US Senate approves debt limit increase

[shamrock_uk]

One thing worth remembering of course is that the US is perhaps the only country in the world capable of running a sustained deficit like this, as it isn't going to run out of foreign exchange in the way that another country would. You can look forward to an even weaker dollar though.

[Timber Loftis]

Did someone say hot monkey sex?

[ 11-29-2004, 03:01 PM: Message edited by: Timber Loftis ]

[John D Harris]

Originally posted by Timber Loftis: Did someone say hot monkey sex?

Yes I did, I wrote Hot Monkey sex.

[John D Harris]

Originally posted by shamrock_uk: One thing worth remembering of course is that the US is perhaps the only country in the world capable of running a sustained deficit like this, as it isn't going to run out of foreign exchange in the way that another country would. You can look forward to an even weaker dollar though.

You are correct, we can sustain it for a while. Weak dollars we've been through that before and will go through it again. It Hurts countries exporting to the USA, which mean stronger Jobs at home. There comes a point of deminishing returns though. Where that point is I don't know, I do Know the USA's economy is growing and growing stronger then the vast majority of other countries economies. As of 2000 durring the US recession our GDP was greater then the combined GDP of the EU with less people. For a net of $28,000+- GDP per captia for the USA vs. $23,000+- for the EU avg. I'd be interested in the figures for 2004 when the USA was rolling along like a freight train.

[Donut]

Originally posted by John D Harris: Yorick, nobody in their right mind would choose 10% of $10 over 10% of $1,000,000!

Unless it was a debt of course!!!!!!!

[shamrock_uk]

The GDP percentage isn't necessarily a good comparison. Even with the current tax & spend government we're blessed with, our national debt stands at some £380bn which when divided by our population of ~60m gives us £6333 of debt per person (around $10k off the top of my head) - a far sight better than the $75k quoted above for each US citizen.

The unavoidable truth is that this debt is ultimately owed to US citizens themselves - and they will be the losers if this situation continues.

As for me, I shall be taking dollars with me when I go abroad this holiday because I can buy so many of them with sterling's new-found purchasing power. So someone's happy

[ 11-29-2004, 03:52 PM: Message edited by: shamrock_uk ]

[John D Harris]

Originally posted by shamrock_uk: As for me, I shall be taking dollars with me when I go abroad this holiday because I can buy so many of them with sterling's new-found purchasing power. So someone's happy

Thar you go Sham, Ya got's to look on the bright side.

[Melusine]

Originally posted by Yorick: 4.What has betting got to do with masculinity?

Nothing. Unless you need to compensate, of course.

[John D Harris]

Originally posted by shamrock_uk: The GDP percentage isn't necessarily a good comparison. Even with the current tax & spend government we're blessed with, our national debt stands at some £380bn which when divided by our population of ~60m gives us £6333 of debt per person (around $10k off the top of my head) - a far sight better than the $75k quoted above for each US citizen. The unavoidable truth is that this debt is ultimately owed to US citizens themselves - and they will be the losers if this situation continues.

Granted the GDP percentage is not a good comparison, But so far it is the only one presented, based in fact and numbers. Please if you have another comparison, present it. (Not a challenge, but a honest open desire for the truth based on facts and not Opinion. ) I've seen a lot of links presented to back up this position over the years here, but the vast majority are links long on opinion short on facts. Give me the facts I'm perfectly capitable of forming my own opinion based on the facts. My opinion is I don't like the debt, because running a debt is stupid, but stupid is not the same thing as heading down the road to disaster/depression. "Hale" yea I would rather owe $10,000 then the $75,000 figure given. that's a no brainer

Now Sham you have broken the code with the statement:"The unavoidable truth is that this debt is ultimately owed to US citizens themselves - and they will be the losers if this situation continues." The vast majority of the debt is owed to ourselves, in essance(sp?) a debt on paper. As Sam Walton said when he was asked,after the largest stockmart drop ever on a single day, "Sam you just lost $2,000,000,000 in a couple of hours what are you going to do?" Sam Walton replied "I lost $2,000,000,000 on paper, I'll do the same thing I did yesterday, go to work and make more real money." (Paraphrased by Me) If we forgive ourselves that debt it is our problem, if we default on the debt we owe ourselves it is our problem, If we decide to pay the debt to ourselves in one fell swoop that scares the "Hale" out of the rest of the world. Because if we pay our debt in one fell swoop, it's only $8,000,000,000,000+- our economy makes nearly $10,000,000,000,000+- a year, so we can do it, but if we do. It is that much money OUT of the economy. That much money out of our economy means we don't buy imported stuff, the rest of the world then suffers. Despite the effort to say the USA is not the world's largest consumer, the fact is we are. Does anybody remember that internet analogy(sp?) about if the world was reduced to 100 people. How the top 4 or 5 richest people would all live in North America,(a nice way of saying the USA), and these people also have the most income to spend, they are the ones with the most. Well you don't get to have the most stuff without being the largest consumer. Granted other countries and regions have larger populations, but we are not talking population, we are talking consuming/Buying/having stuff/ which is what economic is the buying and selling of items/stuff. Those with the most money buy the most stuff, those that buy the most stuff are the largest consumer. A population of 1,000,000,000 with only $1,000 of desposable income each sounds like a powerful economy, but when you compare it to an population of 280,000,000 that has a desposable income of $10,000 each has nearly twice the buying power. When they buy, they can buy more, and buying more makes you the larger consumer.(those number are not exact they are used only for illustration purposes, the real number I'm willing to bet are closer to 3 times the buying power of say China.)

[shamrock_uk]

Originally posted by John D Harris: Granted the GDP percentage is not a good comparison, But so far it is the only one presented, based in fact and numbers. Please if you have another comparison, present it. (Not a challenge, but a honest open desire for the truth based on facts and not Opinion. ) I've seen a lot of links presented to back up this position over the years here, but the vast majority are links long on opinion short on facts. Give me the facts I'm perfectly capitable of forming my own opinion based on the facts. My opinion is I don't like the debt, because running a debt is stupid, but stupid is not the same thing as heading down the road to disaster/depression. "Hale" yea I would rather owe $10,000 then the $75,000 figure given. that's a no brainer

Doesn't my 'per person' comparison provide that very alternative?

Now Sham you have broken the code with the statement:"The unavoidable truth is that this debt is ultimately owed to US citizens themselves - and they will be the losers if this situation continues."

Aah yes, I know! I just find economics makes far more sense when you go with your 'gut feeling'! The size of the damn thing just makes me uncomfortable!

The vast majority of the debt is owed to ourselves, in essance(sp?) a debt on paper.

A very valid point. But (to take your example of that stock market crash - nice quote by the way ) real people lost real jobs as a result of that fall. It's always worth remembering that paper movements (whilst being so insubstantial) are basically what makes the world economy tick now - no more shipping gold around these days - and my opinion would be that they therefore 'punch above their weight' and are quite capable of impacting upon the real economy.

Because if we pay our debt in one fell swoop, it's only $8,000,000,000,000+- our economy makes nearly $10,000,000,000,000+- a year, so we can do it, but if we do. It is that much money OUT of the economy. That much money out of our economy means we don't buy imported stuff, the rest of the world then suffers.

I know what you're trying to say here, but not sure I agree with this bit. Your GDP (very crudely) is the sum of all the economic transactions in the economy, not the amount of 'cash' that the government can raise. Just because the value of your economy is greater than the national debt, doesn't bear much relation to your ability to actually pay it off - that would need to come from budget surpluses and/or forex reserves (in the case of foreign debt). You'll only get a budget surplus from either cutting back spending or raising taxes so it doesn't look like it's gonna be paid back anytime soon (or whether it could be paid back even if it was seen as a problem)!

Despite the effort to say the USA is not the world's largest consumer, the fact is we are.

Not disputing that, but not sure how relevent that is to the level of public debt? If the world decides to call in a few loans here and there (unlikely, true) then very quickly your 'number one consumer' status take a beating.

I think my view would be that 'yes it's sustainable' and 'yes, in a short-term view maybe it could even be considered desirable for increasing demand etc' but I just can't shake the feeling of fiscal irresponsibility that comes with it.

Keeping a balanced budget was one of the primary economic goals for governments for a couple of hundred years until maybe the beginning of the 20th century when unemployment and social considerations started to encroach into the political sphere. It's the blas&eacute attitude that the Administration shows to having such a large debt in the first place that worries me more than the actual realities of the threat to the American and World economy.

[ 11-30-2004, 05:25 PM: Message edited by: shamrock_uk ]