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No generation will ever repay the public debt. There is no need to. The only need is to be able to service the debt without an undue disruption of capital markets. We have never repaid the debt from the Civil War, nor from World War I, from the Depression, from World War II, from Vietnam, or from the Reagan administration. Governments are not individuals. Individuals ultimately must settle their debts. Governments can carry debt representing a reasonable fraction of GDP in perpetuity. Of concern should be the capacity of future generations to make interest payments on the debt and preservation of national creditworthiness such that access to capital when needed is not in question. It is the latter that Bush disrespected continuously and that Obama currently has no choice but to disrespect. Current circumstances do spur some sense of nations giving each other a free pass on borrowing, but that will be a window of tolerance only. Debt is currently above 75% of GDP and will be headed higher in the short-term. We will need to arrange our affairs so as to stabilize debt as 60-65% of GDP going forward, then hoping to get back down toward 50% in the longer run. Obama seems to have his eye on that ball, and so long as someone does, the debt will not become any crippling problem for the economy.
Last edited by saganista; 03-13-2009 at 06:52 AM..
Sag - Your answer, although correct, is way too complex for these guys. They desire to destroy government except for the parts that benefit them and do not want to even pay for that.
President Obama said he will cut the deficit by 1/2 near or at the end of his term! yippeeee!
speaking of debt, let's default on China and leave them holding the bag! http://www.bloomberg.com/apps/news?p...0Eo&refer=home
if we default, what will they take as collateral? Interstate 65 in Indiana?
So if I'm hearing this right...
If the people had less of their own money we would not be in this predicament.
People would likely be better off if they had kept less of "their own money", as it is not any shortage of consumer goods and services, but rather a shortage of public goods and services, that more adversely affects our quality of life and standard of living situations at the present time. That doesn't necessarily relate to the credit crunch, however. Tax cuts that should never have been passed did help set the stage for this calamity, but there was nothing about them that made this outcome a necessary one.
The concept of "their own money" is of course grossly flawed. People love to claim that they are in fact entitled to 100% of whatever their gross pay is, assuming for some unknown reason that all of that was produced solely through ther own individual effort, hard work, and labor. This is hardly the case. Some portion of that pay was in fact earned through reliance on investments made available for your use by others, and those others have a prior claim to the income that results. Only freeloader-wannabes seek to deny that prior claim...
Anyways, considering where the vast majority of the GDP comes from how is taxing those productive people more going to increase the ability to pay that loan off later. GDP to debt ratio was going down during Bush years (a few) and we were in an economic downturn and still the only thing you heard was look deficit spending bad!!... It didn't become okay again till Jan 20th 2009.
Sag - Your answer, although correct, is way too complex for these guys. They desire to destroy government except for the parts that benefit them and do not want to even pay for that.
Ah, the babblers...I'm afraid that there's nothing to be done for them. Herding them back into a well-deserved irrelevancy, aside...
No generation will ever repay the public debt. There is no need to. The only need is to be able to service the debt without an undue disruption of capital markets. We have never repaid the debt from the Civil War, nor from World War I, from the Depression, from World War II, from Vietnam, or from the Reagan administration. Governments are not individuals. Individuals ultimately must settle their debts. Governments can carry debt representing a reasonable fraction of GDP in perpetuity. Of concern should be the capacity of future generations to make interest payments on the debt and preservation of national creditworthiness such that access to capital when needed is not in question. It is the latter that Bush disrespected continuously and that Obama currently has no choice but to disrespect. Current circumstances do spur some sense of nations giving each other a free pass on borrowing, but that will be a window of tolerance only. Debt is currently above 75% of GDP and will be headed higher in the short-term. We will need to arrange our affairs so as to stabilize debt as 60-65% of GDP going forward, then hoping to get back down toward 50% in the longer run. Obama seems to have his eye on that ball, and so long as someone does, the debt will not become any crippling problem for the economy.
I couldn't rep (cause I must do the socialist thing and 'spread the wealth').....but
People would likely be better off if they had kept less of "their own money", as it is not any shortage of consumer goods and services, but rather a shortage of public goods and services, that more adversely affects our quality of life and standard of living situations at the present time. That doesn't necessarily relate to the credit crunch, however. Tax cuts that should never have been passed did help set the stage for this calamity, but there was nothing about them that made this outcome a necessary one.
The concept of "their own money" is of course grossly flawed. People love to claim that they are in fact entitled to 100% of whatever their gross pay is, assuming for some unknown reason that all of that was produced solely through their own individual effort, hard work, and labor. This is hardly the case. Some portion of that pay was in fact earned through reliance on investments made available for your use by others, and those others have a prior claim to the income that results. Only freeloader-wannabes seek to deny that prior claim...
100% of their own money is ridiculous and I'm not one of those. What's obvious to me is that even when deficits are huge and revenues too low government spending increases. The very limited time that we had a balanced budget in my lifetime government still increased but instead of doing it during that time period it just waited around till... Bush tax cuts cause revenue losses and what happened.. the government grew. Now he government is going to grow faster than ever before with the O admin but am I to think once the "rush" is over government will have finally curbed it's appetite? I'm not holding my breath. The end result is either massive tax increases on everyone hidden or not and most of those will fall on the children and that's pretty much bi-partisan. I don't have children by the way and I'm middle class so I have no real losses besides the tax increases on fossil fuels but having a little insider knowledge of HVAC/R I can manipulate that influence on me more than others. I guess I should end with ~rant over~ depending on which side of the isle you lay.
Last edited by BigJon3475; 03-13-2009 at 07:54 AM..
Reason: southern dialect and texting don't mix
By the way Ithink on a much larger scale we are repeating our mistakes with thinking it can grow forever...this time it's not housing prices but America itself.
Anyways, considering where the vast majority of the GDP comes from how is taxing those productive people more going to increase the ability to pay that loan off later. GDP to debt ratio was going down during Bush years (a few) and we were in an economic downturn and still the only thing you heard was look deficit spending bad!!... It didn't become okay again till Jan 20th 2009.
Let's not leave the 800-pound gorilla to sulk over having been ignored here. The credit crisis and its ever-growing implications created an entirely different environment, an environment that was made only worse by the denial and ineffectual treatment of it as it emerged.
As you'll recall, the old saying is that you save up FOR a rainy day, not ON one. When the rain comes, you spend. The problem with Bush was that he inherited a balanced budget that contributed literally nothing to the debt per year, and he took that sunny day as a reason to dissave. Very bad business, that...undid in an instant better than a decade's worth of work to bring federal finances into balance.
The debt as a percent of GDP during the Bush years declined only in 2001, as financial momentum from the Clinton era was briefly able to hold back the debt-increasing tides of Bushanomics. It increased in every other year...
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