U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Economics
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
Reply Start New Thread
 
Old 06-09-2009, 08:42 AM
 
12,870 posts, read 12,780,036 times
Reputation: 4446

Advertisements

Asia Times Online :: Asian news and current affairs
in part:
Under President Barack Obama's budget plan, the federal debt is exploding. To be precise, it is rising - and will continue to rise - much faster than gross domestic product, a measure of America's ability to service it. The federal debt was equivalent to 41% of GDP at the end of 2008; the Congressional Budget Office [CBO] projects it will increase to 82% of GDP in 10 years. With no change in policy, it could hit 100% of GDP in just another five years ...

The deficit in 2019 is expected by the CBO to be $1,200 billion ... Income tax revenues are expected to be about $2,000 billion that year, so a permanent 60% across-the-board tax increase would be required to balance the budget. Clearly this will not and should not happen. So how else can debt service payments be brought down as a share of GDP? Inflation will do it. But how much?

To bring the debt-to-GDP ratio down to the same level as at the end of 2008 would take a doubling of prices. That 100% increase would make nominal GDP twice as high and thus cut the debt-to-GDP ratio in half, back to 41 from 82%. A 100% increase in the price level means about 10% inflation for 10 years. But it would not be that smooth - probably more like the great inflation of the late 1960s and 1970s with boom followed by bust and recession every three or four years, and a successively higher inflation rate after each recession.

The fact that the Federal Reserve is now buying longer-term Treasuries in an effort to keep Treasury yields low adds credibility to this scary story because it suggests that the debt will be monetised. That the Fed may have a difficult task reducing its own ballooning balance sheet to prevent inflation increases the risks considerably. And 100% inflation would, of course, mean a 100% depreciation of the dollar. Americans would have to pay $2.80 for a euro; the Japanese could buy a dollar for 50 yen; and gold would be $2,000 per ounce.
Reply With Quote Quick reply to this message

 
Old 06-09-2009, 09:27 AM
 
28,384 posts, read 68,011,584 times
Reputation: 18195
Default At least give credit to Professor Taylor...

Quote:
Originally Posted by floridasandy View Post
Asia Times Online :: Asian news and current affairs
in part:
Under President Barack Obama's budget plan, the federal debt is exploding. To be precise, it is rising - and will continue to rise - much faster than gross domestic product, a measure of America's ability to service it. The federal debt was equivalent to 41% of GDP at the end of 2008; the Congressional Budget Office [CBO] projects it will increase to 82% of GDP in 10 years. With no change in policy, it could hit 100% of GDP in just another five years ...

The deficit in 2019 is expected by the CBO to be $1,200 billion ... Income tax revenues are expected to be about $2,000 billion that year, so a permanent 60% across-the-board tax increase would be required to balance the budget. Clearly this will not and should not happen. So how else can debt service payments be brought down as a share of GDP? Inflation will do it. But how much?

To bring the debt-to-GDP ratio down to the same level as at the end of 2008 would take a doubling of prices. That 100% increase would make nominal GDP twice as high and thus cut the debt-to-GDP ratio in half, back to 41 from 82%. A 100% increase in the price level means about 10% inflation for 10 years. But it would not be that smooth - probably more like the great inflation of the late 1960s and 1970s with boom followed by bust and recession every three or four years, and a successively higher inflation rate after each recession.

The fact that the Federal Reserve is now buying longer-term Treasuries in an effort to keep Treasury yields low adds credibility to this scary story because it suggests that the debt will be monetised. That the Fed may have a difficult task reducing its own ballooning balance sheet to prevent inflation increases the risks considerably. And 100% inflation would, of course, mean a 100% depreciation of the dollar. Americans would have to pay $2.80 for a euro; the Japanese could buy a dollar for 50 yen; and gold would be $2,000 per ounce.
The guy does a have a book that allegedly has a SOLUTION to the problem: Getting Off Track

Wonder if my public has it on shelf.
Reply With Quote Quick reply to this message
 
Old 06-09-2009, 10:53 AM
 
12,870 posts, read 12,780,036 times
Reputation: 4446
the article does give john taylor credit.

it will be interesting to see the results of the 10 year T bill auction tomorrow and the 30 year the day after that, as well as the beige book results come out tomorrow.
Reply With Quote Quick reply to this message
 
Old 06-09-2009, 11:03 AM
 
10,723 posts, read 20,156,038 times
Reputation: 9868
Why shouldn't taxes increase? Citizens must support the Governments actions. If we are fighting two wars in Afganistan and Iraq our taxes should be going up to cover its increased costs. It's the Governments reluctance to "have its cake and eat it too" that is increasing our deficit. If the president elect promises "no new taxes" but tax cuts but also promises social programs that should be a red flag.

The poor pay almost no taxes yet use the majority of services. When I was poor I would've gladly paid more taxes to get access to Government programs such as healthcare but I certainly didn't expect to get them for free. Yet that is what is happening.

I have a friend who owns low income housing. One of his tenants said to his face that the reason she keeps having kids is the Government keeps paying her more money to have them.
Reply With Quote Quick reply to this message
 
Old 06-09-2009, 11:19 AM
 
12,870 posts, read 12,780,036 times
Reputation: 4446
the problem is the basic issues are not being addressed by this administration, nor were they addressed by the last administration. we are outsourcing our manufacturing, yet importing lower wage / lower skill labor. how does that even make sense? what would be the benefit of having more people compete for even fewer jobs? i cannot comprehend how we have an administration that gets away without even addressing the basics but, instead, is satisfied with increasing taxpayer spending for temporary projects, and this spending will cause inflation and distress for the average worker /taxpayer. it is insanity!

also, MOST americans don't want to be fighting two wars so why should we have to pay more in taxes to fund them?
Reply With Quote Quick reply to this message
 
Old 06-09-2009, 11:32 AM
 
16,704 posts, read 18,933,830 times
Reputation: 6804
Get ready for the VAT tax... thanks to recent government increases in spending... and failures to rein in costs...
Reply With Quote Quick reply to this message
 
Old 06-09-2009, 11:51 AM
 
10,723 posts, read 20,156,038 times
Reputation: 9868
Quote:
Originally Posted by floridasandy View Post
also, MOST americans don't want to be fighting two wars so why should we have to pay more in taxes to fund them?

Because "we" voted the guys in who started/continued them.

Ron Paul 2008...oh wait.
Reply With Quote Quick reply to this message
 
Old 06-09-2009, 11:55 AM
 
12,870 posts, read 12,780,036 times
Reputation: 4446
i believe that the people actually voted for change, but got more of the same in terms of the war(s). i would like to see a poll if americans would be willing to pay more to fund these wars......
as far as the VAT, i don't think any americans would support the VAT as an addition to the tax burden, even though i have heard that some members of congress feel that it would be a good way to pay for national healthcare.
Reply With Quote Quick reply to this message
 
Old 06-09-2009, 12:05 PM
 
10,723 posts, read 20,156,038 times
Reputation: 9868
Yes, that is the question, no one wants to pay more taxes but we want more services.

We should really be paying more to our state Governments than the federal, but it's the opposite. The Federal Government is now doing the things that each state had control over. They've taken over, with the blessing of the people.
Reply With Quote Quick reply to this message
 
Old 06-09-2009, 12:57 PM
 
Location: Eastern Washington
13,420 posts, read 42,778,501 times
Reputation: 11509
Actually, and I realize I am probably in a small minority, but I would like to see federal "services" cut back to the things specifically authorized by the constitution, and taxes reduced correspondingly.

Something that Ron Paul guy said as well I think.

Most federal services, to me, are either positive nuisances, or at best stuff I don't care about and don't want to pay for.
Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:

Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Economics
Similar Threads
Follow City-Data.com founder on our Forum or

All times are GMT -6.

2005-2018, Advameg, Inc.

City-Data.com - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35 - Top