Reducing the National Debt

[Bern80]

The national debt isn't the problem.

Both you and ActuallyIsStupid both....tell me, why is something that would be a real problem for any private business, household or individual not a problem for the government?

Because the government is not a private business, household or individual.

Can you be more specific?

 

[DontBeStupid]

Both you and ActuallyIsStupid both....tell me, why is something that would be a real problem for any private business, household or individual not a problem for the government?

Because the government is not a private business, household or individual.

Can you be more specific?

Sure.

For example: Government. Private business. Individual.

Which one can print their own money?

 

[Bern80]

Because the government is not a private business, household or individual.

Can you be more specific?

Sure.

For example: Government. Private business. Individual.

Which one can print their own money?

Can they do that without consequence? I mean if we can just print 14.5 trillion why don't we and just be done with it?

 

[OohPooPahDoo]

Trying to even get a handle on the magnitude of the ND is a real challenge. Most of us, I think, can't even get what $16,000,000,000,000 (did I get it right) really is.

It's a number that defies comprehension.

From here down all numbers are approximate.(and many probably wrong - remember I'm just a retired working stiff)

The debt is NOW more than 100% of GDP. A number most said just a short time ago would put Greece into default. Many believe that the ND should be no more than 70% of GDP.

I like how you say the debt defines comprehension and then state it in terms of GDP. Obviously its easy to comprehend in those terms.

Let's start there. 70% would be about $11 trillion. So let's look at what it would take to get there.

Our current deficit is running 1.4 -1.5 trillion a year. To get the ND down to we'd have to generate an annual surplus of 100 billion a year for 50 years. That would require a turn around of 1.5 - 1.6 trillion a year.

Of course the task is aggravated by several very significant issues.

• Current interest of Fed notes is about 1/2 of 1 % - The average is about 5%. At that rate the interest would be 100 billion a year more that would have to be added to the 1.5 trillion turn around number (sheesh I'm getting out of breath)
• Taking more than 2 trillion out of the economy would create a loss in federal revenue of (about) 200 billion?? - we'll have to add THAT to the turn around number
• And many more I'm sure the fertile minds on the forum will add

I got lost somewhere in the second paragraph so y'all help me out here!

A) slightly over 100% GDP isn't a horrible position and the U.S. has been there before. My wife and I's home mortgage is presently well over 100% of what we make in a year.

B) We don't need to pay off the whole debt. We just need it to grow slower than the GDP and inflation.

 

[DontBeStupid]

Can you be more specific?

Sure.

For example: Government. Private business. Individual.

Which one can print their own money?

Can they do that without consequence? I mean if we can just print 14.5 trillion why don't we and just be done with it?

Oh yeah, there would be consequences. But the fact is, they could do it and that's one of the things that makes them different.

 

[Bern80]

Oh yeah, there would be consequences. But the fact is, they could do it and that's one of the things that makes them different.

Could the actually do it? Yes. They could physically print 14.5 trillion dollars and give it to all of our creditors. Would they actually accept it? Unlikely. For the debt to be paid off the collaterol for it, in this case currency, has to have value. You can create the physical symbol of value, the dollar, but in doing exactly that you destroy it's value. If something you want costs $10 then you have to provide something, usually currency that is worth $10. I'm not going to accept your $10 bill if I know you have an infinite supply of them because that $10 provides me no utility. It is worthless to me and everyone else. The problem can't be solved by printing money to get rid of it. The simplest argument to show how wrong you are would be to simply turn the tables. What if households and private businesses could print their own money (assuming doing so wasn't considered counterfeit)? How long do you suppose the economy could function with a medium of exchange that everyone essentially has a ready and essentially infinite supply of?

In short while the ability to print money is a distinction between government and households/private businesses, it is not a distinction that makes excessive debt less troublesome for government than for households/private businesses. So...you'll have to come up with some other difference that makes debt less troublesome for government than for households/private businesses.

 

[ilia25]

I think this is a good intro to the issue: google "Nobody Understands Debt", look for Krugman's article in NY Times.

 

[Bern80]

I think this is a good intro to the issue: google "Nobody Understands Debt", look for Krugman's article in NY Times.

Krugman? Yeah pretty sure I don't need to look at that.

EDIT: But dammit you got you to me read it out of morbid curiosity anyway and as suspected Krugman is of course wrong. He uses similar poor reasoning that I'mActuallyStupid does. He first says families have to pay their debt and the government doesn't. He says government revnue simply has to outstrip the debt. That actually IS true of families as well. It's not that any debt is bad. Having some debt is actually good for a few reasons. As long as the income is their to continue to pay it over time a little debt is okay. So Krugman got that one wrong. Next he says families owe somone else and the government only owes itself because the governments money is your money and a lot of it is the result bonds so since it's really just taxpayers oweing taxpayers it's all the same thing to him....but it probably isn't to those holding the bonds and expecting them to be paid back. Also wrong. Most of our debt is held by foreign countries, mainly china. While he concedes he claims he also starts to get a little vague. He essentally claims that for every $1.00 the U.S. government owes other countries, they owe us .89 cents. So he's basically saying that of the amount of our debt that is held by foreign countries we only really owe %11 percent of that. The only way I see that working is if this is their governments oweing our governments which he doesn't really state. But wait, there's more good news, according to Krugman. He says since 'we' (still don't know exactly who that is) tend to invest more aggressively then they do in other countries that 11% is made up by a better return on investment than they get from us. In short all that foreign debt doesn't exist according to Krugman in fact that owe us! Of course the whole giveaway that Krugman is as always full of shit is ending with the pargraph that if people weren't so worried about devt government could take more of our money to spend our way out of the bady economy. That of course is a zero sum game.

 

[Wiseacre]

Well, here's what I know about debt: you have to pay interest on it until you pay it off. In the next ten years we'll be paying between 5 and 7 trillion dollars in interest alone if the current obligations remain unchanged.

http://money.cnn.com/2011/02/02/news/economy/interest_national_debt/index.htm

 

[DontBeStupid]

Well, here's what I know about debt: you have to pay interest on it until you pay it off. In the next ten years we'll be paying between 5 and 7 trillion dollars in interest alone if the current obligations remain unchanged.

National debt interest rates will take big chunk from budget - Feb. 2, 2011

And how much of that interest stays here in this country?

Hint: 90%.

 

[Wiseacre]

Well, here's what I know about debt: you have to pay interest on it until you pay it off. In the next ten years we'll be paying between 5 and 7 trillion dollars in interest alone if the current obligations remain unchanged.

National debt interest rates will take big chunk from budget - Feb. 2, 2011

And how much of that interest stays here in this country?

Hint: 90%.

Sure about that are ya? Where do you think most people around the world are putting their money that used to be in euros?

Hint: US Treasuries

snippet:

" Treasury notes are good solid additions to any portfolio. US individuals hold 12 percent of the country’s debt. Next under the domestic category comes the Federal Reserve, which holds 9 percent of US debt, then pension and retirement funds, mutual funds, and state and local governments.

Foreigners hold about 47 percent of US public debt. And yes, the largest foreign holder here is China – but only by a hair. Chinese investors are owed 9.8 percent of US debt. Next comes Japan, at 9.6 percent, and the United Kingdom, at 5.1 percent.

Oil exporting nations as a group, including Saudi Arabia, Oman, the United Arab Emirates, etc., account for about 2.6 percent of US debt. Brazil has 1.8 percent. The rest is split among lots of other countries. "

National debt: Whom does the US owe? - CSMonitor.com

 

[ilia25]

Bern80, I understand your passion. But I think you will do better if you try to understand what Krugman writes, instead of trying to count how many times Krugman was "wrong"

1) Families do have to pay their debt because, unlike the government, a family income will not rise forever. At some point people plan to retire, so they have to plan on paying off their debts before that. The government does not have such plans.
2) Only a third of US debt is own by foreigners. The rest is own by US households, banks and government agencies.
3) We own our government, so its debt is our debt (we service it when we pay taxes). That is why Krugman is right to compare what Americans (both government and private sector) owes to foreigners with what foreigners owe to Americans. When he says that the public debt is something that we owe to ourself, "we" means the American people.
4) An economy is not a zero sum game -- it creates new wealth all the time. And creating new wealth is what the government should worry about, if only because it will solve the debt problems as well.

 

[ilia25]

Foreigners hold about 47 percent of US public debt.

Google "The TRUTH About Who Really Owns All Of America's Debt" -- according to Business Insider foreigners only owe about a third of US debt. And Americans owe almost the same amount of foreign assets. So foreigners are actually paying us more than we pay to them.

 

[DontBeStupid]

Well, here's what I know about debt: you have to pay interest on it until you pay it off. In the next ten years we'll be paying between 5 and 7 trillion dollars in interest alone if the current obligations remain unchanged.

National debt interest rates will take big chunk from budget - Feb. 2, 2011

And how much of that interest stays here in this country?

Hint: 90%.

Sure about that are ya?

No. I was just spit balling. According to the article I wasn't too far off. Roughly 70% of the entire debt we owe to ourselves. Meaning if we pay $7T in interest over 10 years, almost $5T goes right back here into our economy.

 

[DontBeStupid]

I think this is a good intro to the issue: google "Nobody Understands Debt", look for Krugman's article in NY Times.

Krugman? Yeah pretty sure I don't need to look at that.

EDIT: But dammit you got you to me read it out of morbid curiosity anyway and as suspected Krugman is of course wrong. He uses similar poor reasoning that I'mActuallyStupid does. He first says families have to pay their debt and the government doesn't. He says government revnue simply has to outstrip the debt. That actually IS true of families as well. It's not that any debt is bad. Having some debt is actually good for a few reasons. As long as the income is their to continue to pay it over time a little debt is okay. So Krugman got that one wrong. Next he says families owe somone else and the government only owes itself because the governments money is your money and a lot of it is the result bonds so since it's really just taxpayers oweing taxpayers it's all the same thing to him....but it probably isn't to those holding the bonds and expecting them to be paid back. Also wrong. Most of our debt is held by foreign countries, mainly china. While he concedes he claims he also starts to get a little vague. He essentally claims that for every $1.00 the U.S. government owes other countries, they owe us .89 cents. So he's basically saying that of the amount of our debt that is held by foreign countries we only really owe %11 percent of that. The only way I see that working is if this is their governments oweing our governments which he doesn't really state. But wait, there's more good news, according to Krugman. He says since 'we' (still don't know exactly who that is) tend to invest more aggressively then they do in other countries that 11% is made up by a better return on investment than they get from us. In short all that foreign debt doesn't exist according to Krugman in fact that owe us! Of course the whole giveaway that Krugman is as always full of shit is ending with the pargraph that if people weren't so worried about devt government could take more of our money to spend our way out of the bady economy. That of course is a zero sum game.

It's nice to see you think you know more than a Nobel Prize winning Economist.

 

[Bern80]

I think this is a good intro to the issue: google "Nobody Understands Debt", look for Krugman's article in NY Times.

Krugman? Yeah pretty sure I don't need to look at that.

EDIT: But dammit you got you to me read it out of morbid curiosity anyway and as suspected Krugman is of course wrong. He uses similar poor reasoning that I'mActuallyStupid does. He first says families have to pay their debt and the government doesn't. He says government revnue simply has to outstrip the debt. That actually IS true of families as well. It's not that any debt is bad. Having some debt is actually good for a few reasons. As long as the income is their to continue to pay it over time a little debt is okay. So Krugman got that one wrong. Next he says families owe somone else and the government only owes itself because the governments money is your money and a lot of it is the result bonds so since it's really just taxpayers oweing taxpayers it's all the same thing to him....but it probably isn't to those holding the bonds and expecting them to be paid back. Also wrong. Most of our debt is held by foreign countries, mainly china. While he concedes he claims he also starts to get a little vague. He essentally claims that for every $1.00 the U.S. government owes other countries, they owe us .89 cents. So he's basically saying that of the amount of our debt that is held by foreign countries we only really owe %11 percent of that. The only way I see that working is if this is their governments oweing our governments which he doesn't really state. But wait, there's more good news, according to Krugman. He says since 'we' (still don't know exactly who that is) tend to invest more aggressively then they do in other countries that 11% is made up by a better return on investment than they get from us. In short all that foreign debt doesn't exist according to Krugman in fact that owe us! Of course the whole giveaway that Krugman is as always full of shit is ending with the pargraph that if people weren't so worried about devt government could take more of our money to spend our way out of the bady economy. That of course is a zero sum game.

It's nice to see you think you know more than a Nobel Prize winning Economist.

Yeah pretty sure they Nobel Prize panel lost all credibility when it gave a noble prize Obama......or Krugman....pick one.

 

[merrill]

Paul Krugman is a master....

and a damn good thnker

 

[M14 Shooter]

Paul Krugman is a master....

and a damn good thnker

Given your endorsement, one can only conclude that he, too, is full of horsepuckey.

 

[merrill]

Paul Krugman is a master....

and a damn good thnker

Given your endorsement, one can only conclude that he, too, is full of horsepuckey.

Read for yourself then decide...

 

[merrill]

Complete debt reduction is unthinkable and simply not necessary IF our tax dollars are being invested in the USA and NOT squandered on preferential tax breaks.


AS I stated Jobs Jobs Jobs Jobs Jobs Jobs Jobs is the key to new economic growth,new wealth for the nation as a whole and to reasonable debt reduction.

A variety of avenues need to be put in place... YES!

1. Do like other nations that have our jobs = provide health insurance to all

2. Spend tax dollars to invest in the USA = new industry = new jobs = new economic growth

3. Stop using new housing starts as a measure of the economy

4. Invest in education absolutely!

5. Stop bailing out banks and mismanaged industrials

6. Throw politicians in jail for breaking laws = good for the economy

7. Terminate corporate funding of all our elections

8. Immediately begin work on the interstate highway infrastructure

9. Tighten home buying guidelines

10. Bring on all forms of new energy = new jobs and new manufacturing opportunities