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Swampfox10mm
Joined: 24 Mar 2011
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 Posted: Sat Aug 06, 2011 9:21 am Post subject: US Debt Figures by Dave Ramsey |
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| "If the US Government was a family, they would be making $58,000 a year, they spend $75,000 a year, & are $327,000 in credit card debt. They are currently proposing BIG spending cuts to reduce their spending to $72,000 a year. These are the actual proportions of the federal budget & debt, reduced to a level that we can understand." - Dave Ramsey |
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Gorf
Joined: 25 Jun 2011
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| Posted: Sat Aug 06, 2011 9:31 am Post subject: |
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| Cool post, bro. Thanks. |
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silkhighway
Joined: 24 Oct 2010
Location: Canada
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| Posted: Sat Aug 06, 2011 9:57 am Post subject: |
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| The US debt is a sideshow circus to the more important issue facing America right now, a stagnant economy and threat of a double-dip recession. If the economy doesn't recover, it doesn't matter how much Americans owe. |
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Kuros
Joined: 27 Apr 2004
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| Posted: Sat Aug 06, 2011 10:07 am Post subject: |
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| silkhighway wrote: |
| The US debt is a sideshow circus to the more important issue facing America right now, a stagnant economy and threat of a double-dip recession. If the economy doesn't recover, it doesn't matter how much Americans owe. |
Increased interest rates on US Treasury debt will mean more money to pay the debt and less for stimulus and job programs. |
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silkhighway
Joined: 24 Oct 2010
Location: Canada
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| Posted: Sat Aug 06, 2011 3:12 pm Post subject: |
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| Kuros wrote: |
| silkhighway wrote: |
| The US debt is a sideshow circus to the more important issue facing America right now, a stagnant economy and threat of a double-dip recession. If the economy doesn't recover, it doesn't matter how much Americans owe. |
Increased interest rates on US Treasury debt will mean more money to pay the debt and less for stimulus and job programs. |
US Bond Rates are at 2.56%, a near historic low, just like taxes. That is hardly Italy let alone Greece, and in any case, since the US has their own currency that gives them room to manoeuvre that the Euro zones don't have. By closing tax loopholes and moderate raises to taxes the US could have got it's house back and order.
Without them, relying on surface cuts alone to Welfare and military spending, there's a circular chicken and egg problem. Don't provide economic stimulus because the interest rates on bonds will go up and then you won't be able to provide economic stimulus.
To continue the OPs analogy, to me, America right now is an underemployed person who instead of looking for a new job is trying to cut back their expenses by saving on paper and gasoline (and then not being able to print off resumes or get to their job interviews.)
I'm not saying the deficit or possibility of currency fiddling isn't concerning, but it isn't the boogeyman it's being made out to be and this "crisis" has been entirely politically manufactured by a mixture of stubborn idealism and weak leadership. |
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southernman
Joined: 15 Jan 2010
Location: On the mainland again
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| Posted: Sat Aug 06, 2011 5:25 pm Post subject: |
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How come no ones mentioned that the USA has dropped to AA+ ratings down from AAA. This will mean increases in debt repayments percentages for the US goverment. The organisation that controls the International ratings system said that US consumers will probably have higher personal icreases in their debt repayments.
Also and probably more worringly was that in this mornings Sunday papers China has already started to say the golden age is behind the USA and asked for a new International Currency because the US dollar is no longer sound. How long does everyone think before China starts to call in it's lending to USA companies, banks especially. I'd suggest that China has just been waiting for this whole fiasco to unfold.
USA legislators really dropped the ball bigtime over the national debt repayments and the ratings agency said that it was disappointed at the USA's actions and hense the lower ratings.
On stuff.co.nz and online media group from NZ said today (Sunday) that tomorrows mornings opening of the NZ stock exchange is going to be watched from around the world. NZ's stock exchange is the first to open in the World. Many overseas commentators are predicting a quite large fall in share prices. Some are saying it might well be that another world wide reccession will start
China's comments won't help but the USA's fall to AA+ is not only embarassing it's going to impact around the world.
We're all very lucky to be here in Asia. Teaching in various countries and for the majority of us, saving alright money. When you look at it on a Global scale we're actually doing pretty damn well. Those of us who don't have the burden of payng back huge student debts that is. |
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silkhighway
Joined: 24 Oct 2010
Location: Canada
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| Posted: Sat Aug 06, 2011 5:33 pm Post subject: |
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Only S&P, 1 of the 3 credit agencies, downgraded the US to AA+..and the treasury is now claiming that S&P erred by 2 trillion in estimating discretionary spending levels. (Whether you believe them or not.)
Also one thing that bears repeating..the US has their own currency, the de facto World currency. This is a huge factor that separates them from countries like Greece. It's not the type of power they want to use too often, but the US *does* have the power to just print off more money. This power gives them tons of leverage countries like Greece or Italy don't have.
China is a little dog yapping in the wind. They have been more than happy to undervalue their currency to the US dollar to push their exports these last several years. It takes two to tango in a debtor-creditor relationship.
Yeah, it will be interesting to see when the markets open starting in Asia, but it's going to be rough week (month, year) and I'm personally going to ride it out. This is a different topic, but *if* -- and I think this is a huge if -- the US economy goes down the tubes, your one-year English teaching contracts in Asia are hardly going to be a conciliation prize. |
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silkhighway
Joined: 24 Oct 2010
Location: Canada
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| Posted: Sun Aug 07, 2011 6:25 am Post subject: |
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| Here's The Treasury's response to the downgrade and explanation of the 2 trillion error. |
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Kuros
Joined: 27 Apr 2004
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| Posted: Sun Aug 07, 2011 3:08 pm Post subject: |
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| silkhighway wrote: |
| Kuros wrote: |
| silkhighway wrote: |
| The US debt is a sideshow circus to the more important issue facing America right now, a stagnant economy and threat of a double-dip recession. If the economy doesn't recover, it doesn't matter how much Americans owe. |
Increased interest rates on US Treasury debt will mean more money to pay the debt and less for stimulus and job programs. |
US Bond Rates are at 2.56%, a near historic low, just like taxes. That is hardly Italy let alone Greece, and in any case, since the US has their own currency that gives them room to manoeuvre that the Euro zones don't have. By closing tax loopholes and moderate raises to taxes the US could have got it's house back and order.
Without them, relying on surface cuts alone to Welfare and military spending, there's a circular chicken and egg problem. Don't provide economic stimulus because the interest rates on bonds will go up and then you won't be able to provide economic stimulus.
To continue the OPs analogy, to me, America right now is an underemployed person who instead of looking for a new job is trying to cut back their expenses by saving on paper and gasoline (and then not being able to print off resumes or get to their job interviews.)
I'm not saying the deficit or possibility of currency fiddling isn't concerning, but it isn't the boogeyman it's being made out to be and this "crisis" has been entirely politically manufactured by a mixture of stubborn idealism and weak leadership. |
Well, what can I say? You're just wrong.
Depending on what kind of accounting you use, the US' debt to GDP is about 90% of GDP. Once borrowing reaches 90% of GDP, further borrowing drags down economic growth more than the value of the gov't spending itself.
And no, $15 trillion in debt and almost a $100 trillion in underfunded liabilities isn't a 'boogeyman.' |
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silkhighway
Joined: 24 Oct 2010
Location: Canada
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| Posted: Mon Aug 08, 2011 7:39 am Post subject: |
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| Kuros wrote: |
| silkhighway wrote: |
| Kuros wrote: |
| silkhighway wrote: |
| The US debt is a sideshow circus to the more important issue facing America right now, a stagnant economy and threat of a double-dip recession. If the economy doesn't recover, it doesn't matter how much Americans owe. |
Increased interest rates on US Treasury debt will mean more money to pay the debt and less for stimulus and job programs. |
US Bond Rates are at 2.56%, a near historic low, just like taxes. That is hardly Italy let alone Greece, and in any case, since the US has their own currency that gives them room to manoeuvre that the Euro zones don't have. By closing tax loopholes and moderate raises to taxes the US could have got it's house back and order.
Without them, relying on surface cuts alone to Welfare and military spending, there's a circular chicken and egg problem. Don't provide economic stimulus because the interest rates on bonds will go up and then you won't be able to provide economic stimulus.
To continue the OPs analogy, to me, America right now is an underemployed person who instead of looking for a new job is trying to cut back their expenses by saving on paper and gasoline (and then not being able to print off resumes or get to their job interviews.)
I'm not saying the deficit or possibility of currency fiddling isn't concerning, but it isn't the boogeyman it's being made out to be and this "crisis" has been entirely politically manufactured by a mixture of stubborn idealism and weak leadership. |
Well, what can I say? You're just wrong.
Depending on what kind of accounting you use, the US' debt to GDP is about 90% of GDP. Once borrowing reaches 90% of GDP, further borrowing drags down economic growth more than the value of the gov't spending itself.
And no, $15 trillion in debt and almost a $100 trillion in underfunded liabilities isn't a 'boogeyman.' |
Well what can I say? You're just wrong.  The end of WWII is an example where debt to GDP ratio was about 120% and it exceeded 100% until about 1960.
I've already stated that the debt load -- or more accurately the deficit load -- is concerning, but it's solvable through moderate tax increases and once the economy is on it's feet and there's full employment, moderate spending cuts. The downgrade to AA+ from AAA is more of an indication of risk from poor leadership than fiscal risk. |
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Kuros
Joined: 27 Apr 2004
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| Posted: Mon Aug 08, 2011 8:24 pm Post subject: |
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| silkhighway wrote: |
| Kuros wrote: |
| silkhighway wrote: |
| Kuros wrote: |
| silkhighway wrote: |
| The US debt is a sideshow circus to the more important issue facing America right now, a stagnant economy and threat of a double-dip recession. If the economy doesn't recover, it doesn't matter how much Americans owe. |
Increased interest rates on US Treasury debt will mean more money to pay the debt and less for stimulus and job programs. |
US Bond Rates are at 2.56%, a near historic low, just like taxes. That is hardly Italy let alone Greece, and in any case, since the US has their own currency that gives them room to manoeuvre that the Euro zones don't have. By closing tax loopholes and moderate raises to taxes the US could have got it's house back and order.
Without them, relying on surface cuts alone to Welfare and military spending, there's a circular chicken and egg problem. Don't provide economic stimulus because the interest rates on bonds will go up and then you won't be able to provide economic stimulus.
To continue the OPs analogy, to me, America right now is an underemployed person who instead of looking for a new job is trying to cut back their expenses by saving on paper and gasoline (and then not being able to print off resumes or get to their job interviews.)
I'm not saying the deficit or possibility of currency fiddling isn't concerning, but it isn't the boogeyman it's being made out to be and this "crisis" has been entirely politically manufactured by a mixture of stubborn idealism and weak leadership. |
Well, what can I say? You're just wrong.
Depending on what kind of accounting you use, the US' debt to GDP is about 90% of GDP. Once borrowing reaches 90% of GDP, further borrowing drags down economic growth more than the value of the gov't spending itself.
And no, $15 trillion in debt and almost a $100 trillion in underfunded liabilities isn't a 'boogeyman.' |
Well what can I say? You're just wrong. The end of WWII is an example where debt to GDP ratio was about 120% and it exceeded 100% until about 1960. |
True. And the US instituted 91% tax rates on the top income bracket to pay down that debt. If a country tried to do that today, all the rich would flee to tax havens. Also, back in the 1950s, the US benefited from pent up demand from rationing and such during the war. Today, the situation is precisely the opposite, and American consumer demand is slack from over-borrowing and over-spending. Lastly, the US's creditors were almost exclusively American citizens, so the wealth trickled back to middle-class savers. But today, many of the US's creditors are foreign nation-states.
A 90% debt-to-income load is a very serious affair, even for a nation-state. |
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weso1
Joined: 26 Aug 2010
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| Posted: Mon Aug 08, 2011 8:35 pm Post subject: |
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| Ramsey is a great model to look at in terms of personal finance, but it's been proven over and over again that his ideas don't work on a national scale or for a government. According to Dave, we would never have debt. When every major economic boom was built on debt. Governments must have debt to be able to function. If we relied solely on tax revenue to operate, we would be a very very very poor country. |
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silkhighway
Joined: 24 Oct 2010
Location: Canada
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| Posted: Wed Aug 10, 2011 5:30 am Post subject: |
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US Bonds at 2.16%!!
If the market was really worried about US solvency, would they be pulling their money out of stocks and buying up more bonds? It seems to me that "dismal outlook" is what's driving them, not solvency worries. |
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Ya-ta Boy
Joined: 16 Jan 2003
Location: Established in 1994
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| Posted: Thu Aug 11, 2011 4:19 am Post subject: |
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Mr. Ramsey left out a few of the salient details.
It seems Mr. and Mrs. A still had their college loans to pay off when they got married. Then the babies started to come along since they didn't believe in birth control. Things looked like they were going to be rough and it made the loving couple nervous. Unfortunately, they went to a revival meeting at the local church and had a come to Ayn R...Jesus moment. Mrs. America quit her job so she could home school the kids.
Mr. A took a tip from the revival preacher, went to a crossroads at midnight, crossed his fingers, spun around three times and barked at the full moon. Satisfied with the results of that, Mr. A quit his union-supported job the next day and went to work at a union-free foreign-owned company for less pay but he felt much more virtuous. On top of that he kept spending at the same rate as when the little woman had a job because, after all, he was a man and should be able to support a family. That was bad enough, but then he took up gambling in far-away cities and squandered what little they had managed to save.
The kids are getting old enough to go to college now. They aren't well educated (Mrs. A hadn't turned out to be much of a teacher) so there are no scholarships in their futures. Mr. A is going to have to come up with all of the tuition. Of course, he went to the crossroads again.
The next morning, as he was leaving his dilapidated home, he ran into his atheist neighbor who told him to tell his little woman to turn off the soap operas and get a job to raise some revenue. He said, �No thanks. I'm on my way to quit my job at the foreign-owned factory and start flipping hamburgers for less money. I know if I keep a four-leaf clover in my pocket, a rabbit's foot on my key chain, and a horse shoe over the door, everything will turn out right. The preacher told me so.�
Moral: If you keep listening to the preacher you'll just end up burying Grandpa beside Route 66. |
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Unposter
Joined: 04 Jun 2006
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| Posted: Thu Aug 11, 2011 7:37 am Post subject: |
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Nice one Yata.
As Silkhighway has pointed out: raising taxes right now would make a lot of sense. |
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