Is Rising National Debt Sustainable?

cbs ^ | 3-14-06 | mark trumball

[LouAvul]

In a word, no. And guess who gets to pay?

[ARCADIA]

Yes, we can devalue our way out and sustain it by suffering a high rate of inflation.

[goldstategop]

Eventually there will be an Argentine-style collapse. You can only print out so much money and raise the debt limit so many times. Eventually it has to be repaid. And then - watch out!

(Denny Crane: "I Don't Want To Socialize With A Pinko Liberal Democrat Commie. Say What You Like About Republicans. We Stick To Our Convictions. Even When We Know We're Dead Wrong.")

[Echo Talon]

[ClearCase_guy]

When it shut down, the federal budget was running a surplus.

Isn't it more accurate to say that creative accounting was allowing Clinton to project a surplus?

[OB1kNOb]

Is Rising National Debt Sustainable?

Sustainable? IMO, no. Once the confidence in the dollar is sufficiently shaken, for whatever reason, it will all come crashing in around us.

[So Cal Rocket]

National Debt NEVER went down during the Clinton Years:

Date

Amount
09/30/2005	$7,932,709,661,723.50
09/30/2004	$7,379,052,696,330.32
09/30/2003	$6,783,231,062,743.62
09/30/2002	$6,228,235,965,597.16
09/30/2001	$5,807,463,412,200.06
09/30/2000	$5,674,178,209,886.86
09/30/1999	5,656,270,901,615.43
09/30/1998	5,526,193,008,897.62
09/30/1997	5,413,146,011,397.34
09/30/1996	5,224,810,939,135.73
09/29/1995	4,973,982,900,709.39
09/30/1994	4,692,749,910,013.32
09/30/1993	4,411,488,883,139.38

[joesnuffy]

Sure just as long as the rest of the world (especially the oil arabs) love the US dollar...

We can just keep printing as much as we like...heck it's only paper....

[Cobra64]

I had forgotten about the debt clock. I haven't been to Manhattan in years.

[farlander]

Soo... It's exactly like having a 400K mortgage on a 100K salary. Is that affordable ? Yea, I think so. Ask anyone in San Diego, for example.

As long as your salary keeps growing, you're fine. Last time I checked we were posting a solid 3% annual GDP growth.

[farlander]

We're DOOOMED.

I got news, man. Dollar is going nowhere but up. Eurozone's growth is crap, and will remain so as long as they retain structural inefficiencies in their labor markets (ie, socialist welfare state). They need to lower rates, if anything, to get any growth out of their economy(es), and - that implies stronger dollar.

[spanalot]

Someday the goldbus will have their day - but not yet.

With all the uncertainty since 9/11, if it has not happened yet it wont for quite a few years.

[Cboldt]

National Debt NEVER went down during the Clinton Years

And Congress plans to raise it year by year.

(5) DEBT SUBJECT TO LIMIT.--The appropriate levels of the public debt are as follows:

Fiscal year 2006: $8,526,578,000,000.
Fiscal year 2007: $9,190,311,000,000.
Fiscal year 2008: $9,766,883,000,000.
Fiscal year 2009: $10,302,957,000,000.
Fiscal year 2010: $10,815,812,000,000.
Fiscal year 2011: $11,355,281,000,000.

36 . SUBMITTED RESOLUTIONS DURING ADJOURNMENT

[Red Boots]

. Today, the public debt is larger as a share of the American economy, more than half is held by foreigners, and the wave of baby boomer retirements is no longer decades away

I think this is inaccurate. The percentage of debt to GNP is less today than it was during the Reagan era, not larger as they claim. A lower debt ratio means our economy is stronger, not weaker.

Think of it this way: 10 years ago I paid 40% of my income for housing. Today, I pay 25% of my income for housing. HOwever, that 25% is a bigger amount of dollars than than the 40% was. I make way more money per month; and my new house cost more than my old house.

Am I better off ?

[manwiththehands]

Something tells me we are going to find out.

[OB1kNOb]

I got news, man. Dollar is going nowhere but up.....

Uh huh. And the tech stock market bubble is never gonna bust, right? I'm speaking in the long term, not in the short term. The dollar as a currency is backed by what of real value? Oh, that's right, nothing! Just the full faith and credit of the government. Now that's real value, NOT! Let some event or other countries shake the confidence in that faith and see if the value of the dollar keeps "going nowhere but up"!

I guess they've stopped teaching the concept of fiat money in college economics. I'm not saying the dollar will devalue anytime soon because of rising debt, but go get yourself a few million dollars more in debt each year and see how "sustainable" you will remain in the long term.

[farlander]

Ahem, I *was* talking in the long term. Next 30 years, say. European demographics and their welfare state are only set to decrease growth there. They've got a baby boomer population too. By some estimates there will be 2 retired cheese eating wine drinking europeans for each one working, in 25 years. They're buying our TBills in order to even come close to being able to pay this. Lower growth in EU vs stronger growth in US translates to stronger dollar. Investors buy dollars to benefit from the higher interest rates.

The point is not that it's not backed by gold, as you'd obviously prefer, but that what does back it is the most secure thing in todays world. That's why its going nowhere but up. If something shakes the faith in Dollar, where will that leave other currencies, which are *far* more vulnerable to 'events' ?

If I was making a couple million a year I wouldn't mind taking out a couple million dollar loans to expand my business. That's the point.

[farlander]

Oh, and, don't get me wrong - I'm all about the balanced budget. We need to go there. But the sky is definitely *not* falling.

[ex-snook]

It doesn't have to be indefinitely sustainable. Bush only needs it to hang on until he is back 'home on the range'. Just another can kicked down the road.