tick-tock
Posted on 01/25/2006 8:43:47 AM PST by Capitalism2003
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?
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