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Obama forecasts $1.75 trillion deficit for 09'. stock up on wheelbarrows if you plan on buying brea

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posted on Feb, 26 2009 @ 06:42 AM
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Perhaps it wont get as bad as needing a whellbarrow to purchase bread, but it will get so bad that the middle class will dissolve into an underclass.

This is ironic in a way because Obama likes to champion himself as someone for the middleclass and for the poor, yet his budget will make life so much more difficult for them.

Basically many companies are instituting salary cuts across the board because of the "recession", so people are making less money now. Then from a deficit like this prices of goods will go up since inflation will make the dollar less valuable. End result people will not be able buy as much with each of the fewer dollars they will have.

www.reuters.com...




In an open letter to Obama, experts at the Brookings Institution, the Washington think tank, warned that a soaring national debt would have consequences. "We will have to borrow money in domestic and international capital markets to finance this debt, and without a serious commitment to long-term fiscal restraint, lenders will eventually question the nation's fiscal credibility," they wrote.


Geuss gold and silver are the ideal hedges, maybe non-perishable food. Can anyone envisage price caps on foods, like in zimbabwe I mean they work so well.




posted on Feb, 26 2009 @ 07:21 AM
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Aahh. C'mon.

Obama didn't cause the deficit. He's just here to take the heat.

.



posted on Feb, 26 2009 @ 07:24 AM
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Originally posted by Desolate Cancer

Perhaps it wont get as bad as needing a whellbarrow to purchase bread, but it will get so bad that the middle class will dissolve into an underclass.


Deficit doesn't cause hyperinflation... its just a deficit that your government needs to borrow to cover.

Even if your FED created $1.75 trillion and loaned it to your government to cover the costs, it would probably only push inflation on the dollar up MAX 1%... if even that.



posted on Feb, 26 2009 @ 08:40 AM
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reply to post by soficrow
 


He signed the stimulus ($789 Billion) and TARP part II ($350 Billion) so much of the projected deficit for this year was caused by spending on his watch. Government revenue will be lower this year because of the decrease in economic activity. So a $1.5 trillion deficit seems very optimistic to me considering all of the extra spending done this year because even without the bailouts and stimulus the US government was running a deficit. The government has little control over the economy, in good times or bad but they certainly have control over their own budget and spending.



posted on Feb, 26 2009 @ 10:15 AM
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Originally posted by Dermo

Originally posted by Desolate Cancer

Perhaps it wont get as bad as needing a whellbarrow to purchase bread, but it will get so bad that the middle class will dissolve into an underclass.


Deficit doesn't cause hyperinflation... its just a deficit that your government needs to borrow to cover.

Even if your FED created $1.75 trillion and loaned it to your government to cover the costs, it would probably only push inflation on the dollar up MAX 1%... if even that.


I disagree, the deficit is 12% of gdp. Remember this is just the deficit not the overall spending. At 12% of gdp it will become very hard to find buyers of the debt. Foreigners will be much more reluctant to purchase our debt since it will carry a higher risk and will devalue the investment.

Obama passed the 800billion "stimulus" and he is proposing another 680billion for health.



posted on Feb, 26 2009 @ 10:43 AM
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should we not have foreigners offering to buy our credit as a safe haven instrument.....then the fed will monetize the debt....i.e purchase the treasury bonds themselves.......this will not occur for a while.......when a failed bond auction does occur.....then they will print.....but all other currency's and country's are in the same boat.....and until OPEC or the GULF stops selling oil in dollars then the dollar will be the best of the worst



posted on Feb, 26 2009 @ 10:53 AM
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Originally posted by Desolate Cancer
Foreigners will be much more reluctant to purchase our debt since it will carry a higher risk and will devalue the investment.


Ah. When you look at it that way you are right. But hyperinflation is still an extremely pessimistic outlook though.

Even though confidence in the dollar is already waning and this would make it worse, it is still the worlds reserve so until that changes, other countries will continue to buy into it.

The EURO and Dollar seem to be the only large currencies that are weathering this at the moment. Unfortunately the Dollar would last long if another reserve currency was introduced. We'll just have to wait and see what happens. The US would have to be dragged kicking and screaming into an agreement regarding a new reserve.

[edit on 26/2/09 by Dermo]



posted on Feb, 26 2009 @ 10:57 AM
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Let me grab a quote from a thread I wrote afew days ago...


With the Stimulus Bill that was passed earlier this month, people have huge, horribly high hopes for it to succeed. But this is the real world. Pumping Trillions upon trillions of dollars into the global economy can only create inflation.

Inflation's meaning as stated by wikipedia.com is: a rise in the general level of prices of goods and services in an economy over a period of time. The term "inflation" once referred to increases in the money supply (monetary inflation.)

Monetary Inflation is: the term used by some economists to differentiate direct inflation in the money supply (or debasement of the means of exchange) from price inflation which they view as a result or necessary outcome of the former. Originally "inflation" was used to refer simply to monetary inflation, whereas in present usage it often refers to price inflation.

Please feel free to read the entire wikipedia pages as they offer great insight into our global economics.

When inflation happens people have to spend more to feed and shelter their families. Causing the tightening of budgets and the lost of interest in spending for what they cannot afford.
As we have seen with our current state of affairs that when people do not spend ->
Businesses do not make enough money -->
Which leads to a loss in profits --->
Which then also leads to an unneeded workforce ---->
Then layoffs! The ultimate loss in spending power.

In this infinite circle of loss, adding more money to the economic market is a horribly bad thing to do!


That's pretty much it. The thread it comes from is: Here
Feel free to read through it.



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