OT: National Problem

by BoNeZ on Dec 7, 2006 9:52 PM CST

Came along this in my economics class and just figured id pass it along to those interested....its pretty shocking to say the least............................................................................................
http://www.toptips.com/debtclock.html

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This isn't exactly news

The national debt has been out of hand for a long time. Should be noted perhaps, that, as a percentage of the GDP, it's not quite at historical levels. Of course, that's kind of like saying that eating dirt is not quite as bad as eating shit.

by t ball on Dec 7, 2006 9:49 PM CST reply actions

uhhh

wow, what an analogy. It really made me think...

Your Texas Rangers...laying the foundation for 2009...ok, who am I kidding? 2012.

by RangerMoto on Dec 7, 2006 9:52 PM CST up reply actions

Of course,

when it was higher it was because we had borrowed for WW2 and rebuilding Europe.

Now, we just are borrowing money because Republicans are too wimpy to either cut spending or raise taxes to pay for normal operations of government and to create a Civil War in Iraq. For the last 25 years, we've seen massive debt as their only fiscal program.

Iraq "could be considered a Civil War" - Colin Powell.

by DJCahill on Dec 7, 2006 9:59 PM CST up reply actions

And also under Reagan

as I understand.

by a bebop a rebop on Dec 8, 2006 10:38 AM CST up reply actions

Yea

true....but it is still shocking to think that by the time u finish typing a word we go another million in debt.

by BoNeZ on Dec 7, 2006 9:51 PM CST reply actions

All paper anyway

Meaningless.

Movie of the year

by Sharky on Dec 7, 2006 10:29 PM CST reply actions

Meaningless?

How much of the tax dollar goes toward servicing the debt? I haven't seen any figures on that for quite a while.

by Dustin on Dec 7, 2006 10:52 PM CST up reply actions

China

Check out how much of the U.S. national debt is held by China, either directly or indirectly. Big Emerging Nation (BEM) my behind! They've already got us and Japan in a vice.

by Ed Coffin on Dec 7, 2006 11:03 PM CST reply actions

A vice what?

We demand you return our paper!

Movie of the year

by Sharky on Dec 7, 2006 11:54 PM CST up reply actions

Link

http://www.toptips.com/debtclock.html

by Ed Coffin on Dec 8, 2006 12:08 AM CST up reply actions

Vice = vise

Arrgh .. typos

by Ed Coffin on Dec 8, 2006 12:11 AM CST up reply actions

But our debt

both private and public is our vice. :)

by t ball on Dec 8, 2006 9:52 AM CST up reply actions

The Debt

by PW64 on Dec 8, 2006 12:08 AM CST reply actions

The Debt

While the debt is growing at a very rapid rate, its not that big a deal when calculated as a % of GDP. Furthermore, about 85% of the debt is held by the Federal Reserve, the U.S. government or its citizens. The debt isn't that big a deal because it can easily be refinanced. The only problem comes if we can't pay it. For example, lets say that China comes calling wanting their money back plus the interest on it. The government could do several things but would most likely sell government bonds to American citizens. This way, the debt is removed from foreign hands and stays inside the country. So while the debt may be increasing, most of the assets to pay it of are right here in the U.S.

by PW64 on Dec 8, 2006 12:14 AM CST reply actions

Theoretically true

Two things interfere with the reality, though

Buying bonds is voluntary
Personal debt levels might prevent sufficient buys

by Ed Coffin on Dec 8, 2006 12:18 AM CST up reply actions

Foreign countries selling their debt

would probably devalue the dollar more, and increase inflationary pressures as the 2 Trillion or so of our debt that foreigners currently holds got repatriated.

The Debt falling back into the US economy would also tend to raise interest rates as new supplies of debt were pushed into the current demand for debt.

All in all, it would be much better if the Republicans had any other method in their playbook to finance the level of spending they wish to maintain other than shoveling on new debt. However, providing spending for kickback schemes and business earmarks is an expensive business.

Iraq "could be considered a Civil War" - Colin Powell.

by DJCahill on Dec 8, 2006 6:07 AM CST up reply actions

calling in the debt

if other countries, especially china call in their debt, it will actually devalue their money.
the debt to china, is mostly a result of the trade deficit (which is a product of the market, not really any party). when they sell goods in the US, they get US dollars in return. If they exchanged that for their money, it would devalue their money, so they keep it in USD and invest it in the US, driving up their debt.
People look at the trade deficit as though it is a huge problem, but it is actually what helps finance our government. The debt is obviously a problem, spending needs to be cut...the pork and some entitlement programs need to be looked at.
But again, if they call in the debt, and are left with all of the USD that amounts to, they have no incentive to trade it for their money, which would devalue their money, and raise their prices, and that would actuall adjust the trade deficit, but everyone loses.

Troy I.

by tdi1985 on Dec 8, 2006 7:55 AM CST up reply actions

Thus

The international pressure to float the yuan. Under any scenario, it's a lot of money. Paper or otherwise, it represents obligation.

by Ed Coffin on Dec 8, 2006 12:22 PM CST up reply actions

i was just re-reading this

and some of it sounds a little unclear:

(which is a product of the market, not really any party)
should mean: (which is a product of market forces, not really the fault of any US political party)

so they keep it in USD and invest it in the US, driving up their debt.
should say: driving up the debt. or driving up their share of our debt.

they have no incentive to trade it for their money, which would devalue their money, and raise their prices, and that would actuall adjust the trade deficit, but everyone loses.
should say: they have no incentive to trade in the USD for their money, because it would devalue their money, and raise their prices, which would mean a fall in the demand for their goods. It would actually adjust our trade deficit because their prices could catch up to ours, but everyone loses.

Sorry for basically re-posting here, but parts of that relatively small post, just sounded so awkward.

Troy I.

by tdi1985 on Dec 8, 2006 1:20 PM CST up reply actions

The Debt Part 2

The total public debt of the United States accounts for approximately 57% of our GDP. In 2000, the public debt was $5629 billion, while the GDP was $9962.7 billion. To completely pay off the debt the government would have to cut spending on a massive level and probably raise taxes, both of which reduce growth in the economy. Instead, our government pays the interest on the debt to any party, foreign or local, who commes to collect. The interest on the debt makes up a comfortable 2.2% of GDP, which is really not a big deal. Italy, Japan, Belgium, Canada, Spain, France and Germany all have debt that makes up a higher percentage of their GDP than the U.S.

by PW64 on Dec 8, 2006 12:27 AM CST reply actions

The Debt Part 3

You do raise a good point. However, the U.S. government does have the ability to raise taxes if bonds are unable to handle it. The government doesnt want to raise taxes, as this stifles economic growth. According to Keynesian economics, if a government ever achieves a surplus in budget, it means it is either taxing its citizens too much or not spending their money to benefit the nation. I personally believe that the debt is a problem, as it is too high in my view. However, those people who say that the debt is crushing the U.S. economy are wrong. We only spend 2.2% of our GDP on maintaining it. It is not the harbringer of doom that several politicians believe it is.

by PW64 on Dec 8, 2006 12:35 AM CST reply actions

Side Note

Several people believe that the republicans are the reason that we have seen such an increase in the national debt, and that GOP actions such as the war in iraq are driving up the debt are also false. In 1996, the debt made up 68% of GDP and the interest payments on that debt were 3.2% of GDP. Both the percentage of GDP as debt and the percentage of GDP needed to pay interest on the debt have both decreased since 1996.

by PW64 on Dec 8, 2006 12:51 AM CST reply actions

The trends look fairly clear

http://en.wikipedia.org/wiki/Image:National_debt_as_a_%25_of_gdp.jpg

Debt to GDP starts really taking off under Republicans, and the Dems spend their time trying to get it under control.

Essentially you have debt as a huge percentage after WWII, then it declines through all the presidencies, only to take off again under Reagan, slows its rate of growth and finally decreases under Clinton, only to take off again under Bush.

It would be really nice if cutting spending was one of the tools in the Republican arsenal.

Iraq "could be considered a Civil War" - Colin Powell.

by DJCahill on Dec 8, 2006 5:44 AM CST up reply actions

Republicans are not conservative

as I've said before, and your post is more proof. Reagan talked a good game, ridiculing the defecit under Carter, then blew Carter away in spending. The last Republican presidential candidate that was truly conservative was Goldwater.

Meanwhile they natter on and on about "tax and spend" liberals.

by t ball on Dec 8, 2006 9:51 AM CST up reply actions