Do you feel that the US can continue going into debt to fund the present or must

1. 66

   LAURENS WRIGHTposted 12 years ago

   Do you feel that the US can continue going into debt to fund the present or must tackle the problem?
   
   It seems that the US is kicking the can down the path and borrowing money to just keep up with the programs it now has.  It seems that cutting programs and money will cause the economy to sink even lower, but continuing programs will cause ever increasing taxation problems leading to the problems of people not having money to spend and invest.  What do you feel that the answer is?  What would you do in your house-hold if you are over-taxed, under-income, over-burdened with debt or have lost your income ?  Do you feel that people should get free handouts for not contributing to society ?

   replyreport
2. 72

   Angela Blairposted 12 years ago

   Perhaps the adage used by President Truman applies -- with slight variation: "The buck has to stop somewhere!" (he said the buck stopped with him) and I personally believe that time has come. Yes, we're all going to have to contribute to get out of the overwhelming debt load of our country. Now, as a nation of whiners, we see that as being underprivileged and put-upon. We elected these clowns to office -- some for way, way, too long -- and it's time to pay the price for being an over-indulged society and electing officials who have religiously plunged the country in to more and more debt. As a nation we're going to have to pay our debts at some point in time -- and why not now as it appears the current administration intends to spend more and more as time passes and the deficit will grow exponentially. There's an old cowboy saying about taking difficult and inevitable action: "Get it here or get it at the house" -- and that's probably the bottom line!

   replyreport
3. 80

   junksellerposted 12 years ago

   Well, it's funny because the same exact action can be called a debt or an investment. Lots of people for instance borrow money for education with the expectation of a future career that makes it worth it. Does it always work out? Nope, and sometimes debt really does become poorly spent money. I am nowhere near knowledgeable enough to see how that long-game will play out, but I do think it is a mistake to simply see debt as being bad. It just isn't that simple.
   
   My feeling is that the "kill debt no matter what" mentality (i.e. austerity) is a terrible choice. Personally, in the last election, I supported Jill Stein and her New Green Deal which called for full employment. I'd support that no matter what the cost. Why? well because I believe that an America where everyone was constructively working and engaged in society could wipe out any debt with ease. Having vast untapped productivity idled makes no sense.
   
   Also, I'd argue that no one gets free handouts while not contributing. Except for a very few (as in miniscule) number of people, we ALL both give and take from the public good. Sure there are people at the edges of the bell curve but the vast bulk of us are right in the middle. Most judgmental people should really spend far more time in front of the mirror judging their own qualities than they do in kicking people while they are down. It's unbecoming of a civilized society.

   replyreport
4. 68

   LandmarkWealthposted 12 years ago

   The answer is we should deal with the problem, but we won't until the system forces us to.  Cutting spending and reducing the size of gov't does not have to be as impactful on economic activity if it is done efficiently, which it won't be.  The ultimate problem is that the items that have the largest impact on the Federal budget are the entitlement programs.  And very few politicians have the stones to tell the population the truth.  They actually prefer a society more dependent on that which they seemingly provide.
   
   The problem can't be resolved via taxation.  The revenue to the gov't never really changes as a share of GDP regardless of tax rates.  Nor are their enough people in higher income ranges to tax our way out of this situation.  So, the problem will not be sufficiently addressed until the debt markets force the hand of Washington DC.  For now the Federal Reserve and other central banks are attempting asset price inflation via expanding the monetary base,  This is not a healthy form of asset price inflation.  It means financial markets and other assets are appreciating on a very shaky foundation of anemic economic growth.
   
   Ultimately, the Fed will have to attempt an exit strategy some years down the road.  Unfortunately, the debt market is much smarter than the hubris of beurocrats.  A bond fund manager will be way ahead of anything the Central Bank is planning.  Personally, I believe rates will begin to rise beyond the control of the central banks.  They will lose control of the yield curve in the bond market and inflation will begin to become a serious problem.  It won't be the type of inflation that occurs from growth, but more likely the 1979 type of stagflation.   This type of forced interest rate hike by the debt markets will mandate that the politicians implement far more extreme cuts than anything currently proposed.   In the meantime the cost of all of this will paid for by further weakening of all global currencies, which will hit those on the lower end of the economic scale the hardest. All of this may take some time, since I believe central banks have only just begun their asset purchase programs.  And the larger the asset purchases get, the harder they will be to unwind.   All of this is because our weak in the knees political leaders would rather slowly peel a band aid off rather than rip it off and be done with it.

   replyreport
   1. 68

      LandmarkWealthposted 12 years agoin reply to this

      Incidently, in case anyone wanted to know, the asset purchases of mortgage backed securities by the Federal Reserve is actually a violation of the Federal Reserve Act. (Section 14B).   Seems like nobody is enforcing the law these days.

      replyreport