Do you think this will happen?
http://www.dailymail.co.uk/news/worldne … e-GDP.html
Really, the overall debt level of the US doesn't matter. But then it does matter too. What's that you say? Stay with me for a minute.
Because the dollar is the world's reserve currency, the US HAS to have a deficit. The deficit lets other foreign central banks keep their assets in a safe haven and prop up their currencies if they have a fixed exchange rate. Banks, private individuals and others also want to buy US securities because they're considered a risk-free return on their money.
So, really the US deficit can be huge, and even grow each year as long as their is a willingness (mostly on the part of central banks) to buy and save US dollars (see China). So the US can live outside of its means because other countries need to be backed by dollars.
However, when our deficit gets too high, we end up calling into question the risk-free prospect of our treasury securities, investors will demand a higher return, which means more money ends up going to interest payments each year ballooning the debt even higher and starting a downward spiral to god-knows where.
There's really no way of telling when this is going to happen. 100% of GDP is a big number and could be the start of it.
This unbelievably arrogant idea is the same as borrowing to keep yourself financially afloat in a house you cannot afford because the neighbours will pay for you.
Things are changing in the world and you are putting yourself in the same financial position as many other countries have been in just before a major war.
It's not a matter of "if" it's "when".
Society in the United States is going to have to decide how much money they are willing to continually poor into the Military and if they want to continue on the same Social Agenda that has led the EU into near collapse.
Today the "Rescue" plan for the EU countries was a mainline story on the Internet.
The IMF and EU are putting into place a plan to LOAN more money to countries who can't pay what they owe now.
This is like giving more alcohol to alcoholics.
Debt is not capital and government doesn't create anything.
So yes it's coming.
Pick your month and year.
Mike, It is frigtening to me the amount of debt that America now has. I find it horrifying for my chidlren and grand children, as I know that it will not only be debt that they inherit, but a disfunctional country. I don't see how America can survive and be the strong, independant Country that she has previously been with this amount of debt. I don't see a rescue plan that would work at this point..just like you said, pick a month and pick a year...we are headed for ruin..
It's really a a question of OWNERSHIP of assets. If every country on the planet collapsed financially tomorrow all the buildings, cars, equipment, planes, trains, factories, etc. would all still be there. They just wouldn't be operating. The Chaos and suffering compounded very quickly as the energy infrastructure would shut down.
So debt is really just a way of controlling asset ownership. The system the wealthy elite have benefited from for so long by making the masses debt slaves is collapsing under the weight of it's own greed.
There is really no reason for people to be making payments on homes, cars, food, school, etc. It's all about control... debt puts the wealthy elite in complete control.
The only real fix is to eliminate the debt system. And those who are in control are not looking to eliminate it... they are looking to extend it and then to replace it with another debt based system.
As evidence just look at the "solutions" being proposed. Every "solution" involves creating money from nothing then loaning it to the people who can not pay their existing debts. This allows the wealthy elite to swoop in and gain ownership of even more assets while the people suffer to try and get by.
The masses have and always will be slaves to some kind of economic debt system.
Humans are horrible stewards of the planets assets.
The greed is easy to see - the military spending of the government is received by US Companies, a very very few American people are taking the huge profits from warmongering. The banks lose huge sums by gambling with each other, then get bailed out by public funds.
What should be a clear wake up call to America is being drowned out by organised religion and the media, all controlled by the same very very few people who profit from all the misery.
as much as I agree about the debt stituation. Get your facts straight... the old its the military saw is dead wrong. The military and homeland security dont even account for half the Government spending.. more than fifty percent of it is Social programs. now heres the truth that every one seems to forget. its the unregulated cost of every single thing in the nation. ten dollar dog collars that cost ten cents to make. 1000 dollar Flat screens that cost 90 dollars to make. 60 K autos that cost two grand to make. million dollar homes that cost 68 thousand in materials and labor eight dollar a pack cigs that cost the manufacturer .75 cents to make.
how about this little scheme that the Gov allows.. the Fuel company's fee to remove lead from gasoline. so what you say. gas is naturally lead free. the added lead back in the day. then had to remove it due to legislation and they started charing to remove something they added in the first place. .
its cost people just plain simple cost. control costs, and things begin to change.
I can agree with this also -
my point about the military is that the US spends half the total world expenditure on its military -
and the profits go to a few people - which is the point.
The costs you are talking are the profits which I refer to as going to those same few people.
I agree with what you said in your first paragraph about social problems being far and away the biggest chunk of government spending (in Britain, the ratio is something like 5:1). But I don't think government regulation of prices is a good idea at all (that is what you're suggesting, isn't it?)
Much as I too abhor the fact that people are prepared to spend silly money on something that only cost pennies to make, it's their choice at the end of the day - and that's as it should be.
If you take away the element of personal choice then you are just handing governments a means of snooping and restricting our freedom - as if they needed another one.
This would be true if the prices were not controlled by corporations, your prices are set by a complex pricing structure that is an automatic monopoly - if you don't believe me go and price up a pair of common shoes around the shops - and see if the price varies by more than a percentage point or two.
Can you point us in the direction of a link?
Links - or more biased lies and distortions of facts - I suggest really going to the real shops and really pricing a pair of shoes then you really get to know what is really happening.
I'm a woman, I already know how much shoes cost
But the fact that there are a few High Street retailers producing similar shoes at similar prices doesn't automatically mean that said big retailers are conspiring behind the scenes to fix the prices. It could just mean that the prices have found their natural level. If Dorothy Perkins starts out charging £40.00 for a pair of shoes and New Look charges £25.00 for a similar pair, then you can bet that this price disparity will disappear pretty soon - for reasons that have nothing to do with price fixing, and everything to to with a desire not to have overpriced shoes lingering on store shelves.
And even if there is this conspiracy that you speak of, it's still better than government price fixing. At least it doesn't carry a potential fine or prison sentence for people who don't comply.
On that note, I remember reading once about the price fixing under Franklin Roosevelt's New Deal - it sounds horrendous*.
Like I said, we already have enough government regulation and snooping. We don't need any more, thanks.
*http://lawlegislationandlunacy.blogspot … ssion.html
"A tailor from New Jersey was arrested, convicted, fined, and imprisoned for pressing a suit of clothes for 35 cents when the legally mandated price was 40 cents."
I cannot say much on the US debt problem but your source is not one I trust, fear mongers from what I can tell.
Russell Howard did a great montage thingy you can see here
We are beginning to see all of Europe suddenly wake up to the fact that the promises they made to the people can't be kept, they aren't sustainable, and Europe is now making budget cuts, trimming entitlements while the people who have grown accustomed to government handouts are rebelling, sometimes in violent fashion. This is the backdrop for what is happening here in the USA where President Obama and the democrat congress are spending money left and right on entitlements even as our economy continues to sputter. The interest payments on are debt alone will soon reach 1 trillion dollars. Our government has constructed an economic house of cards that will soon collapse under the weight of yet another promise that can't be kept.
Unfortunately, there is a whole state client base in the UK and other European countries that have spent their whole lives on benefits. They were encouraged by the Labour government, as they were always going to vote for the hand that feeds them. They have neither the skills, aspirations or motivation to work and provide for themselves and their families, as they have been led to believe that they are 'entitled' to a free ride in life. It's a bit like turning around to your pet poodle and saying I'm not looking after you any more, get out there and be the predator that you should be and provide for yourself and your pups.
So its a huge dilemma, as it would be cruel to make people suffer for what in a lot of cases is not actually their fault, especially if there are children involved. Are there actually enough jobs out there for all these unskilled people, with little work experience, that will pay as much or more than their benefits? Simply shutting off benefits without planning, creating jobs and training and motivating people will only lead to civil unrest and riots.
This is correct - except that most of the freeloaders are in pretend work for the government in overblown unneccesary departments that leach off the taxpayers
True, but what does just turning thousands of people out of public sector non-jobs do to the economy? These people will need 'real' jobs in the private sector, but who is creating these jobs? They will just go on to benefits, and the retail, travel, service etc industries will suffer as there is not so much money around, so will start cutting jobs and not creating more of them.
It really is a vicious circle, and the only way out that I can see is for a mass stimulus of the private sector, so that it can expand and create 'real' jobs, while slowly winding back the public sector 'non-jobs'
Personally I'd sooner see wage cuts for the higher echelons than wholesale job losses. For years and years now, the standard way to award a pay rise has been to use a percentage calculation. The net result of this is that we have workers at the bottom of the pile earning £10k and management earning over ten times as much. The differentials have increased and increased in just the same way as compound interest works on a loan.
True, but it would be like turkeys signing up for Christmas. Because it's the senior management who make the pay decisions, they are not going to recommend anything that hurts them - they are more likely to make redundancies lower down if their funding is cut. For some reason, a lot of them think that they are worth £150,000 a year for their public sector 'non-job'
One of the areas that seriously needs addressing in the South-east is rents for private housing. I know several families on benefits who would or could work, but choose not to because the council pays their rent. Many low-paid jobs will scarcely cover the rent on an average family home in Sussex. If housing were to become more affordable in the South-East, and rents were to be capped we might see some real improvements in the level of unemployment.
Here in the UK we are only just beginning to learn whats in store for us financially. The last few years have been a time of profligacy on the part of governments world-wide, and the banks have facilitated this nightmarish situation in order to stack up future profits. Now, in the UK at least, it's payback time. I expect that the USA will also have to start cutting and saving before too long.
From remembering bits of my economic class, since the US dollar is the world's reserve currency, it's actually healthy to have a deficit, but only if it's growing in comparison to inflation.
With that said, it's been growing a bit too fast within the past few years due to wild spending, but I wouldn't worry about it too much.
The Wrong Message on Deficits
Published: June 9, 2010
The whip-deficits-now fever is running hot on both sides of the Atlantic. In Europe, politicians are understandably spooked by investors dumping government bonds in the wake of the Greek meltdown. But the sudden fierce enthusiasm for fiscal austerity, especially among stronger economies, is likely to backfire, condemning Europe to years of stagnation or worse.
The United States is running the same very high risk. Democrats have soured on job creation and economic stimulus in favor of antideficit rhetoric, which Republicans have long seen as the easy road to discontented voters in a confusing election year.
At a hearing on Wednesday, the Federal Reserve chairman, Ben Bernanke, said job creation and financial-stabilization programs were essential to stop recession from becoming depression, but he also called for “a strong commitment to fiscal responsibility in the longer run.” The emphasis in that statement should be on that “longer run,” but we fear many politicians weren’t listening for nuance.
The economic crisis isn’t over. Nearly 1 in 10 workers is still unemployed in the United States and in the European Union. Germany, Europe’s most robust economy, suffers 7 percent unemployment. In Spain, it is nearly 20 percent. Still, the German government plans to cut its budget deficit from 5 percent to 3 percent of gross domestic product by 2013. The Spanish government promised to cut to 6 percent from 11.2 percent. The new British government promised to take an ax to spending when it proposes its budget on June 22.
The enthusiasm for budget cutting has spread beyond the United States and Europe. A meeting last week in South Korea of finance ministers from the Group of 20 large economies applauded deficit-reduction talk.
The Obama administration has warned that the new austerity drive could undercut economic recovery and has pressed the case that stronger countries, such as Germany, should not slam on the brakes. In a letter to G-20 colleagues, Treasury Secretary Timothy Geithner warned that budget cutting won’t work “unless we are able to strengthen confidence in the global recovery.”
Weak European governments cannot ignore investors dumping their bonds, and they will eventually have to curb their gaping budget deficits. But for everybody to slash public spending when growth is faltering and unemployment remains stubbornly high risks undercutting the goal of fiscal probity by slowing economic growth and reducing tax revenues.
The global recovery is already faltering. China’s economy is losing momentum. The United States’ is slowing. If budget cutting depressed economic growth, the reaction from investors would be no less brutal than their current attack on European bonds.
The problem calls for a varied response. Some countries, such as Spain or Portugal, may have to drastically cut their budgets if they don’t want to lose their access to capital markets. But countries such as Germany, Britain and the United States have space to spend.
Interest rates on German and U.S. bonds remain low. Rates on British debt also are very low, reflecting better growth prospects than those of the countries that use the euro. For them, the best policy should be to take advantage of the cheap money to spend more, not less.
Deficits will have to be reduced once the recovery gains more traction and unemployment recedes. Right now, for the most robust economies — the United States, Germany, Britain, Japan — slashing budgets is the wrong thing to do.
http://www.nytimes.com/2010/06/10/opini … u1.html?hp
BERNANKE WARNS OF "UNSUSTAINABLE" DEFICIT
http://www.nytimes.com/2010/06/10/busin … tml?ref=us
This article describing the conditions in Greece sums things up quite nicely. Greece is the canary in the coal mine of the world's economies. This is a depiction of the future of countries whose governments hold power by doling out entitlements that are never fully funded and whose costs are never really estimated close to reality and then whose only recourse is to tax people out of the economy and into the underground. Greece is in trouble because the people with money, rich people, realize that holding Greek debt is likely to result in a loss and so they are selling out, buying gold and buying dollar denominated investments. They are running for the exits and the safety of America, but America is on the same course as Greece. Where will the money go when the last safe haven collapses?
http://www.guardian.co.uk/world/2010/ma … ens-greece
by Rhonda D Johnson 4 months ago
What did the US use for collateral when we borrowed money from other countries?We know that the US government has borrowed billions of dollars from China, Japan and other countries. But what did we use for collateral? I've been told that the United States is actually a...
by wacknuts 8 years ago
And what does it mean for us?
by qwark 7 years ago
A billion:A billion seconds ago it was 1959!A billion minutes ago jesus alledgedly lived!A billion hours ago our ancestors were living in the stone age!A billion days ago no one walked upon the earth on 2 feet!Now, consider 1000 times a billion: a trillion... and try to visualize our national...
by Ralph Deeds 5 years ago
Economists Agree: Solutions Are ElusiveBy EDUARDO PORTERPublished: April 23, 2013 "Last week the International Monetary Fund hosted a conference of some of the world’s top macroeconomists to assess how the most intense crisis to have shaken the industrialized economies since the...
by tobey100 7 years ago
Over $14 trillion in deficitApproximately 99% debt to GDP ratioCan you spell depression?Credit rating downgrade9% unemployment20% real unemploymentGas prices skyrocketFood prices skyrocketClothing prices skyrocket1 extra warForeign policy? Really?Lost 600 plus seats in congress to the joy of his...
by Castlepaloma 3 years ago
If you think this government is working. Please explain to anyone why the average person earns less wages today, than 35 years ago? Why is the cost of living gone up ten times? Most people do not like their jobs or find it unsustainable along with housing and dealt. It gets worst, by the time...
|HubPages Device ID|
|Login||This is necessary to sign in to the HubPages Service.|
|HubPages Google Analytics|
|HubPages Traffic Pixel|
|Google Hosted Libraries|
|Google AdSense Host API|
|Conversion Tracking Pixels|
|Author Google Analytics|
|Amazon Tracking Pixel|