17, 2009, 07:39 PM

    I certainly agree with you Andrew. The level of debt the US is in is quote mind boggling and beyond comprehension for me. Im sure others here have a better understanding of it but it sure scares me a little.

    My country (Australia) is slightly better off, however our PM is trying to pass a stimulus package at the moment that will see us go from a large budget surplus to a large deficit in the space of a few months.

    Its easy to spend someone else's money isn't it?
    George_1950's Avatar
    George_1950 Posts: 3,099, Reputation: 236
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    #3

    Feb 17, 2009, 08:48 PM
    Quote Originally Posted by andrewc24301 View Post
    This is not a political debate, this is a question,

    How can people feel confortable with this number as our national debt? And with no real plan to ever pay it down, only to ever increase.
    ...
    So what happens to America when that day comes?

    At least it looks as though Obama is at least trying to make jobs, as opposed to just throwing money at people so they can buy more stuff from China.

    I'm not the smartest man in the world, I'm just an ordianry High School graduate who maintained a C average, but for the life of me, I can't figure out how this kind of financial policy can work.....
    ...

    Ahh, the good old days.... Looking at that chart makes me roll on the floor now... what a joke!
    Hello, Andrew; you are no idiot! I've always maintained that, to get the right answer, one must ask the right question, and you have: "So what happens to America when that day comes?"

    It's my belief that there is almost nothing new under the sun, which is why we study history. And I cite to you the example of Weimar Germany and its experimentation with hyperinflation. The ultimate 'winner' is anyone's guess. But Obama's efforts to create jobs is worthless because government, even the most well-intentioned, knows nothing about real jobs, much less creating one. For example: we find ourselves, in the U.S. with a president who has never hired anyone in his life, has never 'created' a job. Why should he be able to do so now? I recently visited a shoe distribution center, back in the Fall of 2008 when all the talk was Congress bailing-out the sinking financial mess. I looked around the center at all the conveyor belts and the thought occurred that there is not one member of Congress who could explain how that distribution center worked. How do they understand banking or finance? They don't, or at least most of them don't. The U.S. gov't has been interfering with the economy for a year and the stock market is down about 3,000 points. Doesn't that tell us something? (Let me offer this observation as well: it has nothing to do with tax cuts.)

    Inflation in the Weimar Republic - Wikipedia, the free encyclopedia
    KISS's Avatar
    KISS Posts: 12,510, Reputation: 839
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    #4

    Feb 17, 2009, 09:22 PM

    Hey, someone in our local paper said that they should require politicians to have only a high school education and no more.
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    inthebox Posts: 787, Reputation: 179
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    #5

    Feb 17, 2009, 10:57 PM

    I remember back in the 80s, when Reagan cut taxes and a democratic congress and the military budget spent and spent. I remember the outcry about soaring defecits then.

    Then the cold war ended and Clinton and this country were the beneficiaries of a "surplus" in large part due to the GOP "contract with America".

    --------------------------------------------


    The scary part is
    -- Reagan was an optimist and raised confidence. Obama is telling us the sky is falling.

    -- Nuclear annihilation is real and it is constitutionally correct to spend money on defense [ and a good offense contribute to a good defense].

    Someone should tell Obama that the economy does cycle. By the time his "shovel ready" jobs have started after all the deliberations and bureacratic delays take 6-12 months, theeconomy would have recovered on its own.


    Obama and the congress are using this to spend and spend our taz dollars and our children's tax dollars on what? Bailing out failing banks and uncompetitive industry?

    But the bottom line is confidence, as long as we the taxpayors and those that own t bills have confidence that the US gov is and can pay back its debt it does not matter.

    A rough measure of this confidence is the stockmarket.

    3 mo ago dow was at 9035
    1 mo ago dow was at 8375
    1 week ago dow was at 8249
    2/17/09 7552 *

    [per I phone app ]*

    Oh! Oh!







    G&P
    tomder55's Avatar
    tomder55 Posts: 1,742, Reputation: 342
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    #6

    Feb 18, 2009, 03:44 AM
    To reinforce the views expressed above ,this op-ed at Financial Times is a good read :
    IBDeditorials.com: Editorials, Political Cartoons, and Polls from Investor's Business Daily -- The Price Of Fear

    We are betting a lot on a neo-Keynes-on- steroids economic theory. But the debt service will consume a large portion of future budgets ;and as George , Excon and others have pointed out ,the level of spending could imperil the monetary system.
    And this does not even factor in future entitlement obligations (which I'm sure in issues like SS we will be screwed... that's why some in Congress are seriously contemplating confiscation of private 401-K money and incorporating them into a public pension program) .

    Hoover and FDR turned an cyclical economic slump into a depression with the combination of protectionism and Keynesian pump priming . I don't think it will be any more successful this time.
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    excon Posts: 21,482, Reputation: 2992
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    #7

    Feb 18, 2009, 07:01 AM
    Quote Originally Posted by tomder55 View Post
    To But the debt service will consume a large portion of future budgets ;and as George , Excon and others have pointed out ,the level of spending could imperil the monetary system..
    Hello tom:

    COULD?

    Or, maybe it's an attempt at achieving that very objective. After all, who benefits the most from inflation? That would be DEBTORS, because they get to pay back their loans with cheaper dollars. It's the lenders who get screwed.

    Who is the worlds biggest debtor? That would be US. Who stands to gain the most from an imperiled monetary system? That would be our government. In fact, the government could pay the entire $10 Trillion off in a couple of weeks if hyper-inflation gets underway.

    I said if. I should have said WHEN.

    Buy gold.

    excon
    tomder55's Avatar
    tomder55 Posts: 1,742, Reputation: 342
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    #8

    Feb 18, 2009, 08:17 AM
    Hyperinflation will occure when or if the Fed "Monetizes the debt" .That will happen when they can't find "suckers "... oops I mean investors to purchase the debt. The investors until recently have been China ,Japan ,the OPEC nations etc. But their appetite for owing our debt is likely to diminish given the current economic climate.

    Andrew understated the debt . Once the bucket list American Recovery and Reinvestment Act of 2009 is calculated into the equation the debt balloons .

    Treasury is preparing to borrow up to $2.5 trillion in 2009 to cover the 2009 federal budget deficit, followed by borrowing another $4 trillion in 2010, with the prospect of increasing the current $10 trillion U.S. national debt by 65 percent in the first two years of the Obama administration. The true current obligations of the federal government, as determined by the U.S. Treasury using GAAP, or Generally Accepted Accounting Practice, rules, totaled $65.5 trillion , exceeding the GDP of the world. This is based on future obligations for unfunded liability entitlements including Social Security and Medicare benefits .

    These figures don't show up in the budget because entitlements are not for some reason I can't explain are not included in the liabilities column . When a Corporation like Enron did that the execs got frog marched.
    Like Elliot mentioned in a previous posting ;why is this not a Madoff-like ponzi scheme ?
    andrewc24301's Avatar
    andrewc24301 Posts: 374, Reputation: 29
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    #9

    Feb 18, 2009, 02:54 PM

    Scary scary scary...

    In laymens terms, it strikes me as a big "cash advance" ring! And we know how long those last on those who use them. A few months at the most?

    When the government has to borrow money to pay it's bills, then we are in trouble, just like the family who has to borrow from one cash advance to pay another.

    I'm not expert on it, but it just seems like we are teetering on completle collapse, that to me, could spell the end of America as we know it, maybe even America period.

    Obama's plan has to work because if it doesn't what is plan B, sorry, plan C, sorry maybe we are up to play Q or R now?

    Like I've always been told, you can't grow money by shaking it from one side to another...
    andrewc24301's Avatar
    andrewc24301 Posts: 374, Reputation: 29
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    #10

    Feb 18, 2009, 02:56 PM
    And then there are those opitimist who say "we have always had the debt"

    True

    BUT if you look at any chart of the debt, you see the termendous surge right after 2000. It's like it stays on one spot for most of the last century, then suddely, the bar moves right off the chart!
    tomder55's Avatar
    tomder55 Posts: 1,742, Reputation: 342
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    #11

    Feb 18, 2009, 04:03 PM

    I am one who has no problem with reasonable debt to deal with targeted specific expenditures. When you buy a house you don't put cash down ,you finance it long term. Your assets and revenues need to cover the debt service.

    How much is reasonable ? Much less than our obligations by a long shot.

    But let's consider the asset side of the ledger . Beyond the gvt ability to tax, the country owns about 30% of the land mass of the country. (the most amazing number is 45.3% of the State of California is Federal Lands. What is the value of that ?

    Also as of this date ,the United States is still a good and reliable investment that other nations can invest in . You have not seen the nations I listed above stop purchasing Treasuries.

    I do not think there is an imminent danger of collapse . But the canary in the mine is beginning to gag. The warning signs are lit up like neon. But we just voted for HopenChange and he believes in priming the pump .Which also means that he is transferring a lot of the economy out of the private sector into the public. Even if I was to buy into that theory I have doubts that most people who endorse the nanny state think it is a temporary situation.
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    andrewc24301 Posts: 374, Reputation: 29
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    #12

    Feb 18, 2009, 04:29 PM

    I understand tomder, my concern is that public land being used for collateral. I don't know how much of it is true and how much is rumor, but it's been told to me that the American government owns about as much of the "federal land" as the typical American homeowner owns on a mortgages house.

    So what happens to the homeowner when he can't cash advance anymore and all the equity in his house has been exhausted?
    tomder55's Avatar
    tomder55 Posts: 1,742, Reputation: 342
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    #13

    Feb 18, 2009, 04:39 PM
    I don't know ;there's a whole bunch of resources awaiting leasing rights under the Federal holdings . There is revenue to be had from the land without mortgaging it.

    I share your concern . The growth of spending was uncalled for in the last decade and the new leadership appears to want to triple down on it . There is no doubt that long term it is unsustainable.

    But when ? The alarm bell to me is that I have never seen proof that the nanny state ever shrinks. There was ample opportunity in the last 30 years to do so but pet programs and the size of the bureaucracy constantly expand . Even reductions in the rate of increases gets very negative press.
    George_1950's Avatar
    George_1950 Posts: 3,099, Reputation: 236
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    #14

    Feb 18, 2009, 06:24 PM
    Quote Originally Posted by andrewc24301 View Post
    And then there are those opitimist who say "we have always had the debt"

    True
    Not true. I recall speaking with a (liberal) teacher during the 1964 national election (Johnson v. Goldwater). One issue was the 'Great Society'. My teacher said, why have all that money piling-up in Washington D.C. when it gets to be just like manure, raising an ugly stench? Another teacher (civics) said, what's wrong with the U.S. borrowing money, because we will always be friends with those that loaned it?
    George_1950's Avatar
    George_1950 Posts: 3,099, Reputation: 236
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    #15

    Feb 18, 2009, 06:30 PM
    Quote Originally Posted by andrewc24301 View Post
    ... my concern is that public land being used for collateral....
    I have never heard of national debt and public lands held in a mortgage relationship before. In fact, I do not believe it works that way. Economic problems have led to wars, but the Chinese, et al, are not coming for us even if we start hyperinflation, unless somehow the situation began to undermine the Chinese gov't's ability to regulate itself, in which case, it might lead to hostilities.
    andrewc24301's Avatar
    andrewc24301 Posts: 374, Reputation: 29
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    #16

    Feb 18, 2009, 06:38 PM
    Quote Originally Posted by George_1950 View Post
    I have never heard of national debt and public lands held in a mortgage relationship before. In fact, I do not believe it works that way. Economic problems have led to wars, but the Chinese, et al, are not coming for us even if we start hyperinflation, unless somehow the situation began to undermine the Chinese gov't's ability to regulate itself, in which case, it might lead to hostilities.
    While I do not doubt you, let's discuss, I'm curious as to what's your take on this...

    I'm not saying it's 100% fact, everyone knows you can't believe everything you read on the internet. So I thought this would be a good time to bring it up and hear other opinions:

    Here is the link:
    Is The U.S. Already Bankrupt?

    And then we have this:
    http://whatreallyhappened.com/WRHART...=ifiwere2.html
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    andrewc24301 Posts: 374, Reputation: 29
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    #17

    Feb 18, 2009, 06:47 PM
    Among items in the second link, this catches my eye... I've had these pages bookmarked for a few years now... it's almost like they looked into a crystal ball...

    The trend is obvious; unless there is a radical change to the cash flow across the border, the US government is staring at total economic collapse. The citizens cannot be taxed enough to pay the interest on the debt, let alone the debt itself. The dollar will cease to be the currency of choice in the global market. The situation is desperate. And as Clancy illustrates in his book, a desperate government will take desperate chances.
    tomder55's Avatar
    tomder55 Posts: 1,742, Reputation: 342
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    #18

    Feb 19, 2009, 03:34 AM

    I have never heard of national debt and public lands held in a mortgage relationship before. In fact, I do not believe it works that way.
    I did not say that it is . Our debt is financed with Tresury notes which only collateral is the "full faith and credit".
    The reason I brought it up was because of the comparison being made to a home owner who overextends.

    The real point I was making is that controllable debt is not the worse thing in the world . It allows for planning . As andrew pointed out ,it is the debt service as a percentage of the budget that is becoming scary.
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    tomder55 Posts: 1,742, Reputation: 342
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    #19

    Feb 19, 2009, 11:10 AM
    BUT if you look at any chart of the debt, you see the termendous surge right after 2000. It's like it stays on one spot for most of the last century, then suddely, the bar moves right off the chart!
    For a different perspective on the debt growth in the last 8 years.

    American Thinker: Who Are the Big Spenders?
    But when all was said and done, spending levels remained about where they were for the previous 50 years (as a fraction of GDP).
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    andrewc24301 Posts: 374, Reputation: 29
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    #20

    Feb 19, 2009, 04:18 PM
    Very good read Tomder, a different persective.

    Like I said, I don't claim to be a political expert. I'm not one of the partisan people that is all for the democrats or republicans, I voted third party in the 2008 election. So I don't have any problem with Obama, we won the presidency and I hope this country fares well under this administration.

    However that said, I do see a blatant double standard when the democrats criticize ANY frivilous spending by formers adminstrations, when as the website you said suggested, his administration has already added quite a chunk to it.

    I was talking to my boss today, and I noted that I have been observing the welfare class latley, and they have gotten to the point were they almost bank on two or three stimulous checks every year.

    What the don't realize is every time the government pulls money out of thin air, it's not a free lunch. The cost of imports go up, because the value of the dollar goes down. And since almost everything we buy comes from overseas, then the cost of what we buy goes up.

    If they want to keep sending me money every year for not spending money, have at it. What do I do with mine? Well, I didn't break my neck to get to walmart an buy a new China made flat screen. I paid my credit cards off with them.

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