Thread: Debt now equals total U.S. economy

Makes you feel good about your future doesn't it?

Thank you Mr. Bush!!!

at least he is sitting pretty as a mega multi-millionaire.

looking forward to $15.00 loaves of bread. yay hyper inflation.

I didn't think GWB was in office anymoar.

Originally Posted by Prince

Thank you Mr. Bush!!!

at least he is sitting pretty as a mega multi-millionaire.

Did you read that? The biggest jump ever is under Obama's budget. Yeah it must be Bush's fault.

when Bush entered office we were not in a deficit, when he left after 8 years we had a $1 trillion deficit, so yeah I think Bush had something to do with it.

Originally Posted by Prince

when Bush entered office we were not in a deficit, when he left after 8 years we had a $1 trillion deficit, so yeah I think Bush had something to do with it.

to be fair the US has been living on debt since WWII. when the Europeans countries went broke fighting the war at the conclusion they started to reigned in spending while the US increased it. unfortunately many other countries started to follow the US version of keynesian borrowing with no plan in the future to return to fiscal conservatism. dismissing the conspiracy theroy's regarding the central banks, the rothchild's the illuminati, central banks, etc. 40 years of GOP lead economic policy have ruined and perverted capitalism in this country and special interest groups and lobbyists have corrupted the government which allows it's citizens and countries resources to be exploited for the short term economic growth of a select group of multinational corporations.

big business pull the strings in washington through special interest groups and lobbyist yet they employee the least amount of people. 75% of the country is employed by small business that have no payroll but there is no one in DC to speak for them.

Personally,

I think (of course I cannot prove) that Obama and the American government know the US cannot sustain itself financially and are doing QE 1 & 2, and running these annual deficits to add onto the debt because,

the US is not sustainable.

Economist Dr. Dambisa Moyo (see Amazon top 10 list) advocates that the US default on its debt.

Will this happen? I am doubtful.

The US definitely seems to want to weaken the USD and inflate its way into reducing debt.

We talk about a national debt of $15 Trillion.

But this does not include the first baby boomer that hit the medicare rolls on Jan 1, 2011, 5 weeks ago. Add Social Security,

and it's really a foregone conclusion.

Dambisa Moyo doesn't say anything new in her new book, but it's called How the West was lost.

Note the past tense.

Originally Posted by NeilPearson

Did you read that? The biggest jump ever is under Obama's budget. Yeah it must be Bush's fault.

Ever hear of interest?

I've read a couple of posts on this thread where posters are "blaming" Obama and/or Bush.

It's not that simple.

These problem started about 65 years ago.

The problems existed 30 years ago. Why are people "blaming" so-and-so now?

Originally Posted by maxpro2

Ever hear of interest?

loan servicing adds quite a bit to the budget deficit, especially when you are paying off a loan for many years which there was no return on the investment such as long wars in the middle east and tax breaks for the wealthy, etc. banks are also making a killing so not everyone wants the borrowing to end. people that don't understand basic economic principle and history just don't get it. big business are over-capitalized right now so they don't need to borrow and small business don't require large loans or can't get them. currently many large banks aren't lending to small business, to them the paperwork and hassle isn't worth the interest on an average loan size of 100K.

the real fire started in the 70's, that's when we needed to make a turn to actual fiscal conservatism but instead went the exact opposite direction and increased spending, borrowing while lowering tax receipts simultaneously. i.e, economic retardation.

eventually the debt service ratio will get to high and there will be hyperinflation, etc. the current rate of government and consumer debt and spending is unsustainable. 50% of the increase in the deficit over the next decade will be to cover the costs of loans with 50% of those interest payments going to investors overseas. consumer spending is also going to take a hit soon as people will have to start saving more. this means plenty of jobs to be lost in retail and service (currently the 2 largest growing job markets) in the next 10-15 years. expect to see lots of vacant strip malls, etc. in the future.

the US will never be able to pay off the debt it has incurred even if spending was immediately railed in yesterday. since we can not default on the debts the only option is to let the currency depreciate. the government knows this, those in high finance know this which is why the big corporations and the greedy wallstreet douchebags are stockpiling capital.

Originally Posted by Big Smoothy

The problems existed 30 years ago. Why are people "blaming" so-and-so now?

classic example of distract, divide and conquer brought to you by the Tea Party, funded by the racists Koch Brothers and Rupert Murdoch. with the patsy being played by both Obama and illegal immigrants.

Originally Posted by LAM

classic example of distract, divide and conquer brought to you by the Tea Party, funded by the racists Koch Brothers and Rupert Murdoch. with the patsy being played by both Obama and illegal immigrants.

Sure, the tea party could not possibly have come about by people genuinely being concerned about this govt mortgaging this country's future and leaving future generations to pick up the tab. Perhaps you should join with Nancy Pelosi in "joining others who are calling for an investigation into the source of this hatred and who's funding it."

As far as why banks aren't lending. There are multiple reasons for that. For one, you never know who's going to go belly up tomorrow in this economy. The economy is not by any stretch in any kind of recovery, despite what the DOW tells us. A recovery will begin as soon as private sector jobs start coming back. The fact that large banks, insurance companies, and other companies that lobbied the admin (i.e. GE) got their hands on billions of your $ and invested enough to make Wall Street look better, doesn't mean the country as a whole is any better off than it was two years ago.

Also, forget the paperwork and cost to manage a loan portfolio, when this economy does finally implode under all of this debt and we are no longer able to sustain the interest, the U$D will plunge much further into the shitter, interest rates will rise drastically, you'll see inflation like we haven't seen in the history of this country and that $100K a bank loaned a few years back actually won't be worth the $ that it costs to manage it.

The 1 thing that helps the US is that China cant afford to let anything happen to our debt, they hold almost as much as the treasury.

I might learn how to say "would you like fries with that" in chinese just in case tho.

the "petrodollar" agreement is what holds US dollars up. When the rest of the world smartens up the US is in touble cuz we basically use them to fund our lifestyles and they don't need us anymore.

Buy international non-dollar denominated bond funds if you are worried about the dollars decline hurting your bond portfolio, or buy some international companies that pay dividends in other currencies. Preferred currencies: Canada, Australia, New Zealand, Switzerland, China, Brazil.

Originally Posted by ebn2002

The 1 thing that helps the US is that China cant afford to let anything happen to our debt, they hold almost as much as the treasury.

wiki:

"According to a June 30, 2009 survey, the U.S. Treasury owed China $757 billion in long-term debt."

Originally Posted by DOMS

wiki:

"According to a June 30, 2009 survey, the U.S. Treasury owed China $757 billion in long-term debt."

Chump change.

Not to mention if the US were to collapse down the road, China could afford to take over our global welfare payments across the globe to countries like Egypt and North Korea.

Originally Posted by DOMS

wiki:

"According to a June 30, 2009 survey, the U.S. Treasury owed China $757 billion in long-term debt."

Exactly. China wants $757 billion, not $.02 on the dollar.

BUT the FED is the largest holder of treasuries now, not China.

I bet the US figures a way to fuk china and the rest of the world. We've only done it for the last 200 years or so...

Kinda like when France called Nixon and wanted to exchange their dollars for gold and he told them to get bent and went off the gold standard

Originally Posted by Big Pimpin

Chump change.

It's amazing how many people people in "facts" that aren't based in facts.

Originally Posted by Big Pimpin

Not to mention if the US were to collapse down the road, China could afford to take over our global welfare payments across the globe to countries like Egypt and North Korea.

If the USA collapsed, it's not like we'd drop and the rest of the world would be puppies and kittens. If the USA collapsed, the world would experience a recession. Quite possibly a depression.

Originally Posted by GearsMcGilf

Sure, the tea party could not possibly have come about by people genuinely being concerned about this govt mortgaging this country's future and leaving future generations to pick up the tab. Perhaps you should join with Nancy Pelosi in "joining others who are calling for an investigation into the source of this hatred and who's funding it."

maybe you should actually do research on these things. do you know anything about the Koch family and their history? of course you haven't....nazi sympathizers that get their jolly's off suppressing others that are not like them...yea David Koch really cares about the US which is why he lobbied against extending unemployment benefits but had no problem accepting a 100milllion dollar government contract.

Originally Posted by GearsMcGilf

A recovery will begin as soon as private sector jobs start coming back.

the US has been losing jobs in the private sector since before 1998 this is when the student loan default rate started to increase and hasn't stopped since. 8 years of Bush tax cuts didn't spur jobs or increase R&D in the private sector, so we know that doesn't or didn't work. we need 175K jobs a month just to keep up with the population growth that does not count the current unemployed who have lost their job since the downturn close to prob 8-9million by now.

the economy is only "growing" right now because of deficit spending and the Fed buying toxic assets from Wall Street which currently only has a 3% unemployment rate. big companies are laying people off AND reporting record profits. S&P 500 companies are sitting on almost 2T of cash while reducing capital spending last year by 43%. and the medium income in the US actually dropped 2 years ago. recent BLS data shows that the top 2 job markets in the US are paying wages between $9-$14.

there are no good paying private sector jobs "coming back"....

Originally Posted by Prince

Thank you Mr. Bush!!!

at least he is sitting pretty as a mega multi-millionaire.

are you kidding? This has been covered over and over again...Obama has added more to the debt in gross dollars then the past 4 president combined...and Bush did added more than the four presidents before him combined. Obama has added more in % than Bush as well.


Also covered extensively is the fact the US isn't going to collapse (which would bring the whole world to its knees)...its being intentionally devalued step by step hence QE1, QE2, and future QE3 and/or 4. Monetary expansion has become part of our foreign policy.

And ebn2002, we are already fucking the PRC. We are the author of their inflation...over 75% of the QE2 dollars went to?....You guessed it, the PRC. When the PRC in injected with dollars (b/c we buy so much cheap crap from there) the state gov't is FORCED to buy the dollars (with Chinese Yuan) from its businesses and consumers in order to keep it the Yuan artificially devalued. The problem with this in the PRC is that its increasing the supply of Yuan at an exponential rate to keep up with FED's monetary expansion...and no one (less than 2% of the world) uses the Yuan as a reserve currency so its demand is very very low...hence the sharp inflation problem there. When I say problem, I mean problem. Life is becoming cost prohibitive for the overwhelming majority of population. To add to it all, you have a group of speculators pushing the countries inflation even higher by large capital inflows requiring even more currency conversion

China forex regulator vows to curb money inflows | Reuters

The FED is not stupid....they may be wrong, but they aren't stupid. Their moves are calculated and done for a reason. I'd like to say the US gov't isn't stupid, but they certainly can be from time2time.

How QE2 just made China's inflation threat much, much worse


We are at an advantage b/c the world uses the US dollar as its currency reserve...in addition to that, we have the petrodollar aspect and a lack of good alternatives to choose from (Euro and Sterling Pound are worse, and the Japanese Yen has more debt than the US). There is FULL demand for the US dollar currently.

That being said, we can get away with playing the game: "who can withstand high inflation longer". Kind of like saying who can stand up longer while getting tased, lol...the US will more than likely win that game unless another hard currency becomes a viable alternative AND the world stops trading petrodollars (which I doubt b/c most OPEC nations are in rank and file with the US).

Crumby part: The average US consumer will get hit pretty hard...inflation can be a real difficult thing to deal with when your income in less than 50k/year.

going to be a bumpy ride nonetheless....and sorry for any typos. I'm not proofreading the novel I just wrote.

Originally Posted by GearsMcGilf

A recovery will begin as soon as private sector jobs start coming back.

GearsMcGrif,

This is theee problem.

The private sector jobs eliminated in the recession of the early 2000s, never returned. They were never "re-created."

Add the millions of people entering the labor force every year since then (turning 18, graduating from high school, vocational schools, Uni). Now, add the millions of jobs that disappeared in the latest Great Recession.

Millions entering the workforce every year now, with not enough jobs available.

How long will this last?

Many (all) economists believe that these jobs that were eliminated will not be returning. (And remember how many of these lost jobs were directly and indirectly related to the housing industry).

I think we'll be fine as long as we continue to cut revenue and increase spending.

Originally Posted by Dale Mabry

I think we'll be fine as long as we continue to cut revenue and increase spending.

maybe reduce the tax rate for S&P 500 companies even lower. I have heard that tax breaks for the wealthy spur R&D in the private sector. with the growing service sector in the US we need state of the art telephones and cash registers to ring up purchases at retail stores and restaurants!

Originally Posted by lnvanry

Crumby part: The average US consumer will get hit pretty hard...inflation can be a real difficult thing to deal with when your income in less than 50k/year

that is about what the median home income is now with 2 adults working depending on the state...

eventually the US debt service ratio will get too high and then there are only 2 choices, default or super-inflation. only the highest wage earners will be able to afford anything. coincidentally the majority of the "wealthy" 2% in the US work on wall street. people still pander to the banks yet they are the root cause of all these economic problems.

Ab Lincoln stated it perfectly:

"Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration."

In the 70's when US manufacturing started to go away and the labor and capital when away this is when the problem started. wall street found a way to make capital, a very bad way and now everyone else eventually is going to pay for it. banking greed from the US basically corrupted global finances, doesn't it make sense that the world's youngest and developed country and most indebted country hosts the most billionaires and millionaires in the world? yet the country and government is broke. people are truly idiots when they group together, I don't know how the country bought into wall street and all their stock market bullshit. the poor lured into dreams of wealth by the "rich", the continuing exploitation of humanity of those who mostly just want to provide for their families

This is why when politicians on the left or right are forced to make budget cuts and they never touch the defense budget. the majority of manufacturing left in the US caters to the military and/or defense, this is basically our last economic line of defense. people should read more books on manufacturing, it is the basic financial structure and means of development of every country in the world's history yet people overlooked it and sent it away for short term economic growth and wealth for some and now austerity for the rest. lol at exporting financial services what a fucking joke.

eventually after the dollar drops the US will have to bring manufacturing back to the US to rebuild the economy but it will be at much reduced wages for workers to be competitive with other countries. it will be like the 50's again here in terms of wages, the entire banking industry will have to be permanently restructured.

total fair assessment LAM...in the long term, I agree with you, but its going to take a while together IMO.

wow

does it even matter at this point? there is nothing any of us can do about it. lets just hope whatever country eventually takes us over doesnt believe in concentration camps!