Why is National Debt Bad?

[Ingomike]

What's that leave, war?

I mentioned that last week in a thread, it will pull everyone into its vortex and reset the world financially, just like WWII did and left the US the power it will happen again, just a matter of time, but odds are the US will not be the winner next time…

 

[manifest destiny]

I mentioned that last week in a thread, it will pull everyone into its vortex and reset the world financially, just like WWII did and left the US the power it will happen again, just a matter of time.

I'm not as confident the U.S. comes out on top if the world decides to dance a third time. Perhaps, but my confidence is low. It seems there would be powerful alliances against the us. And frankly, any promises we (US) make about 'no, no. we'll do the world domination right this time' will fall on deaf ears. Scary thoughts but we're bankrupt and something will have to give eventually. I suppose a dark-horse theory to avoiding global war might be to accept global government. Gee, which of those ideas serve me better...

 

[bobzilla]

I mean, uncle joe wrote off $2Trillion in student loans right? Why can't he just wave this away too?

 

[BigMoose]

We do need to get back to where we have a balanced budget or as close to it as we can, and cutting our way there isn't the way.

Growing the economy, whichever way you do it, is the best way to do it. Larger economy = more taxes being paid in.

We are moving the right way, the deficit fell from 2.6tril to 1.4tril

 

[manifest destiny]

Our fed income taxes paid to .gov is ~ $1.5 - 2 trillion/yr. Our debt is ~ $30 - 45 trillion dollars (depending on who you believe) more than our GDP. The .gov would need to confiscate every single dollar produced, every year for 30-50 years just to get even with GDP. That would be the .gov keeping every dollar earned, 100%, for an entire generation. We can't cut spending, grow the GDP, or a combination of both, and expect to reduce our debt:GDP ratio. Our debt is greater than 110% now with estimates of being 130% by 2027, relative to our GDP. And that estimate assumes GDP growth. We're broke.

 

[firecadet613]

I mentioned that last week in a thread, it will pull everyone into its vortex and reset the world financially, just like WWII did and left the US the power it will happen again, just a matter of time, but odds are the US will not be the winner next time…

My money is on the new China/Russia coalition coming out on top. They do not appear to be led by a bunch of senile morons like us...

 

[jamil]

I mean, uncle joe wrote off $2Trillion in student loans right? Why can't he just wave this away too?

No. He didn’t. He said he would. The purple hair graduates with big debts and degrees in silly subjects voted for democrats. And then after the midterms were over, and just like that. Poof. No more student loan forgiveness.

 

[JettaKnight]

General musings from a guy that likes economics podcasts:


I have heard the arguments from neo-Keynesians, and I'm not sold, but it's something worth pondering.


I know there's a lot of complaints about fiat currency and how we should get back to gold, but isn't gold and other precious metals simply a physical fiat currency? What makes gold intrinsically valuable? Because it's shiny? Because it's needed for electronics? You can't say it's because it's a fixed supply because we're stilling mining more for thousands and thousands of years. If you make it a currency again, then you inhibit its use in practical applications.


When is your debt too much? In my limited knowledge that'd be when you can no longer borrow more. And that may be because lenders lose faith in your ability to repay. That could because you've lost your ability to produce income (for us that's losing a job, for a govt it's more complicated but loosely based on GDP) or you've got a bad credit history. On the latter, that's why this stupid game of chicken that Congress plays with the debt ceiling is so dangerous; time to get Congress out of it. Reps seem to only care about what can make them look good in the next election cycle.

Speaking of, that's a problem, IMHO. Tackling this debt is a not easy. We see it over and over from both parties. Pain - either from cuts in spending or increased taxes doesn't sell in November. Every citizen wants a balanced budget, but when it comes to voting, that's nearly at the bottom of the list of important issues. We're more interested in culture warring, climate change, stopping dictators, etc.


Maybe you think the USA is precariously close to losing the ability to borrow, yet in the past few years there was a time that borrowers were throwing money at the Fed to buy securities paying a pittance of interest (or negative?) just in order to get that security that comes with US govt debt. So, I think it's a long ways off, even past our grandchildren's time.


Could the RMB replace the Dollar? That's a good question as China continues to amass wealth from manufacturing (yes, we created that enemy). But is the world ready to back a communist state especially in light of their provocations with Taiwan and propensity to control the world in there belts and road initiative?


There's talk about GDP - "we have to make things!" And I wonder... I've worked in a lot of industries, and I've designed a lot of crap. Is making stuff all it's cracked up to be? Believe you me, I know that America is falling behind on manufacturing - semiconductors are my life. But... I don't know. I guess the alternative is more damned coffee shops and other services. We're paying people to do our grocery shopping because we're busy doing what? Twenty years ago I listened to a coworker rant about how America doesn't produce anything, but if he could only see it now...


And while I'm going, let's talk immigration. Americans are too busy with our careers or becoming influencers to have children (Idiocracy, anyone?). If we're not careful, we'll end up like Japan needing robots because the population is overloaded with the elderly. And here we are, with people risking it all to come with the dream of being able to earn a living without the fear of narcos... You want to make more stuff? Let in people who are willing to work in those factories! If you show up for work and pass a drug test you beat the majority of native born blue collar workers!



My Marconi Wireless is running dry, so my rambling must as well.

 

[2tonic]

I mean, uncle joe wrote off $2Trillion in student loans right? Why can't he just wave this away too?

All debts get paid. The responsibility just gets shifted onto other innocent people. Joe didn't carry out his pandering promise, but this was the plan. Nothing would have been "written off".

We are moving the right way, the deficit fell from 2.6tril to 1.4tril

The deficit dropped because covid spending ended. Don't worry, though. Politicians will surely think of something that needs a couple trillion spent on it. Drag sports leagues or non-binary LGBTQ unicorn birth rates or narwhal horn dust irradiation and it's effect on migratory patterns in the Gobe desert.

 

[DadSmith]

Will there be a prize for the longest post?
Are we taking bets on who will have the longest post?

 

[JettaKnight]

Will there be a prize for the longest post?
Are we taking bets on who will have the longest post?

If I would have know, I would have thrown in some Bacon Ipsum:

Bacon ipsum dolor amet kielbasa turkey kevin, leberkas landjaeger cupim shankle alcatra chicken tail pastrami ham shank. Tenderloin doner sausage meatball ground round kielbasa. Burgdoggen picanha tongue, beef ribs kielbasa andouille turkey beef. Ham hock burgdoggen ball tip picanha, biltong pork short loin salami tenderloin drumstick brisket boudin. Swine corned beef sausage, flank beef ribs ham hock frankfurter spare ribs burgdoggen.

That may be more inteligent than what I actually wrote.

 

[2tonic]

....I know there's a lot of complaints about fiat currency and how we should get back to gold, but isn't gold and other precious metals simply a physical fiat currency? What makes gold intrinsically valuable? Because it's shiny? Because it's needed for electronics? You can't say it's because it's a fixed supply because we're stilling mining more for thousands and thousands of years. If you make it a currency again, then you inhibit its use in practical applications.

All the gold in existence above ground would only fill 2 Olympic swimming pools.
It's rarity and beauty ensure its value. The world has agreed on that for millennia.
You can't make art or jewelry from a paper fiat currency (Rush's tax awareness lapel ribbon notwithstanding).

Regardless of the National currency, or the world reserve currency, nobody refuses gold.
Any locale, any nation, culture, or tribe...a deal can be struck with gold.

JMTC.

 

[thompal]

It makes all of us debt slaves. The government wants your money the pay off the debt it owes.
Or it can print more money out of nothing and devalue your money to pay off the debt it owes. Hidden tax.

According to the Progressives, debt isn't a real thing because the government can simply print as much money as it wants. My question for them has always been: if you can print as much money as you want why do we have to pay taxes?

 

[Leadeye]

Gold has a long history as money and a lot of that is it's value/size ratio. This has made it a traditional source of coinage, but as was mentioned earlier, it's still just a commodity, with it's value going up and down. I remember the 90s when gold was pretty cheap as everybody was in the stock market where the value of the stocks went up, but they also generated dividends. Gold was seen as a fudd investment, responding to inflation only which at the time was low.

American manufacturing was moving to mexico and china, dropping prices and the fear was deflation. It was a rough time for manufacturing suppliers as customers disappeared or you had to chase them off shore. When you could hold on to them all anybody wanted to talk about was price reductions. I thought it strange during that time that college tuition, insurance, taxes, and other government related stuff kept going up.

 

[bobzilla]

I really didn’t think I needed purple on that post….

 

[spencer rifle]

I'm all for barter. But ancients (who weren't less wise than us) decided that something shiny, beautiful, difficult to fake, resistant to corrosion, dense, small, rare and sometimes useful (for silver that includes antibacterial qualities) would suffice for a trade intermediary. And used it for millennia. Easier to transport than a cow or a wagonload of grain. It's agreed-upon value has lasted longer than paper, which has no intrinsic value except for certain specific duties, and never lasts long in real life.

An illustration that may or may not apply is the really good suit. Back in Civil War times a double eagle ($20 gold of nearly an ounce) would get you a really good suit. Now something like a double eagle will get you a really good suit. Back then - $20. Now - $1900. What happens when a government is given the ability to print money based on nothing. Sure that gives them flexibility in an emergency, but it also gives them power they will not surrender, and will use for other things than an emergency (or just have a permanent emergency). Why do you think the old commie FDR wanted everyone's gold?

And it only going to get worse.

 

[blain]

Nothing is wrong with the national debt as long as each US citizen can pay off the $94,390 they owe.

Now that's taken care of, let me get back to re-arranging these deck chairs on the ship.

 

[manifest destiny]

Nothing is wrong with the national debt as long as each US citizen can pay off the $94,390 they owe.

That number only gets us even with GDP (which at least makes us solvent on paper). And of course requires every man, woman and child to pay up. Get rid of the young, infirmed, incarcerated and degenerate citizens and the individual number goes to... oh, never mind. Can I give you a hand with the deck chairs?

 

[Ingomike]

And while I'm going, let's talk immigration. Americans are too busy with our careers or becoming influencers to have children (Idiocracy, anyone?). If we're not careful, we'll end up like Japan needing robots because the population is overloaded with the elderly. And here we are, with people risking it all to come with the dream of being able to earn a living without the fear of narcos... You want to make more stuff? Let in people who are willing to work in those factories! If you show up for work and pass a drug test you beat the majority of native born blue collar workers!

I completely agree, bet most of INGO does. But you don’t say anything about doing it the legal and constitutional way, not illegally…

 

[JettaKnight]

All the gold in existence above ground would only fill 2 Olympic swimming pools.
It's rarity and beauty ensure its value. The world has agreed on that for millennia.
You can't make art or jewelry from a paper fiat currency (Rush's tax awareness lapel ribbon notwithstanding).

Regardless of the National currency, or the world reserve currency, nobody refuses gold.
Any locale, any nation, culture, or tribe...a deal can be struck with gold.

JMTC.

Ever try and negotiate a business contact with gold? Or buy a car? Our make a house payment? Our it travelling instead of getting local currency?